Delhi District Court
Mr. Radhey Shyam Parashar vs M/S Pooja Finelease Ltd on 29 July, 2021
IN THE COURT OF SH GURVINDER PAL SINGH,
DISTRICT JUDGE (COMMERCIAL COURT)-02,
PATIALA HOUSE COURT, NEW DELHI
OMP (COMM.) No. 13/2021
1. Mr. Radhey Shyam Parashar
S/o Sh. CB Parashar
R/o C-5/121, Sector-11, Rohini,
District North West, Delhi-110085
2. Mr. Hitesh Parashar
S/o Sh. R.S Parashar
R/o C-5/121, Sector-11, Rohini,
District North West, Delhi-110085 ....Petitioners
versus
1. M/s Pooja Finelease Ltd.
Registered Office:
70/32A, Rama Road, Moti Nagar,
New Delhi-110015
2. Mr. Jai Narayan Yadav
District Judge (Retd.),
Chamber No. 476, Patiala House Court,
New Delhi-110001 ....Respondents
Date of Institution : 19/01/2021
Arguments concluded on : 07/07/2021
Decided on : 29/07/2021
Appearances : Sh. Puru Mudgal, Ld. Counsel for petitioners.
Sh. Arvind Jadon, Ld. Counsel for respondent no.1.
JUDGMENT
1. Petitioner had filed the present petition under Section 34 of The Arbitration and Conciliation Act, 1996 (herein after referred as the Act) seeking setting aside of the arbitral award dated OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 1 of 33 29/09/2020, passed by Ld. Sole Arbitrator Mr. Jai Narayan Yadav, District Judge (Retd.). Ld. Sole Arbitrator in arbitration case no. ARB/JN/P/4/1/2019 titled M/s Pooja Finelease Ltd. vs. Radhey Shyam Parashar & Anr., vide impugned award dated 29/09/2020 had directed the present petitioners to jointly and severally pay to the claimant company i.e., present respondent no.1 an amount of Rs. 94,49.418.80 with future interest @ 12% per annum from the date of initiation of arbitration till realization, less any amount towards loan paid by present petitioners to claimant during the pendency of the arbitral proceedings; along with sum of Rs.20,000/- as costs plus the costs and expenses that may be borne and incurred by the claimant for recovery of award sum as well as value of non- judicial stamp paper of value 0.1% of the total awarded amount.
2. Shorn of unnecessary details, the facts of the case of petitioners are as follows:-
Respondent no. 1 company entered into an agreement dated 24/04/2018 with the petitioners to provide a personal loan of Rs.80,00,000/- against the property of the petitioner no 1 bearing no. C-5/121, Sector-11, Rohini, District North West, Delhi- 110085. In terms of said agreement, petitioner no. 1 is the borrower whereas petitioner no. 2 is the guarantor who stood surety for the repayment of sum under the aforesaid loan agreement on behalf of the debtor on his default to pay to the creditor. Petitioner no. 1 faced severe financial crises in his business of brokerage later to which he availed the loan vide agreement aforesaid. Unforeseen circumstances were faced by petitioner no. 1 as he faced the huge loss after being duped and OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 2 of 33 deceived by certain private investors and the monthly installments for aforesaid loan got delayed. Wife of petitioner no. 1 suffered critical brain stock, was hospitalized, thereafter later to discharge, remained under medical treatment. Petitioners were served with legal notice dated 11/12/2018 by respondent no. 1 calling upon to pay total sum of Rs.94,49,418.807 in seven days.
Respondent no. 1 company thereafter issued letter dated 24/12/2018 notifying the petitioners of invocation of arbitration clause and appointment of respondent no. 2 as Sole Arbitrator. On 04/01/2019 petitioners requested Ld. Sole Arbitrator, after initiation of the arbitral proceedings, for granting an adequate opportunity for negotiating with respondent no. 1 company for amicable settlement. Deteriorating medical and financial conditions in the family of petitioners made petitioners unable to complete their financial obligations. An amount of Rs.2,00,000/- was paid by petitioners to respondent no. 1 company on 04/01/2019. Petitioners with bona fide intentions and owing their financial obligations towards respondent no 1 company deposited a total sum of Rs. 4,95,000/-. Time and again petitioners approached respondent no. 1 company to settle the dispute amicably by giving an adequate and reasonable time to repay the loan, however, respondent no. 1 company proceeded with their actions in the arbitral proceeding. Petitioner no. 2, guarantor was also facing severe financial crises which was aggravated with the history of the prolonged marital dispute of petitioner no. 2 with his wife. Petitioner no. 2 was obliged to pay monthly maintenance of Rs.7,000/- to his wife and his minor son as per order of Family Courts, Sonipat, Haryana.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 3 of 333. Petitioners have impugned the arbitral award on the following grounds:-
A. It is against the public policy of India;
B. It is passed in utter haste, in arbitrary manner and in
violation of the principles of natural justice which amounts to gross misconduct on the part of Arbitral Tribunal;
C. Ld. Arbitral Tribunal was appointed by respondent no. 1 company unilaterally and failed to act neutrally and impartially as was required under Section 12 of the Act;
D. Objections raised by petitioners at the initial stage against the appointment of respondent no. 2 as Sole Arbitrator were neither considered nor recorded by Sole Arbitrator; rather Ld. Sole Arbitrator chose to proceed with the arbitration proceedings;
E. Ld. Arbitrator grossly failed to consider the unforeseen and unavoidable circumstances which were presented by the petitioners during the arbitral proceedings which led to the default to make payment of monthly installments;
F. Petitioner no. 1 had suffered huge financial loss when he failed to gain any returns from the investments which were made subsequent to the sanction of loan, due to which huge financial burden aggravated upon the petitioners which resulted in delay of the monthly installment. Petitioners deposited sum of Rs. 1,95,000/-, i.e., an additional amount than the fixed installment amount OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 4 of 33 of Rs.1,86,666/-, further, another payment of Rs.1,00,000/- was made by the petitioners on 25/06/2018; however, respondents failed to comprehend the bona fide intentions of the petitioners in repaying the loan amount;
G. Wife of the petitioner no. 1 suffered an unforeseen brain stroke and was hospitalized for 12 days and subsequently medically treated. A severe financial and mental distress upon the petitioner became cause for further delay in payment schedule by petitioners to respondent no. 1 company;
