Important Point—An Arbitrator is not bound by any rules of procedure and can follow his own rules but such rules must be based upon Principles of Natural Justice.

By these two arbitration petitions filed under section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act') the petitioner in both the aforesaid two petitions have impugned the arbitral award declared on 15th October, 2011 by the learned arbitrator under section 84 of the Multi State Co-operative Societies Act, 2002 (for short 'the said Act of 2002'). By consent of parties, both the arbitration petitions were heard together and are being disposed of by a common judgment.

2. The petitioner in Arbitration Petition No.207 of 2012 was impleaded as party on demise of original respondent no.1 in the arbitral proceedings i.e. Mr. Amarlal Ramchand Gera who was her husband who expired during the pendency of the arbitral proceedings. The respondent no.1 herein was the original claimant in the arbitral proceedings. The petitioner in Arbitration Petition No.1345 of 2012 had applied for intervention in the arbitral proceedings before the learned arbitrator and was allowed to intervene by the learned arbitrator though he was not a party to the arbitration agreement. For the sake of brevity the petitioner in Arbitration Petition No.1345 of 2012 is referred to hereinafter as the intervenor. The intervenor had filed Arbitration Petition No.207 of 2012 for impugning some of the directions issued and the findings rendered by the learned arbitrator in the impugned award against the intervenor.

3. Some of the relevant facts for the purpose of deciding these two petitions are as under:-

The respondent no.1 was the original claimant and is a co-operative bank registered under the provisions of the said Act of 2002 and operates in the city of Mumbai and in some of the cities of Gujarat.

4. The husband of the petitioner in Arbitration Petition No. 207 of 2012 Mr. Amarlal Ramchand Gera had applied to the respondent no.1 bank a loan facility for the purpose of expansion of his business on 9th September, 1991. Pursuant to the said request made by the said Mr. Amarlal Gera, the respondent no.1 bank granted him loan facility of Rs. 4 lacs repayable in 50 monthly installments. It was the case of the respondent no.1 bank that the said Mr. Amarlal Ramchand Gera had executed various security documents in favour of the respondent no.1 bank and had also created equitable mortgage by deposit of title deed dated 17th January, 1994 in respect of his immoveable property i.e. flat no.5 on 5th floor, situated in Radha Niwas Co-Operative Housing Society Ltd., Pali Road, Near Khar Telephone Exchange, Khar (West), Mumbai 400 052 alongwith share certificate containing 5 shares bearing nos. 21 to 25 issued by the said society. The respondent no.1 bank sanctioned the said enhanced facilities and converted the said existing loan facility into a overdraft facility.

5. On 15th January 1994, the said Mr. Amarlal Ramchand Gera executed various security documents and declaration deed in respect of equitable mortgage by deposit of title deed dated 17th January, 1994. It was the case of the respondent no.1 bank that Mr.Manoharlal Laxmichand and Mrs. Nasreen Amin Kapadia who were impleaded as respondent nos. 2 and 3 in the arbitral proceedings stood as guarantors for the said loan facilities granted by the respondent no.1 in favour of the said Mr. Amarlal Ramchand Gera. It was the case of the respondent no.1 bank that the said facility granted in favour of the husband of the petitioner was further renewed from time to time. The said over draft facility was enhanced to Rs. 25,00,000/- vide a sanctioned letter dated 5th June, 1995 and was renewed upto 31st May, 2001.

6. On 14th October, 2005 the said Mr. Amarlal Ramchand Gera expired. The respondent no.1 bank went in liquidation. The liquidator came to be appointed in respect of the respondent no.1 bank. It was the case of the respondent no.1 that since the husband of the petitioner committed default in repayment of the loan granted by the respondent no.1 in his favour, the respondent no.1 bank invoke