Delhi District Court
Srihri Sankaran vs Sbi Cards And Payments on 29 March, 2025
IN THE COURT OF DISTRICT JUDGE - 02
CENTRAL DISTRICT : TIS HAZARI COURTS, DELHI
Presided By- Sh. Sandeep Kumar Sharma, DHJS.
ARBTN No. 82/20
CNR No. DLCT01-016118-2018
In the matter of:-
Srihari Sankaran
S/o Sh. P. Sankaran
3/39, Gandhi Nagar (Ext.)
Netaji Street, Ondipudur Post,
Coimbatore-641016
Tamil Nadu
....... PETITIONER/OBJECTOR
VERSUS
SBI Cards and Payments Services Private Limited
Through its Authorized Representative
Having Registered Office at:
Unit no. 401 and 402, 4th Floor,
Aggarwal Millennium Tower E 1, 2, 3,
Netaji Subhash Place,
Wazirpur, New Delhi-110034.
..........RESPONDENT
Date of institution of petition : 30.11.2018
Date of reserving for order : 07.03.2025
Date of decision : 29.03.2025
Order dated 29.03.2025
ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 1 of 21
SANDEEP Digitally
by SANDEEP
signed
KUMAR KUMAR SHARMA
Date: 2025.03.29
SHARMA 14:13:39 +0530
ORDER
1) The Court is rendering this Order in response to the petition filed under Section 34 of the 'Arbitration & Conciliation Act, 1996 (hereinafter to be referred as 'Arbitration Act') for challenging and seeking the setting aside of the Award dated 28th July 2018 passed by the Sole Arbitrator Sh. Nahar Singh Yadav, Adv against the petitioner for the payment of ₹. 1,10,872.17/- along with the interest @ 8% per annum, from the date of accrual of the cause of action has arisen till the date of actual payment and for the payment of court fees ₹.115/-.
Facts of the impugned award (In Brief)
2) That the respondent on 06.02.2018 had appointed the Ld. Sole Arbitrator. Further, on 24.03.2018, the Ld. Sole Arbitrator sent a notice of the first hearing to both the parties which were to be held on 27.04.2018. Since no one was appeared on behalf of the respondent, hence, he was proceeded ex parte on 01.05.2018 and on the basis of the material/evidence adduced by the respondent in the matter before the Ld. Sole Arbitrator, the impugned award was passed on 28.07.2018.
Facts pleaded in the petition (In Brief)
3) It is averred by the petitioner that he availed himself Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 2 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:13:49 +0530 of the credit card facility from the respondent, pursuant to which a credit card bearing no. 5126 2292 1431 4182 was issued to the petitioner at or around the year 2008-09. The above-mentioned credit card of the petitioner was expired in the year 2015, and then he was issued another credit card bearing no. 5126229219211516 by the respondent/claimant company.
4) It has further been averred that on 04.05.2016 the petitioner had traveled to Houston, USA for office purpose and during the trip on 10.05.2016 he made certain purchases from Dubai duty free shop for a sum of ₹. 41,00/- and ₹.5,941/. The petitioner returned back in India on 11.05.2016 and next day i.e. 12.05.2016 petitioner made another purchase of ₹.1,250/-. The petitioner has stated that besides above mentioned transactions there were other transactions for the amount of ₹. 58,754/- were also made by him in Houston, USA. Therefore ₹, 60,004/- was paid by the petitioner on 25.05.2016 vide cheque no. 702170 for ₹.
60,000/- well within the due date i.e. 01.07.2016.
5) It has further been stated that on 02.06.2016 the petitioner received an email from the respondent by which it was informed that the card of the petitioner was blocked due to suspicious activities. The petitioner thereafter reported the matter to the respondent, and the respondent gave assurance to handle the matter. Though, on the same day, on Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 3 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA 14:13:57 Date: 2025.03.29 +0530 03.06.2016, the petitioner received two emails from the respondent stating that 'we have deactivated you Tata Credit Card ending 1516.'
6) It has further been averred that not only the credit card but online banking of the petitioner had also been blocked and as such petitioner was unable to see his statement or get any statement of his credit card. Thereafter, petitioner reported a complaint which was registered as Interaction ID"1-16265575543 and was acknowledged by the respondent vide email dated 19.01.2018.
