{"id":294793,"date":"2023-06-16T16:00:42","date_gmt":"2023-06-16T10:30:42","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=294793"},"modified":"2023-06-21T08:34:44","modified_gmt":"2023-06-21T03:04:44","slug":"delhi-hc-sets-aside-arbitral-award-by-arbitrator-de-jure-inability-legal-updates","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2023\/06\/16\/delhi-hc-sets-aside-arbitral-award-by-arbitrator-de-jure-inability-legal-updates\/","title":{"rendered":"Delhi High Court sets aside arbitral award passed by Arbitrator having de jure inability to pass the award"},"content":{"rendered":"
\n

Delhi High Court:<\/b> A petition was filed by Man Industries (India) Limited (petitioner) under Section 34<\/a> of the Arbitration and Conciliation Act, 1996<\/a> challenging the Arbitral Award dated 03-02-2018 passed by the Sole Arbitrator adjudicating the disputes that had arisen between the parties in relation to the Purchase Order dated 08-08-2013 placed by Indian Oil Corporation Limited, (‘respondent’) on the petitioner for line pipes for debottlenecking Salya-Mathura Pipeline. Navin Chawla, J., sets aside the award and held that the Arbitrator was de jure ineligible to act as such and the Award passed by the learned Arbitrator is void and unenforceable.<\/p>\n

During the pendency of the present petition, the petitioner filed an interim application seeking to amend the petition by an additional ground of challenge to the impugned award, the Sole Arbitrator being de jure ineligible to adjudicate the disputes between the parties in terms of Section 12(5) of the Act. The Arbitration Agreement between the parties was contained in Clause 4.26.1 of the Special Conditions of Contract attached to the Purchase Order which is as follows:<\/p>\n

“4.26.1 Any dispute or difference of any kind at any time(s) between the Purchaser and the vendor arising out of in connection with or incidental to the contract (including any dispute or difference regarding the interpretation of the contract or the termination thereof, or resulting from a termination thereof), shall be referred to arbitration by a Sole Arbitrator appointed by General Manager<\/b>. The provisions of the Arbitration & Conciliation Act, 1996<\/a> and all statutory re-enactments and modifications thereof and the Rules made thereunder shall apply to all such arbitrations. The venue of the arbitration shall be New Delhi (India).”<\/i><\/p>\n

In TRF Limited<\/i> v. Energo Engineering Projects Limited<\/i>, (2017) 8 SCC 377<\/a> and Perkins Eastman Architects DPC<\/i> v. HSCC (India) Ltd.<\/i>, (2020) 20 SCC 760<\/a>, the Supreme Court has held that the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a Sole Arbitrator. A party to the Agreement, therefore, would be disentitled to make any appointment of an Arbitrator.<\/p>\n

In Bharat Broadband Network Limited<\/i> v. United Telecoms Limited<\/i>, (2019) 5 SCC 755<\/a>, the Supreme Court has held that Section 12(5)<\/a> of the Act<\/a> provides for de jure<\/i> inability of an Arbitrator to Act as such. The only way in which this ineligibility can be removed is by fulfilling the conditions in the Proviso to Section 12(5)<\/a> of the Act<\/a>, which states that parties may, after disputes having arisen between them, waive the applicability of Section 12(5) by an express agreement in writing. Thus, where the Arbitrator is unable to perform his function, being ineligible under Section 12(5)<\/a> of the Act<\/a>, the appointment of the Arbitrator itself was void.<\/p>\n

The Court noted that there can be no doubt that the Arbitrator appointed by the respondent was de jure ineligible to act as such. The petitioner by its participation in the arbitration proceedings or by its filing of applications under Section 29A of the Arbitration Act seeking extension of the mandate of the Arbitrator, cannot be said to have waived the ineligibility of the learned Arbitrator under Section 12(5)<\/a> of the Act<\/a>, and, therefore, the Arbitral Award passed by the learned Arbitrator is invalid.<\/p>\n

The Court further concluded that the plea of the Arbitrator being de jure ineligible to act as such is a plea of lack of jurisdiction. This plea can be raised by way of an amendment and even without the same. Thus, the Court held that the Arbitrator was de jure ineligible to act as such and the Award passed by the learned Arbitrator is void and unenforceable.<\/p>\n

[Man Industries (India) Limited v. Indian Oil Corporation, 2023 SCC OnLine Del 3537<\/a>, decided on 01-06-2023<\/span>]<\/p>\n\n

Advocates who appeared in this case :<\/p>\n

Mr .Jayant Mehta, Sr. Adv. with Ms. Amrita Singh & Mr. Raghav Bhatia, Advocates for the Petitioner;<\/p>\n

Mr. Dhruv Malik, Ms. Sharmistha Ghosh, Ms. Aditi Sinha & Ms. Palak Nenwani, Advocates for the Respondents.<\/p>\n

Arbitration and Conciliation Act, 1996   HERE<\/a><\/h3>\n

\"arbitration<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The ineligibility of an Arbitrator goes to the root of his jurisdiction and the Arbitral Award cannot be considered as valid.<\/i><\/p>\n","protected":false},"author":67516,"featured_media":293503,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[2633,3226,17711,53514,2543,3686,49552],"class_list":["post-294793","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-casebriefs","category-highcourts","tag-arbitral_award","tag-arbitration","tag-arbitrator","tag-de-jure","tag-Delhi_High_Court","tag-Jurisdiction","tag-purchase-order"],"yoast_head":"\nDelhi HC sets aside arbitral award passed by Arbitrator having no jurisidiction| SCC Blog<\/title>\n<meta name=\"description\" content=\"Delhi High Court sets aside arbitral award passed by Arbitrator being de jure ineligible to pass the award.\" \/>\n<meta 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