Recently, the Delhi High Court reaffirmed a pragmatic approach to arbitration by holding that mere expiry of statutory timelines cannot justify automatic substitution of an arbitrator, especially when proceedings are at the final stage, observing that such a course would cause “wastage of time, effort and costs already incurred by the parties.”
Brief Fact:
The dispute traces back to a construction contract awarded to M/s Inderjit Mehta Construction Pvt. Ltd. by the Union of India for completion of residential dwelling units at Kirkee. Differences arose between the parties, prompting the petitioner to invoke arbitration under Section 21 of the Arbitration and Conciliation Act, 1996. By an order dated 24.01.2020, the Delhi High Court appointed a sole arbitrator. Following the unfortunate demise of the arbitrator in 2021, the Court appointed Justice Vikramjit Sen (Retd.), former Judge of the Supreme Court of India, to continue the proceedings from the stage they were left. Notably, by the time of his appointment, the arbitral proceedings had already reached the final stage of arguments. Despite multiple extensions granted under Section 29A, the learned arbitrator reserved the award on 06.07.2024, but the award could not be pronounced even after the extended timeline expired on 30.09.2025, leading to the present petition seeking substitution of the arbitrator.
Contentions of the Petitioner:
The Counsel for the Petitioner contended that once the statutory period prescribed under Section 29A of the Act had expired, the mandate of the arbitrator stood terminated by operation of law. It was argued that continued inaction in pronouncing the award amounted to failure to act without undue delay, thereby attracting Sections 14 and 15(2) of the Act and necessitating substitution of the arbitrator. The petitioner emphasised that statutory timelines are mandatory and any deviation would dilute legislative intent behind expeditious arbitration.
Contentions of the Petitioner:
Whereas, the Counsel for the Respondent, on the other hand, urged the Court to adopt a pragmatic approach, submitting that the award was already prepared and awaiting formal pronouncement. It was argued that substituting the arbitrator at such a late stage would undo years of proceedings, causing immense prejudice, duplication of effort, and unnecessary costs.
The respondent sought a short and final extension, stressing that the objective of arbitration would be better served by permitting the existing arbitrator to pronounce the award rather than restarting the process.
Observation of the Court:
The Court undertook a careful balancing exercise between the statutory mandate of expeditious arbitration and the practical realities of the case. The Court noted that the proceedings were not merely advanced but had reached the final stage, with the award already reserved. Emphasising substance over form, the Court observed that “being rigid on the application of statutory timelines should not defeat the objective of arbitration when the proceedings are at the last stage.” Relying heavily on the Apex Court’s decision in Rohan Builders (India) Pvt. Ltd. v. Berger Paints India Ltd., the Court held that expiry of time under Section 29A does not automatically compel substitution, especially where such substitution would be counterproductive.
The Bench categorically noted that “seeking substitution of the arbitrator at this stage would lead to wastage of time, effort and costs already incurred by the parties,” and clarified that the power of the Court includes regularising the expired mandate where justice so demands.
The decision of the Court:
Accordingly, the Court dismissed the petition seeking substitution of the arbitrator, allowed the respondent’s application for extension, and granted a final and limited extension till 31.01.2026 solely for pronouncement of the award, making it clear that no further extension would be granted. The ratio of the decision underscores that statutory timelines under the Arbitration and Conciliation Act must be applied purposively, and not mechanically, particularly where arbitration proceedings are at the threshold of conclusion and substitution would undermine efficiency rather than advance it.
Case Title: M/S Inderjot Mehta Construction Pvt Ltd. V Union of India
Case No.: O.M.P. (T) (COMM.) 113/2025 & I.A. 30641/2025
Coram: Justice Subramonium Prasad
Advocate for Petitioner: Adv. Aaditya Vijay Kumar, Akshita Katoch, Vikram Pradeep, Anay Khandelwal, Pratishtha Chauhan, Ashish Dholakia (Sr. Adv), Vikram Pradeep, Akshita Katoch, Anay Khandelwal, Pratishtha Chauhan
Advocate for Respondent: Adv. B. Ramaswamy
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