Delhi District Court
Sabrina Singh vs Alok Gupta on 28 July, 2025
IN THE COURT OF DISTRICT JUDGE-04,
(PRESIDED OVER BY: ANIL CHANDHEL)
WEST DISTRICT, THC, DELHI
CNR NO. DLWT01-004597-2018
ARBTN N0. 42/2018
MS. SABRINA SINGH
W/o Mr. Balwinder Singh
R/o H. No. J-114, First Floor,
Rajouri Garden,
New Delhi. .... PETITIONER
Versus
1. MR. ALOK GUPTA
S/o Late Sant Raj Gupta
R/o J-107, Rajouri Garden,
New Delhi.
2. MR. SUNEEL KUMAR GOSWAMI
Advocate and Sole Arbitrator. ...RESPONDENTS
OBJECTIONS UNDER SECTION 34 OF
THE ARBITRATION AND
CONCILIATION ACT, 1996 AGAINST
THE AWARD DATED 17.02.2018, PASSED
BY LD. SOLE ARBITRATOR MR.
SUNEEL KUMAR GOSWAMI IN
ARBITRATION MATTER, TITLED AS,
'ALOK GUPTA VS. SABRINA SINGH'.
DATE OF INSTITUTION : 21.05.2018
JUDGMENT RESERVED ON : 01.07.2025
JUDGMENT PRONOUNCED ON : 28.07.2025
________________________________________________________________
Sabrina Singh vs. Alok Gupta Page No. 1 of 27
ARBTN NO. 42/2018
Counsel for the Petitioner: Mr. Amandeep Mehra, Advocate.
Counsel for the Respondent No.1: Mr. Puneet Yadav, Advocate.
JUDGMENT
1. The present petition under Section 34 of the Arbitration and Conciliation Act, 1996 has been filed by the Petitioner to challenge the award dated 17.02.2018, passed by Ld. Sole Arbitrator Mr. Suneel Kumar Goswami in Arbitration matter, titled as, 'Alok Gupta vs. Sabrina Singh'. In terms of the impugned award dated 17.02.2018, the Ld. Sole Arbitrator allowed the claim of the Respondent No.1, against the Petitioner, for recovery of Rs.35,00,000/- along with interest @ 10% per annum and cost. The Respondent No.1 is the only contesting Respondent in the present proceedings and the Respondent No.2 is the Ld. Sole Arbitrator, whose role in the proceedings was limited to filing of the Original record of Arbitral proceedings. The award has principally been assailed on the ground of the arbitration proceedings being conducted by an Arbitrator appointed unilaterally by the Respondent No.1 against consent of the Petitioner.
2. Arbitration Proceedings before the Ld. Sole Arbitrator:
It will be appropriate to recapitulate the Arbitration proceedings before Ld. Sole Arbitrator and the same are ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 2 of 27 ARBTN NO. 42/2018 being summed up in brief in the sub-paras mentioned hereinbelow:
2.1. The Respondent No.1 issued the notice dated 11.07.2017 for invocation of the arbitration. It is stated in the aforesaid notice that the Petitioner had not repaid a loan of Rs.30,00,000/- and therefore the Respondent No.1 had appointed Mr. Suneel Kumar Goswami as an Arbitrator to adjudicate the dispute between the Petitioner and the Respondent No.1. The aforesaid notice remained unserved upon the Petitioner and the unserved returned envelope has been filed before the Ld. Arbitrator by the Respondent No.1.
2.2. The Arbitrator entered upon reference on 08.08.2017 and issued a notice to the parties. The record of the Arbitrator reflects that the notice dated 08.08.2017 was sent to the Petitioner through speed post.
2.3. The Respondent No.1 filed the statement of claim on 19.08.2017. The facts, stated in the statement of claim, are briefly summed up in paras stated hereinbelow:
i. The Petitioner approached the Respondent No.1 for a loan of Rs.30,00,000/- on account of her pressing financial urgency. The Petitioner was known to the Respondent No.1 for the last more than five years and he advanced the loan of Rs.30,00,000/-, which was undertaken to be repaid by the Petitioner after a ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 3 of 27 ARBTN NO. 42/2018 period of one and half years. The parties executed a loan agreement dated 02.06.2017. The Petitioner undertook to make payment of Rs.35,00,000/- against the aforesaid loan.
ii. The Respondent No.1 approached the Petitioner on 02.06.2017 for seeking return of the loan amount and the aforesaid amount was not returned.
