Madras High Court
Moniva Sarkar vs M/S.Kotak Mahindra Bank Ltd on 21 June, 2023
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATE: 21.06.2023
CORAM
THE HON'BLE Mr. JUSTICE KRISHNAN RAMASAMY
Arb.O.P (Com.Div.) No.84 of 2023
and A.No.1085 of 2023
Moniva Sarkar
...Petitioner
versus
M/s.Kotak Mahindra Bank Ltd.,
Rep. By its Authorised Signatory,
5th Floor, Samson Towers,
402 L, Pantheon Road,
Egmore, Chennai – 600 008. ...Respondent
Prayer: Arbitration Original Petition filed under Section 34 (2) of the
Arbitration and Conciliation Act, 1996, to set aside the impugned arbitral
award dated 04.01.2021 in ARB.CASE No. KB S EG14/2020 passed by the
learned Sole Arbitrator.
For Petitioner : M/s. V.Ramana Reddy
For Respondent : M/r.N.S.Sivakumar
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ORDER
This Arbitration Original Petition has been filed by the petitioner,
seeking to set aside the impugned arbitral award dated 04.01.2021 in
ARB.CASE No. KB S EG14/2020 passed by the learned Sole Arbitrator.
2.The case of the petitioner is as follows:
2.1.The respondent bank initiated the arbitration proceendings in
terms of loan agreement entered between the petitioner and the respondent. The
respondent in the arbitral award states that the petitioner had approached the
respondent for loan facility. They executed the loan agreement vide Loan
Agreement No. 60607280. The respondent states that the petitioner after
making initial payment, contrary to the agreement, failed to pay the equated
monthly instalments (EMI) inspite of the repeated reminders. The respondent
states that a balance of Rs. 5,60,832.28/- is due and payable by the petitioner.
But the petitioner submits that she has not availed any loan pertaining to the
aforesaid agreement and she has not received any sort of notice regarding the
demand of loan amount alleged to have been borrowed.
2.2. The learned arbitrator had failed to notice that the aforesaid
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loan agreement was entered at Chennai but the petitioner has been residing at
Chandigarh for the past 10 years. The learned arbitrator also had not given
proper notice before passing the award. The Petitioner was unaware of an
award which had been passed against her on 04.01.2021. She had come to
know about the illegalities of the Respondent only after the attachment of her
salary by way of Execution Proceedings.
2.3. According to the petitioner, the respondent had unilaterally
appointed an Arbitrator of their choice and had filed a claim before the
Arbitrator for a total sum of Rs.5,60,832.28/- without proper notice to the
petitioner. The Learned Arbitrator without considering the facts and without
ordering fresh notice for the non-appearance of notice, he had passed an award
on 04.01.2021 allowing the claims with costs as prayed for by the
respondent/claimant.
3.The main grounds of challenge made by the petitioner are that the
respondent appointed the learned Arbitrator unilaterally and the impugned
award came to be passed on 04.01.2021 without giving sufficient opportunity
to the petitioner, such an award is in conflict with the most basic notions of
morality or justice. The petitioner was never given an opportunity to file any
statement of defence/objections to the claim. Under these circumstances,
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without any further scrutiny, the learned Arbitrator passed an ex parte award
dated 04.01.2021 is liable to be set aside.
4. The Learned counsel appearing for the petitioner would submit that as
per the law laid down by the Hon'ble Apex Court in the case of “Perkins
Eastman Architects DPC Vs. HSCC (India) Ltd.” reported in 2019 SCC
OnLine SC 1517, in the event of any unilateral appointment of Arbitrator
without the consent of the other party, the same would be non-est in law.
Therefore, he contends that the present appointment of the Arbitrator is non-est
in law. In terms of the proviso of Section 12(5) of the Act, in the event of
unilateral appointment, the appointed Arbitrator can proceed with, when the
other party waives the applicability of this Section by way of an express
agreement in writing. In the present case, no such express agreement has been
made by the petitioner . Therefore, he would contend that in the absence of any
such express agreement, the unilateral appointment of the Arbitrator is null and
void and consequently the award passed by the said Arbitrator, is liable to be
set aside.
