Reasons For Bias Do Not Fall Under VII Schedule Of A&C Act , Petition Is Abuse Of Process Of Court : Delhi High Court

The bench of Justice Chandra Dhari Singh held that the mandate of the arbitrator on grounds of bias and prejudice cannot be terminated if the test of the Schedule VII is not satisfied as the grounds mentioned therein are the only situations that render an arbitrator de jure ineligible to act as arbitrator.

The Court held that seeking removal of the arbitrator on grounds of bias or prejudice is beyond the limitations and scope of Section 14 if the ground so taken does not fall within the rubric of the VII Schedule.

Facts

The parties entered into a license agreement dated 30.12.2015. Disputes arose between the parties regarding the payments under the agreement, accordingly, the dispute was referred to the Court appointed arbitrator.

However, the petitioner who was the claimant in the arbitral proceedings felt aggrieved by the conduct of the arbitral proceedings and sought the termination of the mandate of the arbitrator. Accordingly, the petitioner approached the Court under Section 14 of the A&C Act for termination of the mandate of the arbitrator and appointment of the substitute arbitrator.

Grounds

The petitioner sought the removal of the arbitrator on the following grounds:

• The arbitrator has acted in a biased manner to the extent of allowing the respondents to file its statement of defence beyond the time permitted to the petitioner’s for filing their statement of claim.
• The arbitrator allowed an extension of time to the respondents, however, no such extension was ever granted to the petitioner.
• The arbitrator has not given any receipt/acknowledgement of the payments received by him as his fees. Moreover, the tribunal postponed the hearings for non-payment of its fees despite the petitioner paying the due fees.
• During the course of the arbitral proceedings, the arbitrator was designated as a ‘Senior Advocate’, however, this fact was not disclosed with the petitioner.
• The arbitrator was advertising his services on internet websites and soliciting clients through those websites, this, the conduct of the arbitrator is unbecoming of an advocate.
• The arbitrator failed to give reasons on the application filed by the petitioner under Section 16(3) of the Act.

The respondents objected to the maintainability of the petition on the following grounds:

• The petition is not maintainable for the reason that the grounds so taken are beyond the scope of Section 14.
• Issue of bias and impartiality are to be first decided by the tribunal under Section 13 of the Act, however, the petitioner has approached the Court without exhausting a pre-existing and alternative remedy.

Analysis by the Court

The Court observed that the mandate of the arbitrator has been sought to be terminated on grounds of bias and impartiality. However, the grounds taken are related to relaxation provided by the tribunal to the respondents for filing the statement of defence.

The Court held that allegations of bias and impartiality cannot be examined under Section 14 of the Act as the only grounds that can be taken recourse to for the purpose of Section 14 application are the grounds mentioned under the Schedule VII. However, the grounds taken by the petitioner falls outside the rubric Schedule VII, therefore, the petition is not maintainable.

The Court held that the mandate of the arbitrator on grounds of bias and prejudice cannot be terminated if the test of the Schedule VII is not satisfied as the grounds mentioned therein are the only situations that render an arbitrator de jure ineligible to act as arbitrator.

The Court held that seeking removal of the arbitrator on grounds of bias or prejudice is beyond the limitations and scope of Section 14 if the ground so taken does not fall within the rubric of the VII Schedule.

However, the court also examined the petition on its merit and held the extension of time was granted to the respondent as no objection was taken by the petitioner to the request of the respondents for extension. The Court also held that the order of the tribunal sufficiently recorded the fact of payment of partial fees by the petitioner and also answered the allegations of soliciting the services on internet websites.

The Court also observed that the tribunal has not decided the applications filed by the petitioner under Section 16 and 17 of the Act to allow it to challenge the mandate of the tribunal before the Court, thus, it cannot be said that the tribunal has acted in any impartial manner or its order caused any prejudice to the petitioner.

The Court remarked that the petition is an abuse of the process of law and devoid of any merit apart from the fact of being beyond the scope of Section 14 of the Act.

Accordingly, the Court rejected the application.

Case Title: Maj Pankaj Rai v. NIIT Ltd

Citation: 2023 LiveLaw (Del) 425

Date: 16.05.2023

Counsel for the Petitioner: Petitioner-in-person

Counsel for the Respondents: Mr. Rajat Navet, Mr. Kushagra Pandit, and Mr. Shashi Kant

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