The single-headed bench of Justice Neena Bansal Krishna of the Delhi High Court, ruled that the time limit for submitting an application under Section 14 of the A&C Act to request the replacement of an arbitrator is three years from the moment the right to apply arises.

Furthermore, the Court determined that if there are no proceedings conducted for a significant duration, an arbitrator would be considered to have abandoned the arbitration.

The parties initially entered into an agreement on November 24, 2008. Subsequently, they entered into a hypothecation deed on December 14, 2009, followed by a supplementary agreement on May 22, 2011. A dispute arose concerning the respondent's failure to pay dues. Consequently, the Petitioner initiated arbitration proceedings and appointed a sole arbitrator to resolve the dispute between the parties on August 9, 2019.

Following the respondent's application under Section 12 of the A&C Act, requesting withdrawal due to unilateral appointment, the arbitral proceedings ceased. The mandate of the arbitrator expired on October 23, 2022, after excluding the COVID-19 exemption period. Subsequently, the petitioner sought the Court's intervention for the appointment of a substitute arbitrator under Section 14 of the A&C Act.

The Court noted that the respondents did not contest the assertion that the arbitrator had abandoned the arbitral proceedings midway. It was observed that the arbitrator's mandate expired on October 23, 2022. The Court determined that an arbitrator would be considered to have abandoned the arbitration if there are no proceedings conducted for a significant period of time.

The Court established that the timeframe within which to file an application under Section 14 of the A&C Act, seeking the replacement of the arbitrator, is three years from the date when the right to apply first accrues. It clarified that the right to apply for the substitution of the arbitrator arose upon the expiration of the arbitrator's mandate.

Accordingly, the Court held the petition to be within limitation and substituted the arbitrator.

Case Title: North East Centre of Technology Application & Reach v. Divine Bamboo Mat Manufacturing, OMP (T) 1 of 2024

Date: 08.04.2024

Counsel for the Petitioner: Mr. Raghvendra Mohan Bajaj

Counsel for the Respondent: Mr. Durga Dutt, Mr. Pradeep Yadav, Mr. Ratan Singh & Mr. Devendra Rao Madhav