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Mere Delay In Passing The Award By Itself Cannot Be The Ground To Appoint Another Arbitrator

In CIVIL APPEAL NO. 1039 OF 2019, Rajasthan Small Industries Corporation Limited vs M/s Ganesh Containers Movers Syndicate, appeal was filed before the Supreme Court against the decision of the High Court to appoint appointment of an independent arbitrator as requested by the defendant citing enormous delay in the arbitration process and the existing arbitrator hurried up to conclude the proceedings with a view to frustrate the arbitration application.

The Supreme Court quoted from 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.”

The Supreme Court held that 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, 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.

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