The mandatory notice under Section 21 for arbitration commencement must be received, not just sent, and failure to disclose connections violates Section 12, compromising arbitration impartiality.

JUDGMENT

[Physical Court Hearing/Hybrid Hearing (as per request)]

Tara Vitasta Ganju, J.

FAO (COMM) 179/2021 & CM APPL. 39706/2021 [Application for Condonation of Delay]

1. The present Appeal has been filed under the provisions of Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter "the Act") read with Section 13 of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 against the judgment of the learned District Judge dated 17.12.2020 (hereinafter "the Impugned Judgment"). By the Impugned Judgment, the learned District Judge has allowed the Petition under Section 34 of the Act and set aside the Arbitral Award dated 16.07.2019 on the following two grounds:

(i) There is non-compliance of Section 21 of the Act;

(ii) The Arbitrator did not make the requisite disclosure as is required under Section 12 of the Act.

1.1. At the outset, it is noticed that the Appeal is wrongly filed under the provisions of Section 37(1)(b) instead of Section 37(1)(c) of the Act by the Appellant Company. Accordingly, this Appeal is treated as being filed under Section 37(1)(c) of the Act.

2. The matter was listed before this Court on 10.11.2021, wherein this Court recorded as follows:

"5. On being queried, Mr. Bharat Singh, who appears for the appellant, does not dispute the fact that, the learned arbitrator has been engaged on earlier occasions by the appellant.

6. At the request of Mr Singh, list the matter on 14.12.2021.

7. In the meanwhile, Mr Bharat will file the entire record which was placed before the learned arbitrator. The record will be duly indexed and paginated.

8. Furthermore, Mr Bharat will file a note, not exceeding two pages, indicating therein, the ground(s) on which the appellant wishes to assail the impugned judgment."

2.1. We are informed by the Counsel for the Appellant Company that the Arbitral record has since been filed and a certificate in that regard has been placed on record.

2.2. A perusal of the case file, however, shows that the pleadings before the District Judge have not been filed by the Appellant Company. No written submissions, as directed on 10.11.2021, have been filed either.

2.3. The matter was listed on 14.12.2021, 12.07.2022, 18.07.2022 and 25.07.2022, when the Counsel for the Appellant Company addressed arguments in support of maintainability of the Appeal. We may clarify here that, since we have not admitted the Appeal, no notice to the Respondent has been issued.

3. Since the Appellant Company failed to file the pleadings as filed before the District Judge, the brief facts of this case have been culled out from the Impugned Judgement. These are set forth below:

3.1. The Respondent (Petitioner before the District Judge) purchased a vehicle on loan from the Appellant (Respondent before the District Judge) (hereinafter "Appellant Company") by a Loan Agreement No. AZDPRO201040008, dated 16.09.2014 for an amount of Rs.6,00,000/- (hereinafter "Loan Agreement").

3.2. Owing to disputes between the parties, the vehicle was repossessed on 18.04.2017 and consequently sold by the Appellant Company. Thereafter, the Appellant Company sent a notice of demand dated 20.09.2018 to the Respondent, demanding a payment of Rs.4,70,248/- as on 12.09.2018 and mentioning therein that the Arbitration clause would be invoked on failure of the Respondent to make such payment.

3.3. Subsequently, the Appellant Company, by its letter dated 27.09.2018, appointed Shri B.L. Garg (Retd. ADJ) as the Sole Arbitrator (hereinafter "the Arbitrator") to adjudicate the disputes/differences between the parties. The Arbitrator entered into reference on 11.02.2019 and held hearings on 18.03.2019, 23.04.2019, and 31.05.2019.