Delhi District Court
Ajaib Singh vs Mahindra And Mahindra Financial ... on 20 June, 2025
IN THE COURT OF MS. PREETI AGRAWAL GUPTA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
OMP (COMM) No.115/2022
CNR No.DLNW010104112022
AJAIB SINGH
Proprietor
M/s Galana Costructions Com
79, Gali No.2, Haripur, Sector-4,
Panchkula Urban Estate EO,
Panchkula-134112, Haryana.
[email protected]
...Petitioner
Vs
1. MAHINDRA & MAHINDDRA FINANCIAL SERVICES
LTD.
Through its Director/Principal Officer
Having its Office at :
2nd Floor, Sadhana House,
Behind Mahindra Towers,
P.B. Marg, Worli, Mumbai-400018.
2. Sh. Ravinder Pal Singh, Advocate
Sole Arbitrator,
32, Krihshna Apartments,
BH (East), Shalimar Bagh,
Delhi-110088.
....Respondents
PETITION UNDER SECTION 34 OF THE ARBITRATION
& CONCILIATION ACT, 1996 SEEKING SETTING-ASIDE
THE ARBITRAL AWARD DATED 14.07.2022, IN
ARBITRATION CASE TITLED AS 'M/S MAHINDRA &
MAHINDRA FINANCIAL SERVICES LTD VS. GALANA
CONSTRUCTION COM & ORS.'.
Digitally
signed by
PREETI
PREETI AGRAWAL
AGRAWAL GUPTA
OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. GUPTA Date:
2025.06.20
Page 1/17
15:05:23
+0530
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01
North-West/Rohini/New Delhi.
20.06.2025
Date of institution of Petition : 17.10.2022
Date of Assignment to this Court : 18.10.2024
Date on which reserved : 17.05.2025
Date of Judgment : 20.06.2025
JUDGMENT
1. By way of this judgment, the present petition Under Section 34 of the Arbitration & Conciliation Act, 1996 (hereinafter called as A & C Act) is being taken up for adjudication, as per law.
2. This petition has been filed on behalf the Petitioner Sh. Ajaib Singh, seeking setting aside of Arbitral Award dated 14.07.2022 passed by Sh. Ravinder Pal Singh, Ld. Sole Arbitrator, in respect of claim of the respondent namely M/s Mahindra & Mahindra Financial Services Ltd. By way of the impugned Award, claim of the respondent/Claimant has been allowed.
3. Upon notice of the petition, Counsel for M/s Mahindra & Mahindra Financial Services Ltd./respondent no.1 appeared and filed its detailed reply/response to the petition.
4. The Arbitral Record was summoned by the Court but could not be placed on record for want of its traceability on behalf of Ld. Sole Arbitrator. Several opportunities were given to the claimant/respondent to make endeavour to trace the Arbitral record. However the arbitral record could not be traced and ld. Counsel for respondent herself gave 'No Objection', by way of Statement 'At Bar' before the Court, for considering the present Digitally signed by PREETI OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI AGRAWAL AGRAWAL GUPTA Page 2/17 GUPTA Date:
2025.06.20 15:05:32 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 petition/objection as per the copies of the Arbitral Award, available with the parties. Accordingly, Arbitral Award dated 14.07.2022, which is the subject matter in question, which forms part of record, is an admitted document and there is no other record/document available for consideration of the Court on the aspect of Arbitration Proceedings, except the Arbitral Award in question. Further, petitioner also filed original envelop showing postal receipt, issued by the respondent no.2/Sole Arbitrator as on 23.07.2022 and admittedly received by the petitioner on 25.07.2022 containing the alleged Arbitral Award dated 14.07.2022, which is not disputed by the respondent.
Accordingly, the Arbitral Award in respect of the subject matter of the present petition, has been placed before the Court for due perusal and consideration, on merits of the present case.
5. The present petition has been filed on behalf of Petitioner U/S. 34 of the Arbitration & Conciliation Act, 1996, challenging the ex-parte Award passed by Ld. Sole Arbitrator Sh. Ravinder Pal Singh on 14.07.2022, on various grounds which have been crystalised herein-below:-
(i) The impugned Award has been passed by Ld. Sole Arbitrator, who was unilaterally appointed by the respondent and hence, not sustainable.
