Unilateral appointment of an arbitrator by an interested party is invalid. Statutory ineligibility cannot be waived by implication or conduct and requires an express, written post-dispute agreement. Jurisdictional challenges based on such ineligibility are fundamental and can be raised at any stage, including during appellate proceedings.

JUDGMENT :

JASPREET SINGH, J.

1. The appellant has preferred the instant appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act of 1996’) assailing the judgment and order passed by the Commercial Court-II, Lucknow dated 19.04.2023 in Arbitration Case No. 766 of 2019 whereby his petition under Section 34 of the Act of 1996 was dismissed and the arbitral award dated 26.04.2019 passed by the Sole Arbitrator was affirmed.

Factual Background:-

2. In order to appreciate the controversy involved in the instant appeal, it will be apt to take a brief glance at the facts leading up to this appeal.

3. The appellant was a dealer of the respondent-corporation for retail sales of petrol/diesel and other petroleum products. The said dealership agreement was entered between the parties on 14.01.2013 and in terms whereof the appellant was entitled to run his petrol pump under the name and style of ‘Pandey Filling Station’ at Village Budawa, Pargana and Tehsil Attaara, District Banda.

4. On 14.06.2017, a Special Team under the supervision of the District Magistrate, Banda inspected the dealership outlet of the petitioner. During inspection, the seal affixed by the Weights and Measures Department relating to Nozzle No. (ii) of Gilbarco Dual Ms. Dispensing Unit with Serial no. 20152000858 was found broken.

5. Based on the aforesaid discrepancy, a show cause notice was issued by the respondent-corporation dated 21.06.2017 calling upon the appellant to show cause within 15 days as to why necessary action may not be taken against him.

6. The appellant submitted his reply dated 15.07.2017 and also by an undated letter, and both were received by the Corporation on 17.07.2017. The appellant stated that the aforesaid nozzle no. (ii) was not functioning properly and the appellant had already raised his complaint regarding the same on 03.06.2017. Despite the said complaint, the Corporation on its online portal indicated that the complaint had been resolved. This was again interjected by the appellant who raised a fresh complaint on 06.06.2017 and the Corporation was also informed of the incorrect functioning of the aforesaid nozzle, however, it was not physically resolved at the site rather the Corporation closed the complaint on its online portal. This was once again brought to the notice of the respondent-corporation by the appellant that the complaint raised by him had not been resolved.

7. The appellant further stated that even during the inspection upon measuring, no short dispensation of fuel was recorded from any of the dispensing units including from nozzle no. (ii) and moreover all other seals were found intact.

8. The Corporation, however, did not find the reply of the appellant satisfactory and vide its order dated 24.07.2017, the dealership agreement dated 14.01.2013 was terminated.

9. The appellant assailed the cancellation order dated 24.07.2017 by means of a writ petition bearing Writ-C No. 62809 of 2017 which was dismissed by a Division Bench of this Court at Allaha