H. Due to medical ailments, petitioner no.1 was advised for heart surgeries by medical practitioners and incurred expenses for medical treatment;
I. Matrimonial dispute resulted in litigation between petitioner no. 2 and his wife and consequently his financial obligations to pay monthly maintenance of Rs.7,000/- to his wife in terms of order of Family Courts, Sonipat, Haryana whereby petitioners were under severe financial strain;
J. Petitioners had bona fide intention to repay their debt as they had paid total amount of Rs.4,95,000/-
to respondent no. 1 company. Even during the
arbitral proceedings petitioners deposited
Rs.2,00,000/- with respondent no. 1 company but it was not considered in the arbitral proceedings; K. Petitioners were entitled to avail the benefits of the financial relief package issued by Government of India and RBI vide their official Memorandum OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 5 of 33 dated 27/03/2020 and 23/05/2020, whereby relief of loan moratorium of six months was granted and directions were issued by Supreme Court and decision was taken by Government of India for waiver of interest on loan upto Rs 2 Crores.
Accordingly, impugned arbitral award was liable to be rescheduled and recalculated in order to comply with the above mentioned guidelines and therefore, the arbitral award was against the public policy of India;
L. Arbitral award suffers legal infirmities as petitioners were directed to pay total sum of Rs.20,000/- as the arbitration fees, whereas petitioners submitted an amount of Rs.20,000/- which was evident from the order dated 26.08.2020 of Ld. Sole Arbitrator; M. The rustle act of Arbitral Tribunal has created reasonable apprehensions about his independence and impartiality;
N. Arbitral Tribunal erred in not following the principles of natural justice, acted beyond its jurisdiction and award is patently illegal and O. Arbitral Tribunal erred in providing an unstamped award which also required registration as it affected immovable property.
It was prayed (i) to set aside the impugned arbitral award and/or (ii) to partially review the arbitral award, considering the deteriorating medical and financial conditions of petitioner no. 1, remit the amount of the arbitral award.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 6 of 334. Respondent no. 1 filed reply, denying the allegations/ averments of petitioners and controverting the grounds laid. It is the submission of respondent no. 1 company that after obtaining the loan against property by executing loan agreement, petitioners defaulted in payments of due installments though they had created an equitable mortgage in favour of respondent no. 1 company by depositing original title deeds of the said property. Due to repeated persistent defaults by petitioners in making payments of EMIs left respondent no. 1 company with no option except to take legal recourse by initiating the recalling of the said loan followed by instituting arbitral proceedings. Petitioners never raised any objection regarding the appointment of Ld. Arbitrator nor had appeared before Arbitral Tribunal, so Arbitral Tribunal vide order dated 31/01/2019 was constrained to hear the matter ex parte against the petitioners. On 15/03/2019 petitioners appeared before Ld. Arbitrator, filed an application for joining the arbitration proceedings and setting aside the ex parte proceedings, which application was allowed by Ld. Arbitrator and when petitioners sought time for filing reply, Ld. Sole Arbitrator granted them time to file their reply to the Statement of Claim of respondent no. 1. Several opportunities were availed by petitioners to file their reply but it was not so filed before Ld. Arbitrator. Petitioners intentionally delayed the proceedings of arbitration while taking the ground of settlement and only in this petition they have raised for the first time the frivolous and vexatious objections of independence and impartiality of Ld. Arbitrator to mislead this Court. When the award was passed, at that time the lock-down was lifted and the courts had started working and even on 22/07/2020 petitioners appeared in person OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 7 of 33 before Ld. Sole Arbitrator and submitted that they were negotiating with the claimant for amicable settlement and had not raised any difficulty related to Covid-19 while attending the proceedings. The loan agreement solely gives the right to the lender to appoint the arbitrator and said agreement was duly signed by the petitioners who had read and understood the same before signing. Complete notices of the arbitration were served upon the petitioners who had complete knowledge regarding the proceedings of arbitration and had also joined and participated in the proceedings on each and every date fixed by Arbitral Tribunal. Respondent no. 1 denied that Ld. Sole Arbitrator was appointed without the consent of petitioners whereas petitioners did not raise any objection regarding the appointment of respondent no. 2 as Sole Arbitrator. It was also submitted that contractual rate of interest was 18% per annum besides default interest rate, whereas the interest awarded was just 12% per annum, much below the contractual rate of interest. It was also stated that the objections of petitioners with respect to unilateral appointment of respondent no.2 as Sole Arbitrator was redundant at this belated stage in view of Section 4 of the Act as before filing of this petition such objections were never raised by the petitioners and now such objections cannot be raised by the petitioners. It was also stated that whenever payments were made by the petitioners, same were adjusted and reflected in the statement of account of loan, whereas the award also finds mention of the adjustment of the payments made. Respondent no. 1 denied of Ld. Arbitrator to be partial. It was submitted that inspite of admission of liability, petitioners never had any intention to repay the secured loan and petitioners had got the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 8 of 33 reasonable and adequate time, opportunity for repayment and settling the matter, whereas petitioners miserably failed to do so and award was passed while considering the guiding principles and policies of natural justice.
