Court ruled that a sole arbitrator's mandate terminates upon the expiration of the designated time period, warranting appointment of a substitute under Section 29A(6) of the Arbitration and Conciliation Act.

JUDGMENT :

ALOK ARADHE, J.

1. Leave granted.

2. These appeals are filed against an order dated 22.04.2025 by Delhi High Court by which it has declined substitution of a sole arbitrator but has extended his mandate under Section 29A(6) of the Arbitration and Conciliation Act, 1996 (hereinafter, referred to as the ‘Act’) for a further period of four months.

FACTS

3. The appellants who are husband and wife, along with respondent nos. 2 to 4 executed a partnership deed dated 18.05.1992 which contained an arbitration clause. M/s. Bharat Textiles namely, respondent no.1, was registered on 05.01.2007 as a partnership firm. Upon disputes having arisen, the High Court by a common order dated 13.03.2020, passed in two arbitration petitions filed by the appellants, appointed Mr. Anjum Javed, Advocate as a sole arbitrator. The High Court directed that a sole arbitrator shall be entitled to fee as per the Fourth Schedule to the Act.

4. The sole arbitrator entered the reference on 20.05.2020. He thereafter issued various directions on 03.06.2020, 21.10.2020, 09.01.2021 and on 15.06.2021 and directed the parties to deposit various amounts towards administrative expenses. The respondent nos.2 and 3 questioned the action of the sole arbitrator in demanding administrative expenses, in their applications filed under Sections 14 and 15 of the Act, seeking termination of the mandate of the sole arbitrator. The said applications were dismissed by a common order dated 28.01.2022, passed by the High Court, inter alia on the ground that all the expenses are required to be paid on actuals. It was further held, that, it would be open for respondent nos. 2 and 3 to approach the Arbitral Tribunal, to account for administrative expenses. It was also held that the sole arbitrator is neither de jure nor de facto ineligible to act as an arbitrator. The petitions were dismissed.

5. The sole arbitrator issued directions on 09.07.2022, 06.01.2023 and on 14.08.2023 requiring the parties to deposit the administrative expenses. The appellants on 31.08.2003 sought time, in arbitral proceeding, to move an application before the High Court under Section 29A(4) of the Act. Thereupon, the sole arbitrator on 31.08.2023 adjourned the proceeding sine die.

6. The appellants, filed petitions under Section 29A(6) of the Act seeking substitution of the sole arbitrator and extension of tenure, for the substitute arbitrator. The High Court, by an order dated 22.04.2025, inter alia held that the fee must be charged by the sole arbitrator strictly in accordance with Fourth Schedule and administrative expenses only on actuals with disclosure to the parties. The substitution of the sole arbitrator was declined and time was extended to conclude the arbitral proceeding within a period of four months. The petitions were partly allowed. In the aforesaid factual background, these appeals arise for our consideration.

SUBMISSIONS

7. Learned counsel for the appellant submitted that the sole arbitrator acted in contravention of the initial order of appointment dated 13.03.2020 and charged the fee and expenses in excess of Fourth Schedule. It is further submitted that the sole arbitrator also violated the directions issued in the order dated 28.01.2022 passed by the High Court. It is contended that the High Court ought to have appreciated that the power of substitution of an arbitrator is wider under Section 29A(6) of the Act and is not restricted to the grounds in Sections 14 and 15 of the Act.

8. Per contra, learned counsel for the respondents submitted that no ground is made out for substitution of the sole arbitrator. It is