A unilateral appointment of an arbitrator by a party interested in the dispute is null and void under Section 12(5) of the Arbitration and Conciliation Act, 1996, as amended in 2015.

ORDER :

Rakesh Mohan Pandey, J.

1. The petitioners have filed this petition seeking the following relief(s):-

“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 execution proceedings bearing MJC Civil Case No.49/24 between the parties Cholamandalam Investment and Finance Co.Ltd., Vs. Rinkesh Khanna pending before the Court of 1st District Judge, Manendragarh District Korea Now MCB-C.G. (Annexure P-1)

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

2. The facts of the present case are as under:-

(i) The petitioners purchased a Mahindra Blazo bearing registration No. C.G.-16CH-2489 through a higher purchase agreement and obtained a loan of Rs.39,20,800/-. The loan amount was to be paid in monthly installments. The monthly installment was fixed @ Rs.67,600/- per month. The agreement was executed between the parties on 27.06.2017. The petitioners could not continue payment of installments.

(ii) The respondent Company initiated an arbitration proceedings and an arbitrator was appointed by the respondent itself.

(iii) The arbitrator passed a final award to the tune of Rs.13,06,079/- with interest @ 18% per annum on 26.08.2022.

(iv) An application for execution under Section 36 of the Arbitration and Conciliation Act, 1996 was filed by the respondent.

(v) The petitioners in this petition have sought relief to quash the execution proceeding bearing MJC Civil Case No.49/2024 pending before the Court of First District Judge Manendragarh, District Korea now Manendragarh-Chirmiri-Bharatpur (MCB) C.G.

3. Mr. Singh, the learned counsel appearing for the petitioners would submit that a copy of the arbitral award dated 26.08.2022 was never served on the petitioners. He would further submit that when the petitioners received a summons issued by the Executing Court, they came to know about the award. He would contend that part payment of the loan amount was made by the petitioners, the vehicle was surrendered and there was no occasion for the respondent company to initiate the arbitration proceeding. He would further contend that substantial amendments were incorporated in the Arbitration and Conciliation Act through the Amendment Act, 2015 to render more credibility and impartiality to the arbitrator so as to enable him to perform his functions in a just, fair and judicial manner. He would state that according to the provisions of Section 12 (5) of the Amendment Act, 2015 read with Schedule 7, interested persons cannot be appointed as the sole arbitrator. He would further state that as the arbitrator was appointed by the respondent contrary to the provisions of Section 12 (5) of the Act, 2015 read with Schedule 7, the award passed by the Arbitrator is null and void and not binding. In support of his contentions, he placed reliance on the judgment passed by the Hon’ble Supreme Court in the matter of Bharat Broadman Limited Vs. United Telecom , 2019 (5) SCC 755 and the matter of Shreepat Mishra and another Vs. M/s. Equitas Small Finance Bank Limited and others , WP227 No.726 of 2023 decided on 09.09.2024.

4. On the other hand, Mr. Sharma, the learned counsel appearing for the respondent would oppose the submissions made by