The Delhi HC in, HIMACHAL PRADESH POWER CORPORATION LIMITED v. HINDUSTAN CONSTRUCTION COMPANY LIMITED stated that if a presiding arbitrator voluntarily recuses from different arbitral proceedings (where the respondent is one of the parties) then it is not a ground of terminating their mandate under Arbitration and Conciliation Act.
Facts
The Petitioner and respondent entered into an agreement for a hydroelectric project named Kashang Project which contained an arbitration clause. Disputes arose and arbitrators were appointed including a presiding arbitrator. Pleadings were fixed on 19th July 2019 but the petitioners via email on 18th July 2019 requested the Presiding Arbitrator(PA) to recuse from the arbitration proceedings on the ground that he recused himself in another arbitration proceedings between the parties relating to Sainj Project arising out of the different contract. This was rejected by him. A separate order was passed by P.A relating to recusing from Sainj Project as his younger brother appeared on behalf of respondents. The PA voluntarily recused from the proceedings. Presiding Arbitrator further observed that these proceedings are separate arbitration proceedings arising under a separate contract and there are no circumstances as were there in the previous case and no provision prohibits him from acting as PA. The petitioner thus sought termination of the mandate of PA stating that he must too recuse from their arbitral proceedings.
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Petitioner’s Contention
The petitioners contended that the PA is de jure ineligible under Section 14 (1) (a) of the Arbitration and Conciliation Act. According to Category 10 of the Seventh Schedule read with Section 12 (5) of the Arbitration and Conciliation Act the PA is ineligible to act as a PA as his brother and nephew have a financial interest in the respondent. The petitioners thus have a reasonable ground to doubt the partiality of the PA. It was submitted that the PA recused himself in another arbitration proceedings relating to Sainj Project after satisfying that the circumstances gave justifiable doubt to his continuation as Presiding Arbitrator. It was further submitted that if there was no bar under the Arbitration and Conciliation Act, the learned Presiding Arbitrator would not have recused himself in the arbitration proceedings relating to Sainj Project.
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Respondent’s Contention
It was contended that no provision of the Arbitration and Conciliation Act bars the Presiding Arbitrator from continuing in the arbitration proceedings. Further, the two projects are not co-related to each other and the PA recused himself in arbitration proceedings relating to Sainj Project because his brother had appeared for the claimant in proceedings.
Findings
Section 12 (5) of the Arbitration and Conciliation Act provides that any person whose relationship with the parties/counsel or subject matter of the dispute falls in any of the 19 categories of the Seventh Schedule shall be ineligible to be appointed as an Arbitrator and category 10 specifically talks about close family members. The court was of the view that the brother who appeared for respondents in the different matters does not amount to ‘close family member’ according to the explanation of the clause. The court while commenting on the voluntary recusal concluded that “Voluntary recusal of the Presiding Arbitrator in another arbitration proceeding is not a ground for terminating the mandate of a Presiding Arbitrator under the Arbitration and Conciliation Act.” the court thus rejected the petition for stay and allowed the arbitral proceedings.
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Case Details
OMP (T) (COMM) 65/2019 & I.As. 11043/2019, 17504/2019, 6783/2020
Counsel for petitioners- Mr.Anand Prakash, Dr.Lalit Sharma Ms.Varsha Arya, Advocates
Counsel for respondents- Mr.Dayan Krishnan, Senior Advocate with Mr.Jayant Mehta, Mr.Rishi Agrawala, Ms.Shruti Arora, Mr.S. Sethi, Ms.Niharika Kaul, Mr.Srikar, Advocates
Coram- HON'BLE MR. JUSTICE J.R. MIDHA
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