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Case Title: Allied-Dynamic Joint Venture v. Ircon International Ltd

Case No: OMP(COMM) 451 of 2016

Decided on:  10^th January, 2024

CORAM: THE HON’BLE MS. JUSTICE PRATIBHA M. SINGH

Facts of the Case

On December 1, 2010, the parties entered into an agreement wherein the petitioner undertook specific works for the respondent. The agreement stipulated that the entire project should be completed within 11 months from October 25, 2011. Due to delays in project completion, the petitioner raised claims against the respondent, seeking compensation for the extended stay on the site. Subsequently, an arbitrator was appointed to resolve the dispute between the parties.

The arbitrator dismissed all the petitioner’s claims, citing joint responsibility for the project delay and deeming the petitioner’s claims as based on speculative calculations. Dissatisfied with the decision, the petitioner contested the award under Section 34 of the Arbitration and Conciliation Act (A&C Act).

Issue

The petitioner raised challenges against the award on the basis of the following grounds:

1. Alleging bias, the petitioner contended that the arbitrator was an employee of the respondent, resulting in a prejudiced rendering of the award.
2. The petitioner argued that the arbitrator failed to grant compensation for the delayed handover of project sites, despite the respondent acknowledging the existence of delays.
3. Given the admission of delay on the part of the respondent, the petitioner asserted that claims, particularly those related to unauthorized deductions and compensations, should have been acknowledged and allowed.

Court’s analysis and decision

The Delhi High Court, under the bench of Justice Pratibha M. Singh, has ruled that contesting an arbitral award on the basis of arbitrator bias is not permissible if the concerned party failed to raise such a challenge during the arbitration proceedings.

The court emphasized that a party actively participating in the arbitral process without raising objections to the tribunal’s jurisdiction due to bias cannot subsequently directly challenge the award under Section 34 of the Arbitration and Conciliation Act (A&C Act). The court further noted that in arbitrations initiated before the 2015 amendment, such behavior by a party would be considered a waiver as per Section 4 of the A&C Act.

Initially, the Court addressed the objection concerning the arbitrator’s alleged bias. Despite the petitioner expressing concerns about the arbitrator’s impartiality through certain letters, the Court noted that the petitioner had not pursued any available legal remedies.

The Court emphasized that challenging an arbitral award on the grounds of arbitrator bias is not permissible if such a challenge was not raised during the arbitral proceedings. Moving on to the rejection of claims by the arbitrator, the Court affirmed that the arbitrator’s decision was based on the finding that both parties were responsible for the project delay, and they mutually agreed to extend the project completion timeframe. Additionally, the Court noted that the rejected claims were hypothetical and lacked evidentiary support.

The Court underscored its limited role in scrutinizing the award under Section 34 of the A&C Act, stating that it cannot reassess the merits or set aside the award solely based on the misappreciation of evidence. Consequently, the Court dismissed the challenge, affirming the validity of the award.

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Written by- Afshan Ahmad

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