The Delhi High Court in a recent matter set aside an award passed by a three-member arbitral tribunal even as the agreement between the parties provided for appointment of a sole arbitrator only.
The Single Judge Bench of the Delhi High Court held the same in the matter of Mother Boon Foods Pvt. Ltd. Vs. Mindscape One Marketing Pvt Ltd [OMP COMM 136/2017], decided on 27.08.2018
In the instant case, petitioner Mother Boon Foods Pvt Ltd had filed the petition under Section 34 (2) of the Arbitration and Conciliation Act, 1996 challenging the arbitral award dated 15 July 2014, passed by a three-member tribunal.
The contract contemplated the appointment of a sole arbitrator by the respondent. It constituted a three-member tribunal, which issued notices to the parties on 16 April 2014. The petitioner challenged the constitution of the tribunal and did not participate in the arbitration proceedings. The tribunal went ahead to pass the award detailing the petitioner returning the equipment to the company and getting Rs 15.32 lakh as dues.
The High Court held that as the arbitration clause reveals the contemplation of appointment only of a Sole Arbitrator by the Respondent, it is indeed strange as to how a three-member tribunal came to be constituted by the Respondent.
The Court held that as the Petitioner had raised the objection at the initial stage itself to the constitution of the tribunal but the tribunal having proceeded further with the matter, the Petitioner was entitled to challenge the said constitution at this stage by raising its objections under Section 34.