Case Note & Summary
The petitioner, Parekh Industries Limited, filed a petition under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996, seeking termination of the mandate of the sole arbitrator appointed to adjudicate disputes arising from an agreement dated 1 July 2016 with Diamond India Limited. The disputes pertained to the sale of precious metals. The respondent had appointed a sole arbitrator who accepted the appointment on 11 September 2018 and made a disclosure under Section 12(1) of the Act. A preliminary meeting was held on 26 September 2018, wherein the arbitrator fixed fees at Rs.50,000 for reading and Rs.50,000 per sitting, consolidated for claim and counterclaim. The petitioner contended that the arbitrator failed to render the award within a reasonable time despite completion of pleadings and hearings, and also demanded excessive fees. The Court examined the facts and found that the arbitrator had not rendered the award for over six months after the last hearing, which constituted a failure to act under Section 14(1)(a) of the Act. Additionally, the Court noted that the fees demanded were excessive and could be a ground for termination. Consequently, the Court terminated the mandate of the sole arbitrator and appointed a substitute arbitrator to continue the proceedings from the stage already reached. The Court also directed the arbitrator to render accounts of deposits received and return the unexpended balance to the petitioner.
Headnote
A) Arbitration - Termination of Mandate - Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 - Failure to Render Award - The petitioner sought termination of the sole arbitrator's mandate on the ground that the arbitrator failed to render the award within a reasonable time despite completion of pleadings and hearings. The Court held that the arbitrator's failure to render the award for over six months after the last hearing constituted a failure to act within the meaning of Section 14(1)(a) of the Act, justifying termination of mandate. (Paras 1-10) B) Arbitration - Excessive Fees - Ground for Termination - The petitioner also contended that the arbitrator demanded excessive fees, including a reading fee of Rs.50,000 and a sitting fee of Rs.50,000 per sitting, which was not justified. The Court observed that such high fees, especially when demanded after the proceedings had commenced, amounted to a failure to act impartially and could be a ground for termination under Section 14(1)(a) of the Act. (Paras 3-8) C) Arbitration - Substitution of Arbitrator - Section 15 of the Arbitration and Conciliation Act, 1996 - Appointment of Substitute Arbitrator - Upon termination of the mandate, the Court appointed a substitute arbitrator to continue the proceedings from the stage already reached, in accordance with Section 15(2) of the Act. (Para 11)
Issue of Consideration
Whether the mandate of the sole arbitrator should be terminated under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 on the grounds of failure to render the award within a reasonable time and for demanding excessive fees.
Final Decision
The Court allowed the petition, terminated the mandate of the sole arbitrator, and appointed a substitute arbitrator to continue the proceedings from the stage already reached. The arbitrator was directed to render accounts of deposits received and return the unexpended balance to the petitioner.
Law Points
- Termination of mandate of arbitrator
- failure to render award within reasonable time
- excessive fees as ground for termination
- substitution of arbitrator under Sections 14 and 15 of the Arbitration and Conciliation Act
- 1996