(ii) The impugned Award has been passed in the mechanical manner, on the basis of a standard form of contract and not binding upon the petitioner.
(iii) The intent of initiation of Arbitration was not notified to the Petitioner. Proper service has not been effected upon the OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 3/17 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.20 15:05:37 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 petitioner, prior to passing of the Award. The impugned Award has been passed ex-parte, without consent of the Petitioner.
(v) The appointment of Ld. Arbitrator was not made in accordance with the provisions U/S 11 of the Arbitration and conciliation Act, as the consent of petitioner was not taken before appointment of Ld. Arbitrator.
(vi) Petitioner never gave consent for the place of arbitral proceedings as required u/s 20 of the Act.
(vii) Ld. Arbitrator ignored the pendency of the civil Suit before the Panchkula Court, filed by the petitioner and passed the impugned Award despite pendency of the said Suit.
(viii) The arbitration proceedings are void ab initio, which have been commenced and concluded by Ld. Sole Arbitrator in utmost haste and the impugned Award has been passed by Ld. Arbitrator without giving due opportunity to petitioner to present his case, as per law.
(ix) Ld. Sole Arbitrator is not competent in terms of Section 12(5) of Arbitration and Conciliation Act, 1996 and hence passed the impugned Award, which is bad in the eyes of law. Petitioner never waived his right to object to ineligibility of an arbitrator of arbitrator u/s 12(5) of the Act and there was no express agreement executed between the parties, after the dispute arose.
(x) The appointment of the Sole Arbitrator violates Section 12 of the Arbitration and Conciliation Act, as the same arbitrator was appointed by Respondent No.1 in many matters (Stock Arbitrator).
(xi) The impugned Award is against public policy, biased, against basic tenets of rules of justice and is unforceable. Digitally signed by PREETI OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI AGRAWAL GUPTA Page 4/17 AGRAWAL GUPTA Date:
2025.06.20 15:05:44 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025
(xii) The impugned Award been passed without deciding the application moved by the petitioner for taking decision upon the jurisdiction of respondent no.2 first, and for passing directions to respondent no.1 for providing the documents and claim petition, therefore, the impugned Arbitral Award is not binding on the petitioner and is liable to be set aside.
6. The written reply/response was filed on behalf of respondent to the present petition, wherein all the allegations made in the petition have been denied and it is contended that the present petition is not maintainable for setting aside the Award under Section 34 of the Act. It is averred that the Arbitral Award dated 14.07.2022 is a well reasoned Award and is sustainable in the eyes of law. It is further averred that the Arbitral Award is neither against the public policy nor perverse or patently illegal, as claimed in the petition. It is further stated that the arbitration clause was invoked and matter was referred to Ld. Sole Arbitrator, in terms of arbitration clause in Loan cum hypothecation agreement executed between the parties. Respondent No.2, after entering upon the reference, issued notice of appearance dated 20.02.2021 to the petitioner, co- borrower, Shri Ajaib Singh and guarantor Sh. Malkiat Singh, via speed post at their last known addresses, for the hearing on 06.03.2021. Again notice of appearance dated 06.03.2021 were issued upon the petitioner, co-borrower, guarantor, for the hearing on 03.04.2021. On 03.04.2021, respondents appeared through Counsel and noted next date as 16.05.2025. However, thereafter, when they failed to appear on subsequent dates, the OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 5/17 PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.20 15:05:50 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 arbitrator proceeded ex-parte against them. After completing the arbitration proceedings, the arbitrator passed and signed the Award on 14.07.2022. A copy of the award was allegedly sent to the petitioner/co-borrower and guarantor, but despite receiving it, they did not make the payment of the awarded amount to Respondent No.1. It is alleged that the Petitioner has concealed material facts, intentionally avoided to appear before Ld. Arbitrator to delay the proceedings, praying for dismissal of the petition for want of merits.
7. Arguments heard as addressed by both the sides. Arbitral record has been perused. Legal position has been examined. During the course of arguments on behalf of the petitioner, two main grounds that have been assailed for challenging the impugned Award, are based on the legal position wherein the very appointment of the Sole Arbitrator has been challenged. Besides other objections on merits of the case, legal objection as to the impugned Award being unsustainable has been raised as being against public policy and principles of natural justice.
