Court can appoint new Arbitrator to decide claims afresh after setting aside arbitral award: Calcutta High Court

The Calcutta High Court has ruled that in fit cases, the Court can appoint a new Arbitrator to decide the claims afresh after setting aside of an arbitral award. (Jagdish Kishinchand Valecha vs Srei Equipment Finance Ltd).The order was passed by a Single Judge Bench of Justice Moushumi Bhattacharya. .In its petition under Section 34 of the Arbitration & Conciliation Act, the petitioner, who was the award-debtor, challenged the arbitral award passed by the Sole Arbitrator primarily on the ground that he was not given an opportunity to represent himself in the arbitration proceedings..The petitioner and the respondent agreed that a different Arbitrator should be appointed to decide the claim between the parties afresh and that the matter should not be remanded to the same Arbitrator who delivered the Award. .The Court observed that since both the parties were agreeable to a different Arbitrator being appointed, Section 11 of the Act would have no manner of application..It further said that the arena of decision-making under Section 34 was also limited only to whether an award should be set aside or sustained.."The language used in Section 34 – “Application for Setting aside Arbitral Award” – particularly in Section 34(2)(b) is “if the Court finds that” and is repeated in Section 34(2A) indicating that the mandate on the Court is to test the award against the available grounds under Section 34 for deciding whether the recourse against the award should fail or succeed.", it said. .To decide the issue of legality of award, the Court noted that the Arbitrator in the present case had admittedly acted as arbitrator in other arbitration proceedings instituted at the instance of the respondent i.e. award-holder, and had also been engaged as counsel for the respondent group of companies in several other instances..Stating that the Amendment Act of 2016 precisely sought to address such instances and eliminate all possible apprehension of bias and conflict of interest, the Court opined, ."..fundamental objective is to ensure that the arbitrator is impartial and independent. The facts in the present case fall directly within the safeguards introduced in Section 12 read with the Seventh Schedule and the impugned award is thus liable to be set aside on this ground alone.".With regards the issue of the appointment of a new Arbitrator, the Court reiterated that the Arbitration and Conciliation Act ensured party autonomy at all levels right through the dispute resolution process and even to the procedure for a challenge to the award. .While referring to Section 43(4) of the Arbitration Act and Section 89 of Code of Civil Procedure (Settlement of disputes outside the Court), the Court said that the Arbitration Act did not curtail the power of a court to "mould the relief in fit cases" provided the relief is not repugnant to the law as existing on that date..The Court observed,."The above provisions have been highlighted as enablers for the Court to chart the future course of action where parties consent to a particular way forward. The basic premise is that the parties who have come to the Court cannot be without a remedy when they have agreed that the matter should go before a different Arbitrator.".The Court accordingly concluded that a different and independent Arbitrator should be appointed to decide the claim of the award-holder afresh. .Senior Advocate Tilak Kumar Bose with Advocates Urmila Chakraborty, Amit Meharia, Paramita Banerjee, Subika Paul, Ishika Chattopadhyay appeared for the petitioner..Advocates Raghunath Ghose, Pritha Ghosh appeared for the respondent..Read the order: