Power Of Courts To Substitute Arbitrator Under Section 29A(6) Essentially To Further Intent Of Section 29A: Delhi High court

The Delhi High Court bench of Justice C. Hari Shankar, while hearing a petition filed under Section 29A(4) and (6) of the Arbitration Act, has held that Sub-section (6) pertaining to substitute the arbitrator is there to further the purpose of Section 29A.

Section 29A(6) confers power on a court to substitute one or all of the arbitrators while extending the arbitral tribunal's mandate.

Facts:

A petition has been filed under Section 29A(4) and (6) of the Arbitration Act, seeking an extension of the arbitrator's mandate. Additionally, the petition has sought to substitute the arbitrator under Section 29A(6) of the Act.

Submissions by the Parties:

The respondent made the following submissions:

• In the present case, no justifiable reason exists for substituting the arbitrator.
• Placing reliance on a coordinate bench judgment in NCC Ltd v. UOI, where in para 11 it was held that the 2015 amendment introduced Section 29A, and the provision is not intended for a party to seek substitution of an arbitrator solely on the ground that the party has apprehension about the conduct of the arbitrator. The only ground for the removal of the arbitrator is the failure of the arbitrator to proceed expeditiously in the arbitral proceedings.

The petitioner made the following submissions:

• Under Section 29A(6), the court has absolute power to substitute the arbitrator while extending the mandate. As there are no guidelines or criteria in Section 29A(6), the court can act ex debito justiciae and substitute the arbitrator if reasonable grounds are being made out.
• The arbitrator had allowed the respondent to cross-examine the petitioner's witness for over eight hearings. The respondent should not have been granted such liberty in cross-examination.
• The observations of the Coordinate Bench in NCC have to be construed in the light of the facts of that case.

Analysis of the Court:

The Bench observed that Section 29A(6) has to be read in the context of Section 29A. Section 29A pertains to the extension of the mandate of the arbitral tribunal. Sub-section (6), when read in context, indicates that the substitution of the arbitrator is to be undertaken only when the court believes that the proceedings are being unduly delayed by the arbitrator. The intent of Sub-section (6) is to ensure that the exercise of discretion by the court when extending the mandate of the tribunal is not frustrated by an arbitrator who, without any justifiable reason, is delaying the proceedings.

In clear terms, the Coordinate Bench in NCC held that the substitution of an arbitrator under Section 29A is effected when the existing arbitrator fails to proceed expeditiously in the matter. The intent of conferring power on a court in Sub-section (6) to substitute the arbitrator is to further the intent of Section 29A, i.e. to enable the proceedings to conclude. Therefore, in agreement with the Coordinate Bench in NCC, Section 29A(6) would only apply where the existing arbitrator was unjustifiably stretching the proceedings.

The Bench further held that the arbitrator cannot be said to have failed to proceed with reasonable expedition. The extent to which a party is allowed to cross-examine a witness is the arbitrator's sole discretion. If the cross-examination continues for a prolonged period, the court can pass remedial orders. However, in the present case, eight hearings cannot be treated as a case fit for the court to substitute the arbitrator on the grounds under Section 29A(6).

The substitution of an arbitrator is an extreme measure and cannot be pursued at the drop of a hat. Otherwise, no arbitration would proceed to the conclusion. Only when a clear and substantial case for substitution is made out can the court use the power conferred under Section 29A(6) to substitute an arbitrator.

Therefore, the Bench partly allowed the petition by extending the tribunal's mandate but rejected the prayer seeking substitution of the arbitrator.

Case Title: Poonam Mittal v. Creat Ed Pvt. Ltd.

Citation: 2024 LiveLaw (Del) 1062

Case Number: O.M.P. (MISC.) (COMM.) 80/2023

Counsel for the Petitioner: Ms. Suruchi Mittal and Mr. Naman Pandey, Advocates.

Counsel for the Respondent: Mr. Nikhilesh Kirishnan and Mr. Abhishek Bhushan Singh, Advocates.

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