7) It is averred that after a series of correspondences, the respondent had sent the monthly statement for the months of June 2016 and January 2017, wherein an amount of ₹. 1,27,708/- was shown as outstanding against the petitioner. The petitioner has challenged the veracity of the statement and stated that on 02.06.2018, the petitioner had only made a purchase of ₹.16,836/-, and the rest of the entries of the said date were fictitious. It is contended by the petitioner that he also sent an email on 27.03.2017 to the respondent to report about the suspicious activities which were happening with his card.
8) It has further been asserted by the petitioner that respondent sent notices to the permanent address of the petitioner at Coimbatore whereas petitioner has been Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 4 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA 14:14:05 Date: 2025.03.29 +0530 residing and working in Nigeria since July 2015. The award dated 28.07.2018 was delivered at the address of the petitioner at Coimbatore on 06.08.2018 but since the petitioner was not in India and came back only on 16.11.2018, therefore, the present petition was filed on 30.11.2018.
Grounds on which the impugned award has been challenged
9) The petitioner has challenged the impugned award and seeking the setting aside of the Award dated 28.07.2018 on the following grounds, that (A) The petitioner was neither served with proper notice of the appointment of Arbitrator dated 07.06.2018 nor he received the notice dated 24.03.2018 for initiation of Arbitral proceedings. As the notice has not been served upon the petitioner therefore, the impugned award is liable to be set aside in terms of Section 34 (2) (a) (iii) of the Arbitration and Conciliation Act, 1996.
(B) The Sole Arbitrator has passed the impugned award without considering the circular no.
DBOD.LEG.BC.86/09.07.007/2001-02 dated April 8, 2002.
(C) The impugned award has been passed without considering that the petitioner in the present matter has reported the fraud and suspicious activity done on June 02, 2018 from his card on the next date itself i.e. June Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 5 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA Date: 2025.03.29 14:14:13 +0530 03, 2018 as such the award is bad in law and liable to be set aside.
Facts pleaded in the reply filed by the respondent (In Brief)
10) All the allegations of the petitioner are denied by the respondent, who sought the dismissal of the petition on the ground that the petitioner deliberately failed to appear before the arbitrator and has filed the present petition on false grounds. It is contended that the entire correspondence was done at the same address and the petitioner was aware about the pendency of the arbitral proceedings. The respondent was never informed about the change of address by the petitioner and the only address available on records of the respondent was the permanent address. Hence, the objections are no merits and liable to be dismissed.
Arguments of Ld. Counsel for the petitioner
11) This court has heard the arguments of the Ld. Counsel for the parties at length, where the Ld. Counsel for the petitioner argued in sync with the contents of the petition and also raised questions on the legality and maintainability of the impugned award. It has also been argued that the award passed by the sole arbitrator, therefore, ex-facie, is liable to be rejected without even going into the merits of the case. Per contra, Ld. Counsel for the respondent submitted that since it is the clause in the Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 6 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:14:21 +0530 agreement wherein the absolute authority was given to the respondent for the appointment of the Ld. Sole Arbitrator, there is no illegality in the impugned order and even on merits the objections are liable to be dismissed.
Scope of Section 34 of the Arbitration Act
12) At the outset, it is necessary to discuss the scope of Section 34 of the Arbitration Act. It is a settled position of law that proceedings under Section 34 do not contain any challenge on merits. In the case of 'Delhi Airport Metro Express (P) Ltd. vs Delhi Metro Rail Corporation Limited (2022) 1 SCC 131, the Hon'ble Supreme Court held that while deciding applications filed under Section 34, courts are mandated to strictly act in accordance with and within the confines of Section 34, refraining from appreciation or re-appreciation of matters of fact as well as law. Judicial interference with the arbitral awards is strictly limited to the grounds in Section 34, as this approach would lead to corrosion of the object of the Arbitration Act.
13) Further, the constitutional bench of the Hon'ble Supreme Court in the case titled as 'Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899 -
2023 SCC OnLine SC 1666' para- 82 held that Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 7 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:14:32 +0530 "82. One of the main objectives of the Arbitration Act is to minimize the supervisory role of courts in the arbitral process. Party autonomy and settlement of disputes by an arbitral tribunal are the hallmarks of arbitration law. Section 5 gives effect to the true intention of the parties to have their disputes resolved through arbitration in a quick, efficient, and effective manner by minimizing judicial interference in the arbitral proceedings..."