5.The Learned counsel appearing for the petitioner would also contend
that since the unilateral appointment is contrary to proviso to sub-section (5) of
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Section 12 of the Act, the same would fall under Explanation (2) of Section
34(2)(b) of the Act, and it is in contravention with the fundamental policy of
Indian law as held by the Hon'ble Apex Court. Further, he would contend that
the award is also liable to be set aside, since the learned Arbitrator has not
given any opportunity to the petitioner to file a counter and contest the matter.
Hence, he prayed to set aside the award.
6. On the other hand, the learned counsel for the respondent strongly
refuted the contentions of the petitioner, stating that if there is any unilateral
appointment, the remedy available to the petitioner is to immediately challenge
the same under Section 13 of the Act before the same Arbitral Tribunal.
However, in the present case, the petitioner had not resorted to this remedy.
Hence, the petitioner are not entitled to challenge the award at this stage. He
would further contend that there is no merits in this original petition and same
is liable to be dismissed.
7.I have given due consideration to the submissions made by the learned
counsel appearing for the petitioner and the respondent and perused the entire
materials placed on record .
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8.Upon hearing the learned counsel on petitioner and perusing the
documents, it appears that in the present case, in the terms of the provision of
the above said Loan Agreement, the respondent has an option for appointment
of sole Arbitrator at their discretion. In terms of the said agreement, the
respondent had nominated the sole Arbitrator.
9. In terms of Schedule VII of the Act, if the Arbitrator is an employee,
consultant, advisor or has any other past or present business relationship with a
party or if the Arbitrator is a Manager, Director or part of the management, or
has a similar controlling influence, in an affiliate of one of the parties if the
affiliate is directly involved in the matters in dispute in the arbitration, shall be
ineligible to be appointed as Arbitrator.
10.When a person is ineligible to be appointed as an Arbitrator, in the
same way, he is also ineligible to nominate any Arbitrator also. This is what the
Hon'ble Apex Court has held in the Perkins' case (cited supra).
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11. Any person can be appointed as the Arbitrator, subject to that he
shall not be either the employee, consultant, advisor or have any other past or
present business relationship or as Manager, Director or part of the
management of the respondent. If any of the above mentioned person is
appointed as Arbitrator, he is ineligible to act as an arbitrator in terms of
Section 12(5) of the Act. In the same way, the above persons are also not
eligible to nominate any person as Arbitrator to act on behalf of them or the
concern.
12.In the present case, the respondent appointed the arbitrator
unilaterally without the consent of the petitioner . Section 12(5) of the Act
states as follows:
“12. Ground for challenge.-
(1).......................
(2).......................
(3).......................
(4).......................
(5) Notwithstanding any prior agreement to the
contrary, any person whose relationship, with the parties or
counsel or the subject-matter of the dispute, falls under any of
the categories specified in the Seventh Schedule shall be
ineligible to be appointed as an arbitrator:
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Provided that parties may, subsequent to disputes
having arisen between them, waive the applicability of this
sub-section by an express agreement in writing.”
A mere perusal of the above makes it clear that the persons mentioned in
Schedule VII of the Act would be ineligible to be appointed as Arbitrator.
Further, the persons mentioned in Schedule VII are also ineligible to nominate
any person as arbitrator. Further there is no express agreement between the
parties for providing consent in writing for the unilateral appointment of the
arbitrator. Hence, the unilateral appointment of the arbitrator made by the
respondent is in violation of provisions of Section 12(5) of the Act.
13.At this juncture, it would be appropriate to extract the relevant portion
of the judgment rendered by the Hon'ble Supreme Court in the Perkin's case. at
paragraph Nos.16, 17, 18 and 21, which read as follows:
“16. However, the point that has been urged, relying
upon the decision of this Court in Walter Bau AG and TRF
Limited, requires consideration. In the present case Clause
24 empowers the Chairman and Managing Director of the
respondent to make the appointment of a sole arbitrator
and said Clause also stipulates that no person other than a
person appointed by such Chairman and Managing
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Director of the respondent would act as an arbitrator. In
TRF Limited, a Bench of three Judges of this Court, was
called upon to consider whether the appointment of an
arbitrator made by the Managing Director of the
respondent therein was a valid one and whether at that
stage an application moved under Section 11(6) of the Act
could be entertained by the Court. The relevant Clause,
namely, Clause 33 which provided for resolution of
disputes in that case was under:
“33. Resolution of dispute/arbitration
(a) In case any disagreement or dispute
arises between the buyer and the seller under
or in connection with the PO, both shall make
every effort to resolve it amicably by direct
informal negotiation.
