Section 42 A&C | Delhi High Court Terminates Arbitrator's Mandate Who Disclosed Award Prematurely To Party During Proceedings

Brief Facts:

According to the Petitioner, the arguments in the case concluded on 28.08.2023, and the Arbitrator's mandate was set to expire on 01.09.2023. Subsequently, on 12.09.2023, after the mandate had expired, the Arbitrator, Dr. S.K. Dhawan, asked the parties for consent to extend the time for passing the Award. However, the Petitioner contended that on the same day, the Arbitrator disclosed the Award prematurely, revealing details about several claims of the petitioner to the respondent. The petitioner filed a Petition under Section 14(1)(2) and 15(2) in conjunction with the Seventh Schedule of the Arbitration & Conciliation Act, 1996 (“Arbitration Act”) in the Delhi High Court (“High Court”). The Petitioner alleged that this action violated the confidentiality provisions under Section 42A of the Arbitration Act. Additionally, the Petitioner claimed that the Arbitrator was actively soliciting more arbitration appointments from the respondent.

In response, Respondent denied the allegations. The Respondent argued that the computer in the room, where the alleged premature disclosure occurred, was operated by the staff of DIAC, making it impossible for the Arbitral Tribunal to show part of the Award to the Respondent. Furthermore, the Respondent refuted the claim that the Arbitrator was actively seeking additional arbitrations.

Observations by the High Court:

After considering the report submitted by DIAC, the High Court noted that during the hearing, the Arbitrator was dictating the Award in the hearing room. This dictation was being typed by the P.A. on a desktop computer, which was mirrored on a large display in the room, as per general practice. Upon the arrival of the parties and their counsel, the Arbitrator initiated discussions about the mandate of the Tribunal. Simultaneously, the P.A. minimized the computer screen on which the Award was being typed, ensuring that the parties were not able to see the ongoing process. The DIAC, however, clarified that due to the enclosed space and confidentiality reasons, staff beyond the barest minimum required were not present in the room. The High Court noted that the Centre could not comment on any formal or informal discussions between the parties and the Arbitrator during that time.

The High Court held that Section 42 of the Arbitration Act mandates for the strictest confidentiality in arbitration proceedings and the Award itself. The section explicitly mandates maintaining confidentiality of all arbitral proceedings except where disclosure is necessary for the implementation and enforcement of the award. The High Court held that the Arbitrator, in dictating the award, cannot reveal its content to either party. The report from DIAC, coupled with the affidavit of the petitioner's counsel, supported the stance that the arbitral award was visible to the respondent during the hearing.

In light of the breach of confidentiality, the High Court allowed the petition and terminated the mandate of the current Arbitrator. Justice Satish Agnihotri, Retired Chief Justice of Sikkim High Court, was appointed as the new Arbitrator to adjudicate the disputes between the parties.

Case Title: Kamladityya Construction Pvt Ltd Vs Union Of India

Citation: 2024 LiveLaw (Del) 259

Case Number: O.M.P. (T) (COMM.) 112/2023, I.A. 24177/2023, I.A. 24178/2023.

Advocate for the Petitioner: Mr Praveen Chauhan, Mr Sarthak Soushney and Ms Malvika Satija

Advocate for the Respondent: Mr Jitesh Vikram Srivastava, SPC with Mr Prajesh Vikram Srivastava.

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