In a recent decision delivered on 19 September 2024, a single-judge bench of the Delhi High Court refused to substitute an Arbitrator overseeing a dispute between two parties while extending his mandate by six months. This judgment came in response to a petition filed under Section 29A(4) and (6) of the Arbitration and Conciliation Act, 1996, highlighting critical legal principles on bias and the scope of judicial discretion in arbitration proceedings.
Facts of the Case:
The petitioner sought two specific remedies from the court: an extension of the mandate of the Arbitrator under Section 29A(4), and substitution of the Arbitrator under Section 29A(6), citing allegations of bias. The dispute arose from the respondent cross-examining the petitioner’s witness over the course of eight hearings, which the petitioner claimed was unduly protracted and indicative of bias, especially as the respondent's defense had already been struck off.
Issues:
Should the Arbitrator's mandate be extended under Section 29A(4) of the Arbitration and Conciliation Act, 1996?
Does the situation warrant the substitution of the Arbitrator under Section 29A(6), based on allegations of bias?
Contentions made by the Petitioner:
Counsel for the petitioner urged the court to substitute the Arbitrator, relying on Section 29A(6), claiming that no rigid guidelines govern the provision, and the court has the authority to substitute the Arbitrator based on the exercise of its discretion.
Further argued that bias was evident in the conduct of the Arbitrator, particularly pointing to the eight hearings for cross-examination, despite the striking off of the respondent’s defense. This prolonged cross-examination, according to the petitioner, amounted to a lack of expediency.
Contentions made by the Respondent:
While accepting the extension of the mandate, Counsel for the respondent vehemently opposed the substitution request, contending that the petitioner failed to plead or prove any concrete evidence of bias.
Argued that the Arbitrator had been diligently conducting proceedings and that cross-examination, even if extensive, was within the Arbitrator's discretion and did not warrant his removal.
Decision of the Court:
After hearing both sides, the court partly allowed the petition, extending the Arbitrator’s mandate by six months but rejected the plea for substitution. The court emphasized that bias must be specifically pleaded and proven with cogent evidence, quoting the case of Red Roses Public School v. Reshmawati, which clearly stated that bias cannot be presumed without concrete proof.
The court also rejected the petitioner’s argument that eight hearings for cross-examination indicated bias or undue delay. The judgment held that there is no "hard and fast" rule regarding the number of hearings for cross-examination, leaving it to the Arbitrator’s discretion. The court found no evidence that the Arbitrator was unnecessarily delaying the proceedings, stating that he was proceeding with all due sincerity.
Key Legal Observations:
The judgment highlighted several important principles:
Bias as a Legal Concept:
The court reiterated that bias is a serious allegation that must be substantiated through specific pleading and proof. The concept of bias is not lightly invoked, especially in judicial or quasi-judicial functions like arbitration. Imaginary suspicions of bias, howsoever bona fide, can cause irreparable harm to the integrity of the arbitration process.
Substitution of Arbitrator:
The court observed that substitution under Section 29A(6) of the Arbitration and Conciliation Act, 1996, is an extreme remedy. It should only be applied when the Arbitrator is needlessly delaying the proceedings. In the absence of clear evidence of misconduct or delay, trust issues alone cannot justify substitution. Allowing such requests could undermine the very essence of the arbitral process.
Discretion in Arbitration:
The court noted that the Arbitrator has broad discretion to conduct proceedings, including managing cross-examinations. Protracted cross-examination, in itself, does not necessarily imply a lack of expedition or bias, especially when the number of hearings remains within a reasonable range.
Conclusion:
Ultimately, the court ruled that no case for the substitution of the Arbitrator was made out. The judgment extends the Arbitrator’s mandate for six months and dismisses the allegations of bias, reinforcing the principle that bias must be proved by more than mere suspicion. The judgment also serves as a reminder that parties should not resort to arbitration disruptions based on subjective discomfort with the Arbitrator’s rulings or conduct.
This decision is a significant contribution to arbitration law, particularly in interpreting the scope of judicial powers under Section 29A. It reiterates that the substitution of an Arbitrator must be grounded in clear evidence, safeguarding the integrity and finality of the arbitration process.
Case title: Poonam Mittal versus M/S CREAT ED PVT. LTD
Neutral Citation: 2024:DHC:7312
Counsels for the Petitioner: Ms. Suruchi Mittal and Mr. Naman Pandey
Counsels for the Respondent: Mr. Nikhilesh Krishnan, Mr. Abhishek Bhushan Singh,
Date of Judgment: 19.09.2024
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