It was prayed to dismiss the petition with cost.
5. I have heard Sh. Puru Mudgal, Ld. Counsel for petitioners; Sh. Arvind Jadon, Ld. Counsel for respondent no. 1 and perused the record of the case, arbitral proceedings record, brief written submissions of the parties, relied upon precedents and given my thoughtful consideration to the rival contentions put forth.
6. Ld. Counsel for petitioner argued in terms of the grounds of the petition. It was argued that respondent no.1 company unilaterally appointed respondent no. 2 as Ld. Sole Arbitrator which was per contra to law laid in the cases of (i) Perkins Eastman Architects DPC & Anr. vs HSCC (India) Ltd., 2019 SCC Online SC 1517 and (ii) TRF Limited vs Energo Engineering Projects Limited, AIR 2017 SC 3889. It was argued that the reliance of Ld. Counsel for respondent upon the case of Gauri Shankar Educational Trust & Ors. vs M/s Religare Finvest Ltd., 2019 SCC Online Del 6987 was misplaced as in this case at the initial stage itself petitioners had objected for appointment of Sole Arbitrator as petitioners were in the knowledge of the fact that Sole Arbitrator was also dealing with other matters of the respondent no. 1 company for which petitioners made oral request/communication to respondent no. 1 company as well. Respondent no. 1 company through Counsel had issued a letter/notice dated 04/02/2019, copy filed with the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 9 of 33 present petition, calling upon the petitioners to pay sum of Rs.2,22,47,694/- and also for appointment of new Arbitrator namely Mr. L.D Mual, Additional District Judge (Retd.). Said letter was nothing but an intimidation by respondent no. 1 company, in order to get the things executed as per their own wills and wishes; therefore, left with no other alternative, petitioners had to proceed with the arbitration proceedings presided by respondent no.2. It was further argued that even the requisite notice under Section 12 of the Act disclosing the requisite information was not served upon the petitioners by Ld. Sole Arbitrator. Ld. Counsel for petitioners relied upon the cases of (i) HRD Corporation (Marcus Oil and Chemical Division) vs Gail (India) Limited, Civil Appeal No. 11126 of 2017 decided by Supreme Court and (ii) Rajnish Karki & Anr. Vs M/s Pooja Finelease Limited, OMP (T) (COMM.) 17/2020 decided by Delhi High Court on 01/10/2020. It was argued that Ld Sole Arbitrator acted in a biased and partisan manner to favour respondent no. 1 company as no compliance of Section 31(3) of the Act was done. It was argued that Section 31 (3) of the Act stipulates that an arbitral award shall state the reasons upon which it is based whereas present case does not fall in exceptions mentioned thereafter. Therefore Ld. Sole Arbitrator completely failed to substantiate his award as to how he concluded on the very same amount as was being raised by the claimant/ respondent no.1. It was argued that compliance of Section 31(3) of the Act was adequately dealt in the case of Anand Bros vs Union of India, (2014) 9 SCC 212. It was also argued that in this case it was a non speaking and unreasonable award which was against public policy and law, against the notifications/circulars OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 10 of 33 issued by RBI, giving relief package to borrowers by waiving off compound interest, whereby award was passed by Ld. Arbitrator who was unilaterally appointed by respondent no. 1 company. It was argued that the impugned award needs to be set aside.