(b) If, even after 30 days from the
commencement of such informal negotiation,
seller and the buyer have not been able to
resolve the dispute amicably, either party may
require that the dispute be referred for
resolution to the formal mechanism of
arbitration.
(c) All disputes which cannot be settled
by mutual negotiation shall be referred to and
determined by arbitration as per the
Arbitration and Conciliation Act, 1996 as
amended.
(d) Unless otherwise provided, any
dispute or difference between the parties in
connection with this agreement shall be
referred to sole arbitration of the Managing
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Director of buyer or his nominee. Venue of
arbitration shall be Delhi, and the arbitration
shall be conducted in English language.
(e) The award of the Tribunal shall be
final and binding on both, buyer and seller.”
17. In TRF Limited, the Agreement was entered into
before the provisions of the Amending Act (Act No.3 of
2016) came into force. It was submitted by the appellant
that by virtue of the provisions of the Amending Act and
insertion of the Fifth and Seventh Schedules in the Act, the
Managing Director of the respondent would be a person
having direct interest in the dispute and as such could not
act as an arbitrator. The extension of the submission was
that a person who himself was disqualified and disentitled
could also not nominate any other person to act Arbitration
Application No.32 of 2019 Perkins Eastman Architects DPC
& Anr. v. HSCC (India) Ltd. as an arbitrator. The
submission countered by the respondent therein was as
under: -
“7.1. The submission to the effect that
since the Managing Director of the
respondent has become ineligible to act as
an arbitrator subsequent to the amendment
in the Act, he could also not have nominated
any other person as arbitrator is absolutely
unsustainable, for the Fifth and the Seventh
Schedules fundamentally guide in
determining whether circumstances exist
which give rise to justifiable doubts as to the
independence and impartiality of the
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arbitrator. To elaborate, if any person whose
relationship with the parties or the counsel
or the subject-matter of dispute falls under
any of the categories specified in the Seventh
Schedule, he is ineligible to be appointed as
an arbitrator but not otherwise.
18. The issue was discussed and decided by this
Court as under:-
50. First, we shall deal with Clause (d). There is no
quarrel that by virtue of Section 12(5) of the Act, if any
person who falls under any of the categories specified in
the Seventh Schedule shall be ineligible to be appointed as
the arbitrator. There is no doubt and cannot be, for the
language employed in the Seventh Schedule, the Managing
Director of the Corporation has become ineligible by
operation of law. It is the stand of the learned Senior
Counsel for the appellant that once the Managing Director
becomes ineligible, he also becomes ineligible to nominate.
Refuting the said stand, it is canvassed by the learned
Senior Counsel for the respondent that the ineligibility
cannot extend to a nominee if he is not from the
Corporation and more so when there is apposite and
requisite disclosure. We think it appropriate to make it
clear that in the case at hand we are neither concerned with
the disclosure nor objectivity nor impartiality nor any such
other circumstance. We are singularly concerned with the
issue, whether the Managing Director, after becoming
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ineligible by operation of law, is he still eligible to
nominate an arbitrator. At the cost of repetition, we may
state that when there are two parties, one may nominate an
arbitrator and the other may appoint another. That is
altogether a different situation. If there is a clause
requiring the parties to nominate their respective
arbitrator, their authority to nominate cannot be
questioned. What really in that circumstance can be called
in question is the procedural compliance and the eligibility
of their arbitrator depending upon the norms provided
under the Act and the Schedules appended thereto. But,
here is a case where the Managing Director is the “named
sole arbitrator” and he has also been conferred with the
power to nominate one who can be the arbitrator in his
place. Thus, there is subtle distinction. In this regard, our
attention has been drawn to a two-Judge Bench decision in
State of Orissa v. Commr. of Land Records & Settlement. In
the said case, the question arose, can the Board of Revenue
revise the order passed by its delegate. Dwelling upon the
said proposition, the Court held: (SCC p. 173, para 25)
“25. We have to note that the
Commissioner when he exercises power of the
Board delegated to him under Section 33 of the
Settlement Act, 1958, the order passed by him is
to be treated as an order of the Board of
Revenue and not as that of the Commissioner in
his capacity as Commissioner. This position is
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clear from two rulings of this Court to which we
shall presently refer. The first of the said rulings
is the one decided by the Constitution Bench of
this Court in Roop Chand v. State of Punjab. In