14) The Hon'ble High Court of Delhi in the case titled as 'MTNL Vs. Fujitshu India Private Limited" 2015 SCC OnLine Del 7437,' held that the law is settled that where the Arbitrator has assessed the material and evidence placed before him in detail, the court while considering the objections U/S. 34 of the said Act does not sit as a court of appeal and is not expected to re-appreciate the entire evidence and reassess the case of the parties. The jurisdiction under Section 34 is not appellate in nature and an award passed by an Arbitrator cannot be set aside on the ground that it was erroneous. It is not open to the court to interfere with the award merely because in the opinion of the court, another view is possible. The extent of judicial scrutiny under section 34 of the Act is limited and scope of interference is narrow.
15) The remedy given by the statute under Section 34 of the Act cannot be an appeal under the guise of petition under Section 34. The Hon'ble High Court of Delhi, in a case titled as 'State Trading Corporation of India Ltd. Vs M/s Toepfer International Asia PTE Ltd" 2014 SCC Online Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 8 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:14:41 +0530 Del 3426' held that, "A Section 34 proceeding, which in essence is the remedy of annulment, cannot be used by one party to convert the same into a remedy of appeal. In our view, mere erroneous/wrong finding of fact by the Arbitral Tribunal or even an erroneous interpretation of documents / evidence, is non-interferable under Section 34 and if such interference is done by the Court, the same will set at naught the whole purpose of amendment of the Arbitration Act"
16) The Hon'ble High Court of Delhi in its decision in 'NHAI vs Hindustan Construction Company Ltd. 2018 SCC OnLine Del 8020' discussed the law related to Section 34 as manifested by decisions ranging from 'Renu Sagar Power Company Ltd. vs. General Electric Company 1994 Supp. (1) SCC 644' to 'Associated Builders vs. DDA (2015) 3 SCC 49 and delineated the following propositions:-
(i) The four reasons motivating the legislation of the Act, in 1996, were
(a) to provide for a fair and efficient arbitral procedure,
(b) to provide for the passing of reasoned awards,
(c) to ensure that the arbitrator does not transgress his jurisdiction, and
(d) to minimize supervision, by courts, in the arbitral process.
(ii) The merits of the award are required to be examined only in certain specified circumstances, for examining whether the award is in conflict with the public policy of India,
(iii) An award would be regarded as conflicting with the public policy of India if,
(a) it is contrary to the fundamental policy of Indian law, or Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 9 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:14:53 +0530
(b) it is contrary to the interests of India,
(c) it is contrary to justice or morality,
(d) it is patently illegal, or
(e) it is so perverse, irrational, unfair or unreasonable that it shocks the conscience of the court.
(iv)An award would be liable to be regarded as contrary to the fundamental policy of Indian law, for example, if,
(a) it disregards orders passed by superior courts, or the binding effect thereof, or
(b) it is patently violative of statutory provisions, or
(c) it is not in public interest, or
(d) the arbitrator has not adopted a "judicial approach", i.e. has not acted a fair, reasonable and objective approach, or has acted arbitrarily, capriciously or whimsically, or
(e) the arbitrator has failed to draw an inference which, on the face of the facts, ought to have been drawn, or
(f) the arbitrator has drawn an inference, from the facts, which, on the face of it, is unreasonable, or
(g) the principles of natural justice have been violated.
(v) The "patent illegality" had to go to the root of the matter. Trivial illegalities were inconsequential.
(vi) Additionally, an award could be set aside if,
(a) either party was under some incapacity, or
(b) the arbitration agreement is invalid under the law, Or
(c) the applicant/petitioner was not given proper notice of appointment of the arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case, or
(d) the award deals with a dispute not submitted to arbitration, or decides issues outside the scope of the dispute submitted to arbitration, or
(e) the composition of the Arbitral Tribunal was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 10 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:15:02 +0530
(f) the arbitral procedure was not in accordance with the agreement of the parties, or in accordance with Part I of the Act, or
(g) the award contravenes the Act, or
(h) the award is contrary to the contract between the parties.
(vii)"Perversity", as a ground for setting aside an arbitral award, has to be examined on the touchstone of the Wednesbury principle of reasonableness. (A reasoning or decision is Wednesbury unreasonable (or irrational) if it is so unreasonable that no reasonable person acting reasonably could have made it (Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1 KB 223). It would include a case in which
(a) the findings, in the award, are based on no evidence, or
(b) the Arbitral Tribunal takes into account something irrelevant to the decision arrived at, or
(c) the Arbitral Tribunal ignores vital evidence in arriving at its decision.