7. Ld. Counsel for respondent no. 1 company argued in terms of the filed reply. It was argued that admittedly the petitioners were in breach of the agreement by defaulting and neglecting to pay various installments as per terms of repayment of the loan. Neither the petitioners had raised any objection regarding the appointment of Sole Arbitrator nor appeared before Arbitral Tribunal and on 31/01/2019 Arbitral Tribunal proceeded ex parte against petitioners. It was argued that on appearance on 15/03/2019 before Ld. Sole Arbitrator, petitioners moved an application for joining the arbitration proceedings and setting aside the ex parte proceedings, which was allowed leniently by Ld. Sole Arbitrator. No reply to Statement of Claim was filed by petitioners despite opportunities given by Ld. Sole Arbitrator. Ld. Counsel for respondent relied upon the case of Gauri Shankar Educational Trust & Ors. vs M/s Religare Finvest Ltd., 2019 SCC Online Del 6987 and argued that challenge to the jurisdiction of the Arbitrator has to be made immediately while entering appearance and before the written statement is filed, whereas petitioners cannot now after passing of the impugned award question the jurisdiction of Ld. Arbitrator by alleging doubts as to the independence and impartiality of Ld. Sole Arbitrator. It was also argued that one who does not raise the objection to the appointment of Arbitrator, as soon as possible, waives his/their right to object in terms of Section 4 of the Act.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 11 of 33Reliance was placed upon the case of Union of India vs PAM Development Private Limited, (2014) 11 SCC 366. It was also argued that Arbitrator is to be appointed as per general condition of the contract, as has been laid in the case of Central Organisation for Railway Electrification vs ECI-SPIC-SMO- MCML (JV) A Joint Venture Company, (2020) 14 SCC 712. Ld. Counsel for respondent no. 1 also argued that petitioners were taking frivolous grounds of medical ailments which were not tenable in law. It was also argued that the loan account was not eligible to be re-scheduled as the loan account was in default and was recalled on 11/12/2018 whereas petitioners raised vexatious grounds just to mislead this Court. Ld. Counsel for respondent no. 1 also relied upon the cases of (i) M/s IWorld Business Solutions Pvt. Ltd. vs M/s Delhi Metro Rail Corporation Ltd., OMP (T)(Comm.) No. 71/2020, decided on 04/12/2020 by Hon'ble Mr. Justice C. Hari Shankar of Delhi High Court; (ii) Vidya Drolia & Ors. Vs Durga Trading Corporation, (2021) 2 SCC 1 and (iii) Bhavnagar University vs Palitana Sugar Mill Pvt Ltd. & Ors., MANU/SC/1092/2002. It was prayed that the present petition be dismissed with costs.
8. An arbitral award can be set aside on the grounds set out in Section 34 (2) (a), Section 34 (2) (b) and Section 34 (2A) of the Act in view of Section 5 of the Act and if an application for setting aside such award is made by party not later than 3 months from the date from which the party making such application had received the arbitral award or if a request had been made under Section 33 of the Act, from the date on which that request had been disposed of by the Arbitral Tribunal. If the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 12 of 33 Court is satisfied that the applicant was prevented by sufficient cause from the making the application within the said period of three months it may entertain the application within further period of 30 days, but not thereafter.
9. Section 34 (1) (2), (2A) and (3) of The Arbitration and Conciliation Act, 1996 read 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 sub- section (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 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 OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 13 of 33 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 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 reappreciation 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."
10. Supreme Court in the Suo Motu Writ Petition (Civil) No. 03/2020, by order dated 23/03/2020 had extended the period of OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 14 of 33 limitation in all proceedings, including for filing of present petition under Section 34 of The Act, with effect from 15/03/2020 till further orders, exercising power under Article 142 read with Article 141 of The Constitution of India. In terms of Section 34(3) of The Act, petitioner had three months period of limitation for filing the objections/present petition and such three months period started from the date of receipt of signed copy of the impugned award.
11. It is the averment of the petitioners that they had received the impugned award on 10/10/2020. The present petition was filed on 19/01/2021. At that time the aforesaid order dated 23/03/2020 of the Supreme Court for extending the period of limitation inter alia for filing the present petition was in vogue.
Accordingly, the present petition has been filed within the period of limitation.
12. Normally, the general principles are that Arbitrator is a Judge of the choice of the parties and his decision, unless there is an error apparent on the face of the award which makes it unsustainable, is not to be set aside even by the Court as a Court of law could come to a different conclusion on the same facts. The Court cannot reappraise the evidence and it is not open to the Court to sit in appeal over the conclusion of the Arbitrator. It is not open to the Court to set aside a finding of fact arrived at by the Arbitrator and only grounds on which the award can be set aside are those mentioned in the Arbitration Act. Where the Arbitrator assigns cogent grounds and sufficient reasons and no error of law or misconduct is cited, the award will not call for OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 15 of 33 interference by the Court in exercise of the power vested in it. Where the Arbitrator is a qualified technical person and expert, who is competent to make assessment by taking into consideration the technical aspects of the matter, the Court would generally not interfere with the award passed by the Arbitrator.
13. Supreme Court in case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49 has held that the interference with an arbitral award is permissible only when the findings of the arbitrator are arbitrary, capricious or perverse or when conscience of the Court is shocked or when illegality is not trivial but goes to the root of the matter. It is held that once it is found that the arbitrator's approach is neither arbitrary nor capricious, no interference is called for on facts. The arbitrator is ultimately a master of the quantity and quality of evidence while drawing the arbitral award. Patent illegality must go to the root of the matter and cannot be of trivial nature.
14. Supreme Court in case of Ssangyong Engineering & Construction Co. Ltd. vs. National Highways Authority of India, 2019 SCC OnLine SC 677 has held that under Section 34 (2A) of The Act, a decision which is perverse while no longer being a ground for challenge under "public policy of India", would certainly amount to a patent illegality appearing on the face of the award. A finding based on the documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties and therefore would also have to be characterized as perverse. It is held that a finding OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 16 of 33 based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality.
15. Section 4 of The Act provides that a party who knows that any provision of Part-I from which parties may derogate or any requirement under the arbitration agreement has not been complied but still proceeds with the arbitration without stating his objection to such non-compliance without undue delay or if a time limit is provided for stating that objection, within that period of time, shall be deemed to have waived his right to so object.
