Delhi High Court reiterates: Bias Of Arbitrator And Manner Of Arbitral Proceedings Can’t Be Decided Under Section 29A of A&C Act

Delhi High Court reiterates: Bias Of Arbitrator And Manner Of Arbitral Proceedings Can’t Be Decided Under Section 29A of A&C Act

It was limited to the examination of whether the extension should be granted

The Delhi High Court has held that an issue related to the bias of an arbitrator in conducting the arbitral proceedings cannot be determined while dealing with the application under Section 29A of the Arbitration and Conciliation (A&C) Act.

The bench of Justice Pratibha M. Singh reiterated that the power of the court under Section 29A was limited to the examination of the extension to be granted or not. The grievance of a party with the conduct of arbitral proceedings or any other substantive challenge could not be decided by the court.

On 16 July 2015, the partners in the firm entered a Memorandum of Settlement (MoS). It contained an arbitration clause for the settlement of any dispute arising out of the agreement.

A dispute arose between them and on 03 November 2015, the arbitration was invoked by the petitioners. The arbitrator entered reference but on the respondent’s request, recused from the proceedings in 2018. Thereafter, the petitioner approached the court for the appointment of a substitute arbitrator. Thus, vide the 16 January 2019 court order, the substitute arbitrator was appointed.

After the proceedings began, the pleadings were completed on 09 July 2019. The petitioner then filed an application under Section 17, which was allowed by the arbitrator. Against the arbitrator’s order, the respondent filed an appeal under Section 37. It caused substantial delay, as the proceedings could not move due to the pendency of the appeal.

Due to the Covid-19 pandemic, it led to the expiry of the timeframe provided for the completion of the arbitral proceedings. The petitioner filed an application under Section 29A. The court allowed the application and the mandate of the arbitrator was extended till December 2022.

However, the proceedings met with multiple delays and could not be completed within the extended time, leading to the filing of another application under Section 29A.

The respondent objected to the extension on the following grounds:

• The ld. arbitrator is taking a view contrary to and against the order of the court.

• Certain documents supplied to the present arbitrator by the substituted arbitrator, are not available with the present arbitrator.

• The application does not provide sufficient cause to extend the mandate. The proceedings have continued for 18 months, and more than 17 hearings have taken place. Still, the evidence for the parties has not commenced.

The petitioner countered on the following grounds:

• The issue of bias and conduct of arbitral proceedings cannot be determined under Section 29A.

The bench observed that the delays happened due to the pandemic. The appeals against the orders were passed by the arbitrator under Section 17, but during the pendency of the appeal, the proceedings did not happen.

The judge held that the objections raised by the respondent related to the way the proceedings were conducted and the alleged bias of the arbitrator. The bias could not be determined by a court while dealing with the application under Section 29A.

The bench stated that as the petitioner had already filed an application under Section 13, it was not appropriate for the court to make any observations on the alleged bias. Thereby, it extended the mandate of the arbitrator for one year.