(viii) At the same time,
(a) a decision which is founded on some evidence, which could be relied upon, howsoever compendious, cannot be treated as "perverse",
(b) if the view adopted by the arbitrator is a plausible view, it has to pass muster,
(c) neither quantity, nor quality, of evidence is open to reassessment in judicial review over the award.
(ix)"Morality" would imply enforceability, of the agreement, given the prevailing mores of the day.
"Immorality", however, can constitute a ground for interfering with an arbitral award only if it shocks the judicial conscience.
(x) For examining the above aspects, the pleadings of the parties and materials brought on record would be relevant.
(xi) The court cannot sit in appeal over an arbitration award. Errors of fact cannot be corrected under Section
34. The arbitrator is the last word on facts."
17) From the above-referred judgments, the law relating Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 11 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA 14:15:12 Date: 2025.03.29 +0530 to Section 34 may be summarized as that it is not open to the Court to interfere with the award, as the jurisdiction under Section 34 of the Act is not appellate in nature, and an award passed by the arbitrator cannot be set aside on the ground that it was erroneous. The extent of judicial scrutiny and scope of interference under Section 34 is absolutely limited. However, the award may be set aside if it is against the fundamental policy and principles of Indian law.
Analysis & Conclusion
18) Before further analysis and application of the Section 34 of the Act, it is apposite to reproduce to Section 34 (1) (2), (2A) and (3) of The Arbitration and Conciliation Act, 1996, as under:
"34. Application for setting aside arbitral award-
(1) Recourse to a court against an arbitral award may be made only by an application for setting aside such award in accordance with sub-section (2) and subsection (3).
(2) An arbitral award may be set aside by the court only if-
(a) the party making the application furnishes proof that-
(i) a party was under some incapacity, or
(ii) the arbitration agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law for the time being in force; or
(iii) the party making the application was not given proper notice of the appointment of an arbitrator or of the Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 12 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA Date:
SHARMA 2025.03.29 14:15:22 +0530 arbitral proceedings or was otherwise unable to present his case; or
(iv) the arbitral award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:
Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the arbitral award which contains decisions on matters not submitted to arbitration may be set aside; or
(v) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this Part from which the parties cannot derogate, or, failing such agreement, was not in accordance with this Part; or
(b) the Court finds that (i) the subject-
matter of the dispute is not capable of settlement by arbitration under the law for the time being in force, or (ii) the arbitral award is in conflict with the public policy of India.
[Explanation 1.For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,
(i) the making of the award was induced or affected by fraud or corruption or was in violation of section 75 or section 81; or
(ii) it is in contravention with the fundamental policy of Indian law;
or
(iii) it is in conflict with the
most basic notions of morality or
justice.
Explanation 2. For the avoidance of doubt, the test as to whether there is a Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 13 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA Date:
SHARMA 2025.03.29 14:15:29 +0530 contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.] (2A) An arbitral award arising out of arbitrations other than international commercial arbitrations, may also be set aside by the Court, if the Court finds that the award is vitiated by patent illegality appearing on the face of the award: Provided that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
(3) An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under section 33, from the date on which that request had been disposed of by the arbitral tribunal: Provided that if the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter.
(Emphasis Supplied)
19) The objections under Section 34 of the Arbitration Act has to be filed within 90 days from the date of receiving of award and that period may be extended merely for 30 days if sufficient reasons exits. In the present case the impugned award passed on 28.07.2018 and delivered at the address of the petitioner at Coimbatore on 06.08.2018, therefore, the period of 90 days for filing of objections under Section 354 ends on 7.11.2018, whereas the present petition was filed on 30.11.2018, which is beyond the period of 90 days. However, proviso to Section 34 (3) of the Arbitration Act confers discretion upon the court to condone Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 14 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA Date:
SHARMA 2025.03.29 14:15:37 +0530 the delay in filing for further 30 days if a sufficient reason exists. The petitioner averred that he was not in India and returned only on 16.11.2018 and thereafter immediately he filed the petition.
20) It may not be presumed that every delay is intentional, and the same may not be condoned. The primary rationale for granting the court so extensive discretion is to enable it to examine the particulars of each case to determine if the circumstances warrant justifying and condoning the delay. Every case needs to be evaluated on its merits rather than dismissed only due to noncompliance with procedural or technical formalities.