16. Section 11 of The Act is with respect to the appointment of the arbitrators by the Supreme Court or as the case may be, by the High Court only.
17. Under Section 12 of The Act, when a person is approached in connection with his possible appointment as an arbitrator, he is bound to disclose in writing any circumstances, such as the existence either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months. Various grounds are set out in the Fifth Schedule as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 17 of 33 independence or impartiality of an arbitrator. The disclosure shall be made by such person in the form specified in the Sixth Schedule. An arbitrator may be challenged by the parties only if any circumstances referred to in Section 12 (3) of The Act subject to Section 13 (4) of The Act exist which provide for an agreement between the parties for such procedure for challenge. If such challenge is unsuccessful, the party may make an application for setting aside an arbitral award in accordance with Section 34 of The Act.
18. Section 14 of The Act provides that the mandate of an arbitrator shall terminate and he shall be substituted by another arbitrator if he becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay and he withdraws from his office or the parties agree to the termination of his mandate.
19. Section 15 of The Act provides that the mandate of arbitrator is also terminated if he withdraws from office for any reason or by or pursuant to agreement of the parties. In such an event, the substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. If such an arbitrator is replaced, any hearing previously held may be repeated at the discretion of the arbitral tribunal unless otherwise agreed by the parties. The earlier order or ruling of the arbitral tribunal made prior to the replacement of an arbitrator shall not be invalid unless otherwise agreed by the parties.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 18 of 3320. Under Section 16 of The Act, the arbitral tribunal is empowered to rule on its own jurisdiction including ruling on any objection with respect to the existence or validity of arbitration agreement. Such plea shall be raised not later than the submission of the statement of defence. If such plea is rejected by the arbitral tribunal, it has to proceed with the arbitral proceedings and declare an award. If plea of jurisdiction is accepted by the arbitral tribunal, the respondent may file an appeal under section 37 of The Act. If plea of jurisdiction is not accepted, the respondent may challenge such ruling along with award under section 34 of The Act.
21. Supreme Court in case of TRF Ltd. vs Energo Engg. Projects Ltd., (2017) 8 SCC 377 has held that by virtue of section 12(5) of The Act, if any person, who falls under any of the category specified in the Seventh Schedule shall be ineligible to be appointed as an Arbitrator. It is held that the amended law under Section 11(6-A) of The Act requires the Court to confine examination of the existence of an arbitration agreement notwithstanding the judgment of the Supreme Court or the High Court while considering an application under section 11(6) of The Act. The designated arbitrator whose ineligibility to act as an arbitrator by virtue of amendment to Section 12 of The Act by the Arbitration and Conciliation (Amendment) Act, 2015, does not have power even to nominate any other person as arbitrator. The Supreme Court and High Court in certain circumstances have exercised jurisdiction to nullify the appointments made by the authority in such situation.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 19 of 3322. Supreme Court in case of Bharat Broadband Network Ltd vs United Telecoms Ltd, (2019) 5 SCC 755 after construing Section 12(5) of The Act read with Fifth, Sixth and Seventh Schedule held that the Managing Director of the party, who was a named arbitrator, could not act as arbitrator nor could be allowed to appoint another arbitrator. The disclosure of a prospective arbitrator has to be made in the form specified in the Sixth Schedule and the ground stated in the Fifth Schedule are to serve as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Any prior agreement to the contrary is wiped out by the non-obstante clause in Section 12(5) of The Act the moment any person whose relationship with the parties or the counsel or the subject matter of the dispute falls under the Seventh Schedule. The sub-section then declares that such person shall be ineligible to be appointed as arbitrator. Such ineligibility can be removed by an express agreement in writing. It was held that learned arbitrator had become de jure ineligible to perform his function as an arbitrator.
23. Supreme Court in the case of Perkins Eastman Architects DPC vs HSCC (India) Ltd., 2019 SCC Online SC 1517 has held that in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. 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.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 20 of 33Supreme Court has set aside the appointment of an arbitrator appointed by one of the parties having exclusive right to appoint and appointed an independent arbitrator in the application filed under Section 11(6) of The Act.
24. Sub-section (1) of Section 29-A of The Act (as amended by Act 33 of 2019) provides that the award shall be made within a period of twelve months from the date of completion of pleadings under sub-section (4) of section 23 of the Act. Sub- section (2) of Section 29-A of The Act provides that if the award is made within a period of six months from the date the arbitral tribunal enters upon the reference, the arbitral tribunal shall be entitled to receive such amount of additional fees as the parties may agree. Sub-section(3) of Section 29-A of The Act provides that the parties may, by consent, extend the period specified in subsection (1) for making award for a further period not exceeding six months. Subsection (4) of Section 29-A of The Act provides that if the award is not made within the period specified in sub-section (1) or the extended period specified under sub- section (3), the mandate of the arbitrator(s) shall terminate unless the Court has, either prior to or after the expiry of the period so specified, extended the period. If the Court finds that the proceedings have been delayed for the reasons attributable to the arbitral tribunal, then, the Court may pass an order for reduction of fees of arbitrator(s) by not exceeding five per cent for each month of such delay. Sub-section (5) of Section 29-A of The Act provides that the extension may be granted only for sufficient cause and on such terms and conditions as may be imposed by the Court.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 21 of 3325. In the case of Proddatur Cable TV Digi Services vs. Siti Cable Network Ltd., 2020 SCC Online Del 350, it was inter alia held that following ratio of the judgment in the case of Perkins (supra), it is clear that a unilateral appointment by an authority which is interested in the outcome or decision of the dispute is impermissible in law. When the Arbitration Clause empowers the Company to appoint Sole Arbitrator, it can hardly be disputed that the Company acting through its Board of Directors will have an interest in the outcome of the dispute. The appellant had filed the petition under Section 14 and 15 of The Act seeking declaration that the mandate of the arbitrator appointed by the respondent be terminated and an arbitrator be appointed by High Court in the provisions of The Act. Following ratio of the judgments in Perkins (supra) and Bharat Broadband Network Limited (supra), the mandate of the Arbitrator was found terminated de jure and since the present arbitrator had become unable to perform her functions as an arbitrator, her mandate was terminated and another independent Sole Arbitrator was appointed to substitute the previous arbitrator.