Thereafter the Respondent No.1 issued a legal notice dated 11.07.2017 for invocation of the arbitration. The Respondent No.1 claimed the recovery of Rs.35,00,000/- along with interest @ 18% per annum.
2.4. None appeared on behalf of the Petitioner on 19.08.2017 and it is also not mentioned in the Order dated 19.08.2017 as to whether the notice dated 08.08.2017 was served upon the Petitioner. Ld. Arbitrator issued notice of the Claim Petition to the Petitioner on 19.08.2017, returnable for 07.09.2017. In the Order dated 07.09.2017, it is mentioned that husband of the Petitioner appeared along with Counsel and sought time to file reply and the matter was posted for 15.09.2017. In the Order dated 15.09.2017, it is mentioned that a Proxy Counsel has appeared along with husband of Petitioner and filed the copy of objections dated 19.08.2017, which were stated to be sent through courier. The aforesaid objections are dismissed by the Ld. Sole Arbitrator in terms of a separate Order dated 15.09.2017.
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 4 of 27 ARBTN NO. 42/2018 2.5. On the next date of hearing, i.e., 07.10.2017, the appearance of the husband of the Petitioner is recorded and it is stated that he had requested for an adjournment, which was declined and the matter was posted for Claimant's evidence.
2.6. On 14.11.2017, the Respondent No.1 filed his affidavit of evidence and none appeared for the Petitioner. The matter was adjourned for cross-examination on 30.11.2017, however none appeared for the Petitioner and her right to cross-examine the witness was closed. Thereafter the matter was placed for the Petitioner's evidence, being the Respondent in the Arbitration proceedings on 22.12.2017 and on 10.01.2018 and the Petitioner remained absent in the matter and did not lead any evidence. Subsequently, the matter was posted for final arguments and eventuality an award was passed on 17.02.2018.
3. Grounds of Challenge and submissions of parties :
3.1. Ld. Counsel for the Petitioner has submitted that the appointment of the Arbitrator was unilateral and against the consent of the Petitioner and therefore, the proceedings conducted by the Ld. Sole Arbitrator were non-est ab initio.
It is submitted that the Ld. Sole Arbitrator has wrongly assumed jurisdiction and went ahead with the proceedings, despite the objections to the same by the Petitioner, in terms of the communication dated 19.08.2017. It is submitted that ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 5 of 27 ARBTN NO. 42/2018 the Petitioner neither executed any loan agreement nor was a party to the arbitration agreement. It is submitted that there was no evidence on record about the amount of Rs.30,00,000/- ever paid by the Respondent No.1 to the Petitioner or of the fact that the Respondent No.1 was capable of making payment of any such amount. It is submitted that the only evidence of the loan transaction is in terms of a document, which was executed on a loose paper, cut in the middle, which further suffers from the deficiency of requisite stamp duty. It is submitted that the award in question is not sustainable, being against the public policy and being patently illegal and the same further cannot be sustained as being borne out of the proceedings carried against the consent of the Petitioner. Ld. Counsel for the Petitioner has relied upon the following judgments:
i. Geeta Podar vs. Satya Developers Pvt.
Ltd.: 2022/DHC/3359.
ii. Kona Elevators Ltd. vs. V3S Infratech Ltd.
(FAO(COMM) 62/2022 Delhi High Court. iii. Parkins Eastman Architects DPC & Ors vs. HSCC (INDIA) Ltd. : AIR 2020 SC 59.
iv. TRF Ltd. vs. Energo Engineering Projects Ltd.: AIR 2017 SC 3889 v. Voestalpine Schienen GmBH vs. Delhi Metro Rail Corporation Ltd.: AIR 2017 SC 939 vi. Guwahati Municipal Corporation vs. ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 6 of 27 ARBTN NO. 42/2018 International Constructions Ltd.: AIR 2014 Gau 101.