Keeping the mandate of the justice in view this court is allowing the application of the petitioner filed under Section 5 of the Limitation Act for condoning the delay of 24 days in filing the petition so that the matter may be adjudicated on merits.
21) The first and fundamental ground raised by the petitioner is that the arbitrator was appointed unilaterally and without his consent and the order passed by the Ld. The arbitrator is in violation of one of the principles of natural justice, i.e., audi alteram partem, which provides that no one should be left unheard and everyone deserves an opportunity to put forward the merits of their case. Though the same was rebutted by the Ld. Counsel for the respondent Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 15 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:15:46 +0530 submitted that the agreement empowered the respondent to appoint the arbitrator as per the clause 10 of the Card Holders Agreement and therefore, no objection regarding appointment could be taken by the petitioner at this belated stage. The relevant part of the clause 10 is reproduced here is under, in verbatim "If any dispute arises in future between the parties shall be referred to the Sole Arbitrator by the claimant company to resolve the dispute through Arbitration in accordance with the provisions of Arbitration and Conciliation Act, 1996 and the venue of the Arbitration shall be at New Delhi.
(Emphasis Supplied)
22) From perusal of the arbitration clause as mentioned in the agreement and in the impugned award it is evident that it is at the absolute discretion of the respondent to nominate a sole arbitrator for resolution of the dispute. The petitioner had no choice in the appointment of the sole arbitrator. The ethos and first principle on which the arbitration mechanism functions is party autonomy, i.e., the freedom to choose an arbitrator acceptable to both parties to the agreement, embedded in the principle of natural justice:
"No man can be a judge of his own cause, i.e., Nemo judex in causa sua.' It is one of the most fundamental principles of natural justice, which is the soul and fulcrum of any judicial or quasi-judicial process. The unilateral appointment of arbitrators is germane to this vice, and when the first step is taken in a wrong direction and is rendered non est, every Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 16 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA Date:
SHARMA 2025.03.29
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+0530
next step and the culmination of the arbitral journey into an award is nothing but a zilch or nullity.
23) The letter of appointment of the Sole Arbitrator dated 06.02.2018 lucidly manifests that the Sole Arbitrator was appointed unilaterally by the respondent as it neither carries the signature of the petitioner nor it mention or reveals that the petitioner was also consented on the appointment of the Sole Arbitrator. Therefore, it is evident that the Ld. Sole Arbitrator was appointed by the respondent without consultation or concurrence of the petitioner which is squarely within the ambit of Section 34 (2) of the Arbitration Act which provides that the arbitral award shall set aside where the proper notice of the appointment of the arbitrator has not been given to the petitioner.
24) Further, the unilateral appointment of the Arbitrator is bad in law and as held in the judgment of the Hon'ble Supreme Court titled as 'Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.: (2020) 20 SCC 760'.23.
Reliance may also be placed on the judgment of the Hon'ble High Court of Delhi titled as 'Abraham Memorial Education Trust Vs. Prodigy Development Institution' passed in OMP (Comm)391/2020 dated 23.03.2021,' wherein it has been held that, "Since the Arbitrator's appointment was contrary to the provisions of Arbitration Agreement and Act, the Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 17 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA Date: 2025.03.29 14:16:05 +0530 unilateral reference of disputes and the proceedings before the Sole Arbitrator are void ab initio and the award so rendered is a nullity in law. Hence, the impugned award cannot be sustained and the Court has no hesitation in setting aside the award and it is ordered accordingly."
(Emphasis Supplied)
25) In 'Kotak Mahindra Bank Ltd vs Narendra Kumar, 2023 SCC OnLine Del 3148 (DB)' the Hon'ble High Court of Delhi held, as under:-
"10. The award rendered by an arbitrator who is ineligible to be appointed as such cannot be enforced.
12. In Govind Singh vs Satya Group Pvt. Ltd. 2023/DHC/000081 this court held as under:
"In view of the above, the remaining question to be addressed is whether an arbitral award rendered by a person who is ineligible to act as an arbitrator is valid or binding on the parties. Clearly, the answer must be in the negative. The arbitral award rendered by a person who is ineligible to act as an arbitrator cannot be considered as an arbitral award. The ineligibility of the arbitrator goes to the root of his jurisdiction. Plainly an arbitral award rendered by the arbitral tribunal which lacks the inherent jurisdiction cannot be considered as valid. In the aforesaid view, the impugned award is liable to be set aside as being wholly without jurisdiction."
