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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
SOMASEKHAR SUNDARESAN
Suryadeep Engineering Pvt. Ltd. – Appellant
Versus
Nm Construction – Respondent
JUDGMENT:
(Per, Somasekhar Sundaresan J.)
The Controversy:
The validity of an award passed by an arbitrator appointed unilaterally by the party invoking arbitration under an arbitration agreement that does not envisage unilateral appointment, is under challenge in this Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”). For the reasons recorded below, I hold that such Award deserves to be set aside, being a product of a process that is a patent contravention of the Act, and its finely nuanced scheme.
Factual Matrix:
2. The factual matrix for adjudication of this petition may be summarized as follows:
a) Sometime in 2013, a listed company called Pratibha Industries Limited (“PIL”) was awarded two work orders by the Public Health Engineering Department, Government of Rajasthan. It is a matter of record that PIL is currently under liquidation under the Insolvency and Bankruptcy Code, 2016;
b) PIL awarded the Petitioner some part of the work orders awarded by the Government of Rajasthan. The Respondent claims to have “facilitated” the sub-contract work from PIL, for which it claims “facilitation consideration” (the Petitioner characterises this as a “commissio
Unilateral appointment of an arbitrator contravenes the arbitration agreement and violates principles of party autonomy, rendering the award void ab initio.
A unilateral appointment of an arbitrator by one party contravenes Section 12(5) of the Arbitration and Conciliation Act, rendering the arbitral award void ab initio and against public policy.
Unilateral arbitrator appointment causes de jure ineligibility under Section 12(5); participation without objection does not waive rights, requiring express written agreement; challenge valid under S....
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
A party cannot challenge an arbitration award if it has unilaterally appointed the arbitrator, as such appointments violate principles of impartiality, making the award unenforceable.
Participation in arbitration without objection constitutes a waiver of the right to challenge the appointment of the arbitrator, as per Sections 4 and 12 of the Arbitration and Conciliation Act.
The appointment of the arbitrator must adhere to the terms of the arbitration agreement, and challenges to the appointment must fall within the exhaustive grounds enumerated in Section 34(2) of the 1....
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