Petitioners cannot challenge an award post-participation in arbitration without raising objections, affirming the award's validity under Section 34.

ORDER

This petition has been filed under Section 34 of the Arbitration and Conciliation Act , 1996, challenging the impugned Arbitral Award dated

28.07.2023 passed in favour of the respondent against the petitioners.

2.The petitioners are defaulters in repayment of the loan to the respondent. In view of the default committed by the petitioners, the respondent initiated arbitration in accordance with the arbitration clause contained in the agreement, which is the subject matter of the dispute, by appointing a Sole Arbitrator. The Sole Arbitrator, acted upon the reference and after hearing both the parties, has passed the impugned Arbitral Award dated 28.07.2023 under which the petitioners have been directed to pay a sum of Rs.94,235/- together with interest at 18% per annum on the said sum from the date of reference i.e. 19.10.2022 till the date of realisation to the respondent. The petitioners, aggrieved by the impugned Arbitral Award, have filed this petition under Section 34 of the Arbitration and Conciliation Act , 1996 raising the following grounds:

a)The Arbitrator, who passed the impugned Arbitral Award, was unilaterally appointed by the respondent, without the consent of the petitioners;

b)The contentions of the petitioners as raised in the statement of defence filed by the petitioner before the Arbitrator, have not been considered by the Arbitrator in the impugned Arbitral Award;

c)The principles of natural justice have been violated by the Arbitrator, while passing the impugned Arbitral Award.

3.Learned counsel for the petitioners would reiterate the grounds that have been raised in this petition by the petitioners. He also drew the attention of this Court to the impugned Arbitral Award to substantiate the petitioners' case.

4.On the other hand, the learned counsel for the respondent would submit that the petitioners did not raise the ground of unilateral appointment in the arbitral proceedings either through their statement of defence or through their submissions. According to him, having participated in the arbitration, without any demur, the question of raising the ground of unilateral appointment at this stage in the Section 34 petition does not arise. In support of the said contention, learned counsel for the respondent drew the attention of this Court to the Division Bench judgment of this Court dated 26.11.2024 passed in O.S.A. (CAD) Nos. 62 & 63 of 2023 in the case of VR Dakshin Private Limited vs. SCM Silks Private Limited and would submit that when a party, who had participated in the arbitration, did not raise the ground of unilateral appointment of an arbitrator, the Award passed by such an Arbitrator is perfectly valid and cannot be set aside by this Court under of the Arbitration and Conciliation Act , 1996.

5.Learned counsel for the respondent drew the attention of this Court to another order passed by the Delhi High Court in the case of Arjun Mall Retail Holdings Pvt. Ltd. and others vs. Gunocen Inc dated 23.01.2024, which also supports the same view. Learned counsel for the respondent also submits that the Division Bench judgment of the Madras High Court in O.S.A. (CAD) Nos.62 & 63 of 2023 in the case of VR Dakshin Private Limited vs. SCM Silks Private Limited , referred to supra, has also been upheld by the Hon’ble Supreme Court by its order dated 16.12.2024 passed in M/s.SCM Silks Pvt. Ltd. vs. VR Dakshin Pvt. Ltd. by dismissing the S.L.P. Nos.30047 & 30048 of 2024. Learned counsel for the respondent also submits that as seen from the impugned Arbitral Award sufficient opportunities have been granted to the petitioners to raise all their objections and despite the same, excepting for filing the statement of defence, the petitioners have chosen not to defend the case any further in the Arbitral proceedings. According to him, only based on the evidence available on record, the Arbitrator has passed the impu