The Delhi High Court recently clarified the scope and applicability of Section 29A of the Arbitration and Conciliation Act, 1996 (A&C Act), which empowers the court to extend the time for concluding arbitral proceedings. In a significant judgment delivered by Justice Sachin Datta, the court emphasized that the primary concern under Section 29A is to determine whether the arbitrator has conducted the proceedings with expedition. Any issues related to the conduct of arbitration or the fees charged by the arbitral tribunal are not within the purview of this provision.
Brief Facts:
The arbitration proceedings began on 20th September 2021 in CS (COMM) 409/2021, where the defendant sought arbitration under Section 8 of the Act. The court appointed Mr. Justice Manmohan Sarin (Retd.) as the arbitrator, allowing him to fix his fees with the parties' consent.
The arbitrator's proceedings started on 23rd September 2021, with initial directions for fee deposits. The respondent complied initially but failed to pay an additional amount, leading to a temporary suspension of counterclaims.
The respondent sought to modify fees through a dismissed petition, but the Delhi High Court's prior judgment closed the issue. The respondent considered filing a petition before the Supreme Court, but the Delhi High Court's order remained binding. The petitioner then approached the court under Section 29A, seeking an extension of the arbitrator's mandate as proceedings were at an advanced stage, with final arguments concluded.
Contentions of the Appellant (Petitioner):
- The petitioner (appellant) sought an extension of time for completion of arbitral proceedings and making of the arbitral award under Section 29A (4) and (5) of the Arbitration and Conciliation Act, 1996.
- The arbitration proceedings had already commenced pursuant to an order passed on 20th September 2021 in CS (COMM) 409/2021, where the defendant sought an order referring the dispute to arbitration under Section 8 of the Act.
- The petitioner contended that the arbitral proceedings were at an advanced stage, with final arguments already concluded.
- The petitioner argued that since the proceedings were already in the final stages, it was necessary to grant an extension of time to enable the learned arbitrator to make the arbitral award.
Contentions of the Respondent:
- The respondent raised a grievance concerning the fees charged by the arbitrator and sought a modification of the fees as per Schedule IV of the Act.
- The respondent contended that the fees issue was still a matter of concern and was in the process of taking steps to challenge the Delhi High Court's judgment before the Supreme Court.
- The respondent reiterated its request for a new or substitute arbitrator, expressing dissatisfaction with the current arbitrator.
Observations by the Court:
The court heard both parties' contentions and found no merit in the respondent's arguments regarding fees and the request for a new arbitrator. The court reiterated that proceedings under Section 29A are only concerned with determining if the Arbitrator acted with expedition and that issues related to the Arbitration's conduct or arbitral fees are not relevant under this section.
Referring to previous judgments Orissa Concrete & Allied Industries Ltd. Vs. Union of India[1] and NCC Ltd. Vs. Union of India, the court emphasized that challenges to the conduct of the arbitral proceedings and substantive issues must be raised in other appropriate remedies available to the party and cannot be ventilated in Section 29A proceedings. It reiterated that the sole permissible reason for the removal of an arbitrator under Section 29A is if the arbitrator fails to proceed expeditiously with the adjudication process. This provision cannot be interpreted as a basis for removing the arbitrator due to any issues related to the fees fixed by the arbitrator. The Court emphasized that the scope of Section 29A is limited to ensuring the timely progress of arbitral proceedings and cannot be expanded to include matters concerning the arbitrator's fee determination.
The decision of the Court:
Considering the ongoing proceedings and the Arbitrator's expeditious conduct, the court allowed the petition and granted a six-month extension for the completion of arbitral proceedings and the making of the arbitral award, set to be completed by 10th January 2024.
Case Name: Anay Kumar Gupta v. Jagmeet Singh Bhatia
Coram: Justice Sachin Datta
Case No.: OMP(MISC)(COMM) 147 of 2023
Advocates of the Petitioners: Mr. Shailen Bhatia, Mr. Amit Jain, Mr. Arnav Chatterjee and Mr. Raghav Bhalla, Advs
Advocates of the Respondent: Mr. Manish Kaushik, Mr. Ajit Singh Johar, Mr. Plarsh Vashishth, Ms. Snigdha Sharma and Mr. Mishal Johri, Advs.
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