A unilateral appointment of an arbitrator by one party without the other's consent is invalid under the Arbitration and Conciliation Act, 1996, rendering any orders made void.

ORDER :

(SURAJ GOVINDARAJ, J.)

1. The Petitioners are before this Court seeking the following reliefs :

i. To quash the entire proceedings bearing No. A.C.No.1032/2019 & 1033/2019 pending before the 2^nd Respondent Arbitrator at Annexure A and B;

ii. Issue such other suitable writ or order on the facts and circumstances of the case in the interest of justice and equity.

2. Petitioner No.1 claims to be the widow, and Petitioner No.2 claims to be the son of Manjunath, who expired on 25-08-2018. The said Manjunath had availed two loans, from 1^st Respondent - Shriram Transport Finance Company Limited, (hereinafter referred to as ‘Shriram’).

3. On the ground that the said Manjunath had not made payment of the above loans, on his expiry, two legal notices had been issued on 27-7-2019, to the Petitioners calling upon them to repay the entire amount of Rs.28,33,882/- towards full and final settlement in respect of the vehicle loan towards vehicle bearing No.KA13-B-4570 and a sum of Rs.28,61,998/- towards the vehicle bearing No.KA13-B-4571. It was also informed that if the payments were not made, Shriram would appoint an arbitrator. It is contended that Shriram indeed did appoint an Arbitrator who had passed an order on an application under Section 17 of the Arbitration and Conciliation Act, 1996 (for short, ‘the Act’) directing the repossession of the hypothecated vehicles. It is in that background that the Petitioners are before this Court challenging the proceedings, as also the order passed by the Arbitrator and seeking for the aforesaid reliefs.

4. Ms.Neeraja Karanth, learned Counsel appearing for the Petitioners, would submit that:

4.1. There is no notice which had been issued to Sri.Manjunath during his lifetime. On his expiry, the notice dated 27-7-2019 had been issued, calling upon the Petitioners to make payment of the amounts as afore indicated, within seven days of the receipt of the notice, failing which the lawyer of Shriram had indicated that the matter would be referred for arbitration to Sri.B.K.Vishwanath, the 2^nd Respondent herein. Two notices have been issued on the very same date; one for Vehicle bearing No.KA13-B-4570 and the other for Vehicle bearing No.KA13-B- 4571.

4.2. The notices having been issued on 27-07-2019, even before that date, applications were filed before the 2^nd Respondent - Arbitrator on 12-07-2019 under Section 17 of the Act, seeking for ad interim order authorizing Shriram to seize and take possession of the aforesaid vehicles.

4.3. On the very same day, the Arbitrator had passed an order holding that the petition discloses that the Respondents have not paid the amount and trying to cause damage to the vehicle and also trying to alienate the vehicles to third parties with the intention to deprive Shriram of the security and hence in the interest of justice, the 2^nd Respondent – Arbitrator permitted the Respondent to repossess the hypothecated vehicles, with the help of jurisdictional police and retain the same in the custody, till the disposal of the case. But however, observed that if the amounts were paid, the vehicles would be released, to the Respondents’ therein, that is the Petitioners’ herein.

4.4. The Claim Petition under Section 23 of the Act was filed only on 10.8.2019. Thus, she submits that a notice having been issued, on 27-7- 2019, calling upon the Petitioners to make payment of the monies, failure thereof within 7 days would result in Arbitrator being appointed, namely the 2^nd Respondent. The 2^nd Res