Delhi High Court: In a petition filed under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 (‘the Act’) seeking substitution of the sole arbitrator, Prathiba M. Singh, J., while appointing a new arbitrator, noted that the initial arbitrator’s mandate was terminated due to non-responsiveness and that termination of the arbitrator’s mandate would not culminate into termination of the arbitral proceedings.
Background
Extramarks Education India Pvt. Ltd., the petitioner, and Saraswati Shishu Mandir, the respondent, entered into agreements for the sale, installation, and services of smart learn classes. Following the termination of these agreements due to outstanding dues, the petitioner attempted to resolve the matter through various emails and a final warning letter, culminating in a legal notice in May 2018, and a subsequent reminder in August 2018 were also sent.
In October 2018, the petitioner invoked arbitration under Section 21 of the Act, leading to the appointment of a sole arbitrator. Procedural hearings commenced in November 2018, and continued until February 2020, but were interrupted by the nationwide COVID-19 lockdown in March 2020. Thereafter several attempts were made to continue with the arbitral proceedings, which also included an email sent by the petitioner to the arbitrator for commencing with the proceedings, however, for various reasons, the same failed to come to fruition. The petitioner, therefore, filed the present petition before the Court, seeking substitution of the sole arbitrator.
Contentions of the Petitioner
The petitioner argued that unilateral appointments were invalid as per the Supreme Court decision in Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760.
Contentions of the Respondent
The respondent contended that the petitions were time-barred as they were filed beyond the permissible period and further that the arbitration agreement was unstamped.
Decision and Analysis
Upon consideration of arguments presented by the parties, while dealing with the issue of the petition being time barred, the Court considered the exclusion of the period from 15-03-2020 to 28-02-2022, as per the Supreme Court’s order in Cognizance for Extension of Limitation, In re, (2022) 3 SCC 117, due to the COVID-19 pandemic, and therefore, the petitioner’s email to the arbitrator was thus deemed within the acceptable timeframe, negating the time-bar objection.
The Court referred to the 7-Judge Bench decision in Interplay between Arbitration Agreements under the Arbitration & Conciliation Act, 1996 & the Indian Stamp Act, 1899, In Re, 2023 SCC OnLine SC 1666, which clarified that stamping of the arbitration agreement was not mandatory for invoking arbitration and hence, the objection with regard to the insufficiently stamped arbitration agreement was also dismissed.
The Court examined Sections 14 and 15 of the Act, which provide for the termination of an arbitrator’s mandate if they are unable to perform their duties and the subsequent appointment of a substitute arbitrator. The Court highlighted that the initial arbitrator had become non-responsive, justifying the appointment of a substitute arbitrator to continue the proceedings.
The Court further referred to Religare Finvest Ltd. v. Widescreen Holdings (P) Ltd., 2024 SCC OnLine Del 2769, which distinguished between the termination of an arbitrator’s mandate and the termination of arbitral proceedings and emphasized that the mandate of the arbitrator may end, but the arbitration proceedings can continue with a new arbitrator.
The Court, therefore, disposing of the petition, appointed a new arbitrator, and further directed that the arbitration proceedings would resume from the stage left by the previous arbitrator, under the aegis of DIAC.
[Extramarks Education India Pvt. Ltd. v. Saraswati Shishu Mandir, 2024 SCC OnLine Del 3710, Decided on 15-05-2024]
Advocates who appeared in this case :
Advocates for Petitioner: Zeeshan Hashmi, Ankit Parashar
Advocates for Respondent: Vivek Sharma
Buy Arbitration and Conciliation Act, 1996 HERE
