Bombay High Court
Mohdateeque Mohdismail Momin vs Hdfc Bank Ltd. on 8 October, 2025
Author: Manish Pitale
Bench: Manish Pitale
2025:BHC-OS:18258
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16-ial-30318.22.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION PETITION (L) NO. 30314 OF 2022
Mohdateeque Mohdismail Momin ... Petitioner
Versus
HDFC Bank Ltd. ... Respondent
WITH
INTERIM APPLICATION (L) NO. 30318 OF 2022
IN
ARBITRATION PETITION (L) NO. 30314 OF 2022
******
Mr. S. C. Wakankar a/w Ms. Aishwarya Bapat for the Petitioner.
Mr. Chetan C. Agrawal for Respondent-Bank.
******
CORAM: MANISH PITALE, J.
DATE : 8th OCTOBER 2025
P.C. :
. Heard learned counsel for the parties.
2. The present petition filed under Section 34 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
'Arbitration Act' for short) challenges award dated 11 th June 2022
passed by the sole arbitrator, whereby the petitioner has been
directed to pay a specific amount along with interest to the
respondent-bank.
3. Mr. Wakankar, learned counsel appearing for the petitioner,
specifically invokes Section 34(2)(b)(ii) of the Arbitration Act, to
contend that the impugned award is clearly in contravention of the
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fundamental policy of Indian law, as the sole arbitrator in the
present case was unilaterally appointed by the respondent-bank. In
support of the said contention, he relies upon the judgment of the
Supreme Court in the case of TRF Limited v/s. Energo
Engineering Projects Limited, (2017) 8 SCC 377, as also the
judgment of this Court in the case of Hanuman Motors Pvt. Ltd.
& Anr. v/s. M/s. Tata Motors Finance Ltd., AIR 2023 Bom 217
and an order dated 8th February 2024 passed by a learned Single
Judge of this Court in Arbitration Petition No. 30 of 2021 (Riak
Insurance and Financial Services & Ors. v/s. HDFC Bank Limited) .
4. He further submits that the impugned award records certain
findings that are contrary to the Roznama maintained by the
learned Arbitrator himself. It is emphasized that the petitioner had
specifically filed a say/written statement to the claim of the
respondent-bank and a counsel had appeared on behalf of the
petitioner before the sole arbitrator, who had argued against the
claim petition of the respondent-bank. Yet, the sole arbitrator
recorded that the petitioner had neither filed any written
statement/objection, nor he had appeared before the arbitrator. It
was submitted that therefore, the impugned award deserves to be
set aside.
5. On the other hand, Mr. Agrawal, learned counsel appeared
on behalf of the respondent-bank and submitted that the subject
document i.e. the loan agreement cannot be denied and there is
sufficient material to show that the petitioner was clearly in
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arrears of repayment of the loan amount. All such material was
taken into consideration by the sole arbitrator, while passing the
impugned award. The petitioner cannot be permitted to escape
liability on the basis of the sole arbitrator having been appointed
unilaterally, particularly, when the petitioner had participated in
the proceedings before the sole arbitrator.
6. This Court has considered the rival submissions. But, before
rendering findings thereon, it would be appropriate to refer to the
arbitration clause in the present agreement.
7. The arbitration clause in the subject agreement reads as
follows :
"26. GOVERNING LAW, JURISDICTION AND
ARBITRATION
This agreement shall be construed in accordance with
the laws of India. The Parties hereto expressly agree that all
disputes arising out of and / or relating to this Agreement
including any Collateral Document shall be subject to the
exclusive jurisdiction of the courts/tribunals of the city in
which the Lending Office is situated. Provided that to the
extent allowed by law; the Bank shall be entitled to take
proceedings relating to a dispute in any court/tribunal of any
place with jurisdiction. Provided further that if any dispute
arising under this Agreement is below the peculary
jurisdiction limit of the Debt Recovery Tribunals established
under Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (51 of 1993), then such dispute shall be
referred to arbitration in accordance with the provisions of
the Arbitration and Conciliation Act, 1996 as may be
amended, or its re-enactment, by a sole arbitrator, appointed
by the Bank. The arbitration proceeding shall be conducted in
the English language. The award passed by the arbitrator shall
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be final and binding on the Parties. The costs of such
arbitration shall be borne by the losing Party or otherwise as
determined in the arbitration award. The venue of the
arbitration shall be the city in which the Lending Office is
situate or such other place as may be determined by the Bank,
If a party is required to enforce an arbitral award by legal
action of any kind, the party against whom such legal action is
taken shall pay all reasonable costs and expenses and
attorney's fees, including any cost of additional litigation or
arbitration taken by the party seeking to enforce the award."
