Pravin Sharma vs M/S.Hinduja Leyland Finance ...
2023 Latest Caselaw 9220 Mad

                                                                          Arb.O.P.(Com.Div.) No.295 of 2023

                                  IN THE HIGH COURT OF JUDICATURE AT MADRAS

                                                     DATED: 28.07.2023

                                                          CORAM

                                  THE HON'BLE Mr. JUSTICE ABDUL QUDDHOSE

                                          Arb.O.P (Com.Div.) No.295 of 2023


                     1.Pravin Sharma
                     2.Neetu Devi                                                  ... Petitioners

                                                        Versus

                     M/s.Hinduja Leyland Finance Limited,
                     Rep by its POA Holder
                     Having its Corporate Office at No.27A,
                     Developed Industrial Estate, Guindy,
                     Chennai- 600 032 and registered
                     office at No.1, Sardar Patel Road,
                     Guindy, Chennai – 600 032.                                    ... Respondent

                     Prayer: Arbitration Original Petition (Commercial Division) filed under
                     Section 34(1) of the Arbitration and Conciliation Act, 1996 to set aside the
                     award of the Arbitral Tribunal dated 27.12.2022 and to direct the
                     respondent to pay the costs.


                                    For Petitioner      : Mr.J.Srinivasa Mohan
                                                          for M/s.TVJ Associates

                                    For Respondent      : Mr.A.Rajavel



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https://www.mhc.tn.gov.in/judis
                                                                            Arb.O.P.(Com.Div.) No.295 of 2023

                                                            ORDER

This petition has been filed under Section 34 of the Arbitration and

Conciliation Act, 1996 challenging an Arbitral Award dated 27.12.2022

passed against the petitioners.

2. Apart from raising other grounds, the petitioners have primarily

raised the ground that the respondent has unilaterally appointed an

Arbitrator, which is in violation of the decision of the Hon'ble Supreme

Court in the case of Perkins Eastman Architects DPC and another vs.

HSCC (India) Limited reported in (2020) 20 SCC 760, wherein it has been

held that a party to a dispute cannot unilaterally appoint an Arbitrator and

an Award passed by the Arbitrator appointed unilaterally is per se illegal. As

seen from the impugned Arbitral Award, it is clear that the respondent has

unilaterally appointed an arbitrator, which has culminated in passing of the

Award dated 27.12.2022 against the petitioners.

3. The petitioners had availed loan from the respondent financial

Institution. According to the respondent, the petitioners had committed

https://www.mhc.tn.gov.in/judis Arb.O.P.(Com.Div.) No.295 of 2023

default in the repayment of the loan. There is an Arbitration Clause

contained in the loan contract based on which arbitration was initiated by

the respondent by appointing a Sole Arbitrator. The impugned Arbitral

Award dated 27.12.2022, which is an ex-parte award makes it clear that

only on the request made by the respondent, the Sole Arbitrator had given

consent for being appointed as a Sole Arbitrator and has acted upon the

reference. It is now settled law as laid down by Hon'ble Supreme Court in

Perkins judgment that a party interested in a dispute cannot unilaterally

appoint an arbitrator and if an award is passed by such an Arbitrator, it is

per se illegal.

4. Since the impugned Arbitral Award dated 17.12.2022 has been

passed by a Sole Arbitrator, who has been appointed by the respondent

unilaterally without obtaining the consent of the petitioners, necessarily in

view of the Hon'ble Supreme Court decision referred to supra, the impugned

Arbitral Award dated 27.12.2022 has to be set aside by this Court and this

Arbitration Original Petition will have to be allowed.

https://www.mhc.tn.gov.in/judis Arb.O.P.(Com.Div.) No.295 of 2023

ABDUL QUDDHOSE, J.

rsi

5. Accordingly, the impugned Arbitral Award dated 27.12.2022 is

hereby set aside and this Arbitration Original Petition is allowed as prayed

for. No costs.

28.07.2023

rsi Index:Yes/No Speaking/Non-speaking orders

Arb.O.P (Com.Div.) No.295 of 2023

https://www.mhc.tn.gov.in/judis