8 July 2025 | New Delhi
In a key judgment reinforcing the importance of time-bound arbitration, the Delhi High Court has ruled that an arbitrator’s mandate can be lawfully terminated for unreasonable delay in passing the arbitral award, even if the applicable rules such as the NSE (National Stock Exchange) Bye-laws do not contain a specific clause for automatic termination.
Background: Prolonged Inaction by Sole Arbitrator
The case arose from a petition under Section 14(2) of the Arbitration and Conciliation Act, 1996, filed by a party aggrieved by the inordinate delay of the appointed sole arbitrator in concluding arbitration proceedings. The matter originated under the dispute resolution mechanism of the NSE’s Investor Grievance Redressal framework.
Despite multiple hearings having concluded, the arbitrator failed to deliver an award for an extended period. The petitioner argued that this unexplained delay defeated the very purpose of arbitration as an efficient and time-bound alternative dispute resolution method.
NSE Bye-Laws Don’t Protect Against Judicial Intervention
The opposing party contended that since the NSE bye-laws do not expressly provide for automatic termination of an arbitrator’s mandate due to delay, the arbitrator’s position could not be unilaterally vacated. However, the High Court rejected this view, holding that judicial intervention is justified under Section 14 if an arbitrator becomes de jure or de facto unable to perform their functions.
Justice Anup Jairam Bhambhani, delivering the judgment, observed:
“The absence of an automatic termination clause in institutional rules cannot override statutory provisions. A party cannot be indefinitely bound to an arbitrator who has demonstrably failed to deliver the award within a reasonable time.”
Mandate of Arbitrator Terminated
The Court declared the mandate of the arbitrator as terminated, paving the way for a fresh appointment under Section 15 of the Act. The ruling emphasizes that institutional rules cannot operate in isolation from the overarching statutory framework of arbitration in India.
Implications of the Judgment
This decision will have wide implications for arbitration proceedings conducted under stock exchange and similar institutional mechanisms. It reaffirms that:
• Delay in award — even without a specific time-limit clause can amount to inability to act under the law.
• Expeditious delivery of justice remains the cornerstone of arbitration.
• Parties have a right to judicial recourse if procedural delays frustrate arbitration timelines.
• Case Title: Ravindra Bhandari v. National Stock Exchange of India Ltd. & Anr.
