An ineligible arbitrator appointed unilaterally violates Section 12(5) of the Arbitration and Conciliation Act, rendering the arbitral award invalid.

JUDGMENT

Vibhu Bakhru, J. The appellant, Mr. Govind Singh, has filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning an order dated 07.12.2021 (hereafter `the impugned order') passed by the learned Commercial Court, whereby the appellant's application under Section 34 of the A&C Act [being ARBTN No. 16 of 2019], seeking to set aside an arbitral award dated 17.01.2019 (hereafter `the impugned award'), was rejected.

Factual Context

2. In the month of January 2014, the appellant had received a message from a broker regarding the availability of a property for sale. Thereafter, on 03.02.2014, the appellant gave a cheque for an amount of Rs.50,000 to Mr. Ankush Chawla and Mr. Manish Chawla (brokers) to book a flat in a building developed by M/s Satya Group Pvt Ltd. (hereafter `the respondent company') named `The Hermitage' bearing no. T8-804, 2-1 BHK situated in Sector-103, Dwarka Gurugram Expressway, Gurgaon (hereafter `the property').

3. Subsequently, on 30.06.2014, the appellant and the respondent company executed an agreement (Buyer Agreement) in respect of the property. The appellant states that on receiving the said Buyer Agreement, he noticed that the cost of the flat was mentioned as Rs.92 lakhs, which was much higher than the price of Rs.70 lakhs informed to him earlier. The appellant claims that he sought to cancel the transaction to purchase the property but was informed that the amount paid by him would be forfeited.

4. The appellant claims that the parties agreed to transfer the said amount towards the purchase of a smaller unit. A new Buyer Agreement was executed between the parties on 29.08.2017, the appellant submits that contrary to the understanding, the same did not contain the adjustment of the amount already paid by him towards the property. The appellant claims that he did not agree to the changes made in the Buyer Agreement dated 29.08.2017 but was coerced to sign the same by the respondent company.

5. The appellant claims that after signing the Buyer Agreements, the respondent company did not implement the required changes in the property, therefore, he did not wish to proceed with the transaction to purchase the property.

6. The impugned award indicates that the appellant had appeared before the Arbitral Tribunal on 24.02.2019 and had objected to the procedure adopted for appointment of the Arbitrator. Thereafter, the appellant and the proxy counsel accompanying him had left the proceedings. Notwithstanding the objections raised by the appellant, the learned Arbitrator proceeded ex parte and delivered the impugned award. He found in favour of the respondent company and against the appellant. The operative part of the impugned award is set out below:

"i. The Buyer's Agreement dated 29.08.2017 between the Respondent Company and the Claimant is cancelled/terminated.

ii. The Developer Company is entitled to forfeit 20% of the basic sale price of the said unit in terms of the Buyer's agreement dated 30.06.2014 as the earnest money and deductions towards the losses suffered by the Respondent company towards Brokerage and tax(es).

iii. The Claimant has proceeded ex-parte and has not paid arbitration fees of their share and therefore the Respondent Company is entitled to further deduct the arbitration fees of the C1aimant's share to the tune of Rs.50,000/- and litigation cost of Rs.50,000/- over and above the earnest money and deductions towards the losses suffered by the Respondent company towards Brokerage and tax(es).

iv. T