26. In the case of M/s Omcon Infrastructure Pvt. Ltd. Vs India Bulls Investment Advisors Ltd, OMP (T) (Comm.) 35/2020 and IA 6153/2020 decided on 01/09/2020 by Hon'ble Ms. Justice Rekha Palli, wherein petition was filed under Section 14 and 15 of The Act, seeking termination of the mandate of Ld. Arbitrator unilaterally appointed by the respondent and also quashing of order passed by Ld. Arbitrator, deciding the application of petitioner under Section 12 of The Act, the ratio of the decision in case of Perkins (supra) was applied and held that once the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 22 of 33 Managing Director of the respondent Company was ineligible to appoint the arbitrator, the same would also bar the Company itself from unilaterally appointing the sole arbitrator and reference was also made to the decision of Proddatur Cable TV Digi Services (supra). Therein also the mandate of the Ld. Arbitrator was terminated and new independent Sole Arbitrator was appointed.
27. I now advert to the arbitral proceedings record filed by Ld. Sole Arbitrator. Copy of Personal Loan Agreement Ex CW1/2 inter se petitioners and respondent no.1 company reveals petitioner no. 1 to be the borrower and petitioner no. 2 to be the guarantor, who stood surety for repayment of sum due under said agreement for and on behalf of the debtor on his default to pay to the creditor. Respondent no. 1 had invoked the arbitration clause no. 10 of aforesaid agreement by letter/notice dated 24/12/2018, copy Ex CW1/5 in the arbitral proceedings record and one of the addressee therein was Ld. Sole Arbitrator, respondent no. 2. In proceeding sheet/order dated 04/01/2019, Ld. Sole Arbitrator mentioned of his acceptance to appointment as Sole Arbitrator in the matter in hand. In said order dated 04/01/2019 there is mention of the fact by Ld. Sole Arbitrator that he was independent and impartial and had no relationship or interest of any kind in any of the parties or in relation to the subject matter in dispute. It was also elicited therein by Ld. Sole Arbitrator that claimant company/respondent no.1 had appointed him as arbitrator in five matters and also the fact that he had nothing to disclose in writing any circumstance likely to give rise to any justifiable doubts on his independence or impartiality and also OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 23 of 33 the fact that he can devote sufficient time to the arbitration having ability to complete the entire arbitration within the period prescribed under the statute. No separate disclosure in the form specified in the Sixth Schedule of the Act was sent by Ld. Sole Arbitrator to the present petitioners with respect to any circumstances, either direct or indirect, of any past or present relationship with or interest in any of the parties or in relation to the subject-matter in dispute, whether financial, business, professional or other kind, which is likely to give rise to justifiable doubts as to his independence or impartiality; and which are likely to affect his ability to devote sufficient time to the arbitration and in particular his ability to complete the entire arbitration within a period of twelve months. Various grounds are set out in the Fifth Schedule as a guide in determining whether circumstances exist which give rise to justifiable doubts as to the independence or impartiality of an arbitrator. Such disclosure had to be made by Sole Arbitrator in the form specified in the Sixth Schedule of the Act.
28. Proceedings/order sheets of Ld. Sole Arbitrator on record of arbitral proceedings also reveal that those proceedings/order sheets of date 15/03/2019 and 30/05/2019 are signed by both the petitioners as respondents before Ld. Sole Arbitrator. Arbitral proceedings record also reveals that an application on behalf of respondents to attend arbitration proceedings regularly, at page no. 51 of arbitral proceedings record, simply finds mention of the request to kindly allow the applicants/present petitioners as respondents before Ld. Sole Arbitrator to attend further dates of arbitration process on regular basis. No mention/prayer was in OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 24 of 33 the said application with respect to setting aside of ex parte proceedings or for grant of time to file any reply to Statement of Claim of claimant/present respondent no. 1. Per contra in order dated 15/03/2019 of Ld. Sole Arbitrator, it is mentioned therein that the application moved by the present petitioners, respondents therein, was for joining the arbitration proceedings and setting aside of the ex parte proceedings.
29. Section 21 of The Act provides that unless and otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which the request for that dispute to be referred to the arbitration is received by the respondent. Limitation in respect of which a request is made by one party to other party to refer such dispute to the arbitration stops when such notice is received by other party.
