Participation In Arbitration And Filing Section 29(A) Application Not To Preclude Challenge To Arbitrator's Eligibility: Delhi High Court

The High Court of Delhi has held that mere participation of a party in the arbitration proceeding cannot be deemed to be a waiver under Section 12(5) of the A&C Act.

The bench of Justice Manoj Kumar Ohri held that filing an application under Section 29(A) does not amount to an express waiver in writing of the right to challenge the arbitrator's ineligibility under Section 12(5). The decision clarified that mere participation in arbitral proceedings, without an overt act indicating awareness and conscious waiver of the right to object, does not suffice.

Facts of the Case

The petitioner filed petitions under Section 34 of the Arbitration & Conciliation Act, seeking to set aside two final arbitral awards delivered by the same Sole Arbitrator for different projects. The projects involved the construction of flats in Dehradun and Meerut, and disputes arose between the parties, leading to arbitration.

Submissions of the Parties

• The petitioner challenged the awards primarily on the ground of the Sole Arbitrator's de jure ineligibility, citing Section 12(5) of the Act. The petitioner argued that participation in arbitral proceedings does not waive the right to challenge an inherently ineligible arbitrator.
• The respondent contended that implicit waiver could occur through the petitioner's active steps, such as filing a Section 29(A) application for extension of the arbitrator's mandate. The respondent opposed the petitioner's reliance on certain judgments, including one under challenge, and argued that filing an application under Section 29(A) amounted to a waiver.

Court's Analysis and Conclusion

The court focused on whether the petitioner's continued participation and the Section 29(A) application precluded it from challenging the arbitrator's de jure eligibility. Notably, the arbitrator was unilaterally appointed by the respondent, and clauses in the agreements did not involve the petitioner in the appointment process.

The court referred to various case laws, including Perkins Eastman Architects DPC v. HSCC (India) Ltd., to establish that an inherently ineligible arbitrator cannot appoint another arbitrator. It held that filing a Section 29(A) application does not constitute an express waiver in writing, citing Larson & Toubro Ltd. v. HLL Lifecare.

Rejecting the respondent's argument and distinguishing the case law cited, the court concluded that the petitioner's objections were not waived, allowing the petitions and setting aside the awards.

The court reaffirmed that filing an application under Section 29(A) does not amount to an express waiver in writing of the right to challenge the arbitrator's ineligibility under Section 12(5). The decision clarified that mere participation in arbitral proceedings, without an overt act indicating awareness and conscious waiver of the right to object, does not suffice.

Case Title: Umaxe Projects Pvt Ltd v. AIR Force Naval Housing Board, OMP(COMM) 469/2023

Citation: 2023 LiveLaw (Del) 1261

Date: 01.12.2023

Counsel for the Petitioner: Mr. Anirudh Bakhru, Mr. Ayush Puri, Mr. Kanav Madnani, Ms. Pragya Choudhary, Mr. Vijay L. Rathi and Mr. Sultan Haider, Advocates.

Counsel for the Respondent: Mr. Yoginder Handoo, Mr. Ashwin Kataria and Ms. Medha Gaur, Advocates with GP Captain K.K. Sharma and Mr. B.S. Nirola.

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