An arbitral award can be set aside if the arbitrator was appointed in contravention of the contractual terms.

1. The petitioners, through the medium of present petition under S.34 of the Arbitration and Conciliation Act, have challenged award dated 10.04.2023 passed by the learned Arbitrator, whereby the respondent / claimant has been held entitled to recover an amount of Rs.25,20,969 / along with interest @8% per annum from 31.08.2021 till the date of its realization, from the petitioner company.

2. As per case of the petitioners, in the year 2015, they started purchasing automotive accessories from the respondent company. It has been claimed that without the authorization of the petitioner company, its previous General Manager entered into an agreement on behalf of the petitioner company with the respondent company on 13th June, 2018. The agreement was valid for a period of two years from 1st October, 2017. According to the petitioners, the petitioner company continued to purchase the automotive accessories from the respondent company up to the year 2021. However, when the company did not make any profit on the goods and services supplied by the respondent company, they stopped doing business with it. It has been claimed that in the year 2021, it came to the knowledge of the petitioner company that its previous General Manager had unauthorizedly executed an agreement with the respondent company.

3. On 18.04.2023, the petitioner company is stated to have received the impugned award dated 10.04.2023, which has been passed by respondent No.2 - Arbitrator. It has been submitted that the impugned award has been passed by respondent No.2 in exparte without any authority or jurisdiction.

4. The petitioners have challenged the impugned award on the ground that agreement dated 13th June, 2018, which contains the arbitration clause, has not been validly executed by the petitioner company, inasmuch as it has not been executed by an authorized person. It has been further contended that as per Clause (16) of the said agreement, the disputes were required to be referred to the sole Arbitrator mutually agreed upon by the parties or appointed by the Court under Arbitration and Conciliation Act, 1996 and it was further provided that the venue of arbitration would be at Srinagar, but in the instant case, respondent No.1 has unilaterally appointed respondent No.2 as the Arbitrator and the arbitration proceedings have been conducted at Greater Noida (UP). It has been further contended that as per Clause (18) of the agreement, the arbitration venue and courts in Srinagar were alone given jurisdiction to decide the unresolved disputes or differences between the parties but in the instant case, the aforesaid clause stands contravened. On these grounds, the petitioners have sought setting aside of the impugned award.

5. Respondent No.1 has filed its reply to the petition, in which it has been submitted that agreement dated 13.06.2018 was executed by the General Manager of the petitioner company and there is nothing on record to show that he was not having authorization to do so. It has been further submitted that the respondent company fulfilled all its obligations towards the petitioner company. It has also been submitted that after May, 2019, the petitioner company discontinued to procure the products from the respondent company. It has been contended that the petitioner company failed to clear the past dues, as a result of which the respondent company issued a legal notice of demand dated 31.08.2021 upon the petitioner company seeking recovery of any amount of Rs.25,20,969 / from it but in spite of receipt of the said notice, the petitioner company did not clear the outstanding dues. It has been further submitted that vide notice