30. No material is available either on the arbitral proceedings record nor any such material/tracking report for sent speed post, has been placed on record by respondent no. 1 company through Counsel with respect to proof of service of the notice invoking the arbitration by respondent no.1 company upon present petitioners. In the arbitral proceedings record, it is mentioned by Ld. Sole Arbitrator of receipt of copy of said letter/notice dated 24/12/2018 issued by authorized signatory of respondent no. 1 to present petitioners as well as to Ld. Sole Arbitrator for invocation of arbitration clause and appointment of respondent no. 2 as Ld. Sole Arbitrator. It was pursuant to receipt of said notice/letter dated 24/12/2018, the proceeding/order dated 04/01/2019 was passed by Ld. Sole Arbitrator accepting the OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 25 of 33 appointment as Sole Arbitrator. Said order dated 04/01/2019 reveals Ld. Sole Arbitrator had entered upon the reference on that day. Arbitral proceedings record also reveals that in order dated 23/12/2019 at page no.15 of the arbitral proceedings record, there is mention by Ld. Sole Arbitrator that besides Sh. Arvind Kumar Jadon, Ld. Counsel for claimant; respondent no. 2 Sh. Hitesh Parasar i.e., present petitioner no 2 was present before Ld. Sole Arbitrator. It is also mentioned therein in order dated 23/12/2019 that said Sh. Hitesh Parasar, respondent no. 2 therein, was present there for himself as well as on behalf of respondent no. 1 i.e., present petitioner no. 1 Sh. Radhey Shyam Parashar, who was stated to be ill that day on 23/12/2019. No where in the entire arbitral proceedings record is there any Power of Attorney given by either of the present petitioners to each other as respondents therein to appear on behalf of each other before Arbitral Tribunal. In the said order sheet dated 23/12/2019 at the foot of it, there are signatures of Sh. Radhey Shyam, present petitioner no. 1, who was respondent no. 1 before Ld. Sole Arbitrator and there are no signatures on proceeding/order sheet dated 23/12/2019 of Sh. Hitesh Parashar, who is stated in the said order to be present there, whereas on that day, as per said order sheet dated 23/12/2019, present petitioner no. 1 Sh. Radhey Shyam Parashar, respondent no.1 therein, was stated to be ill. Order sheet dated 23/12/2019 of Ld. Sole Arbitrator records at the end " Period to pass award is extended for 6 months with the consent of both the parties." There had been no application filed by any party as per Section 29A (5) of the Act before Ld. Sole Arbitrator for seeking extension of the time for making the award nor even an oral prayer of any of the party for that facet is recorded in said OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 26 of 33 order. Even both the respondents were not present before Ld. Sole Arbitrator on 23/12/2019 and as per said order dated 23/12/2019, only respondent no. 2 Sh. Hitesh Parasar i.e., present petitioner no. 2 was present before Ld. Sole Arbitrator, whereas present petitioner no. 1 Sh. Radhey Shyam Parashar, who was respondent no. 1 before Ld. Sole Arbitrator was stated to be ill, as per order dated 23/12/2019. On the record of arbitral proceedings, there is no Power of Attorney given by present petitioner no. 1 Sh. Radhey Shyam Parashar, who was respondent no. 1 before Ld. Sole Arbitrator, in favour of present petitioner no. 2 Sh. Hitesh Parashar, who was respondent no. 2 before Ld. Sole Arbitrator. The recordings in the order dated 23/12/2019 of Ld. Sole Arbitrator are accordingly found to be perverse and contrary to record. Even there has been no consent for extension of six months for making/passing the award by the two respondents of arbitral proceedings, who are present petitioners. Even no signatures of respondent no. 2 Sh. Hitesh Parashar, present petitioner no. 2 herein, were taken by Ld. Sole Arbitrator for consenting for extension of period for making award for six months. When present petitioner no. 1 Sh. Radhey Shyam Parashar, who is respondent no. 1 before Ld. Sole Arbitrator is stated to be ill on 23/12/2019, how can he sign that day on those proceedings/order sheet dated 23/12/2019 in absence? Petitioners had not filed any pleadings before Ld. Sole Arbitrator. Petitioners were proceeded exparte by Ld. Sole Arbitrator on 31/01/2019. Accordingly, order dated 23/12/2019, of Ld. Sole Arbitrator elicited above for extension of time in making of the award was not proper. Perversity in the order dated 23/12/2019, elicited above, is writ large on the face of it.
OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 27 of 3331. Proceeding/order sheet dated 04/07/2019 of Ld. Sole Arbitrator at page no. 18 of the arbitral proceedings record reads as follows:-
"ARB/JN/P/1/2019 POOJA FINELEASE LTD. V/S RADHEY SHYAM PARASHAR & ANR PROCEEDING DATED 04/07/2019 RECORDED AT CHAMBER NO. 70, PATIALA HOUSE COURTS, NEW DELHI PRESENT: SH. ARVIND KR. JADON, ADVOCATE FOR CLIAMANT PRESENT: RESPONDENTS IN PERSON Both the respondents are present in person, respondents say that they are negotiating with the claimant company for the amicable settlement of dispute. They have sought time for filing amicable settlement. They have not filed any REPLY/OBJECTIONS despite availing opportunities to file the same. The settlement if any be file on or before next date. The respondents have paid today part of the Arbitration fee Rs.15000/- through cheque and undertakes to pay the remaining on the next date. The claimant has tendered in evidence affidavit exhibit CA. and documents Ex Cw1/1 to Ex. CW1/5. Copy of the affidavit is supplied to the respondent. Now put up for 01/08/2019 at 2. Pm at same venue for filing settlement/evidence if any on behalf of the respondents.
