Termination of arbitrator's mandate u/s 29A(4) - Substitution of arbitrator warranted, to achieve expeditious resolution

Supreme Court Replaces Arbitrator in Mohan Lal Fatehpuria Case, Upholds Speedy Resolution Principle Mandate of Arbitrator Terminated; Justice Najmi Waziri Appointed as New Arbitrator to Expedite Proceedings

In a significant ruling, the Supreme Court of India has quashed the Delhi High Court's decision to extend the mandate of a sole arbitrator in the case of Mohan Lal Fatehpuria vs. M/s Bharat Textiles. The apex court has instead appointed Justice Najmi Waziri, a former judge of the Delhi High Court, as the new arbitrator to expedite the resolution of the ongoing dispute.

The judgment, delivered by a bench comprising Justices Sanjay Kumar and Alok Aradhe, emphasized the legislative intent behind Section 29A of the Arbitration and Conciliation Act, 1996, which was introduced to address delays in arbitration proceedings and ensure time-bound disposal of disputes. The court highlighted that the mandate of the previous arbitrator, Mr. Anjum Javed, had expired as per the statutory provisions, rendering him functus officio.

The case originated from a partnership dispute involving Mohan Lal Fatehpuria and M/s Bharat Textiles, where arbitration was chosen as the method of dispute resolution. The arbitration proceedings faced delays, prompting the appellants to seek substitution of the arbitrator under Section 29A(6) of the Act. The High Court had earlier extended the arbitrator's mandate despite its expiration, a decision now overturned by the Supreme Court.

In its analysis, the Supreme Court underscored the importance of adhering to the time limits prescribed under Section 29A, which mandates that an arbitration award must be made within twelve months, extendable by six months with the parties' consent. The court noted that the arbitrator failed to deliver the award within this timeframe, prompting the necessity for substitution to uphold the Act's objective of expeditious dispute resolution.

The Supreme Court's ruling not only reinforces the legislative intent behind Section 29A but also sets a precedent for future arbitration cases, emphasizing the need for timely resolution and adherence to statutory mandates. The newly appointed arbitrator, Justice Waziri, has been directed to resume the proceedings from the current stage and conclude them within six months, ensuring a swift resolution to the dispute.

The judgment is expected to have wide-reaching implications for arbitration proceedings across the country, serving as a reminder of the judiciary's commitment to enforcing legislative provisions aimed at reducing delays and enhancing the efficiency of dispute resolution mechanisms.

Bottom Line:

Termination of arbitrator's mandate under Section 29A(4) of the Arbitration and Conciliation Act, 1996 - Substitution of arbitrator warranted when his mandate ceases to exist, to achieve expeditious resolution of disputes.

Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 29A(4), 29A(6), 14, 15

Mohan Lal Fatehpuria v. M/s Bharat Textiles, (SC) : Law Finder Doc Id # 2820191