Delhi High Court sets aside arbitral award due to failure of arbitrator to disclose conflict, non-supply of documents

The Delhi High Court in the case Flfl Travel Retail Lucknow Private Limited vs. Airport Authority Of India And Anr observed and has held that the duty of arbitrators of disclosure of any conflicts under Section 12 of the Arbitration and Conciliation Act, 1996 is mandatory and continuous throughout the proceedings.

- NEW DELHI

The bench headed by Justice Prateek Jalan in the case noted that the disclosure must be in writing and a verbal disclosure does not suffice.

The court in the case also held that there was a violation of section 18 of the Act as the party has not had an opportunity to consider and respond to submissions on evidence furnished by the opposing party.

On March 23, 2018, the parties entered into a Concession Agreement. The Agreement involved concession to develop, market, set up, operate, maintain, and manage retail outlets at various airports including the Chaudhary Charan Singh Airport in Lucknow. The Disputes arose between the parties under the Agreement. It has been claimed by the petitioner the rebates or refund of concession fees (amounting to a total of Rs. 2.32 crores) towards the delay by the Respondent in security clearance, and cancellation of the invoices for the amount of Rs. 1.44 lakh and cancellation of any interest and/or penalty levied by the Respondent.

The Arbitrator awarded approx. Rs. 20 lakhs with interest out of all the claim of petitioner.

The petition is filed by the petitioner under section 34 of the Arbitration and Conciliation Act, 1996 to challenge the award.

CONTENTIONS OF THE PETITIONER: The award is vitiated by the failure of the arbitrator to comply with section 12(2) of the Act as he failed to disclose his appointment by respondent No. 1 in another arbitration, during the pendency of the arbitral proceedings.

The Section 24 of the Act had been violated by the arbitrator, who received documents and clarifications from the respondent after the order was reserved.