IMPORTANT POINT
A unilateral appointment of an arbitrator by a party with an interest in the dispute is invalid, rendering the award void ab initio under the Arbitration and Conciliation (Amendment) Act, 2015.

ORDER :

Deepak Kumar Tiwari, J.

1. This petition has been filed under Article 227 of the Constitution of India for the following reliefs:-

10.1 That, this Hon'ble may kindly be pleased to issue appropriate writ, order, direction in the nature of certiorari and quash the impugned order dated 07.06.2023 (ANNEXURE P/1) passed in Claim Petition No. MA/ESFB/33/2023 between the parties M/s. Equitas Small Finance Vs. Shreepat Mishra & another and the Hon'ble Court may quash the order dated 29.05.2023 (ANNEXURE P/2) passed in Application No. 1/2023, Arbitration Case No. MA/ESFB/33/2023 between the parties M/s. Equitas Small Finance Vs. Shreepat Mishra & another.

10.2 That, the Hon'ble Court may kindly be pleased to further direct the respondents to immediately defreezed the bank accounts of the petitioners.

10.3 That, the respondent no. 1 may be further directed to immediately return the vehicle or refund the amounts obtained after the auction/sell of the vehicle of the petitioners.

10.4 That, this Hon'ble Court may kindly be pleased to grant any other relief as it may deems fit and appropriate.

2. Facts of the case in brief are that petitioners obtained a vehicle loan of Rs.13 Lakhs from Respondent No.1 and entered into a loan agreement on 20.09.2018(Annexure R-1/1). Out of the total loan amount, petitioners have already paid Rs.9,41,695/- and additionally have paid Rs.1,86,000/- to the authorized representative of the company Shri Ved Prakash Sen. During covid pandemic, petitioners faced financial hardship and could not pay some of the installments. Respondent No.1 declared the account to be NPA and forcibly seized the vehicle bearing registration No.CG 13 LA 5370 from yard on 20.01.2022 without issuing any notice to the petitioners and also auctioned the vehicle. Thereafter, respondent No.1 initiated arbitration proceedings before Respondent No.2/Sole Arbitrator, who was appointed unilaterally by him contrary to to the provisions of Section 12(5) read with Schedule 7 of the Arbitration and Conciliation (Amendment) Act, 2015(henceforth ‘the Act, 2015’). The sole arbitrator, without following due procedure, has passed the interim order on 29.05.2023 and directed to freeze all the bank accounts of the petitioners. In pursuance of the said direction, 3 accounts of the petitioners were freezed and made inoperative since then. The arbitrator without issuing any notice to the petitioners, proceeded to decide the arbitration application and finally decided it on 07.06.2023 wherein, it was ordered and decreed that Respondent No.1 is entitled to claim and recover Rs.5,18,106/- with interest @ 18% per annum from 15.02.2023 till the realization of the claim amount. Petitioners had earlier challenged the interim award before the civil court at Raigarh and the same was dismissed for want of jurisdiction vide order dated 07.08.2023. Hence this petition.

3. Learned counsel for the petitioners submits that impugned award itself is bad in the eye of law and is a total nullity being contrary to the provisions of Section 12(5) read with Schedule 7 of the Act, 2015. Learned counsel for the petitioners would further submit that as the loan agreement was executed in the year 2018 after the enactment of Arbitration and Conciliation Amendment Act, 2015(3 of 2016), unilateral appointment of the sole arbitrator is not valid in the eye of law. He would further submit that it is inconceivable in law that a statutorily ineligible person can nominate a person. He submits that in the matter of TRF Limited vs. Energo Engineering Projects Limited {(2017) 8 SCC 377}, the Managing Director, as per the arbitration clause, appointed a former Chief Justice of High Court as an arbitrator and after such appointment, the appellant TRF limited preferred an application under Section 11(5) read with Section 11(6) of the Arbitration and Conciliation Act, 1996(henceforth ‘the Act,1996’) for appointment of an arbitrator under Section 11(2) of the said Act. The said foundation was struct