Arbitrator's Mandate Can't Be Denied Extension Because It May Remove Challenge Ground: Delhi High Court

The Delhi High Court has extended an arbitrator's mandate after an arbitral award had already been pronounced, holding that an extension cannot be refused merely because it would eliminate a ground to challenge the award.

Justice Avneesh Jhingan observed, “Merely as the outcome of the arbitration proceedings was known to the parties and with extension of the mandate one of the ground to challenge award under Section 34 of the Act may not survive, cannot be the consideration for rejection of the prayer for extension more so, on court being satisfied that sufficient cause exists.”

The ruling came in a dispute between Sarvesh Security Services Pvt. Ltd. and the Institute of Human Behaviour and Allied Sciences (IBHAS) arising from a contract for providing security services.

Arbitration proceedings were conducted under the aegis of the Delhi International Arbitration Centre (DIAC), and the arbitrator's mandate had earlier been extended by the High Court till November 1, 2024.

However, by an email dated October 30, 2024, the arbitrator informed the parties that since DIAC would remain closed from October 31 to November 3 due to Diwali holidays, the award would be pronounced on November 4, 2024.

After the award was delivered, IBHAS challenged it, including on the ground that it had been pronounced after expiry of the arbitrator's mandate. The award was subsequently set aside on that ground, and Sarvesh Security Services' appeal was dismissed.

Sarvesh Security Services then approached the Supreme Court, which restored its plea seeking extension of the arbitrator's mandate and directed the High Court to reconsider the issue in light of its ruling in C. Velusamy v. K. Indhera. The Supreme Court clarified that the award would remain unenforceable pending reconsideration.

Before the High Court, Sarvesh Security Services argued that the award was ready within the mandate period but could not be pronounced because DIAC was shut for holidays.

IBHAS opposed the plea, arguing that the company had waited to see the outcome of the award before seeking extension and that no sufficient cause existed.

Rejecting the objection, the High Court held that there was no intentional inaction by Sarvesh Security Services and that the delay was caused solely by institutional holidays.

“The petitioner cannot be blamed for non-pronouncement of the award till 01.11.2024 i.e., within the extended mandate period. Even otherwise there cannot be quarrel with the proposition that where technicalities are pitted against substantial justice, the latter prevails. The delay in pronouncement of the award is consequent of intervening holidays,” the Court said.

The Court further held that no limitation period is prescribed for seeking extension of an arbitrator's mandate and that such power can be exercised even after expiry of the mandate and pronouncement of the award.

It accordingly allowed the plea, extended the arbitrator's mandate, and declined to reduce the arbitrator's fees or substitute the arbitrator, noting that the delay in pronouncement was attributable solely to the Diwali holidays.

For Petitioner (Sarvesh Security Services Pvt. Ltd.): Advocates Manish Vashisht, Senior Advocate, Rikky Gupta, Ananya Singh, Uday Malhotra, Vedansh Vashisht and Swapan Singhal.

For Respondent (Institute of Human Behaviour Resource and Allied Sciences): Advocates Tushar Sannu, Standing Counsel, Ankita Bhadauriya and Akansha Vidyarthi.