In yet another judgment delivered by the Delhi High Court, one of the key principles of arbitration law has been reiterated and it pertains to challenge of arbitral award on the basis of biasness of the Arbitrator. The judgment succinctly reiterates that any such plea of objection shall be raised at the very outset when the arbitral proceedings commence. What transpired further?

The Delhi High Court was tasked with adjudicating a Section 34 Petition under the Arbitration & Conciliation Act, 1996 (‘A&C Act’) filed by the Petitioner/ Contractor challenging an arbitral award passed by the Sole Arbitrator where the Petitioner’s claims were rejected by the concerned Arbitrator.

The dispute arose between the parties to the present proceedings out of a work contract that was awarded by the Respondent to the Petitioner in 2010 for a stipulated amount of approximately 22 Crores. However, the work could not completed within the stipulated timeline as agreed by the parties which resulted in deductions rendered by the Respondent which led the Petitioner to file its statement of claim before the Sole Arbitrator. However, the Sole Arbitrator ended up rejecting all the claims of the Petitioner and as a result the present Petition came to be filed.

One of the main grounds for challenging the impugned arbitral award by the Petitioner was that the Arbitrator being an employee of the Respondent resulting in the rendition of the award in a biased manner. The Respondents however, strongly contested this challenge by contending that, the invocation of arbitration pre-dated the 2015 amendment, thus, the unamended 1996 Act would be applicable for appointment of arbitrator.

It is also interesting to note that, until the filing of the present petition, the Petitioner claimed to have written letters raising the issue of bias,  but at no point, any formal adjudication was sought on this aspect, nor any change of arbitrator was sought on the ground of bias.

After hearing both the sides at length, the Court ended up dismissing the petition holding that, the Petitioner having participated in the proceedings fully and the Final Award in terms of Section 31 of the Act having been rendered, the allegation of bias cannot be agitated at such a belated stage and as such conduct could also constitute waiver under Section 4 of the 1996 Act.

Additionally, the Court also reasoned for not entertaining the present petition, that “under Section 34 of the 1996 Act, this Court cannot go into a fact-finding exercise, and an award cannot be set aside under Section 34(1) of the 1996 Act merely on the ground of misappreciation of evidence, which the present petition seeks to indirectly manifest.”.

The present judgment once again highlights the importance of acting vigilantly where a party seeking to challenge any proceeding, ought not to sit back and rather make a formal challenge during the arbitral proceedings.