Delhi High Court: Arbitrator's discussion on claims and costs exceeds jurisdiction if not as per arbitration clause

The Delhi High Court in the case Ram Chander Aggarwal Vs Ram Kishan Aggarwal & Anr.observed and has held that if an arbitrator concludes that she was not appointed according to the arbitration clause, then any discussion which being on the merits of the claims and the award of costs against the Respondents exceeds the arbitrator's jurisdiction.

The Delhi High Court bench of Justice Prateek Jalan was hearing the present matter.

FACTS OF THE CASE:

The present matter relates to a petition filed challenging an arbitral award which addressed disputes arising from a partnership deed.

The Petitioner, Ram Chander Aggarwal who was the claimant in the arbitration, initiated proceedings after a dispute emerged between the parties.

On July 2, 2018, the Petitioner appointed an arbitrator via letter. The arbitrator issued a notice to the Ram Kishan Aggarwal & Anr. i.e., the Respondent prompting them to object to this unilateral appointment.

On the other hand, the respondent also filed an application with the arbitrator, who decided that the objection would be considered at the final hearing. Subsequently, the Respondents sought the termination of the arbitrator's mandate under Sections 14 and 15 of the Arbitration and Conciliation Act, 1996 by approaching the District Court, Patiala House. This petition was dismissed as it did not raise a valid ground under Section 14 of the Arbitration Act.

The arbitrator then framed several issues for determination. These included whether the arbitration tribunal was constituted in accordance with the partnership deed's arbitration clause, whether the claimant had a valid cause of action, and the claimant's entitlement to various financial claims, which includes a share of profits, stocks, goodwill, and dissolution of the firm M/s. Shree Om Steel Corporation.