Madras High Court
Balakrishnan Manari vs M/S. Mercedes – Benz Financial Services on 11 March, 2025
Author: Abdul Quddhose
Bench: Abdul Quddhose
Arb. O.P. (Com. Div.) No.289 of 2024
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.03.2025
CORAM
THE HON'BLE Mr. JUSTICE ABDUL QUDDHOSE
Arb.O.P (Com.Div.) No.289 of 2024
Balakrishnan Manari ... Petitioner
vs.
M/s. Mercedes – Benz Financial Services
India Pvt. Ltd.,
(Formerly known as Daimler Financial
Services India Pvt. Ltd.)
Rep. by its Authorised Representative
Mr.Ra. Sivadhara Adiyaman
5th Floor, Plot No.8, Baashyam Willow
Square 9 & 10,
st
1 Street,
Thiru Vika Industrial Estate,
Guindy,
Chennai – 600 032. ... Respondent
Prayer : Arbitration Original Petition (Commercial Division) filed under
Section 34(2)(a)(ii), (iii), (v), 34(2)(b)(ii) and 34(2A) of the Arbitration
and Conciliation Act, 1996 to set aside the Arbitral Award, dated
19.03.2024 passed by the Arbitral Tribunal.
For Petitioner : Ms. Deepika Murali
For Respondent : Mr.RA. Sivadhara Adiyaman
for GNP Legal
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Arb. O.P. (Com. Div.) No.289 of 2024
ORDER
This petition has been filed under Section 34 of the Arbitration and
Conciliation Act, 1996, challenging the impugned Arbitral Award, dated
19.03.2024.
2. The petitioner has challenged the impugned Arbitral Award
primarily on the following grounds :-
a) The impugned Arbitral Award has been passed by an Arbitrator
appointed unilaterally by the respondent without obtaining the consent of
the petitioner;
b) The impugned Arbitral Award has not taken into consideration
the Statement of Defence filed by the petitioner before the Arbitrator,
wherein a specific plea was taken that the claim filed by the respondent
against the petitioner is barred by limitation and
c) The impugned Arbitral Award has been passed within 34 days
from the date when the claim statement was made by the respondent
against the petitioner.
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Arb. O.P. (Com. Div.) No.289 of 2024
3. As seen from the impugned Arbitral Award, the sole Arbitrator
was appointed by the respondent unilaterally without obtaining the
consent of the petitioner. The petitioner has also filed a copy of the
Statement of Defence filed before the Arbitrator, dated 14.03.2024. The
said Statement of Defence was acknowledged by the Arbitrator as seen
from the acknowledgment card, dated 16.03.2024. The acknowledgment
card has also been filed as a document along with this petition.
However, in the impugned Arbitral Award, there is no reference to the
Statement of Defence, dated 14.03.2024 filed by the petitioner before the
Arbitrator. In the Statement of Defence, a categorical defence has been
raised by the petitioner that the claim of the respondent before the
arbitrator is barred by limitation.
4. The law is now well settled by the decision rendered by the
Hon'ble Supreme Court in the case of Perkins Eastman Architects DPC
vs. HSCC (India) Limited reported in 2020 20 SCC 760 that an award
passed by an Arbitrator appointed unilaterally by one of the parties to the
dispute without obtaining the consent of the other is patently illegal. It is
also to be noticed from the documents filed along with this petition that
the Statement of Defence filed by the petitioner before the Arbitrator,
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Arb. O.P. (Com. Div.) No.289 of 2024
wherein a specific defence was raised that the claim of the respondent is
barred by limitation has not been considered by the Arbitrator. By total
non application of mind to the same, the Arbitrator has passed the
impugned Arbitral Award. It is also to be noticed that within 34 days
from the date when the claim statement was filed by the respondent
before the Arbitrator against the petitioner, the impugned Arbitral Award
has been passed. The claim statement was filed on 15.02.2024 and the
impugned Arbitral Award has been passed on 19.03.2024 without
granting sufficient opportunity for the petitioner to raise all defences
available to him under law. With regard to the contention of the learned
counsel for the respondent that the Arbitral Award was not filed at the
time of filing of the petition under Section 34 of the Arbitration and
Conciliation Act, 1996 is concerned, the said contention will have to be
rejected by this Court as it is evident from records maintained by the
Registry that the Arbitral Award was e-filed along with the petition filed
by the petitioner under Section 34 of the Arbitration and Conciliation
Act, 1996. This petition was also filed within the period of limitation as
prescribed under Section 34(3) of the Arbitration and Conciliation Act,
1996. The petitioner need not challenge the unilateral appointment of the
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Arb. O.P. (Com. Div.) No.289 of 2024
Arbitrator by the respondent. Since the petitioner has challenged the
entire arbitration itself in this petition on the ground that the Arbitrator
has been appointed unilaterally and the Hon'ble Supreme Court has also
made it clear in Perkin's judgment referred to supra that such an
unilateral appointment is legally not permissible under law, the
contention raised by the learned counsel for the respondent that since the
petitioner has not challenged the appointment of the arbitrator before the
Arbitrator does not arise. Only in accordance with law, any arbitration
can be initiated. Since the arbitration initiated by the petitioner is not in
accordance with law, necessarily the arbitration is bad in law. Whether
the claim is within the period of limitation or not cannot be decided in a
Section 34 petition, when admittedly, the petitioner did not participate in
the arbitration which is the subject matter of challenge in this petition.
Only when fresh arbitration is initiated in accordance with law, the plea
of limitation can be considered by the said Arbitrator. Therefore, the
plea of limitation need not be considered by this Court in the Section 34
petition. On the ground that the impugned Arbitral Award has been
passed by an arbitrator appointed unilaterally by the respondent without
obtaining the consent of the petitioner, necessarily the impugned Arbitral
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Arb. O.P. (Com. Div.) No.289 of 2024
Award has to be set aside. Accordingly, the impugned Arbitral Award,
dated 19.03.2024 passed against the petitioner is hereby set aside by this
Court and this petition is allowed. However, liberty is granted to the
respondent to initiate fresh arbitration against the petitioner in
accordance with law.
11.03.2025
Index: Yes/ No
Speaking order / Non speaking order
Neutral citation : Yes / No
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Arb. O.P. (Com. Div.) No.289 of 2024
ABDUL QUDDHOSE, J.
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Arb.O.P (Com.Div.) No.289 of 2024
11.03.2025
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