Arbitral Award Can't Be Challenged On Ground Of Bias Of Arbitrator If No Challenge Was Made During Arbitral Proceedings: Delhi High Court

The bench of Justice Pratibha M. Singh held that a party that has fully participated in the arbitral proceedings without raising any challenge to the jurisdiction of the tribunal on ground of bias, cannot challenge the award directly under Section 34 of the A&C Act.

The Court held that in an arbitration that has commenced before the 2015 amendment, such a conduct by a party would constitute a waiver under Section 4 of the A&C Act.

Facts

The parties entered into an agreement dated 01.12.2010. In terms of the agreement, the petitioner was to carry out certain works for the respondent. The total project work was to be completed within 11 months from 25.10.2011.

There were certain delays in the completion of the project work. Thereafter, the petitioner raised certain claims against the respondent claiming payment for the extended stay on the site. Accordingly, the arbitrator was appointed to adjudicate the dispute between the parties.

The arbitrator rejected all the claims of the petitioner on the ground that both the parties were responsible for the delay and that the claims of the petitioner were based on hypothetical calculations.

Aggrieved thereby, the petitioner challenged the award under Section 34 of the A&C Act.

Grounds of Challenge

The petitioner challenged the award on the following grounds:

• That the arbitrator was an employee of the respondent, and the Award was rendered in a biased manner.
• That the arbitrator did not award any compensation in respect of the delayed handing over of the project sites, though it is admitted by the respondent that there was a delay.
• The delay caused by the Respondent was also admitted, and hence the claims, particularly regarding illegal deductions and compensations, should have been allowed.

Analysis by the Court

Firstly, the Court dealt with the objection regarding the bias of the arbitrator. It observed that though the petitioner had issued certain letters regarding the bias of the arbitrator, however, it did not take recourse to any remedy available to it under the law.

The Court held that an arbitral award cannot be challenged on the ground of bias of arbitrator if no challenge to bias was made during the pendency of arbitral proceedings.

The Court held that a party that has fully participated in the arbitral proceedings without raising any challenge to the jurisdiction of the tribunal on ground of bias, cannot challenge the award directly under Section 34 of the A&C Act.

The Court held that in an arbitration that has commenced before the 2015 amendment, such a conduct by a party would constitute a waiver under Section 4 of the A&C Act.

Next, the Court considered the issue of rejection of claims by the arbitrator. It held that the arbitrator rejected the claims by observing that the delay was attributable to both the parties, ergo, the parties mutually agreed to extend the time period to complete the project work. Moreover, the claims were based on hypothetical calculations and were not based on any evidence at all.

The Court held that it cannot re-appreciate the merits of the award within the limited scope of scrutiny available under Section 34 of the A&C Act. It held that the award cannot be set aside on mere ground of misappreciation of evidence.

Accordingly, the Court rejected the challenge and upheld the award.

Case Title: Allied-Dynamic JV v. Ircon International Ltd

Citation: 2024 LiveLaw (Del) 62

Date: 10.01.2024

Counsel for the Petitioner: Mr. Akash Kakade

Counsel for the Respondent: Ms. Monisha Handa, Mr. Rajul Shrivastav, Mr. Anubhav Sharma

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