The Supreme Court on Friday appointed former Supreme Court judge Justice Ajay Rastogi as the substitute sole arbitrator to continue arbitration proceedings between DMI Finance Private Limited and RCC Infraventures Limited, following the recusal of former Supreme Court judge Justice R Banumathi from the matter.
Addressing Justice Banumathi’s withdrawal, a bench consisting of CJI Surya Kant and Justices Joymalya Bagchi and V. Mohana declined to examine the underlying causes, even as they expressed regret over how the situation unfolded. The bench observed that someone had effectively manipulated the recusal, noting that while proper handling could have prevented it had the Court been informed in time, they were now choosing to leave the issue unexamined.
The dispute reached the apex court after a witness allegedly left the arbitral proceedings midway through cross-examination without signing his recorded deposition and later disputed the contents of the statement. Justice Banumathi subsequently recused herself from the arbitration.
Appearing for DMI Finance, Senior Advocate Vikas Singh argued that a witness could not be permitted to repudiate a statement recorded before an arbitral tribunal merely by refusing to sign it. Referring to Section 27(5) of the Arbitration and Conciliation Act, 1996, he submitted that the issue of the evidentiary value of the unsigned deposition and the witness’s conduct should be left to the substitute arbitrator for consideration.
The Bench agreed, observing that all issues relating to the witness’s testimony, including whether the unsigned deposition could be relied upon or whether any action should be initiated against the witness, ought to be decided by the newly appointed arbitrator. Singh clarified that he was not seeking a ruling from the Supreme Court on those issues but only that they remain open for adjudication.
The Court also noted that eight days of cross-examination of the claimant’s first witness had already been completed and directed that the arbitration continue from the stage at which it had been interrupted. Counsel informed the Bench that only a small portion of the cross-examination remained, leaving it to the substitute arbitrator to determine the future course of the proceedings.
It was further brought to the Court’s notice that an application under Section 29A of the Arbitration and Conciliation Act seeking extension of the arbitral mandate was pending before the Delhi High Court due to the pendency of the present proceedings before the Supreme Court.
During the hearing, several retired judges were suggested for appointment as the substitute arbitrator. Ultimately, both parties expressed no objection to the appointment of Justice Ajay Rastogi, following which the Bench appointed him as the sole arbitrator.
The Court declined a request to reconstitute the tribunal as a three-member arbitral tribunal, observing that the Delhi High Court had earlier appointed Justice Banumathi as the sole arbitrator with the consent of both parties.
Before concluding the proceedings, the Bench directed both sides to extend full cooperation to the newly appointed arbitrator and ensure that no similar controversies arise during the continuation of the arbitration, which will resume from the stage at which it stood before Justice Banumathi’s recusal.
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