In a recent judgement by the Delhi High Court, the case of Extramarks Education India Private Limited vs. Saraswati Shishu Mandir regarding the substitution of the Sole Arbitrator has been resolved. The Court’s decision will have significant implications on the arbitration proceedings between the parties. Find out more about the legal intricacies and implications of this case in this comprehensive summary.
Facts
- Petitioner-Extramarks Education India Private Limited filed O.M.P. (T) (COMM.) 13/2024 and O.M.P. (T) (COMM.) 14/2024 seeking substitution of the Sole Arbitrator.
- Time period till 28th February, 2022 was excluded as per the decision of the Supreme Court in Suo Moto Writ Petition (C) No 3/2020.
- Disputes arose from agreements dated 20th May, 2013 and 4th February, 2014 for sale, installation, and services of Smart Learn Classes.
- An email was sent by the Petitioner to the ld. Arbitrator on 28th December, 2022 to re-enter the reference.
- Notice invoking arbitration under Section 21 of the Act was sent to Saraswati Shishu Mandir on 4th October, 2018 as per clause 13.1 of the agreement dated 20th May, 2013.
- Legal notices and reminders were sent to the Respondent due to non-responsiveness.
- Petitioner tried to resume arbitration proceedings but faced obstacles.
- A Full and Final Settlement of Dues and Hardware letter was sent on 13th November, 2017, indicating the intention to terminate the contract.
- Agreements were eventually terminated due to outstanding dues.
- Repeated emails and warning letters were sent by the Petitioner for clearing outstanding dues.
- Ld. Arbitrator was appointed and procedural hearings were scheduled but deferred due to various reasons.
Analysis
- Section 15 of the Act deals with termination of the arbitrator’s mandate and appointment of a substitute arbitrator.
- Arbitrator’s mandate can terminate if he is unable to perform his functions, withdraws from his office, or parties agree to termination.
- These provisions ensure efficient continuation of arbitration by replacing arbitrators unable to fulfill their roles.
- The mandate termination solely due to expiry of the award-making period specified under Section 29A does not trigger these provisions.
- Substitution of arbitrator allows the arbitration proceedings to continue seamlessly from where the original arbitrator left off.
- Section 14 of the Act applies when an Arbitrator is unable to perform their duties
- It also applies if the Arbitrator fails to act without undue delay
- The section is triggered if the Arbitrator withdraws from office
- It can also be invoked if the parties agree to terminate the mandate of the Arbitrator
- Termination of arbitral proceedings does not survive, no scope for a substitute Arbitrator.
- If the mandate of the Arbitrator is terminated, the proceedings survive with scope for a substitute Arbitrator.
- Appointment of Sole Arbitrator in October 2018 in the present case.
- Statement of Defence filed in September 2019.
- Court’s reference to Section 14 of the Act for circumstances of Failure or impossibility of the Arbitrator to act.
- Sole Arbitrator’s mandate may come to an end but not the arbitral proceedings.
- Substitute Arbitrator can continue proceedings from the stage left by the earlier Arbitrator.
Decision
- Arbitration proceedings to take place under the Delhi International Arbitration Centre (DIAC)
- Original arbitrator became non-responsive and unable to perform functions
- Appointment of substitute arbitrator necessary under Sections 14 and 15 of the Act
- Recent decision establishes arbitration agreement stamping not compulsory
- Objection raised by the Respondent regarding stamping does not stand
- New arbitrator, Ms. Zubeda Begum Advocate, appointed with fees to be borne by the Petitioner
- Arbitration proceedings to continue from where they were left off
- All contentions of the parties left open
- Listed before DIAC on 8th July, 2024 at 3:00 p.m.
Case Title: EXTRAMARKS EDUCATION INDIA PVT. LTD. Vs. SARASWATI SHISHU MANDIR (2024:DHC:4084)
Case Number: O.M.P. (T) (COMM.)-13/2024