3.2. Ld. Counsel for the Respondent No.1 has submitted that the Arbitrator was appointed in terms of the right, conferred upon the Respondent No.1 by the contract and there is no legal infirmity associated with such appointment. It is submitted that the Petitioner was duly served with the notice of the arbitration proceedings, which is evident from her objections dated 19.08.2017, which were duly considered and decided by the Ld. Arbitrator. It is submitted that the Petitioner entered appearance through her husband, however did intentionally not contest the same and therefore was rightly proceeded against ex-parte. It is submitted that the Petitioner has not challenged her signatures on the agreement specifically and in the absence of any defence, the Ld. Arbitrator passed a justified award on the merits of the case.
Ld. Counsel for the Respondent No.1 has relied upon the judgment passed by the Delhi High Court in "Arjun Mall Retail Holdings Pvt. Ltd. & Ors. vs. Gunocen INC:
2024:DHC:495-DB".
4. Conclusions on the Objections and Reasons for such Conclusions:
4.1. The Petitioner has raised two fold objections to the impugned award. The Petitioner has challenged the appointment as well as the competence of the Ld. Arbitrator ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 7 of 27 ARBTN NO. 42/2018 to act as an Arbitrator. The Petitioner has also challenged the impugned award on the ground of it being in conflict with the public policy and being patently illegal.
4.2. The principal ground of challenge is the unilateral appointment of Arbitrator without concurrence of the Petitioner and his de-jure ineligibility to act as an Arbitrator, in view of no consent of the Petitioner. It is submitted that the Petitioner was never served with any notice for invocation of the arbitration proceedings or with the notice for appointment of Arbitrator. It is submitted that the Petitioner has challenged the jurisdiction of the Arbitrator in terms of letter dated 19.08.2017 and the Ld. Arbitrator wrongly proceeded with the matter, in view of the objections of the Petitioner.
4.3. It is the contention of the Respondent No.1 that the arbitration agreement empowered the Respondent No.1 to appoint the Arbitrator and the Respondent No.1 appointed the Arbitrator, in exercise of the right conferred by virtue of agreement executed with the consent of the Petitioner. It is submitted that the Petitioner intentionally did not accept the notice for invocation of the arbitration and further opted not to contest the proceedings. It is submitted that the Petitioner could have challenged the agreement before the Ld. Arbitrator, however the Petitioner intentionally opted to not defend the same and the Petitioner cannot now challenge the appointment of the Arbitrator or raise a defence, which was ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 8 of 27 ARBTN NO. 42/2018 previously not raised before the Ld. Sole Arbitrator.
4.4. The original arbitration agreement is in the arbitral record.
The aforesaid agreement is being reproduced hereinbelow:
The last para of the above-mentioned agreement prescribes that the Arbitrator is to be appointed only by the Respondent No.1. The Respondent No.1 has issued a notice dated ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 9 of 27 ARBTN NO. 42/2018 11.07.2017 for invocation of arbitration. The aforesaid notice was sent through speed post to the Petitioner, however the same could not be served and was returned to the Respondent No.1 with the comments that the Petitioner was not available, despite repeated visits of the postman. The original returned envelope containing the notice dated 11.07.2017 has been filed by the Respondent No.1 before the Ld. Arbitrator.
4.5. Thus, the notice for invocation of arbitration has not been served upon the Petitioner. Ld. Arbitrator has entered upon reference on 08.08.2017 and issued a notice to the parties. It is not evident from the arbitral record or from the proceedings as to how the Ld. Sole Arbitrator was intimated about his appointment by the Respondent No.1. Ld. Arbitrator issued another notice dated 19.08.2017 to the parties. Subsequently on 07.09.2017, attendance of the husband of the Petitioner along with an advocate is recorded in the Order, however no Vakalatnama came to be filed on behalf of the Petitioner. Ld. Arbitrator did not verify the authority of the husband of the Petitioner to appear on her behalf.