that case, it was held by the majority that where
the State Government had, under Section 41(1)
of the East Punjab Holdings (Consolidation and
Prevention of Fragmentation) Act, 1948,
delegated its appellate powers vested in it under
Section 21(4) to an “officer”, an order passed by
such an officer was an order passed by the State
Government itself and “not an order passed by
any officer under this Act” within Section 42 and
was not revisable by the State Government. It
was pointed out that for the purpose of exercise
of powers of revision by the State under Section
42 of that Act, the order sought to be revised
must be an order passed by an officer in his own
right and not as a delegate of the State. The
State Government was, therefore, not entitled
under Section 42 to call for the records of the
case which was disposed of by an officer acting
as its delegate.” (emphasis in original)
51. Be it noted in the said case, reference was made
to Behari Kunj Sahkari Awas Samiti v. State of U.P., which
followed the decision in Roop Chand v. State of Punjab. It
is seemly to note here that the said principle has been
followed in Indore Vikas Pradhikaran.
52. Mr Sundaram has strongly relied on Pratapchand
Nopaji. In the said case, the three-Judge Bench applied the
maxim “qui facit per alium facit per se”. We may profitably
reproduce the passage: (SCC p. 214, para 9)
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“9. … The principle which would apply, if the
objects are struck by Section 23 of the Contract
Act, is embodied in the maxim: “qui facit per alium
facit per se” (what one does through another is
done by oneself). To put it in another form, that
which cannot be done directly may not be done
indirectly by engaging another outside the
prohibited area to do the illegal act within the
prohibited area. It is immaterial whether, for the
doing of such an illegal act, the agent employed is
given the wider powers or authority of the “pucca
adatia”, or, as the High Court had held, he is
clothed with the powers of an ordinary commission
agent only.”
53. The aforesaid authorities have been commended
to us to establish the proposition that if the nomination of
an arbitrator by an ineligible arbitrator is allowed, it would
tantamount to carrying on the proceeding of arbitration by
himself. According to the learned counsel for the appellant,
ineligibility strikes at the root of his power to arbitrate or
get it arbitrated upon by a nominee.
54. In such a context, the fulcrum of the controversy
would be, can an ineligible arbitrator, like the Managing
Director, nominate an arbitrator, who may be otherwise
eligible and a respectable person. As stated earlier, we are
neither concerned with the objectivity nor the individual
respectability. We are only concerned with the authority or
the power of the Managing Director. By our analysis, we
are obligated to arrive at the conclusion that once the
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arbitrator has become ineligible by operation of law, he
cannot nominate another as an arbitrator. The arbitrator
becomes ineligible as per prescription contained in Section
12(5) of the Act. It is inconceivable in law that person who
is statutorily ineligible can nominate a person. Needless to
say, once the infrastructure collapses, the superstructure is
bound to collapse. One cannot have a building without the
plinth. Or to put it differently, once the identity of the
Managing Director as the sole arbitrator is lost, the power
to nominate someone else as an arbitrator is obliterated.
Therefore, the view expressed by the High Court is not
sustainable and we say so.”
19..........................
20. We thus have two categories of cases. The first,
similar to the one dealt with in TRF Ltd4. where the
Managing Director himself is named as an arbitrator with
an additional power to appoint any other person as an
arbitrator. In the second category, the Managing Director
is not to act as an arbitrator himself but is empowered or
authorised to appoint any other person of his choice or
discretion as an arbitrator. If, in the first category of cases,
the Managing Director was found incompetent, it was
because of the interest that he would be said to be having in
the outcome or result of the dispute. The element of
invalidity would thus be directly relatable to and arise from
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the interest that he would be having in such outcome or
decision. If that be the test, similar invalidity would always
arise and spring even in the second category of cases. If the
interest that he has in the outcome of the dispute, is taken to
be the basis for the possibility of bias, it will always be
present irrespective of whether the matter stands under the
first or second category of cases. We are conscious that if
such deduction is drawn from the decision of this Court in
TRF Ltd. all cases having clauses similar to that with which
we are presently concerned, a party to the agreement would
be disentitled to make any appointment of an arbitrator on
its own and it would always be available to argue that a
party or an official or an authority having interest in the
dispute would be disentitled to make appointment of an
arbitrator.