14. 14. This court finds no infirmity with the aforesaid view. A person who is ineligible to act an Arbitrator, lacks the inherent jurisdiction to render an Arbitral Award under the A& C Act. It is trite law that a decision, by any authority, which lacks inherent jurisdiction to make such a decision, cannot be considered as valid. Thus, clearly, such an impugned award cannot be enforced."
Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 18 of 21 Digitally signed by SANDEEP SANDEEP KUMAR KUMAR SHARMA SHARMA Date:
2025.03.29 14:16:14 +0530
26) In Smaash Leisure Ltd. vs Ambience Commercial Developers Pvt. Ltd, 2023 SCC OnLine Del 8322, the Hon'ble High Court of Delhi, held as under:
"38....It is no longer res-integra that an arbitral award rendered by an Arbitrator, who is ineligible to act as an Arbitrator cannot be termed as an arbitral award and thus not binding on the parties...
39. From the aforesaid judgment, it is clear that the ineligibility of the Arbitrator goes to the root of the jurisdiction and vitiates the award...."
27) In 'Babu Lal and Another vs. Cholamandalam Investment and Finance Company Ltd. and Another, 2023 SCC OnLine Del 7239, the Hon'ble High Court of Delhi held, as under:
"8. It is an admitted position that the respondent Company nominated a Sole Arbitrator on its own without recourse to Court. Supreme Court in Perkins Eastman Architects DPC. (supra) has held that there cannot be a unilateral appointment or nomination of an Arbitrator by a party interested in the dispute. Reference has to be to an independent person. 9. In the instant case, admittedly, nomination of the Sole Arbitrator was done by the respondents on their own without any concurrence from the appellant. Letter dated 18.10.2021 is merely an intimation to the appellant of nomination of the Sole Arbitrator. Said nomination was without reference to the Court in terms of Section 11 of the Arbitration & Conciliation Act, 1996.
10. Clearly, an award rendered by an ineligible Arbitrator would be a nullity as has been held by a Coordinate Bench of this Court in Kotak Mahindra Bank Ltd. v. Narendra Kumar Prajapat, 2023 SCC OnLine Del 3148.
Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 19 of 21 Digitally signed by SANDEEP SANDEEP KUMAR SHARMA KUMAR Date:
SHARMA 2025.03.29 14:16:24 +0530
11. In the instant case since the appointment of an Arbitral Tribunal was unilateral and without recourse to Court, the Award rendered by the Arbitral Tribunal would also be a nullity. The Trial Court has clearly erred in not appreciating that the appointment was unilateral and consequently, the Award was a nullity"
28) Therefore, an arbitration award passed by a sole arbitrator appointed unilaterally by the respondent is without jurisdiction and non-est and hence 'non- executable'. This Court has not considered the merits of the case of the parties in view of the fact that unilateral appointment of sole arbitrator is null and void, non-est and void ab initio and the impugned award passed by him is without jurisdiction, unenforceable and nullity.
Conclusion
29) Therefore, on the basis of material placed on record and in view of the settled proposition of law, the objections under Section 34 of the Arbitration & Conciliation Act filed by the petitioner is allowed merely on this ground without going into the merits on the challenge on the basis of other grounds as mentioned by the petitioner. Ergo, the impugned award dated 28.07.2018 in Arbitration Case No. ARB-LA- Mar-9472/2018 titled as 'SBI Cards and Payment Services Ltd.vs Shriharishankaran' is set-aside.
30) File be consigned to record room.
Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 20 of 21 Digitally signed SANDEEP by SANDEEP KUMAR KUMAR SHARMA SHARMA Date: 2025.03.29 14:16:34 +0530
31) Original arbitration proceedings be sent back.
SANDEEP Digitally by SANDEEP signed KUMAR KUMAR SHARMA Date: 2025.03.29 SHARMA 14:16:43 +0530 Announced in the open court (Sandeep Kumar Sharma) on March 29th , 2025 District Judge-02/Central/THC Order dated 29.03.2025 ARBTN No. 82/20 CNR No. DLCT01-016118-2018 Srihari Sankaran Vs SBI Cards and Payments Services Private Limited Page No. 21 of 21