4.6. The Petitioner has submitted that she has responded to the notice dated 08.08.2017 by a letter dated 19.08.2017, sent through courier, whereas the Ld. Sole Arbitrator has recorded in the Order dated 15.09.2017 that only copy of the aforesaid letter dated 19.08.2017 was filed on 15.09.2017. Be that as it ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 10 of 27 ARBTN NO. 42/2018 may, the Ld. Sole Arbitrator has treated the aforesaid copy of letter dated 19.08.2017 as objections on behalf of the Petitioner herein and decided the same accordingly vide Order dated 15.09.2017.
4.7. The Petitioner has raised the objection to the proceedings and appointment of Ld. Arbitrator against her consent, in terms of the objections dated 19.08.2017. The aforementioned letter dated 19.08.2017 is being reproduced hereinbelow:
"Dated:19.08.2017 To Shri Suneel Kumar Goswami Advocate, Chamber No.323/329, Western Wing, Tis Hazari Courts, Delhi-110054.
Subject: Objection against notice of Arbitration dated 08.08.2017 regarding the appointment of Arbitrator.
Sir, I have received your notice dated 08./08.2017 sent by you as a Arbitrator, to attend the arbitration proceedings before you regarding a reference to adjudicate the dispute between Alok Kumar Gupta and applicant Sabreena Singh. But you have not supply the copy of any reference mentioned in above said notice.
That I have never sent any reference before your goodself to adjudicate the dispute between Alok Gupta and myself.
I have no dispute with Mr. Alok Gupta. Infact Alok Gupta had taken loan from my father in law namely Shri Gulzari Lal and Mr. Alok Gupta has issued ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 11 of 27 ARBTN NO. 42/2018 cheque in favour of my father in law which was dishonoured by the bank and my father in law has failed various cases against Mr. Alok Gupta.
I never appointed you as an Arbitrator at any point of time in any reference and dispute, hence the notice sent by you to me to join arbitration proceedings my kindly be withdrawn immediately.
sd (Sabrina Singh) Copy to:
Shri Alok Gupta S/o Late Sant Raj Gupta R/o J-107, Rajouri Garden, Delhi."
4.8. The Ld. Arbitrator has dismissed the aforesaid objections vide an Order dated 15.09.2017, which is being reproduced hereinbelow:
"Vide this order, I shall dispose of the objection raised on behalf of the respondent vide a latter dated 19.08.2017. The respondent through her counsel Sh. A. Khan (proxy counsel) present along with husband of the respondent has filed only the photocopy of the said letter.
In the said letter, It has been wrongly stated on behalf of the respondent that the undersigned has not sent any reference to to be adjudicated between the parties. In this regard, I observe that the undersigned had duly sent a notice dated 08.08.2017, along with a declaration under the amended Arbitration and Conciliation Act, 1996 to the respondent vide speed post mode and the same was duly delivered upon her.
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 12 of 27 ARBTN NO. 42/2018 The same is evident from the Arbitral record, wherein the original postal receipt and the downloaded delivery report is there.
With regard to the next objection raised by the respondent to the effect that she has not dispute with the claimant, Sh. Alok Gupta and other pleas on merits are concerned, the same are matters on merits, which the respondent is supposed to mentioned in her reply to the claim petition. The said pleas would be considered, if raised, by way a reply in accordance with law.
With regard to the next objection that respondent never appointed the Undersigned as an arbitrator, I hold that a perusal of the loan agreement dated 02.11.2015, it is apparent that the right to appoint the sole arbitrator has been vested in the party of the second part i.e. the claimant, Sh. Alok Gupta.
In view of the above, the objections raised on behalf of the respondent are rejected as not maintainable and dismissed."
