1 staffer for 4,155 arbitrations: HC raps bank | India News

The Delhi high court has expressed displeasure over the appointment of a sole arbitrator who handled 4,155 arbitral proceedings involving Axis Bank, observing that unilateral and repeated appointments of the same arbitrators goes against the core of neutrality which is at the soul of any arbitration process.A bench of Justices Prathiba M Singh and Dinesh Bhatt in its verdict released on October 5 termed the situation the “tip of the iceberg” and directed Axis Bank to explain how such repeated appointments were permitted.“The most shocking aspect uncovered from the affidavit of the Respondent Bank is that in a span of four to five years the said Arbitrator - Shri Vikrant Bhardwaj --has acted as an arbitrator in a whopping 4155 cases concerning the Respondent Bank. The clear impression that the court gathers from the above is that this is nothing but the tip of an iceberg,” the court said in the order dated September 30.It added, “Arbitrators who were appointed in thousands of matters like this without filing proper declarations cannot be said to be independent and impartial arbitrators...handling thousands of the arbitrations by the very same arbitrator appointed by one single party would give rise to justifiable doubts as to independence and impartiality. Clearly such lawyers who are appointed as arbitrators cannot be considered as lacking bias. Repeated appointments of the same arbitrators in thousands of cases goes against the core of neutrality which is at the soul of any arbitral process.”In its order, the court further directed the Reserve Bank of India (RBI) to caution banks and financial institutions against the practice of unilaterally appointing arbitrators. “The RBI being the sector regulator, shall also caution all banks in this regard, so that if any remedial measures need to be taken by other banks and financial institutions in respect of unilateral appointments, the same can also be looked into and some guidance issued in respect thereof,” the Court said.The court passed the order while hearing a petition filed by Shikha Ghosh challenging an arbitral award in favour of Axis Bank in a loan dispute on May 26, 2023. The bank had sanctioned a loan of ₹16.66 lakh to Ghosh in 2019 and subsequently initiated arbitration, alleging default in repayment. Ghosh contended that she was not properly served in the proceedings and that the award was passed without her knowledge.Pursuant to the court’s directions, Axis Bank disclosed that Vikrant Bhardwaj had acted as a sole arbitrator in 4,155 cases involving the bank over four to five years. The bank said it had discontinued unilateral appointments, with no such appointment made since 2023. It also acknowledged that awards arising from unilateral appointments were void ab initio (invalid from inception) in view of Supreme Court rulings requiring neutrality in the appointment process. The bank further informed the court that around 65% of Bhardwaj’s cases had been settled, while execution petitions were not filed in about 1,264 cases. It also disclosed that around 76,000 awards had been passed nationwide by arbitrators unilaterally appointed in disputes involving the bank.In its order, the court declared that the award would be un-enforecable against Ghosh, since the bank had submitted that the award is void ab initio.The court directed Axis Bank to file a response outlining the course of action it proposes to take in respect of awards already passed by arbitrators who were unilaterally appointed and RBI to examine whether guidance should be issued to banks and financial institutions regarding unilateral appointments of arbitrators.The court directed both Axis Bank and the RBI to file their respective affidavits by November 16.