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JASMEET SINGH
Sunil Sethi – Appellant
Versus
Hero Fincorp Ltd. – Respondent
JUDGMENT
Jasmeet Singh, J. (Oral) - This is a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 seeking setting aside of the ex parte award dated 17.05.2022 passed by the Sole Arbitrator awarding a sum of Rs.6,05,46,413.80/- in favour of the respondent and against the petitioner.
2. It is stated by Mr. Singh, learned counsel appearing for the petitioner that in the present case, the appointment of the Arbitrator is itself faulty.
3. The brief facts are as under:
a. The petitioner is one of the Directors in a company namely M/s Upper India Trading Co. Pvt. Ltd., which sought working capital limit from the respondent.
b. Pursuant to sanction of the Facility Agreement vide letter dated 26.04.2018, a formal agreement dated 11.05.2018 was executed between the parties.
c. The agreement dated 11.05.2018 contained the arbitration agreement which reads as under:
"DISPUTE RESOLUTION
All claims, disputes, differences or question of any nature arising between the parties, whether during or after the termination of this Agreement, in relation to the construction, meaning or interpretation of any term used or clause of this Agreement or as to the rights, duties, liabilities o
Unilateral appointment of an arbitrator in conflict with the provisions of the Arbitration and Conciliation Act, 1996 is non-est in law.
Unilateral appointment of an arbitrator without proper notice and in violation of statutory provisions renders the resulting award unsustainable and against the public policy of India.
The main legal point established in the judgment is that the appointment of the sole arbitrator unilaterally by one of the parties was improper and impermissible, violating the provisions of Section ....
The court emphasized the necessity for impartiality in arbitration, ruling that automatic appointments of arbitrators undermined the arbitration clause, rendering the award invalid.
Unilateral appointment of an arbitrator in violation of Section 12(5) of the Arbitration and Conciliation Act, 1996 renders the award unsustainable under law and against the public policy of India.
Unilateral appointment of an arbitrator by a party with vested interests breaches principles of fairness and impartiality, rendering such appointment invalid under arbitration laws.
An award rendered by an ineligible arbitrator is void ab-initio, and the appointment of an arbitrator by an ineligible person goes to the root of the arbitrator's jurisdiction.
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