JUDGMENT :

Heard finally with the consent of the learned counsel for the rival parties. The question that arises for consideration in this petition is, as to whether the petitioners are justified in claiming that the impugned award passed by the learned arbitrator deserves to be set aside, only on the ground that the respondent unilaterally appointed the learned arbitrator. The other issues that arise for consideration are, as to whether such a ground can be raised in this petition filed under Section 34 of the Arbitration and Conciliation Act, 1996, without expressly having raised the same before the learned arbitrator and as to whether in the facts and circumstances of the present case, it can be held that the appointment of the learned arbitrator was hit by Section 12(5) read with the Seventh Schedule of the said Act.

2. The facts, in brief, leading to filing of the present petition are that the petitioners received a notice dated 17/3/2021, for recall of loan from the Advocate of the respondent. By the said notice, the loan agreement was also terminated and a sole arbitrator was appointed. The petitioners claimed that the agreement in question was itself non-existent and, in that backdrop, they sent a communication to the respondent dated 22/3/2021, asking for a copy of the loan agreement. The respondent proceeded on the basis that the arbitration clause in the agreement was invoked and the sole arbitrator stood nominated. The respondent further proceeded to file an application under Section 17 of the said Act before the learned arbitrator.

3. On 3/4/2021, the learned arbitrator accepted his nomination and fixed the schedule for the arbitral proceedings. He also gave a disclosure statement, as required under Section 12 of the said Act. On 9/4/2021, the Advocate representing the petitioners sent a letter, requesting for a copy of the agreement and called upon the respondent not to proceed further as the learned arbitrator was appointed without the consent of the petitioners. On 27/4/2021, the respondent supplied a copy of the agreement to the petitioners. It contained an arbitration clause, which reads as follows:

“Arbitration Clause – 21.1 – All disputes, differences and/or claims arising out of this agreement or as to the construction, meaning or effect hereof or as to the rights and liabilities of the parties hereunder shall be settled by arbitration to be held in Mumbai in accordance with Arbitration and Conciliation Act, 1996, or any statutory amendments thereof and shall be referred to a sole arbitrator to be appointed by the Lender. In the event of death, refusal, neglect, inability or incapability of the person so appointed to act as an arbitrator, the Lender may appoint a new arbitrator. The proceedings will be conducted in English. The award of the arbitrator shall be final and binding on all the parties concerned.”

4. The petitioners sent a letter dated 6/5/2021, claiming that the agreement was a forged and fabricated document and that the petitioners had never executed the same. In the meanwhile, the learned arbitrator fixed a date for virtual hearing. The petitioners also sent a letter dated 6/9/2021, to the learned arbitrator, challenging the execution of the said agreement and further took a stand that they had not consented to the arbitration proceedings. On 13/9/2021, the respondent filed an affidavit, responding to the objections raised by the petitioners in their letter dated 6/9/2021. On 21/9/2021, the respondent filed its affidavit in evidence. On 21/10/2021, the petitioners sent a letter to the respondent reiterating their stand that the agreement was forged and also that they had not consented to the arbitration proceedings.

5. On 8/11/2021, the learned arbitrator passed the impugned award, allowing the claim of the respondent, thereby directing the petitioners to pay a sum of Rs.5,78,437.83, to the respondent with interest @ 18% per annum, giving further direction that the respondent shall be entitled to