8. A bare perusal of the above quoted clause shows that it
provides for appointment of a sole arbitrator by the respondent-
bank. This clearly indicates that the arbitration clause itself
provides for a unilateral appointment of the arbitrator. After the
amendment brought about in the Arbitration Act, including in
Section 12(5) thereof w.e.f. 23rd October 2015, it is clear that even
according to the statute, the provision for unilateral appointment
of an arbitrator can take place only if the parties, expressly in
writing, agree to waive any objection to such unilateral
appointment of arbitrator.
9. This position of law was considered by the Supreme Court
in the case of TRF Limited v/s. Energo Engineering Projects
Limited (supra). It was held that appointment of arbitrator
unilaterally would clearly be hit by Section 12(5) of the
Arbitration Act, read with relevant schedule. The question
regarding such a ground pertaining to unilateral appointment of
arbitrator being taken up at the stage of challenging the award
under Section 34 of the Arbitration Act, came up for consideration
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before this Court in various cases, including in the case of Naresh
Kanayalal Rajwani & Ors. v/s. Kotak Mahindra Bank Ltd. & Anr.
(Commercial Arbitration Petition (Lodging) No. 1444 of 2019). It
was held that such a ground could indeed be taken in a petition
filed under Section 34 of the Arbitration Act to challenge the
arbitral award.
10. In the case of Hanuman Motors Pvt. Ltd. & Anr. v/s. M/s.
Tata Motors Finance Ltd. (supra), a specific contention raised on
behalf of the respondent therein to the effect that such a ground
could not have been raised in a petition under Section 34 of the
Arbitration Act, if the petitioner had not raised an objection to
unilateral appointment of arbitral, during arbitral proceedings,
was repulsed. It was held that since such unilateral appointment of
the arbitrator goes to the very root of the matter, notwithstanding
failure in raising such an objection during the arbitral proceedings,
a ground for challenging the arbitral award could certainly be
raised under Section 34 of the Arbitration Act. It was held that in
such a situation, the arbitrator could not have entered upon
reference itself and therefore, such a ground going to the very root
of the matter could certainly be raised in a petition filed under
Section 34 of the Arbitration Act. The said position of law was
reiterated by this Court in the case of Riak Insurance and Financial
Services & Ors. v/s. HDFC Bank Limited (supra).
11. Thus, the position of law has been clearly explained in the
aforementioned judgments of the Supreme Court and this Court.
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The said position of law clearly inures to the benefit of the
petitioner in the present case, as the above quoted arbitration
clause reserves powers only in the respondent-bank to unilaterally
appoint the arbitration. As a matter of fact, the sole arbitrator was
appointed unilaterally by the respondent-bank. This is evident
from paragraph 2 of the impugned arbitral award. Thus, the very
appointment of the sole arbitrator in the present case stood
vitiated and it was clearly against the settled position of law.
Therefore, the petitioner is justified in invoking Section 34(2)(b)
(ii) of the Arbitration Act, to claim that the impugned arbitral
award is in contravention of the fundamental policy of Indian law.
12. Apart from this, the facts recorded in paragraph 3 of the
arbitral award, to the effect that the petitioner neither appeared
before the arbitrator nor filed a say or written statement, is belied
by the documents on record, including the Roznama.
13. The Roznama clearly shows that the petitioner was
represented by a counsel and that arguments were heard on 7 th
May 2021, which led to passing of the impugned award dated 11 th
June 2022. The recording of facts in paragraph 3 of the impugned
arbitral award is also, therefore, found to be contrary to the
record of the arbitral proceedings themselves.
14. Since the petitioner has successfully made out a case under
Section 34(2)(b)(ii) of the Arbitration Act, this Court is inclined to
allow the present petition.
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15. Accordingly, the petition is allowed. The impugned arbitral
award dated 11th June 2022 passed by the learned arbitrator is
quashed and set aside.
16. Needless to say, the respondent-bank would be at liberty to
take further steps in accordance with law.
17. In view of the disposal of the petition, pending interim
application also stands disposed of.
MANISH PITALE, J.