8. On merits of the Award, Ld. Counsel for Petitioner has challenged the impugned Arbitral Award dated 14.07.2022 with the contentions that the Petitioner availed a loan facility from Respondent No.1 on 31.12.2018, and a loan amount of Rs.47,00,000/- was disbursed for the purchase of vehicle with make Tata Hitachi Hydraulic Ex, Engine No. SP2160272, Chassis No. SP2160272, vide Loan Agreement No. 5927728 OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI Page 6/17 AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.06.20 15:05:57 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 executed between the Petitioner and the Respondent No.1. Respondent no.1 allegedly sent demand notice dated 28.01.2021 calling upon the petitioner to pay a sum of Rs.50,23,113/-. The said notice was never received by the petitioner, however, the petitioner had been asking the respondent no.1 to disclose the amount to be paid by him towards the loan account. Petitioner also filed a Suit in the court of Civil Judge, Senior Division, Panchkula, seeking Decree for Permanent and Mandatory Inunction against respondent no.1. Later on, petitioner received a letter dated 20.02.2021 from respondent no.2 which was duly replied by the petitioner through his counsel vide reply dated 09.03.2021, after appearing before Ld. Arbitrator through his Counsel on 03.04.2021, requesting the Ld.Arbitrator not to proceed with the matter, raising several points regarding absence of valid agreement between the parties qua the arbitration and lack of jurisdiction of Arbitrator, as parties to the arbitration did not live or work for gain at Delhi. The Sole Arbitrator (Respondent No.2), unilaterally appointed by Respondent No.1, issued an ex-parte award on 14.07.2022, without deciding his jurisdiction, supply of documents or giving the applicant an opportunity to present his case, despite pendency of the aforesaid Civil suit.
9. It is contended that petitioner was never served with any notice of Invocation dated 15.02.2021 with regard to the proceedings, having been initiated by the respondent no.2 and that he received the copy of Award dated 14.07.2022, only on 25.07.2022. It is also submitted that the appointment of the ld.
OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed Page 7/17PREETI by PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.06.20 15:06:08 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 Arbitrator was not made in accordance with the provisions u/s 11 of the Arbitration and Conciliation Act, 1996 by respondent no.1 as the consent of the petitioner was not taken before appointment of respondent no.2, and also that the petitioner never gave consent for the place of the arbitral proceedings as required u/s 20 of the Act. On receipt of notice of appearance from the sole arbitrator for 03.04.2021, petitioner specifically appeared before the Sole Arbitrator and took objection to the mode of appointment of the Arbitrator and the jurisdiction of the Arbitral proceedings. It is further contended that the petitioner never gave any written consent in favour of the arbitrator for conducting the arbitration proceedings, which were conducted in a one sided and biased manner, without the petitioner having any hope of impartiality or neutrality. Accordingly, the petitioner never appeared before the Arbitrator, after raising objections on appearance on 03.04.2021. Thus, it is contended that the arbitration proceedings have been held without the knowledge and consent of the applicant since, notice of invocation of the arbitrator was never served upon the petitioner and the arbitration process was continued, despite specific objection by the petitioner, ignoring provisions of Section 12(5) of the Arbitration and Conciliation Act, 1996 and whole proceedings were held, at the instance of respondent no.1. The petitioner challenges the arbitral award under Section 34 of the Arbitration and Conciliation Act, 1996, arguing that the arbitration process was unfair, the appointment of the arbitrator was unilateral and invalid, and the award was arbitrary, biased, and contrary to Indian law and principles of natural justice. PREETI Digitally signed by PREETI AGRAWAL OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 8/17 AGRAWAL GUPTA GUPTA Date:
2025.06.20 15:06:14 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025
10. The petition has been strongly contested on behalf of the respondent asserting that a well reasoned and legally enforceable Award dated 14.07.2022 has been passed by Ld. Arbitrator, who was appointed as per the binding terms and conditions of the Loan Agreement executed between the parties, incorporating an Arbitration Clause. It is further contended that respondent No.2 (Sole Arbitrator), after entering upon the reference, issued notice for appearance on 20.02.2021 upon the petitioner/co-borrower and guarantor, via speed post at their last known addresses for the hearing on 06.03.2021 and again on 06.03.2021, for 03.04.2021. Respondents appeared on 03.04.2021 through Counsel. The arbitrator proceeded ex-parte against them, when the petitioner deliberately failed to further participate in the arbitration proceedings, despite Notice. It is contended that a copy of the Award was sent to both, the petitioner and the co-borrower, but despite receiving it, they did not comply for payment nor filed any challenge to the impugned Award, as per law. Alleged reply dated 09.03.2021 filed by the petitioner, in reply to notice dated 20.02.2021, is vehemently denied. It has been contended that the Petitioners failed to raise any objection, during the arbitration proceedings and have thus, waived their right to challenge the appointment of the Sole Arbitrator. It is contended that a valid and enforceable Award dated 14.07.2022 was passed by Ld. Sole Arbitrator / respondent no.2 and that the petition be dismissed, on merits.Digitally signed by PREETI
PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.20 15:06:20 +0530 OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 9/17 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025
11. The Court has appreciated vehement arguments on behalf of respective Counsels and has perused and briefly reproduced herein-above the averments and pleadings before the Court. The Statutory provisions have also been considered.
