The appointment of the Sole Arbitrator by the MCCI was valid and did not contravene the Arbitration and Conciliation Act, 1996, even if one party did not participate in the arbitration proceedings.

ORDER :

N.ANAND VENKATESH, J.

1. The petitioner assails the award passed by the Sole Arbitrator dated 13.04.2023 by filing the present petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for brevity, hereinafter referred to as ‘the Act’).

2.The respondent/claimant is a financial institution. The petitioner is said to have approached the respondent seeking for financial assistance for purchase of a vehicle. Accordingly, the petitioner and the respondent entered into a loan agreement dated 31.7.2019 and the father of the petitioner also signed in the said agreement in his capacity as the guarantor. A sum of Rs.20,15,000/- was lent towards purchase of vehicle and this amount had to be repaid together with interest in 42 monthly installments commencing from 17.8.2019 to 17.01.2023. The loan dues became outstanding and hence the respondent issued legal notice to the petitioner and his father on 05.6.2021 calling upon them to pay the outstanding dues of Rs.21,91,738.81.

3.On receipt of the above notice, the petitioner surrendered the hypothecated vehicle to the respondent on 11.11.2021.

4.The hypothecated vehicle was sold by the respondent on 14.2.2022 for a sum of Rs.8,00,000/-. Thereafter, the respondent issued a notice dated 9.3.2022 calling upon the petitioner and his father to pay the shortfall amount of Rs.16,62,289.80 after appropriating the sale amount towards the outstanding dues.

5.The outstanding amount was not repaid back and hence the trigger notice under Section 21 of the Act was issued by the respondent on 05.06.2021 for appointment of an Arbitrator through Madras Chamber of Commerce and Industries [MCCI].

6.Pursuant to the above, the MCCI appointed Sole Arbitrator on 31.05.2022.

7.The respondent filed a claim statement on 26.8.2022 by making a claim of a sum of Rs.15,76,575.52 towards outstanding dues with interest.

8.After the statement of claim was filed by the respondent, an application also came to be filed before the Sole Arbitrator under Section 17 of the Act for a direction to the petitioner and his father to furnish security and on failure to attach the property belonging to the petitioner’s father who stood as the guarantor for the loan.

9.The Sole Arbitrator issued notice on 23.9.2022 and directed the petitioner and his father to furnish security.

10.Inspite of service of notice, the petitioner and his father did not contest the claim. Hence, they were set ex-parte.

11.PW.1 was examined on the side of the respondent and Ex.A1 to Ex.A9 were marked.

12.In the absence of any contest on the side of the petitioner and his father, the Sole Arbitrator proceeded to deal with the claim and passed an award on 13.04.2023, by directing the petitioner and his father to pay a sum of Rs.15,76,575.52 along with further interest of 18% p.a. from 14.2.2022 till the date of realisation. The Sole Arbitrator also awarded cost. Aggrieved by the same, the present petition has been filed before this Court.

13.The main ground that was urged by the learned counsel for the petitioner is that there was unilateral appointment of Sole Arbitrator and hence the award passed by the Sole Arbitrator is liable to be interfered by this Court on this ground alone in line with the judgment of the Apex Court in Perkins Eastman Architects DPC v. HSCC (India) Ltd. Reported in [(2020) 20 SCC 760] . The further ground raised on the side of the petitioner is that the award was passed against a dead person viz., the father of the petitioner who died as early as on 26.01.2023 an