“No Arbitrator Should Be Made a Party Unless Statutory Conditions Apply”: Madras High Court Directs Compliance with Arbitration Rules
Sanchayita Lahkar
The Madras High Court has directed strict adherence to procedural safeguards under the Madras High Court (Arbitration) Rules, 2020, observing that “no arbitrator should be arrayed as a formal party to any arbitral proceedings” unless allegations meet the conditions stipulated in Rule 5(iv) or where personal allegations of mala fide are involved. The Division Bench comprising Chief Justice K.R. Shriram and Justice Mohammed Shaffiq issued the directive while addressing procedural compliance issues arising in arbitral matters.
In the interim, the Court issued notice to the second respondent, returnable on April 21, 2025. The Court also ordered that a copy of this directive be circulated to all District Courts to ensure consistent application of the mandate, stating, “The Registry shall ensure that no arbitrator is made as a party to arbitral proceedings, except in cases enumerated under Rule 5(iv) of the Rules or where personal allegations of mala fides are alleged against the arbitrator.”
The appeal was filed by the Chairman, Secretary, and Executive Engineer of the Puducherry Housing Board, challenging procedural aspects related to arbitral proceedings involving Justice K.P. Sivasubramaniam, a former judge of this Court, and Sri Pathy Associates Private Limited, represented by its Chairman and Authorised Signatory.
Represented by Mr. T.M. Naveen, the appellants contended that the arbitral proceedings warranted the inclusion of the sole arbitrator as a respondent. However, the Court noted the absence of specific allegations invoking Rule 5(iv) of the Madras High Court (Arbitration) Rules, 2020, or personal allegations against the arbitrator.
The case brought to question whether, in the absence of the conditions specified under the Rules and the Arbitration and Conciliation Act, 1996, an arbitrator can be routinely made a party to proceedings under Section 34 or related provisions. The appellants relied upon provisions including Section 14 of the Arbitration and Conciliation Act, 1996, concerning the termination of an arbitrator’s mandate, and Section 34(2b) related to the setting aside of arbitral awards on grounds including public policy violations.
Despite referencing the statutory framework, the appellants did not make any averment or claim concerning personal misconduct, mala fide, or statutory triggers under Rule 5(iv) of the Madras High Court (Arbitration) Rules, 2020.
No counter submissions from the respondents were recorded at this stage, as the Court issued notice to the second respondent for further proceedings.
The Bench examined the Madras High Court (Arbitration) Rules, 2020, framed under Section 82 of the Arbitration and Conciliation Act, 1996, noting the specific restrictions placed on impleading arbitrators as party respondents. Rule 5(iii) of the Rules states that “the sole arbitrator or arbitrators constituting the Arbitral Tribunal shall not be added as respondent or respondents”, while Rule 5(iv) mandates impleading arbitrators only when allegations are made against them, including but not limited to proceedings under Section 14 or Clause (i) of Explanation 1 to Section 34(2b) of the Act.
Section 14 governs situations where an arbitrator’s mandate may be terminated due to inability or failure to act, while Clause (i) of Explanation 1 under Section 34(2b) addresses instances where an award may be set aside if it is affected by fraud, corruption, or violations of Section 75 or Section 81.
The Court recorded that it found “no reason why an arbitrator should be made party to any arbitral proceedings, unless allegations as instantiated in Rule 5(iv) of the Madras High Court (Arbitration) Rules, 2020 are made out and/or personal allegations of mala fide are made against the arbitrator that he has to defend.”
The Bench further noted, “When such is the mandate of the Act and the Rules framed thereunder, it is not known why in almost all arbitration matters the arbitrator is arrayed as a party respondent in a routine manner without an averment to the effect that Rule 5(iv) of the Rules is attracted or any personal allegation of mala fide is made against the arbitrator that he has to defend.”
The Court referred to the Division Bench judgment in Kothari Industrial Corporation Limited v. Southern Petrochemicals Industries Corporation Limited (2021 SCC OnLine Mad 5325), wherein it was recorded: “It is a pernicious practice in this court to implead arbitrators or arbitral tribunals when there is no need to do so. Often, arbitrators are embarrassed upon receipt of notice. It is only in a rare case when a personal allegation is made against an arbitrator may such arbitrator be impleaded.” The earlier Bench in that case further noted: “Just as in case of a revision or an appeal the lower forum or the Judge manning the lower forum is not impleaded as a party, in proceedings under Section 34 of the Arbitration and Conciliation Act, 1996, the arbitrator or the members of the arbitral tribunal are utterly unnecessary parties unless specific personal allegations are levelled against them that would require such persons to answer the allegations.”
The Court directed that arbitrators are not to be made respondents in arbitral proceedings unless the conditions under Rule 5(iv) of the Madras High Court (Arbitration) Rules, 2020, or specific allegations of mala fide apply. The Bench recorded, “No arbitrator should be arrayed as a formal party to any arbitral proceedings.”
The Registry was directed to circulate this order to all District Courts, with the Court recording, “A copy of this order shall also be circulated to all the District Courts so that they shall also follow this dictum.” The matter was adjourned to April 21, 2025.
Advocates Representing the Parties
For Appellant(s): Mr. T.M. Naveen
Case Title: The Chairman, Puducherry Housing Board and Others v. Justice K.P. Sivasubramaniam and Sri Pathy Associates Private Limited
Neutral Citation: 2025:MHC:1510
Case Number: Arb. Appeal No.14 of 2025 and CMP No.6208 of 2025
Bench: Chief Justice K.R. Shriram and Justice Mohammed Shaffiq
[Read/Download order]