During course of arguments, numerous Authorities have been relied upon by Ld. Counsels, which have also been appreciated as per the facts and circumstances of this case.
12. In the peculiar facts of the case, the impugned Award dated 14.07.2022 has been passed by a Sole Arbitrator, after the claimant/respondent no.1 nominated the Sole Arbitrator, which was accepted. Allegedly, upon notice of arbitration, the Petitioner, who is respondent before the Arbitrator, appeared before the Arbitrator on 03.04.2021 raising objections but was proceeded ex-parte and the claimant filed its Statement of Claim, affidavit of evidence. The Arbitrator proceedings were concluded after final hearing, leading to passing of the impugned Award dated 14.07.2022. By way of the said Arbitral Award, respondent no.1 herein as claimant, sought recovery on outstanding dues computed in respect of vehicle Loan Facility availed by the Petitioner herein, from the respondent. The claim was deemed proved by the Ld. Arbitrator, who passed the impugned Award dated 14.07.2022, as per the Claim, alongwith interest and costs.
13. The present petition has been filed by the Petitioner raising objections on several grounds, as crystalised in the foregoing Para 5 herein-above. It is contended in support of the petition that the Petitioner did not receive any Notice of OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 10/17 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.20 15:06:28 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 Invocation dated 15.02.2021. It is further case contended vehemently that the appointment as Sole Arbitrator, unilaterally and without consent of the Petitioner, is bad in the eyes of law and violative of principles of natural justice and therefore, any Award or Order dated 14.07.2022, passed by the Sole Arbitrator, in disregard of law, is bad in the eyes of law and liable to be set- aside. On the other hand, the filing of the present petition U/S 34 of Arbitration and Conciliation Act, 1996 by the petitioner/principal borrower, has been objected on the ground that petitioner himself has admitted receipt of notice/letter dated 20.02.2021 from Ld. Arbitrator, which is deemed served upon the petitioner. Submitting contentions on the merits of the petition, it is stated that a well reasoned Award has been passed by the Arbitrator on actual facts of the present case, as per law and that the petitioner himself deliberately did not participate in the arbitral proceedings despite Notice and is accordingly, liable to pay, as per the Award, praying for dismissal of the present petition.