21. But, in our view that has to be the logical
deduction from TRF Limited. Paragraph 50 of the decision
shows that this Court was concerned with the issue,
“whether the Managing Director, after becoming ineligible
by operation of law, is he still eligible to nominate an
Arbitrator” The ineligibility referred to therein, was as a
result of operation of law, in that a person having an
interest in the dispute or in the outcome or decision thereof,
must not only be ineligible to act as an arbitrator but must
also not be eligible to appoint anyone else as an arbitrator
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and that such person cannot and should not have any role
in charting out any course to the dispute resolution by
having the power to appoint an arbitrator. The next
sentences in the paragraph, further show that cases where
both the parties could nominate respective arbitrators of
their choice were found to be completely a different
situation. The reason is clear that whatever advantage a
party may derive by nominating an arbitrator of its choice
would get counter balanced by equal power with the other
party. But, in a case where only one party has a right to
appoint a sole arbitrator, its choice will always have an
element of exclusivity in determining or charting the
Arbitration Application No.32 of 2019 Perkins Eastman
Architects DPC & Anr. v. HSCC (India) Ltd. course for
dispute resolution. Naturally, the person who has an
interest in the outcome or decision of the dispute must not
have the power to appoint a sole arbitrator. That has to be
taken as the essence of the amendments brought in by the
Arbitration and Conciliation (Amendment) Act, 2015 (Act 3
of 2016) and recognised by the decision of this Court in
TRF Limited.”
Therefore, the above judgment of the Hon'ble Apex Court makes it clear that
the appointment of sole arbitrator unilaterally by one of the parties would be
ineligible by operation of law.
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14.Now the question that arises for consideration is whether the
petitioner participated in the arbitral proceedings or after having the knowledge
of the appointment of the sole Arbitrator, failed to challenge the said
appointment in terms of Section 13 of the Act, and whether the same would
deprive the rights of the petitioner to challenge the said appointment of the
Arbitrator in terms of the provisions of Section 34 of the Act for the violation of
provisions of Section 12(5) of the Act?
15.In my considered view, the answer is no. The petitioner are certainly
entitled to challenge the appointment of the Arbitrator under Section 34 of the
Act, if there is any violation of the provisions of the Act. Even though, the
petitioner have not challenged the unilateral appointment of the sole Arbitrator
under Section 13 of the Act, it would not certainly take away the rights of the
petitioner to challenge the same under Section 34 of the Act. Even if there is
any participation by the petitioner in the arbitral proceedings, they would still
have the right to challenge about the violation of the provisions of Section 12(5)
of the Act under Section 34 of the Act.
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16. Further, proviso to Section 12(5) envisages that the parties may
subsequent to disputes having arisen between them, waive the applicability of
this sub-section by an express agreement in writing. The definition of 'express
and implied authority' is explicitly defined under Section 187 of the Contract
Act, which reads as under:
“187. Definitions of express and implied authority.
An authority is said to be express when it is given by words
spoken or written. An authority is said to be implied when it
is to be inferred from the circumstances of the case; and
things spoken or written, or the ordinary course of dealing,
may be accounted circumstances of the case.
17. A perusal of the above makes it clear that an authority is to be
implied when it is inferred from the circumstances of the case and is said to be
express when it is given by words spoken or written. In the present case, from
the circumstances even if it is inferred that the authority is implied by the act of
the petitioner having not raised any objection towards the appointment of the
Arbitrator made by the respondent unilaterally, the same cannot be taken as
implied authority in as much as the proviso to Section 12(5) of the Act insists
that the 'express agreement between the parties for providing consent for
unilateral appointment, must be in writing. Therefore, if the consent is not in
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writing, no other inference can be drawn contrary to what is provided under the
proviso to Section 12(5) of the Act.