4.9. Ld. Counsel for the Petitioner has relied upon the judgment passed by the Hon'ble Supreme Court of India in "TRF Ltd. vs. Energo Engineering Projects Ltd: (2017) 8 SCC 377"
and in "Perkins Eastman Architects vs. HSCC Ltd: AIR 2020 SC 59", in order to submit that a party cannot unilaterally appoint the Arbitrator and such appointment is void ab initio. Further reliance is placed upon the judgment passed by the Hon'ble High Court of Delhi in "Geeta Podar vs. Satya Developers Pvt. Ltd.: 2022/DHC/3359", and, "Shakti Pumps vs. Apex Buildsys (19.03.2025): OMP (COMM) 107/2024". Ld. Counsel for the Respondent No.1 has submitted that the aforesaid judgments, as relied upon by ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 13 of 27 ARBTN NO. 42/2018 the Ld. Counsel for the Petitioner, pertains to the scope of appointment of Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996 and do not pertain to challenge to an award under Section 34 of the Arbitration and Conciliation Act, 1996. Ld. Counsel for the Petitioner has further placed his reliance upon the judgment of the Hon'ble High Court of Delhi in "Arjun Mall Retail Holdings Pvt.
Ltd. & Ors. vs. Gunocen INC: 2024:DHC:495-DB". It is submitted that in the aforesaid case, the contentions similar to the present case were raised to challenge the award, however the challenge was rejected on the ground that the Arbitrator has sent multiple notices to the opposite party and it did not appear to contest the proceedings before him.
4.10. The aspect of unilateral appointment and the scope of challenge to such an award under Section 34 of Arbitration and Conciliation Act, 1996 has recently been enunciated and explained by the Hon'ble Division Bench of the Hon'ble High Court of Delhi in "M/s Mahavir Prasad Gupta vs. Govt. of NCT of Delhi:2025/DHC/4781-DB". The Hon'ble High Court of Delhi in the aforesaid judgment has referred to and discussed the judgments, relied upon by the Counsels in the present case. The Hon'ble Division Bench has framed the issues for consideration in para No.31 of the judgment and the aforesaid para is being reproduced hereinbelow:
"31. The following issues arise for consideration in this case:
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 14 of 27 ARBTN NO. 42/2018 A. In view of requirement of express waiver in writing under proviso to Section 12(5) of the Act, can the parties by conduct of participating in arbitration proceedings and not raising objection before the arbitrator, be deemed to have waived the objection against the unilateral appointment?
B. Does the award passed by unilaterally appointed arbitrator is per se bad and a nullity, which goes to the root of the jurisdiction of the arbitrator, that entitles any party (including the party that unilaterally appointed the arbitrator itself) to object at any stage during or after the arbitration proceedings including the proceedings for challenge to the award under Section 34 of the Act and/or enforcement of the award under Section 36 of the Act?"
Thereafter the validity of uniliteral appointment of Arbitrator has been discussed in para No.32 to 37 of the aforesaid judgment, which are being reproduced hereinbelow:
"Validity of unilateral appointment of the arbitrator:
32. It is a well-settled position in law that unilateral appointment of an arbitrator by one of the parties to the dispute is impermissible and invalid being contrary to the scheme of the Act.
Section 12(5) of the Act read with the Seventh Schedule of the Act lays down that appointment of any person as an arbitrator that gives rise to justifiable doubts as their independence or impartiality, is ineligible to act as an arbitrator. When the power to appoint an arbitrator is exercised unilaterally, such an appointment is ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 15 of 27 ARBTN NO. 42/2018 null and void and an award rendered by an ineligible arbitrator would be unenforceable.
33. The question whether a person, who is ineligible to act as an arbitrator can appoint an arbitrator, is no longer res integra. The law on this aspect has been settled by TRF Limited v. Energo Engineering Projects Limited (2017) 8 SCC 377, wherein it has been categorically held by the Supreme Court that a person who is ineligible to be an arbitrator cannot nominate any other person as the arbitrator:
"54. In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so."
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 16 of 27 ARBTN NO. 42/2018
34. The Supreme Court in Perkins (supra), relying upon the decision in TRF (supra), has held that a party who has an interest in the outcome of the decision in an arbitration proceeding must not have the power to appoint a sole arbitrator. In a situation where the right to appoint a sole arbitrator rests solely with one party, that party's selection will inherently carry an exclusive influence in shaping or directing the path of dispute resolution:
"20. We thus have two categories of cases. The first, similar to the one dealt with in TRF Ltd. [TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases.
