ORDER :

1. This Arbitration Original Petition was filed under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter called as “the Act”) to set aside the ex-parte arbitral award dated 30.08.2021 passed by the learned sole Arbitrator.

2. The petitioners borrowed a sum of Rs.4,77,014/- by virtue of the Loan-cum-Hypothecation Agreement dated 27.11.2019. The petitioners has admitted the fact about the disbursement of the said loan to purchase a car. As per the terms and conditions of the aforesaid agreement, the petitioners have to pay installments at a sum of Rs.9,900/- per month. The petitioners had made uninterrupted payment of installments from 05.01.2020 till November 2020. Under these circumstances, due to the non-payment of the outstanding amount, the loan of the petitioners was foreclosed and thereafter the respondent unilaterally appointed a sole Arbitrator on 05.02.2021 by referring the clauses in the Loan-cum-Hypothecation Agreement dated 27.11.2019. The Arbitrator proceeded to conduct the arbitration proceedings and he had passed an award dated 30.08.2021 and the same is under challenge before this Court.

3. The main grounds of challenge that are made by the petitioners are that the respondent appointed the learned Arbitrator unilaterally through his letter dated 05.02.2021. Further, the learned counsel for the petitioners would contend that the learned Arbitrator has not send any notice to the petitioners and also the respondent has not served any claim statement to counter it. Under these circumstances, without any further communication, the learned Arbitrator passed an ex-parte award dated 30.08.2021.

4. The learned counsel for the petitioners would submit that as per the law laid down by the Hon'ble Apex Court in the case of Perkins Eastman Architects DPC Vs. HSCC (India) Ltd., reported in 2019 SCC OnLine SC 1517, in the event of any unilateral appointment of Arbitrator without the consent of the other party, the same would be nonest in law. Therefore, he contends that the present appointment is non-est in law. In terms of the proviso of Section 12(5) of the Act, in the event of unilateral appointment, the appointed Arbitrator can proceed with, when the other party waives the applicability of this Section by way of an express agreement in writing. In the present case, no such express agreement has been made between the parties. Therefore, he would contend that in the absence of any such express agreement, the unilateral appointment of the Arbitrator is null and void and consequently any award passed by the said Arbitrator, is liable to be set aside.

5. The learned counsel for the petitioners would also contend that since the unilateral appointment is contrary to proviso to sub-section (5) of Section 12 of the Act, the same would fall under Explanation (2) of Section 34(2)(b) of the Act, and it is in contravention with the fundamental policy of Indian law as held by the Hon'ble Apex Court. Further, he would contend that the award is also liable to be set aside, since the learned Arbitrator has not given any opportunity to the petitioners to file a counter and contest the matter. Hence, he prayed to set aside the award.

6. On the other hand, the learned counsel for the respondent strongly refuted the contentions of the petitioners, stating that if there is any unilateral appointment, the remedy available to the petitioners is to immediately challenge the same under Section 13 of the Act before the same Arbitral Tribunal. However, in the present case, the petitioners have not resorted to this remedy. Hence, they are not entitled to challenge the award at this stage.

7. Further, he would contend that a notice dated 05.02.2021 has been sent to the petitioners with regard to the appointment of Arbitrator. Therefore, the petitioners are well aware of the fact about the appointment of Arbitrator. Hence, now they cannot come before this Court and raise the issue of unilateral appointment. Hence, he would cont