14. Considered. Arbitral proceedings have been perused which record that Claimant (Respondent) sent Notice of Invocation/appointment of Arbitrator 15.02.2021/18.02.2021 invoking the arbitration clause to Mr. Ravinder Pal Singh, with copy allegedly sent to respondent (Petitioner herein), appointing thereby Mr. Ravinder Pal Singh as Sole Arbitrator to decide the dispute. As per case of the petitioner, letter of invocation/appointment of Arbitrator dated 15.02.2021 and 18.02.2021 were never delivered to them. Further notice of OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 11/17 PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.20 15:06:41 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 appearance dated 20.02.2021 was sent to petitioner, for 06.03.2021 and notice of appearance dated 06.03.2021 for 03.04.2021. As per the case of the Petitioner, petitioner received letter dated 20.02.2021 from respondent no.2 which was duly replied by the petitioner through his counsel vide reply dated 09.03.2021, requesting the Ld.Arbitrator not to proceed with the matter, raising several points regarding absence of valid agreement between the parties qua the arbitration and lack of jurisdiction of Arbitrator, as parties to the arbitration did not live or work for gain at Delhi. It is further case of the petitioner that thereafter, no notices were received by him, before or after the claim petition was entertained by the Sole Arbitrator. It is admitted case of respondent no.1 that the notices were deemed duly served, and the arbitrator proceeded ex-parte against the petitioner/co-borrower and guarantor. Respondent no.1 has failed to file any postal service report, on record, to support the contention of respondent no.1, with regard to due service of the Invocation notice, notice of appointment or supply of claim petition/documents, upon petitioner, which is vehemently contested by the petitioner. There is no document filed by the respondent or annexed in the arbitral record to show any proof of despatch by postal receipt or to show that copy Notice of invocation/appointment was delivered upon the petitioner. On the other hand, it is the case of the petitioner that upon receipt of notice of appearance from the sole arbitrator for 03.04.2021, he appeared before the Arbitrator to raise objections regarding the appointment of the Arbitrator. It is also the case of the petitioner that a reply dated 09.03.2021 was issued by the petitioner, after OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 12/17 PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.20 15:06:48 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 receipt of notice of appearance dated 20.02.2021 from the arbitrator, which fact finds no mention in the arbitral record. The petitioner has not placed any postal receipt to show despatch of alleged reply dated 09.03.2021. It is also not the case of the petitioner that copy of reply dated 09.03.2021 was presented by him before the Arbitrator, when he appeared on 03.04.2021, raising objections upon the legality of the appointment of the arbitrator and the arbitration proceedings.
15. It is further considered that the petition U/S 34 of the Act, has been filed on behalf of petitioner against the impugned Arbitral Award dated 14.07.2022. The locus of the petitioner in the dispute is as a principal borrower against the loan sanctioned by the respondent no.1 herein. The admitted facts are that an Arbitral Award dated 14.07.2022 has been passed pursuant to the Invocation of the Arbitration Agreement by the respondent. The Sole Arbitrator has passed an ex-parte Award dated 14.07.2022, purportedly on merits of the claim filed by the respondent herein, before the Arbitrator. The present petition has been filed on behalf of the non-applicant/petitioner U/S 34 of Arbitration and Conciliation Act 1996, on various grounds which have been detailed herein-before vide para-5 of this judgment. Besides several grounds raised by the petitioner challenging the impugned Award, the prime most challenge to the impugned Award has been raised on the ground that the impugned Award has been passed by the sole Arbitrator who was unilaterally appointed by the respondent, without consent of the petitioner and that the very appointment of the Arbitrator violates Section OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI Page 13/17 AGRAWAL AGRAWAL GUPTA Date: GUPTA 2025.06.20 15:06:54 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 12(5) of the Arbitration and Conciliation Act 1996. It is prayed by way of the petition that the impugned Award be declared non-
est in the eyes of law, being against public policy and basic principal of natural justice.
16. It shall be now relevant to examine the well settled legal position, in regard to the scope of interference by the Court as per Section 34 of the Arbitration and Conciliation Act. The relevant statutory provisions which empowers the Petitioner to take recourse to a Court against the Arbitral Award, has been provided under Sub-sections (1) and (2) of Section 34, as amended by the Arbitration and Conciliation (Amendment) Act, 2019. This Court has to exercise its judicial discretion in the backdrop of the Statutory Law provided under Section 34 of the Act, by way of well settled judicial pronouncements and landmark judgements of Hon'ble Superior Courts.
17. The numerous landmark binding judgments in "Perkins Eastman Architects DPC & Anr. Vs. HSCC (India) Ltd." reported in [2019] 17 S.C.R. 275 and "Bharat Broadband Network Limited Vs. United Telecoms Limited" reported in [2019] 6 S.C.R 97, have laid down resonating legal position to hold that a unilaterally appointed arbirator is de jure ineligible to perform his functions and that his mandate is automatically terminated under Section 14(1)((a) of the Act. It has been further laid down that the ineligibility of the Sole Arbitrator, who has been unilaterally appointed by the claimant, as contained in Section 12(5) of Act, can be cured only through an express OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 14/17 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.20 15:07:02 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 waiver.
