Past Professional Relationship Creates Enough Bias To Terminate Arbitrator’s Mandate U/S 14 Of A&C Act, Duration Is Immaterial: Delhi HC
The Delhi Excessive Courtroom bench of Justice Jasmeet Singh has held that if any particular person had any skilled or supervisory relationship with the get together to the Arbitration, such particular person can’t be appointed as an Arbitrator as per Entry 1 of the Seventh Schedule. It doesn’t matter whether or not such a relationship existed over 17 years in the past however the actual take a look at is whether or not such a relationship created a cheap apprehension of bias. Accordingly, the mandate of the Arbitrator was terminated within the current case.
Temporary Details:
It is a petition filed beneath Part 14 and 15 of the Arbitration and Conciliation Act, 1996 (Arbitration Act”) looking for termination of the mandate of the arbitrator, Mr. B.B. Dhar (for brevity “the appointed arbitrator”), appointed vide the order dated 10.02.2025 handed by this Courtroom and appointment of one other impartial arbitrator to adjudicate the disputes between the events.
The Petitioner was awarded a contract by the Respondent via a letter of acceptance issued on 05.01.2019 for developing extra school rooms, laboratories, bathrooms and allied companies at Seven Authorities Faculties.
The works had been accomplished to the satisfaction of the respondent and the petitioner raised its ultimate invoice for Rs.20,73,39,891/- on 23.05.2022. When fee was launched in March 2023, the respondent unilaterally decreased the quantity to Rs.5,09,52,388/- giving rise to a number of financial claims and disputes.
Between July 2023 and February 2024, the petitioner exhausted the three tier dispute decision mechanism envisaged in Clause 25 of the GCC and on 16.12.2024, the petitioner issued a discover beneath Part 21 of the Act and when no arbitrator was appointed, filed ARB.P. 214/2025 beneath Part 11 of the Act on this Courtroom. Vide the order dated 10.02.2025, this Courtroom appointed Mr B. B. Dhar, a retired CPWD engineer, as the only real arbitrator to adjudicate the disputes between the events.
Later, the petitioner found that the appointed arbitrator had been the involved engineer in varied works executed by the petitioner for the respondent.
The Petitioner submitted that the appointed arbitrator is a “common” nominee of the respondent and has beforehand adjudicated a number of of its issues, making a notion of bias that violates the rule towards adjudicators and the ideas of pure justice.
Per contra, the Respondent submitted that for the reason that appointment was achieved by the court docket beneath part 11 of the Arbitration Act, the mandate can’t be terminated beneath sections 14 and 15 of the Act except precise proof of ineligibility is offered which the petitioner has failed to supply.
It was additional submitted that the Arbitrator’s affiliation was merely an oblique supervision of the undertaking that too over 17 years in the past and there was no skilled relationship since 2015 after his retirement due to this fact grounds talked about beneath the fifth or Seventh Schedule are not established to terminate the mandate of the Arbitrator.
Observations:
The court docket on the outset famous that Part 12(5) learn with Seventh Schedule and Part 14(1)(a) of the Act offers that an arbitrator turns into de jure unable to behave if any of the disqualifications listed within the Seventh Schedule are attracted.
It additional noticed that Entry 1 of the seventh schedule of the Arbitration Act disqualifies any particular person from appearing as an arbitrator who had any skilled or enterprise relationship within the type of worker, marketing consultant or advisor with any of the events to the Arbitration. The objective of the supply launched by the 2015 Modification is to make sure impartiality within the Arbitration. The Supreme Courtroom TRF Restricted and Perkins held that any such relationship of the Arbitrator with the get together disqualifies them except such ineligibility is waived expressly in writing after the dispute having arisen.
Equally, the Coordinate Bench of the Delhi Excessive Courtroom Proddatur Cable TV DIGI Service and the Division Bench in Govind Singh held that previous or current affiliation of the Arbitrator with the get together creates an inexpensive apprehension of bias on which an arbitration might be disqualified beneath part 12(5) of the Arbitration Act.
In mild of the above dialogue, the court docket held that within the current case, the petitioner and the appointed arbitrator had an expert relationship up to now. The Petitioner was a contractor and the Appointed Arbitrator was appearing as a Superintendent Engineer in CPWD which was a shopper of the Contractor. The Respondent contended that their interplay was restricted and occurred over 17 years in the past. Nonetheless, it reveals {that a} skilled, enterprise or supervisory relationship existed between the petitioner and the Arbitrator.
It additional held that “Entry 1 of the Seventh Schedule, particularly, is designed to insulate the arbitral course of from each precise and perceived bias by disqualifying people who’ve had a previous or current enterprise relationship with a celebration to the dispute.”
The court docket additional noticed that the objective of Entry 1 is to disqualify any particular person from appearing as an Arbitrator if he had any skilled or enterprise relationship with the get together. It doesn’t concentrate on the character or length of the connection moderately whether or not such affiliation has created an inexpensive apprehension of bias or not. This prior affiliation creates a terror of bias thereby violating the precept of neutrality that the Arbitration regulation upholds.
It held that due to this fact, it can’t be stated that the Petitioner’s invocation of Entry I of the Seventh Schedule isn’t arbitrary or whimsical however a legitimate floor to hunt termination of mandate of the Arbitrator.
It held that the court docket appointment beneath Part 11 of the Act doesn’t override the statutory safeguards of independence or disqualify a celebration from looking for redress beneath Part 14 of the Act.
The court docket additional noticed that the Arbitrator not solely was a former worker but additionally had an expert or supervisory affiliation with the petitioner. The appointment of the Arbitrator was earlier withdrawn by the Respondent on comparable grounds. The truth that a declaration was made beneath part 12(1) of the Arbitration Act doesn’t imply that the ineligibility attracted beneath part 12(5) of the Arbitration Act is cured and that too when no specific waiver in writing has been given by the petitioner. An earlier order appointing the Arbitrator was handed by the court docket with none information of those details.
Accordingly, the current petition was allowed and the mandate of the Arbitrator was terminated.
Case Title: ROSHAN REAL ESTATES PVT LTD versus GOVERNMENT OF NCT OF DELHI
Case Quantity: O.M.P.(T)(COMM.) 23/2025
Judgment Date: 01/07/2025
For Petitioner: Ms. Anusuya Salwan, Adv.
For Respondent: Mr. Tushar Sannu with Mr. Aman Kumar, Advs.
