IMPORTANT POINT
Arbitral award will be vitiated where appointment of Sole Arbitrator is unilateral.

ORDER

By this Arbitration Petition, the Petitioners are seeking the setting aside of the impugned Award dated 14th December, 2019 passed by the Sole Arbitrator Dr. D.K. Sonawane.

2. A few facts are relevant to be adverted to whilst considering the issue as to whether there has been unilateral appointment of the Sole Arbitrator. These are as under:—

(i) The Petitioners and the Respondent had entered into a Used Car Dealer/DSA Agreement dated 24th July, 2013. Under Clause 22 of the Agreement, arbitration had been provided for. The disputes and differences between the parties to the Agreement were to be referred to a Sole Arbitrator to be nominated by the Respondent-Bank.

(ii) By Letter dated 17th September, 2018, the Respondent had demanded certain monies allegedly due under the Agreement and in case of non-compliance of the alleged demand, the Respondent had stated that they would be constrained to refer the dispute to the Sole Arbitrator to be appointed by the Respondent as per the terms of the arbitration clause in the said Agreement.

(iii) This was responded to by the Advocate for the Petitioners on 26th September, 2018 denying that there was a big amount due to the Respondent and calling upon the Respondent not to precipitate the matter any further based on the Notice. The Respondent was also called upon to furnish a copy of the Agreement dated 24th July, 2013.

(iv) Thereafter by a Letter dated 26th September, 2018 which is very same day as the Letter which had been addressed by the Petitioner, the Sole Arbitrator Dr. D.K. Sonawane, nominated pursuant to reference Letter dated 26th September, 2018 sent by the Respondent, gave his written consent to act as Sole Arbitrator in terms of Arbitration Clause 22 of the said Agreement.

(v) The Sole Arbitrator in the said Letter dated 26th September, 2018 annexed the necessary disclosure as per the form specified in the 6th Schedule under Section 12(1)(b) of the Arbitration Act, wherein it was stated that the Sole Arbitrator had within the past three years received more than three appointments by the Claimant who is the Respondent herein.

(vi) Thereafter, by another Letter dated 26th September, 2018 the Sole Arbitrator Dr. D.K. Sonawane has again accorded his consent to act as Sole Arbitrator in the dispute which is alleged to have arisen under the said Agreement dated 24th July, 2013 and which was in response to the Respondents’ reference Letter dated 26th September, 2018.

3. The learned Counsel for the Petitioners has submitted that it is a well settled position of law that a unilateral appointment of an Arbitrator as in the present case is impermissible and on this ground alone, the Award is liable to be set aside.

4. The learned Counsel for the Petitioners has placed reliance upon the Judgment of the Supreme Court in Perkins Eastman Architects DPC Vs. HSCC India Ltd., (2020) 20 SCC 620, at Paragraphs 20 and 21 in this context.

5. The decision of the Supreme Court in Perkins (supra) had been relied upon by the learned Single Judge of this Court in Naresh Kaniyalal Rajwani Vs. Kotak Mahindra Bank Ltd. & Anr., in Commercial Arbitration Petition (L) No.1444/2019 with IA(L) No.30023/2021. The learned Single Judge at Paragraph 7 of the said decision recorded the submission of the counsel for the Petitioner that the unilateral appointment of the Arbitrator is hit by Section 12(5) of the Arbitration Act read with the 7th Schedule thereof. Such appointment itself was vitiated in terms of this provision and the law clarified by the the Supreme Court in the case of Perkins (supra).

Hence, the impugned Award deserves to be set aside on this ground alone. Further, the submission of the counsel for the Respondent-Bank therein was recorded viz. that the ground pertaining to Section 12(5) of the Arbitration Act was not specifically raised in the Petition.

It was submitted that in the absence of such ground being specifically raised on behalf of the Petitioners, the same cannot be cons