We are conscious that if such deduction is drawn from the decision of this Court in ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 17 of 27 ARBTN NO. 42/2018 TRF Ltd. [TRF Ltd. v. Energo Engg.
Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] , all cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an arbitrator.
21. But, in our view that has to be the logical deduction from TRF Ltd. [TRF Ltd. v.
Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] Para 50 of the decision shows that this Court was concerned with the issue, "whether the Managing Director, after becoming ineligible by operation of law, is he still eligible to nominate an arbitrator" The ineligibility referred to therein, was as a result of operation of law, in that a person having an interest in the dispute or in the outcome or decision thereof, must not only be ineligible to act as an arbitrator but must also not be eligible to appoint anyone else as an arbitrator and that such person cannot and should not have any role in charting out any course to the dispute resolution by having the power to appoint an arbitrator. The next sentences in the paragraph, further show that cases where both the parties could nominate respective arbitrators of their choice were found to be completely a different situation. The reason is clear that whatever advantage a party may derive by nominating an arbitrator of its choice would get counter-balanced by equal power with the other party. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 18 of 27 ARBTN NO. 42/2018 always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and recognised by the decision of this Court in TRF Ltd. [TRF Ltd. v.
Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72]"
35. This Court has in Osho G.S. (supra), relied upon by the Respondent, has followed the decision in Perkins (supra) to set aside an award with the finding that a request by one party to another for the unilateral appointment cannot be considered a valid waiver under the proviso to Section 12(5) of the Act.
36. The decision of the Constitution Bench of the Supreme Court in CORE (supra), while upholding the judgments of TRF (supra) and Perkins (supra) has conclusively held that a clause allowing unilateral appointment of an arbitrator gives justifiable doubts as to the independence and impartiality of the sole arbitrator. The Supreme Court further held that unilateral appointment clauses in public private contracts are violative of Article 14 of the Constitution of India:
"129. Equal treatment of parties at the stage of appointment of an arbitrator ensures impartiality during the arbitral proceedings. A clause that allows one party to unilaterally appoint a sole arbitrator is exclusive and hinders equal participation of the other party in the appointment process of arbitrators. ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 19 of 27 ARBTN NO. 42/2018 Further, arbitration is a quasi-judicial and adjudicative process where both parties ought to be treated equally and given an equal opportunity to persuade the decision-maker of the merits of the case. An arbitral process where one party or its proxy has the power to unilaterally decide who will adjudicate on a dispute is fundamentally contrary to the adjudicatory function of arbitral tribunals.
xxxxxx
168. In the present reference, we have upheld the decisions of this Court in TRF (supra) and Perkins (supra) which dealt with situations dealing with sole arbitrators. Thus, TRF (supra) and Perkins (supra) have held the field for years now. However, we have disagreed with Voestalpine (supra) and CORE (supra) which dealt with the appointment of a three-member arbitral tribunal. We are aware of the fact that giving retrospective effect to the law laid down in the present case may possibly lead to the nullification of innumerable completed and ongoing arbitration proceedings involving three-member tribunals. This will disturb the commercial bargains entered into by both the government and private entities. Therefore, we hold that the law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction only applies to three-member tribunals.
