Party's Participation Insufficient To Infuse Life To Arbitral Proceedings If Award Is Void Due To Arbitrator's Ineligibility: Delhi HC Opines Prima Facie

Expressing a prima facie opinion, the Delhi High Court has observed that the participation of any party is not sufficient to infuse life to arbitral proceedings if the award is void ab initio on the ground of ineligibility of an arbitrator.

Justice Vibhu Bakhru made the said observation while staying the enforcement of an arbitral award in the case of Ruia Exports & Another v. Moneywise Financial Services Private Limited & Others.

"Prima facie, if the award is void ab initio on the ground of ineligibility of an arbitrator, the participation of any party in the arbitral proceedings may not be sufficient to infuse life to the arbitral proceedings," the Court said.

The Court heard Advocate Shashank Garg, the Amicus Curiae in the matter on the question as to whether the arbitral award was sustainable.

The amicus had referred to a decision delivered by a Coordinate Bench of the High Court in the case titled Abraham Memorial Education Trust v. Prodigy Development Institution dated March 24, 2021.

The Court in the aforesaid decision had held that the arbitral award was void ab initio since it was rendered by an arbitrator unilaterally appointed by the parties, which is impermissible.

On the other hand, the counsel appearing for the respondent did not dispute that unilateral appointment of an arbitrator is impermissible in view of the decision of the Supreme Court in Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.

However, it was submitted that since the petitioner had participated in the arbitral proceedings, it was precluded from raising objections on this ground.

The Court was of the view that the question was a substantial one which required consideration, the Court posted the matter for further hearing on May 19 while staying enforcement of impugned award.

"In view of the above, the enforcement of the impugned award is stayed," the Court ordered.

Advocates Gaurav Srivastava and Rashmi Kumari appeared for the petitioners. Advocates Shreyas Jain and Prachi Gupta appeared for the respondents. Advocate Shashank Garg was the amicus curiae.

Case Title: RUIA EXPORTS & ANR. v. MONEYWISE FINANCIAL SERVICES PVT.LTD & ORS.

Citation: 2022 LiveLaw (Del) 253

Click Here To Read Order