In a recent decision of Delhi High Court, an arbitral award has been set aside by the court on the grounds of the arbitrator's inherent ineligibility to preside over the dispute. The case, filed under section 34 of the Arbitration & Conciliation Act 1996, involved disputes arising from a contract for the construction of rural roads under the Pradhan Mantri Gram Sadak Yojana.
The genesis of the disputes lay in a contract between the petitioner and the Madhya Pradesh Rural Road Development Authority. Subsequently, a Memorandum of Understanding (MoU) was signed between the petitioner and the respondent, leading to the issuance of work orders. However, due to alleged defaults by the respondent, the petitioner terminated the contract and completed the remaining work at the respondent's risk and cost.
Invoking arbitration as per clause 19 of the MoU, the petitioner appointed a Sole Arbitrator.
The arbitration process culminated in an Arbitral Award dated 17.12.2021, which the petitioner challenged under section 34 of the Arbitration and Conciliation Act 1996, arguing the arbitrator's de jure ineligibility in terms of Section 12(5) of the 1996 Act.
After considering the arguments from both sides, the court found the appointment of the arbitrator to be void ab-initio due to their inherent ineligibility. Citing precedents and legal provisions, the court emphasized that a defect of jurisdiction can be challenged at any stage, as it strikes at the foundation of the tribunal's authority. The court further noted that the absence of a waiver in express written agreement subsequent to disputes precluded any argument for the validity of the appointment.
Consequently, the court set aside the Arbitral Award, declaring all proceedings in arbitration as null and void.
This judgment underscores the importance of ensuring the eligibility of arbitrators and the necessity of adhering to legal provisions governing arbitration proceedings.
Case title: Telecommunication Consultants India Ltd vs. Shivaa Trading
Neutral Citation: 2024: DHC: 3094
Counsels for the Petitioner: Mr. Nikhilesh Krishnan, Ms. Ritika Priya and Mr. Abhishek Bhushan Singh,
Counsels for the Respondent: Mr. Ajay Kumar Tiwari
Date of Judgment: 09.04.2024
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