JUDGMENT

Vipin Sanghi, J. (Oral)--By this petition under Section 34 of the Arbitration and Conciliation Act, the petitioner assails the award dated 12.02.2011 passed by Sh. Deepak Arora, Advocate, sole arbitrator made by him in favour of the respondent and against the petitioner.

2. The parties entered into collaboration agreements dated 24.03.2008 and 30.03.2008. Both these agreements contain a dispute resolution clause, which provides for arbitration by "a mutually appointed arbitrator". The respondent sought to invoke the arbitration agreements and nominated Mr. Deepak Arora, Advocate as the sole arbitrator. Pertinently, there was no mutual consent given to his appointment as the arbitrator, at any stage, by the petitioner.

3. The learned arbitrator assumed jurisdiction on the unilateral nomination made by the respondent, without even bothering that there was no consent to his appointment, given by the petitioner, and started the proceedings by issuing notice to the parties; requiring the respondent to file its statement of claim, and; also requiring the petitioner to cause appearance before him.

4. The petitioner did not put in appearance despite repeated notices, and for the first time, put in appearance on 01.09.2010. The proceedings recorded by the arbitrator show that the proxy counsel for the petitioner sought time to file their reply. On 11.09.2010, the petitioner filed the Vakalatnama and the proceedings recorded are that the petitioner sought further time to file the reply. The petitioner's defence was, however, struck off by the arbitrator on the same date.

5. On 07.10.2010, the petitioner served a notice on the arbitrator challenging his authority to proceed in the matter, as the arbitrator had not been appointed by mutual consent. The arbitrator replied to the said notice on 11.10.2010. In his reply, he shies away from the petitioner's assertion that there was no mutual agreement between the parties to nominate him as the arbitrator. He states in his reply, and this is so stated by him in court as well, that the respondent had sent a legal notice dated 03.02.2010 informing the petitioner regarding reference of disputes under the two collaboration agreements to the arbitrator, and despite receiving the notice, the petitioner did not raise any objection to the appointment of the arbitrator. Therefore, his stand is that there was an implied consent given to his appointment by the petitioner.

6. Both the learned arbitrator as well as learned counsel for the respondent, who has argued the matter without filing the reply despite opportunity, have submitted that the petitioner did not object to the respondent's nomination of the arbitrator and, consequently, the mutual consent is taken as impliedly granted by the petitioner, to the appointment of the arbitrator. It is also argued that the petitioner participated in the proceedings on 01.09.2010, 11.09.2010 and again 18.09.2010, and did not object to the appointment of the arbitrator. It is argued by learned counsel for the respondent that the plea of the arbitrator having no jurisdiction in the matter was raised only when his defence was struck off by the learned arbitrator.

7. Having heard learned counsel for the parties as well as the learned arbitrator, I am of the view that the impugned award cannot be sustained and is liable to be set aside. The present is a shocking case where the arbitrator assumed jurisdiction without even caring to see that the parties had not appointed him mutually as required by the agreement.

8. It is well settled that an arbitrator derives his authority from the arbitration agreement. Once the arbitrator had noticed that his nomination had been only made by the respondent/claimant, without the consent of the petitioner, before entering upon the reference and issuing notice to the parties, or taking any steps in the arbitration proceedings, he should have ensured that the petitioner also gave his consent to his nomination as t