Court holds mere apprehension of bias without concrete evidence insufficient to set aside arbitration award under Section 34 of Arbitration and Conciliation Act, 1996
In a significant judgment delivered on September 2, 2026, the Delhi High Court dismissed the petition filed by M/s Lanco-Rani (JV) challenging the arbitral award in its dispute with the National Highways Authority of India (NHAI) relating to a highway four-laning contract in Bihar. The petition under Section 34 of the Arbitration and Conciliation Act, 1996, alleged bias on the part of Dr. C.S. Suryawanshi, the arbitrator appointed by NHAI.
The petitioner contended that Dr. Suryawanshi's role as an employee of Consulting Engineering Services (India) Private Limited (CES), which had professional ties with NHAI, created a justifiable apprehension of bias. The petitioner argued that this relationship was not disclosed at the time of arbitration and that CES's involvement with NHAI on various highway projects compromised the arbitrator's impartiality.
However, the Court, presided over by Justice Om Prakash Shukla, emphasized that mere apprehension or suspicion of bias, without specific or tangible evidence, cannot invalidate an arbitral award. Relying on established Supreme Court precedents such as Indian Oil Corporation Ltd. v. Raja Transport and Aravali Power Co. Pvt. Ltd. v. Era Infra Engineering Ltd., the Court reiterated that the appointment of an arbitrator who is an employee of one of the parties is not ipso facto proof of bias.
The judgment underscored that the unamended provisions of Sections 12 and 13 of the Arbitration and Conciliation Act apply since the arbitration commenced before October 23, 2015. These sections do not render invalid the appointment of an arbitrator simply by virtue of their employment. The Court noted that a justifiable apprehension of bias arises only when there is evidence of a disqualifying interest, direct involvement in decision-making, or control over the contract in question.
The Court found that the petitioner failed to demonstrate any concrete link between the arbitrator's employment and the arbitral award's outcome. The allegations were deemed vague and unsupported by the record, and no evidence was shown of partiality or improper influence. The Court also observed that the arbitral award contained extensive reasoning and contractual analysis, further negating claims of bias.
Ultimately, the petition was dismissed, affirming that challenges to arbitral awards on grounds of bias require solid facts and clear evidence rather than mere suspicion or hindsight assertions. This judgment reinforces the legal position that arbitration is a binding alternative dispute resolution mechanism, and courts must exercise caution before interfering with arbitral awards.
Bottom Line:
Arbitration - Allegations of bias against arbitrator - Mere apprehension of bias without specific evidence is insufficient to invalidate the award under Section 34 of the Arbitration and Conciliation Act, 1996.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 12, 13, 18, 34
