Analysis of Supreme Court Judgement in Rajasthan Small Industries Corporation Ltd. vs. M/s Ganesh Containers Movers Syndicate

Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties.

Having regard to the factual matrix of the present case, it is true that there was some delay in passing the award. However, between 2011 and 2013, the respondent has not filed any application to expedite the proceedings and for passing of the award. The respondent has neither filed the Request Case for passing of the award at an early date nor filed the petition under Section 14 of the Act for termination of the mandate of the arbitrator that the arbitrator has ‘failed to act without undue delay’.

Mere neglect of an arbitrator to act or delay in passing the award by itself cannot be the ground to appoint another arbitrator in deviation from the terms agreed to by the parties. We may usefully refer to RUSSELL ON ARBITRATION, 20th Edition which reads as under:-

“Mere neglect of an arbitrator to act, as distinct from refusal or incapacity, does not of itself give the court power to appoint another arbitrator in his place. It does, however, give the court power to remove him, whereupon there is a power to replace him.”

Section 15 deals with termination of the mandate and substitution of an arbitrator. Sub-section (1) of Section 15 states that in addition to the circumstances referred to in Sections 13 and 14 of the Act, the mandate of an arbitrator shall terminate where he withdraws from office for any reason or by pursuant to the agreement of the parties. In terms of sub-section (2), after termination of arbitrator’s mandate, the appointment of the substitute arbitrator shall be in accordance with the rules applicable to the appointment of an arbitrator who is being replaced.

After analysis of the scheme of Sections 11, 14 and 15, in S.B.P. and Company v. Patel Engineering Limited and Another (2009) 10 SCC 293, this Court held that the legislature has repeatedly laid emphasis on the necessity of adherence to the terms of agreement between the parties in the matter of appointment of arbitrators and procedure to be followed for such appointment.

Judgement link : https://www.sci.gov.in/supremecourt/2016/24069/24069_2016_Judgement_23-Jan-2019.pdf