Only if advocate on record indicates that personal allegations have been made against the members of the arbitral, they may be impleaded; or else, their names should be deleted: Madras High Court
The advocate on record must be enquired seeking to file a petition under Section 34 of the Act wherein the members of the arbitral tribunal have been impleaded as to whether any allegations of misconduct or the like have been levelled in the petition. Only then can their names be impleaded. If not, the names must be deleted. This was held by the two judge bench comprising of the Hon’ble Chief Justice Sanjib Banerjee and Hon’ble Justice Senthilkumar Ramamoorthy in the case of 3i Infotech Limited vs. P. Balasubramanian and Ors. [O.S.A.(CAD) No.38 of 2021] on the 26th of July before the Hon’ble High Court at Madras.
The current case is the challenge under Section 37 of the Arbitration and Conciliation Act, 1996 to an order dated July 16, 2019 passed on a petition challenging an arbitral award rendered on June 10, 2015. The short grievance of the appellant lessee is that the arbitral award acknowledged that there was failure on the part of the lessors to mitigate the loss consequent on the breach by the lessee. The appellant submits that once such a finding was rendered, no damages on account of the perceived loss suffered could have been awarded in favour of the lessors. According to the appellant, the respondents herein were not entitled to mesne profits or damages during the period that the leasehold property remained unoccupied and idle, since the respondents had made no attempt to either take over possession thereof or to let out the property to any other and earn therefrom. According to the appellant, despite such aspect of the matter, which goes to the very root of the claim by the lessors in the arbitral reference, the arbitration court dealt with the challenge in a perfunctory manner and merely allowed the award to stand since a considered view was expressed by the arbitral tribunal. It was also observed that, there appears to be sufficient basis to the arbitral tribunal awarding damages since the lessors were not in a position to let out the premises in question as possession in respect thereof had not been made over by the lessee to the lessors till October 9, 2014. There is no merit in the appellant’s grievance that the arbitral tribunal or the court of the first instance had erred in such regard. As such, the challenges to the arbitral award and the impugned order stand repelled.
The court herd the submissions of both the parties and observed that There was sufficient material for the arbitral tribunal to conclude that possession had, indeed, not been made over by the lessee to the lessors till or about October 9, 2014 and mesne profits were awarded till October 9, 2014. It is an entirely different matter that the arbitral tribunal did not award interest on the security deposit, though the security deposit had been withheld for an inordinate period of time. Merely because it is an interest-free deposit may not imply that the wrongful withholding of it would not make the person in receipt of the deposit liable for interest for the duration during which it is wrongfully withheld. It was also observed that, adjudicatory authorities are not sued unless direct allegations of misconduct are made against such authorities and precious time is wasted in issuing notices to arbitrators when such arbitrators are made parties to proceedings under Section 34 of the Act. Unless direct allegations of misconduct or the like are made against the arbitrators, it is quite unnecessary to implead the arbitrators and vex them with notices mindlessly issued by the department. The current rules also provide for the arbitrators not being impleaded.
The court dismissed the present challenge and deleted the names of the arbitrators decreeing, “As a matter of practice, without it being set down as a practice direction as such, the department is requested to enquire of advocate on record seeking to file a petition under Section 34 of the Act wherein the members of the arbitral tribunal have been impleaded as to whether any allegations of misconduct or the like have been levelled in the petition. A written reply may be sought to cover e-filing of petitions under Section 34 of the Act. It is only if advocate on record indicates that personal allegations have been made against the members of the arbitral tribunal or allegations of misconduct or the like have been included in the petition, that the members of the arbitral tribunal may be impleaded; or else, their names should be deleted.”