Unilateral appointment of arbitrator cannot be challenged under Section 34 of Arbitration Act: Delhi High Court

The Delhi High Court has held that unilateral appointment of an arbitrator cannot be challenged through a petition filed under Section 34 of the Arbitration and Conciliation Act of 1996 (Kanodia Infratech Limited v Dalmia Cement (Bharat) Limited)..Single-judge Justice Suresh Kumar Kait held that under Section 34 of the Act, the scope of interference in arbitral award is very limited and can be explored only when an arbitral tribunal goes beyond the scope of contracts or agreements and exceeds its jurisdiction."This Court finds that under the provisions of Section 34 of the Act, scope of interference in arbitral award is quite limited and can be gone into only when the arbitral tribunal has gone beyond the scope of contracts/agreements and exceeded its jurisdiction,” the Court said..The observation was made in a judgment delivered on a plea filed by Kanodia Infratech Limited challenging a March 2021 award of an arbitrator, a retired judge of the Punjab and Haryana High Court, in favour of Dalmia cements.The arbitrator through his order, had granted several reliefs to the Dalmia cements that included a refund of ₹25 crore along with an interest of 18 percent per annum, ₹20.83 crores as principal cost of supply plus 18 percent interest and a token compensation of Rs 4 crore with 18 percent interest.The petitioner had argued that the arbitrator lacked inherent jurisdiction to entertain the dispute since it was appointed unilaterally by the respondent which went contrary to the settled proposition of law. The plea also asked the court to set aside the arbitral award in favour of respondents..Justice Kait held that the appointment of the Arbitrator was never objected to by the petitioner which participated in the arbitration proceedings. “Moreover, the learned Arbitrator himself is a retired Judge of Punjab and Haryana High Court and his integrity cannot be doubted. Accordingly, the case of petitioner challenging the mandate of arbitral tribunal is hereby rejected,” said the judgment.Besides, the same cannot be challenged under Section 34, the Court said..The Court therefore, disposed of petition but set aside the compensation of ₹4 crore awarded by the arbitrator after the petitioner argued that the there was no prayer for such a relief by the respondents and it would lead to miscarriage of justice..While Senior Advocate Sandeep Sethi along with Sunil Dalal, Kunal Vajani, Shikhar Khare, Ketul Hansraj, Gokula Krishnan, Harsh Agrawal and Devashish Bhaduria appeared for the petitioner, the respondent was represented by Senior Counsel Parag P Tripathi and BB Gupta along with advocates Mahesh Agarwal, Rishi Agrawala, Tarun Singla, Pranjit Bhattacharya, Aarushi Tiku, Megha Bengani, Srinivasan and Achal Gupta..[Read Judgment]