JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

1. Each of the captioned Petitions is yet another case of a non-banking finance company unilaterally appointing an arbitrator who has proceeded to pass urgent interlocutory orders without any description as to how the arbitral tribunal came to be constituted.

2. Learned Advocate for the Respondent submits that she has no instructions in the matter other than to state that arbitration proceedings are being withdrawn and the Petition may be disposed of as infructuous.

3. An increasing trend is being seen in a number of matters, in particular by non-banking financial companies and even scheduled commercial banks that are themselves listed companies, requiring them to be mindful of having greater intensity of promise to be compliant with the law, where a unilateral arbitrator is appointed but purporting to appoint the arbitrator through an “institution” or an algorithm-based selection of arbitrator, it is hoped that the inherent illegality in unilateral-appointment is magically cleansed.

4. I have to take judicial notice from the trend of these cases. What is evident is that the modus operandi is to conduct arbitration in this process and hope that in most cases the affected party may not challenge the arbitration and may instead come up with settlement terms, with the strategy resulting in recoveries. However, whenever a counterparty challenges the unilateral appointment, the unilaterally-appointing party simply comes to Court and volunteers to have the arbitration proceedings withdrawn. In this manner, it is apparent that such parties are hoping to circumvent the law declared by the Supreme Court with impunity.

5. It is made clear that such an attempt merely presents a veneer or a fig-leaf to contend that the arbitrator is “independent” but such an arbitrator would still be a unilaterally-appointed arbitrator. As is typical in such cases, an order under Section 17 of the Act, attaching various bank accounts gets passed rapidly by such arbitrators. In these orders, there is invariably no mention at all about the process of appointment of the arbitrator. In most cases, such orders are also devoid of material particulars of compliant invocation of arbitration. While this itself would be a giveaway about the quality of the independence and impartiality brought to bear, even the citation of particulars of invocation can never cure what is fundamentally and substantially a unilateral appointment.

6. There are only two known methods in law to appoint an arbitrator – (i) the consent of the parties; and (ii) appointment by a Section 11 Court having jurisdiction in the matter. Any third appointment cannot be whitewashed as being a compliant appointment.

7. The law on unilateral appointment has been explicitly declared by the Supreme Court in Central Railway[Central Organization for Railway Electrification v. ECI SPIR SMO MCML (JV) A Joint Venture Company, (2025) 4 SCC 641] making it abundantly clear that the manner of appointment is an integral and foundational facet of independence and impartiality of the arbitrator. However, it must be remembered that this is a reiteration of what was first declared by the Supreme Court in Perkins Eastman[Perkins Eastman Architects DPC v. HSCC ( India) Ltd., (2020) 20 SCC 760.]

8. More recently, in the case of Bhadra International[Bhadra International (India) Pvt. Ltd. & Ors. v. Airports Authority of India, 2026 INSC 6], the Supreme Court has provided a seminal explanation of the principles involved and traced the history of the declared law on the subject. The Supreme Court noted that even before the amendments effected in 2015, the Supreme Court had always considered the facet of appointment of arbitrator as a foundational element. The Supreme Court held that facet of unilateral appointment, even if contained in the agreement, is foundationally in conflict with the core requirements of the Act. The following extracts are noteworthy:

36. The principle of equal treatment of pa