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A party can seek new arbitrator if proceedings contravene principles of law: High court of Delhi

When the proceedings are carried out against the principles of law, one party to the arbitration can approach high court under Section 11 of the Arbitration Act and seek appointement for a new arbitrator. This was decided in the case of Oyo Hotels And Homes Pvt. Ltd. V. Rajan Tewari & Anr [ARB.P. 424/2020] in the High Court of Delhi by Hon’ble Justice V. Kameswar Rao.

The facts of the case are that the petitioner has been delaying the payment of pending monthly rentals since March 2020 and it was after repeated reminders that the respondents were forced to invoke the arbitration clause calling upon the petitioner to consent to the appointment of the learned Retd. Judge of this Court, as sole Arbitrator, to which the petitioner did not even respond and after th e expiry of 30 days.

Counsel appearing for the respondents has raised a preliminary objection as to the maintainability of the present petition. It is the case of the respondents and contended by Ms. Anand that while adjudicating a petition under Section 11 of the Act, the scope of enquiry is limited and the petitioner, under the garb of Section 11, is in fact seeking termination of the mandate of the learned sole Arbitrator, who has already been appointed for adjudication of all disputes between the parties.

It is also stated by the counsel that the present petition is infructuous and therefore liable to be dismissed as the sole Arbitrator has already given consent and has entered upon reference to adjudicate upon all the disputes emanating between the parties from the Lease Deed.

The mandate of the sole Arbitrator already appointed cannot be terminated under the provisions of Section 11(6) of the Act. In fact, it is her submission that the petitioner is within its right to challenge the jurisdiction of the Arbitrator by resorting to Sections 12-15 of the Act, which concedingly not done.

The court said  “Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar ARB.P. 424/2020 Page 14 the jurisdiction under Section 11(6) cannot be countenanced in law.”

The court put reliance on the judgments of coordinate benches of this Court in Naveen Kandhar & Anr. v. Jai Mahal Hotels Pvt. Ltd., (Arb.P. 453/2017) and Manish Chibber v. Anil Sharma & Anr., (Arb.P. 249/2020), wherein it was held that an appointment of an Arbitrator in contravention of the agreed procedure is non-est and ought to be ignored.

The court further said that the petitioner is within its right to approach the Court for appointment of an arbitrator under Section 11 of the Act. This position of law is well settled in terms of the Supreme Court judgment in Walter Bau Ag, Legal Successor of the Original Contractor (2015) 3 SCC 800 case “after appointment of an Arbitrator is made, the remedy of the aggrieved party is not under Section 11(6) but such remedy lies elsewhere and under different provisions of the Arbitration Act (Sections 12 and 13), the context in which the aforesaid view was expressed cannot be lost sight of..”

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