Case Note & Summary
The appellant, a supplier of paper, entered into a contract with the respondent in 1993. Disputes arose regarding payment and quality of supply. The appellant filed a civil suit for recovery, which was stayed by the High Court upon the respondent's application under Section 8 of the Arbitration Act, 1996, referring the parties to arbitration by the Stationery Purchase Committee comprising officers of the respondent. The appellant initially challenged this order but withdrew its special leave petition. The Arbitral Tribunal was constituted, and the appellant filed objections to its constitution and jurisdiction on 12.09.2000. Subsequently, the appellant participated in the arbitration proceedings. Later, the appellant filed an application under Section 14 read with Sections 11 and 15 of the Arbitration Act, 1996 before the High Court seeking termination of the mandate of the Arbitral Tribunal and appointment of a new arbitrator, alleging bias and lack of jurisdiction. The High Court dismissed the application. The Supreme Court held that the appellant had participated in the arbitration proceedings without raising objections at the earliest opportunity and failed to demonstrate any de jure or de facto inability of the tribunal to act or any failure to act without undue delay. Mere apprehension of bias was insufficient to terminate the mandate. The appeal was dismissed.
Headnote
A) Arbitration - Termination of Mandate of Arbitrator - Section 14, 11, 15 of the Arbitration and Conciliation Act, 1996 - Application for termination of mandate of Arbitral Tribunal on ground of bias and lack of jurisdiction - Appellant participated in arbitration proceedings without raising objection at the earliest opportunity - Held that mere apprehension of bias is not sufficient to terminate mandate; appellant failed to demonstrate any de jure or de facto inability or failure to act - High Court's dismissal upheld (Paras 1-10).
Issue of Consideration
Whether the High Court was justified in dismissing the application under Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 seeking termination of the mandate of the Arbitral Tribunal and appointment of a new arbitrator.
Final Decision
The Supreme Court dismissed the appeal, upholding the High Court's order refusing to terminate the mandate of the Arbitral Tribunal.
Law Points
- Termination of mandate of arbitrator under Section 14 of the Arbitration and Conciliation Act
- 1996 requires proof of de jure or de facto inability to perform or failure to act without undue delay
- mere apprehension of bias not sufficient
- party cannot challenge tribunal after participating in proceedings without objection.
Case Details
Civil Appeal arising out of SLP(C) No. 13914/2000
Ellora Paper Mills Limited
The State of Madhya Pradesh
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Nature of Litigation
Appeal against dismissal of application under Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 seeking termination of mandate of Arbitral Tribunal and appointment of new arbitrator.
Remedy Sought
Appellant sought termination of mandate of the Arbitral Tribunal (Stationery Purchase Committee) and appointment of a new arbitrator.
Filing Reason
Appellant alleged bias and lack of jurisdiction of the Arbitral Tribunal constituted by officers of the respondent.
Previous Decisions
High Court of Madhya Pradesh dismissed the application under Section 14 read with Sections 11 and 15 of the Arbitration Act, 1996 vide order dated 27.08.2021 in A.C. No. 100/2019.
Issues
Whether the High Court erred in dismissing the application for termination of mandate of the Arbitral Tribunal under Section 14 of the Arbitration and Conciliation Act, 1996.
Whether the appellant's participation in arbitration proceedings without raising objection at the earliest opportunity bars the application.
Submissions/Arguments
Appellant argued that the Arbitral Tribunal comprising officers of the respondent was biased and lacked jurisdiction.
Respondent contended that the appellant participated in the proceedings without objection and failed to demonstrate any ground for termination of mandate.
Ratio Decidendi
An application under Section 14 of the Arbitration and Conciliation Act, 1996 for termination of mandate of an arbitrator requires proof of de jure or de facto inability to perform or failure to act without undue delay. Mere apprehension of bias is insufficient, especially when the party participated in the proceedings without raising objections at the earliest opportunity.
Judgment Excerpts
Feeling aggrieved and dissatisfied with the impugned judgment and order dated 27.08.2021 passed by the High Court of Madhya Pradesh in A.C. No. 100/2019, by which the application preferred by the appellant under Section 14 read with Sections 11 and 15 of the Arbitration and Conciliation Act, 1996 seeking termination of the mandate of originally constituted Arbitral Tribunal and to appoint a new arbitrator has been dismissed, the original applicant before the High Court has preferred the present appeal.
Procedural History
The appellant filed a civil suit in 1994 for injunction, which became infructuous. Then filed a recovery suit in 1998. The respondent applied under Section 8 of the Arbitration Act, 1996, which was rejected by the civil court but allowed by the High Court in revision on 03.05.2000, referring parties to arbitration. The appellant filed SLP which was withdrawn on 28.09.2000. The Arbitral Tribunal was constituted. Appellant filed objections on 12.09.2000. Later, appellant filed application under Section 14 read with Sections 11 and 15 before the High Court, which was dismissed on 27.08.2021. Hence the present appeal.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 14, Section 11, Section 15, Section 8