18. The endeavour of this Court is always to rectify the errors apparent
on the decisions/orders/judgments of the authorities/Tribunals/lower Courts
etc., at any stage of the matter in order to avoid miscarriage of justice. Once
this Court finds irregularity or illegality in the orders/judgments of the lower
authorities, while exercising inherent jurisdiction, this Court can very well set
right the same. In the present case, the award itself was challenged under
Section 34 of the Act primarily on the ground that the appointment of
Arbitrator is unilateral and cannot be sustained. Therefore, now the question
raises as to whether such a challenge to the appointment of the Arbitrator is
sustainable in the proceedings filed under Section 34 of the Act for setting aside
the award?
19.The answer is 'yes'. When an authority exercises jurisdiction it does
not possess, its decision amounts to a nullity in law. Thus, a decision by an
authority having no jurisdiction is non est and its invalidity can be set up
whenever it is sought to be acted upon. In the present case, by virtue of Section
12(5) of the Act, the learned Arbitrator, who was appointed unilaterally, is
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ineligible to be an Arbitrator and the award passed by him, deserves to be set
aside, more particularly, as already observed, there is no express waiver in
writing as contemplated under the proviso to Section 12(5). Therefore, this
Court is of the considered view that irrespective of the stage whether it is at the
initial stage of the arbitral proceedings or at stage of the execution of the award,
the appointment of the Arbitrator can be questioned, not particularly under
Section 13 but also under Section 34 of the Act and the same can be rectified
by this Court.
20.In this regard, it is worthwhile to refer a judgment of the Hon'ble
Supreme Court reported in "Hindustan Zinc Ltd. v. Ajmer Vidyut Vitran
Nigam Ltd., (2019) 17 SCC 82, wherein, it has been held under as under in
para 16 and 17:
“16. Shri Vaidyanathan, learned Senior Counsel for the
appellant, has argued that the challenge to the award was
only on merits before the learned Commercial Court, and no
challenge was raised stating that the arbitrator's appointment
itself would be without jurisdiction, both the parties having
agreed to the order dated 12-2-2007 to refer the matter to
arbitration. However, the said issue was argued and taken up
before the High Court in first appeal under Section 37 of the
Arbitration Act.
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17. We are of the view that it is settled law that if there
is an inherent lack of jurisdiction, the plea can be taken up
at any stage and also in collateral proceedings. This was held
by this Court in "Kiran Singh v. Chaman Paswan [Kiran
Singh v.Chaman Paswan, (1955) 1 SCR 117 : AIR 1954 SC
340] as follows : (SCR p. 121 : AIR p. 342, para 6)
“6. … It is a fundamental principle well-
established that a decree passed by a court without
jurisdiction is a nullity, and that its invalidity could
be set up whenever and wherever it is sought to be
enforced or relied upon, even at the stage of
execution and even in collateral proceedings. A
defect of jurisdiction, whether it is pecuniary or
territorial, or whether it is in respect of the subject-
matter of the action, strikes at the very authority of
the Court to pass any decree, and such a defect
cannot be cured even by consent of parties. If the
question now under consideration fell to be
determined only on the application of general
principles governing the matter, there can be no
doubt that the District Court of Monghyr was coram
non judice, and that its judgment and decree would
be nullities.”
21. In "Sanjay Pukraj Bafna v. Volkswagon Finance (P) Ltd. Reported
in 2020 SCC OnLine Bombay 6362, it was held that an improper and
impermissible appointment imperils any arbitral award, for it goes to the root of
the matter.
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22.Therefore, arbitration proceedings are liable be vitiated from the
stage of the appointment of the Arbitrator when the very appointment of the
Arbitrator unilaterally, is improper and impermissible by virtue of Section 12(5)
of the Act.
23.Further, any violation of provisions of the Act is against the public
policy of India. The Hon'ble Supreme Court has also held at paragraph No.27
in the case of “Associate Builders vs. Delhi Development Authorities”
reported in 2015 3 SCC 49, which reads as follows:
“Fundamental Policy of Indian Law
27. Coming to each of the heads contained in the Saw
Pipes judgement, we will first deal with the head "fundamental
policy of Indian Law". It has already been seen from the
Renusagar judgement that violation of the Foreign Exchange
Act and disregarding orders of superior courts in India would
be regarded as being contrary to the fundamental policy of
Indian law. To this it could be added that the binding effect of
the judgement of a superior court being disregarded would be
equally violative of the fundamental policy of Indian law.”
