JUDGMENT :

Shekhar B. Saraf, J.

1. The present application has been filed under Section 36 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) by Cholamandalam Investment and Finance Company Ltd (hereinafter referred to as the ‘award holder’) seeking execution of an arbitral award dated November 22, 2021 (hereinafter referred to as the ‘impugned award’) passed by Mr. Soma Kar Ghosh, Sole Arbitrator. The award debtors herein are Amrapali Enterprises represented by proprietor Mohammad Jahangir (hereinafter referred to as the ‘borrower’) and Saif Khan (hereinafter referred to as the ‘guarantor’).

2. The impugned award arises out of a Loan cum Hypothecation Agreement dated February 24, 2020 entered between the parties wherein financial assistance was extended to the borrower for purchase of one vehicle. It is to be noted here that the said hypothecated vehicle is presently in possession of the award holder as the same was surrendered by the borrower.

3. It has also been submitted that the impugned award has been challenged under Section 34 of the Act before the City Civil Court. However, I understand that the same may be time barred.

4. From the submissions made by the parties and perusal of the arbitral award, it is apparent that Mr. Soma Kar Ghosh, Sole Arbitrator was unilaterally appointed by the award holder vide its letter dated June 24, 2021. Further, the arbitral proceedings were conducted without participation of the award debtors and consequently, the arbitral award was passed ex-parte.

5. The position of law on unilateral appointment of an arbitrator is no more res integra and has been settled by the Supreme Court through various judicial pronouncements.

6. Firstly, in the case of HRD Corporation vs. GAIL reported in (2018) 12 SCC 471 [Coram: R.F. Nariman and S.K. Kaul, JJ.], the Apex Court ruled that when a person directly falls under Schedule VII, ineligibility goes to the root of the appointment as per prohibition under Section 12(5) read with Schedule VII. Such person lacks inherent jurisdiction. Thereafter, in TRF Limited vs. Energo Engineering Projects Limited reported in [2017] 7 S.C.R. 409 [Coram: Dipak Misra and A.M. Khanwilkar, JJ.], the Apex Court expanded the approach in HRD Corporation (supra) and held that an individual who himself is ineligible under the provisions of the Act to be appointed as an arbitrator, cannot nominate a sole arbitrator. The ineligibility goes to the root of the matter and arises out of lack of inherent jurisdiction. The relevant paragraph penned down by J. Nariman in HRD Corporation (supra) is enumerated below for reference :–

“57. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so.”

7. Subsequently, in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. reported in [2019] 17 S.C.R. 275 [U.U. Lalit and Indu Malhotra, JJ.] the Supreme Court extended the approach taken in TRF Limited (supra) and h