xxxxxx J. Conclusion ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 20 of 27 ARBTN NO. 42/2018
169. In view of the above discussion, we conclude that:
a. The principle of equal treatment of parties applies at all stages of arbitration proceedings, including the stage of appointment of arbitrators;
b. The Arbitration Act does not prohibit PSUs from empanelling potential arbitrators. However, an arbitration clause cannot mandate the other party to select its arbitrator from the panel curated by PSUs;
c. A clause that allows one party to unilaterally appoint a sole arbitrator gives rise to justifiable doubts as to the independence and impartiality of the arbitrator. Further, such a unilateral Page clause is exclusive and hinders equal participation of the other party in the appointment process of arbitrators;
d. In the appointment of a three-member panel, mandating the other party to select its arbitrator from a curated panel of potential arbitrators is against the principle of equal treatment of parties. In this situation, there is no effective counterbalance because parties do not participate equally in the process of appointing arbitrators. The process of appointing arbitrators in CORE (supra) is unequal and prejudiced in favour of the Railways;
e. Unilateral appointment clauses in public-
private contracts are violative of Article 14 of the Constitution;
f. The principle of express waiver contained under the proviso to Section 12(5) also applies to situations where the parties seek ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 21 of 27 ARBTN NO. 42/2018 to waive the allegation of bias against an arbitrator appointed unilaterally by one of the parties. After the disputes have arisen, the parties can determine whether there is a necessity to waive the nemo judex rule; and g. The law laid down in the present reference will apply prospectively to arbitrator appointments to be made after the date of this judgment. This direction applies to three-member tribunals."
37. Hence, a unilateral appointment of the sole arbitrator or the presiding arbitrator by a party to the arbitrations seated in India is strictly prohibited and considered as null and void since its very inception. Resultantly, any proceedings conducted before such unilaterally appointed Arbitral Tribunal are also nullity and cannot result into an enforceable award. Any award passed by the unilaterally appointed Arbitral Tribunal is against public policy of India and can be set aside under Section 34 of the Act and/or refused to be enforced under Section 36 of the Act."
Thus, the Hon'ble Division Bench has held that unilateral appointment of Sole Arbitrator is strictly prohibited, which renders the proceedings conducted by such an Arbitrator a nullity and such an award will be against the public policy and can be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
4.11. The Hon'ble Division Bench has further held that party does not waive its right to object to such a proceedings even if the aforesaid issue has not been raised before the Arbitrator. It is ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 22 of 27 ARBTN NO. 42/2018 held that the right to object to unilateral appointment can be waived only in writing. The final conclusion of the afore- mentioned judgment is being reproduced hereinbelow:
"CONCLUSION:
84. In view of the above discussion, the legal position on the unilateral appointment of the Sole and Presiding Arbitrator is summarized as under:
a) Mandatory Requirement: Any arbitration agreement providing unilateral appointment of the sole or presiding arbitrator is invalid. A unilateral appointment by any party in the arbitrations seated in India is strictly prohibited and considered as null and void since its very inception. Resultantly, any proceedings conducted before such unilaterally appointed Arbitral Tribunal are also nullity and cannot result into an enforceable award being against Public Policy of India and can be set aside under Section 34 of the Act and/or refused to be enforced under Section 36 of the Act.
b) Deemed Waiver: The proviso to Section 12(5) of the Act requires an express agreement in writing. The conduct of the parties, no matter how acquiescent or conducive, is inconsequential and cannot constitute a valid waiver under the proviso to Section 12(5) of the Act. The ineligibility of a unilaterally appointed arbitrator can be waived only by an express agreement in writing between the parties after the dispute has arisen between them. Section 12(5) of the Act is an exception to Section 4 of the Act as there is no deemed waiver under Section 4 of the Act for unilateral appointment by conduct of participation in the proceedings.
The proviso to Section 12(5) of the Act requires ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 23 of 27 ARBTN NO. 42/2018 an „express agreement in writing‟ and deemed waiver under Section 4 of the Act will not be applicable to the proviso to Section 12(5) of the Act.
c) Award by an Ineligible Arbitrator is a Nullity:
An award passed by a unilaterally appointed arbitrator is a nullity as the ineligibility goes to the root of the jurisdiction. Hence, the award can be set aside under Section 34(2)(b) of the Act by the Court on its own if it „finds that‟ an award is passed by unilaterally appointed arbitrator without even raising such objection by either party.
d) Stage of Challenge: An objection to the lack of inherent jurisdiction of an arbitrator can be taken at any stage during or after the arbitration proceedings including by a party who has appointed the sole or presiding arbitrator unilaterally as the act of appointment is not an express waiver of the ineligibility under proviso to Section 12(5) of the Act. Such objection can be taken even at stage of challenge to the award under Section 34 of the Act or during the enforcement proceedings under Section 36 of the Act."