18. In this respect, Hon'ble High Court of Delhi has been further pleased to consider and lay down the binding law in EFA(COMM) 2/2023 CM APPL. 25636/2023, CM APPL. 25637/2023, CM APPL. 25638/2023, CM APPL. 25639/2023 & CM APPL. 25635/2023, in case titled 'SBI Card and Payment Services Limited. Vs. Narendra Kumar Prajapat' vide orders dated 17.05.2023. Hon'ble High Court of Delhi has been pleased to hold that an Award rendered by an Arbitrator, who is ineligible to act as an Arbitrator by virtue of Section 12(5) of the 'Act' is a nullity and, therefore, cannot be enforced. The finding of the Hon'ble High Court of Delhi have been fortified by Hon'ble Apex Court in Special Leave Petition (Civil) Diary No(s). 47322/2023, vide orders dated 12.12.2023, and is accordingly, the law of the land.
19. The legal position has been now nailed and well settled by the recent pronouncement by five Judge's Constitution Bench of Hon'ble Apex Court in case titled 'Central Organisation of Railway Electrification Vs. M/s ECI SPIC SMO MCML (JV)' in Civil Appeal Nos.9486-9487 of 2019, dated 08.11.2024. The Hon'ble Apex Court, by majority view, was seized of the matter pertaining to a Government Agency wherein the arbitration proceedings involved three member tribunal. The Hon'ble Apex Court duly considered the Reference after appreciating the adequate safeguards provided within the Arbitration Act to ensure a level playing field between the OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI AGRAWAL Page 15/17 AGRAWAL GUPTA GUPTA Date: 2025.06.20 15:07:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 disputing parties, having commercial conflict of interests which needs to be adjudicated by a mutual forum. The Hon'ble Supreme Court gave the following authoritative and binding conclusion as under:-
"VII. Neither public policy considerations under the Contract Act or the Arbitration Act restrain the parties to the arbitration from maintaining a panel of arbitrators in any manner. However, arbitration agreements enabling one of the parties to unilaterally constitute arbitral tribunal do not inspire confidence of independence and may violate the public policy requirement of constituting an independent and impartial tribunal. The Court will, therefore, scrutinise the agreement and hold them to be invalid if it considers it appropriate."
20. In the present case, the impugned award dated 14.07.2022, was passed by a Sole Arbitrator, who was unilaterally appointed by way of letter of Invocation/appointment dated 18.02.2021, issued by respondent no.1 as Claimant. Though, the petitioner has failed to prove the issuance of letter dated 09.03.2021 raising alleged objections to appointment of the arbitrator or filing any such formal objections before the arbitrator on the date of its appearance before the Arbitrator on 03.04.2021. It is an admitted fact on behalf of respondent that the petitioner never gave written consent in favour of the arbitrator or signed any expressed waiver as contemplated U/S 12(5) of the Act to empower the Arbitrator to discharge his role as an Arbitrator in the alleged arbitral proceedings, wherein he was unilaterally appointed by the claimant/respondent no.1. The very appointment of the Sole Arbitrator suffers from a permanent and Digitally signed by PREETI OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI AGRAWAL AGRAWAL GUPTA Page 16/17 GUPTA Date:
2025.06.20 15:07:15 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 indelible mark of bias and prejudice and as per Law, such a unilaterally appointed Arbitrator cannot be deemed to be an unbiased, neutral and independent arbitral tribunal. Furthermore, as considered that the Petitioner, who was respondent in the Arbitration proceedings, did not ever issued any Letter of Consent in favour of the Arbitrator and accordingly, there is absence of any express waiver as contemplated by Section 12(5) of the Act, to lend any legal sanctity to the Arbitral proceedings, that took placed before the Ld. Sole Arbitrator, who has been unilaterally appointed by the Claimant, without consent of the Petitioner. Therefore, the Sole Arbitrator, as the adjudicating Arbitral Tribunal lacks inherent jurisdiction and competence to adjudicate the disputes in hand, and thus, the impugned award is an unenforceable award and a nullity.
21. Accordingly, this Court is satisfied that the Award dated 14.07.2022 passed by Ld. Arbitrator is unenforceable, void ab initio and non-est in the eyes of law and cannot be sustained and is therefore, set aside.
Parties to bear their own cost.
Petition stands disposed of accordingly. File be consigned to Record R oom.
Announced in the open Court today on this 20st day of June, 2025 Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.20 15:07:26 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025 OMP (Comm.) 115/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 17/17 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
20.06.2025