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A perusal of the above judgment makes it clear that if any award passed in
violation of the provisions of the Act, the same would be against the public
policy of India.
24. In the present case, the petitioner is not a party to the loan
agreement. The respondent with a malafide intention used the petitioner's
personal information for the aforesaid loan agreement. Further, the Petitioner
has not received any sort of notice regarding the demand of loan amount
alleged to have been borrowed. The respondent by suppressing the material
facts unilaterally appointed an Arbitrator without sending notice. The learned
arbitrator failed to consider the facts that the Petitioner is a resident of
Chandigarh for the past 10 years, and she has no connection either on job basis
or on her personal at Chennai. And without giving sufficient opportunity to the
petitioner, he proceeded with the matter and passed an ex-parte award. The
learned Arbitrator had not ordered fresh notice to the petitioner due to non-
appearance, the petitioner did not have any opportunity to file and contest the
matter. Even if the petitioner had filed the counter and considered, the present
award is liable to be set aside for the violation of the provision under Section
12(5) of the Act.
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25.Hence the award passed by the learned Arbitrator is liable to be set
aside on the ground of unilateral appointment of the arbitrator.
26. For all the reasons assigned above, this Court is of the view that the
present award is not sustainable under law and the same is liable to be set aside
as it is against the public policy of India.
27.In the result, this Arbitration Original Petition is allowed and the
impugned Award dated 04.01.2021 passed by the learned Arbitrator is set
aside. No costs. Consequently, the connected application is closed.
28. Since the Award passed by the learned Arbitrator is set aside by this
Court primarily on the ground that the unilateral appointment of the Arbitrator
itself is contrary to the provision of law as well as against the settled position of
law and also the learned counsel for both the parties have requested this Court
to appoint an Arbitrator in the event of setting aside the award by this Court, in
the interest of justice and in order to save the time and to resolve the dispute at
the earliest of point of time without any further delay and as this Court deals
with the applications filed under Section 11 of the Act, this Court feels it
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appropriate to appoint an Arbitrator. Accordingly, this Court passes the
following:
i) Mr.Muthuchharan Sundresh, Advocate, residing at
No.224, Rajendra Gardens, Vettuvankeni, Chennai –
600115 and contact No.7397261623, is appointed as
sole arbitrator to enter upon reference and adjudicate the
disputes inter se the parties.
ii) The learned Arbitrator appointed herein, shall after
issuing notice to the parties and upon hearing them,
pass an award as expeditiously as possible, preferably
within a period of six months from the date of receipt of
the Order. The learned Arbitrator is also directed to
decide the matter without influenced by any of the
observations made by this Court in the present order.
iii) Learned Arbitrator is requested to conduct arbitration
proceedings in accordance with the Madras High Court
Arbitration Proceedings Rules, 2017 and the fee of the
learned Arbitrator shall be fixed in accordance with
Madras High Court Arbitration Centre (MHCAC)
(Administrative Cost and Arbitrator's Fees), Rules 2017.
iv) In the event of non-appearance of the
petitioner/respondent herein, the petitioner/respondent
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herein shall bear the entire remuneration and other
expenses and thereafter, the petitioner/respondent can
recover the same directly from the petitioner/respondent
herein.
v) Since this Court has appointed an Arbitrator, it is open
to the petitioner/s as well as the respondent herein to
seek other reliefs under the provisions of Arbitration and
Conciliation Act 1996 before the learned Arbitrator.
rst/suk 21.06.2023
Speaking/Non-speaking order
Index : Yes / No
Neutral Citation : Yes / No
Note: Issue Order Copy on 05.07.2023
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https://www.mhc.tn.gov.in/judis
KRISHNAN RAMASAMY.J.,
rst/suk
Arb.O.P (Com.Div.) No.84 of 2023
and A.No.1085 of 2023
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21.06.2023
https://www.mhc.tn.gov.in/judis