Further, the aforesaid judgment has also discussed the decision in Arjun Mall (Supra) and the aforesaid decision has been held to be per-incurim in para 69 of the judgment.
4.12. In the present case, the Petitioner was not served with the notice for invocation of the arbitration. Though the Ld. Arbitrator has issued a notice dated 08.08.2017, however the Petitioner has objected to the appointment of Arbitrator as well as to the proceedings before him. Ld. Sole Arbitrator ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 24 of 27 ARBTN NO. 42/2018 has dismissed the objections of the Petitioner on the ground that the Respondent No.1 had exclusive power to appoint the Arbitrator, in terms of the agreement between the parties. The Petitioner has disputed the execution of the very agreement, which contains the arbitration agreement. The Petitioner neither participated nor gave consent to the proceedings before the Arbitrator and objected to the same in terms of objections dated 19.08.2017. In terms of the law discussed hereinabove, the Petitioner could have waived her right to object the unilateral appointment in writing, however the Petitioner did the opposite and exercised the right to object to the appointment. Therefore, in view of the law discussed hereinabove, the unilateral appointment of the Arbitrator by the Respondent No.1 is void ab-initio and award passed in the aforesaid proceedings is a nullity and is against public policy.
4.13. Even on the facts of the case, the view of the Ld. Arbitrator in the award cannot be said to be a possible one, in terms of insufficient evidence on record to sustain the conclusions. The Respondent No.1 has contended that he had given a loan of Rs.30,00,000/- to the Petitioner. The amount has been stated to be given in cash. The agreement between the parties is written on a paper, which is cut at the bottom. The agreement has not been stamped, in terms of Article 1 or Article 5 of the Indian Stamp Act, 1899. The loan was stated to be agreed to be repaid after one and half years, along with an interest amount of Rs.5,00,000/-, which is exorbitant. ________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 25 of 27 ARBTN NO. 42/2018 The nature of the need of the Petitioner for an amount of Rs.30,00,000/-remains unexplained and unspecified on record. Even if the amount was to be given in cash, no explanation has been provided as to why the agreement has been executed on such loose sheet of paper, cut at the bottom. There is nothing on record to infer anything about the financial capability of the Respondent No.1 to give a loan of such a huge amount in cash. Though in view of the decision in Mahavir Prasad Gupta (supra), this Court does not need to take the decision in Arjun Mall (supra) into further consideration, however the facts of the present case are distinguishable even from the facts of the Arjun Mall (supra) as in the present case except the loan agreement, the transaction in question is not corroborated by any other document or evidence on record. In Arjun Mall (supra), the previous transactions between the parties and contradictory contentions of the party challenging the award were considered by the Court, whereas in the present case, there is nothing on record whereby, the previous relationship of the parties for entering into a loan transaction in cash for such a huge amount, the financial capability of the Respondent No.1 or disbursal of the amount to the Petitioner, could be inferred. Therefore, even in terms of an ex-parte case, the evidence was hardly sufficient to conclude the liability for such a huge amount.
4.14. Thus, the impugned award is against public policy and is liable to be set aside.
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 26 of 27 ARBTN NO. 42/2018
5. Final decision:
Accordingly, in terms of the discussion/reasons stated hereinabove, the present petition/objections under Section 34 of the Arbitration & Conciliation, 1996 is allowed and the award dated 17.02.2018, passed by Ld. Sole Arbitrator Mr. Suneel Kumar Goswami in Arbitration matter, titled as, 'Alok Gupta vs. Sabrina Singh', is set aside. The files be consigned to the record room after due compliance.Digitally signed by ANIL
ANIL CHANDHEL
CHANDHEL Date:
2025.07.28
16:01:08 +0530
Announced in the open Court (ANIL CHANDHEL)
today on 28th of July, 2025 DISTRICT JUDGE-04
WEST DISTRICT
THC/DELHI/28.07.2025
________________________________________________________________ Sabrina Singh vs. Alok Gupta Page No. 27 of 27 ARBTN NO. 42/2018