Sd/- Sd/-
(Adv) J.N. Yadav (Retd. District Judge)
For claimant Sole Arbitrator (Stamp Impression)
Jai Narayan Yadav
(District Judge Retd.)
Sole Arbitrator"
It is also revealed that on 04/07/2019 Sh. Santosh Sharma, AR of claimant i.e., respondent no. 1 company was not in attendance before Ld. Sole Arbitrator. Infact perusal of entire arbitral proceedings record reveals that not even on a single date of hearing in arbitral proceedings, said Sh. Santosh Sharma, AR OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 28 of 33 of claimant ever appeared. Only Counsel for claimant had been appearing before Ld. Sole Arbitrator. In absence of Authorized Representative namely Sh. Santosh Sharma, the affidavit of Sh. Santosh Sharma was exhibited as Ex. CA by Ld. Sole Arbitrator besides which the other documents were exhibited as Ex CW1/1 to Ex CW1/5. Even no opportunity was given to respondents to cross examine the witness of claimant by Ld. Sole Arbitrator with respect to the averments in affidavit Ex CA and documents Ex CW1/1 to Ex CW1/5, whereas in evidence, tender of affidavit, exhibition of affidavit and documents was done before Ld. Sole Arbitrator. It reflects that the parties were not treated equally by Ld. Sole Arbitrator in accordance with Section 18 of the Act. True that the Arbitral Tribunal is not bound by The Code of Civil Procedure, 1908 or The Indian Evidence Act,1872 but when evidence is being taken; affidavit, documents are being exhibited in the Arbitral Tribunal, then the opposite party need to be given right to cross examine the witness with respect to averments in such documents/affidavit. Here in this case, in the absence of the witness, his affidavit and the documents were tendered in evidence and exhibited on 04/07/2019.
32. Arbitral proceedings record also reveals that on 13/08/2019 Ld. Sole Arbitrator had kept the case for orders on 06/09/2019. Order dated 06/09/2019 of Ld. Sole Arbitrator finds mention that "Ld. Counsel for the respondent has telephonically requested for adjournment alleging that there is possibility for settlement in this matter. Put up on 27/09/2019." No one had appeared on behalf of respondents viz. present petitioners in arbitration proceeding before Ld. Sole Arbitrator on 06/09/2019. Infact in OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 29 of 33 the record of arbitral proceedings no Power of Attorney/ Vakalatnama of any Counsel was filed by present petitioners as respondents therein nor any Counsel had filed so on their behalf. In this fact of the matter, where was any scope for any telephonic request by any Learned Counsel on behalf of present petitioners, who were respondents before Ld. Sole Arbitrator, for any kind of adjournment/accommodation to be given by Ld. Sole Arbitrator?
33. Arbitral proceedings record also reveals that as per order dated 30/10/2019 of Ld. Sole Arbitrator, after hearing further arguments, case was kept for 29/11/2019 for orders. On 29/11/2019 it is recorded by Ld. Sole Arbitrator in the order that further arguments are required to be heard in the matter, so case was kept for further arguments if any for 23/12/2019.
34. It had been vehemently argued that the present petitioners had opposed the unilateral appointment of respondent no. 2 as Sole Arbitrator not only before Ld. Sole Arbitrator orally but also before respondent no. 1 company. Whereas it was not recorded by Ld. Sole Arbitrator about such opposition of the present petitioners, who were not assisted by any Counsel. It was also argued that only upon such opposition of present petitioners of unilateral appointment of respondent no. 2 as Ld. Sole Arbitrator, respondent no. 1 had got issued through Advocate a letter/notice dated 04/02/2019 for appointment of Sh. L.D. Mual, Ld. Additional District Judge (Retired) as Sole Arbitrator. In the filed reply by respondent no. 1 company/claimant, there is no specific denial with respect to issuance of aforesaid letter/notice dated 04/02/2019. In the course of arguments, Ld. Counsel for OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 30 of 33 respondent no. 1 company submitted that aforesaid notice dated 04/02/2019 by Advocate on behalf of respondent no. 1 company was issued wrongly/inadvertently. Had there been no opposition of present petitioners in appointment of respondent no. 2 as Sole Arbitrator, then during pendency of arbitral proceedings before respondent no. 2, there was no occasion for respondent no. 1 company to issue another letter/notice dated 04/02/2019 through Advocate for appointing another Ld. Additional District Judge (Retired) as Ld. Sole Arbitrator when previously respondent no. 1 company had already sent letter/notice dated 24/12/2018 to present petitioners as well as to respondent no. 2, Ld. Sole Arbitrator, appointing respondent no. 2 as Sole Arbitrator.
35. Supreme Court in the case of M/s Voestalpine Schienen GMBH Vs. Delhi Metro Rail Corporation Ltd., (2017) 4 SCC 665 has construed Section 12(5) of The Act (as amended) and also the Seventh Schedule to The Act and has held that under Section 12(5) of The Act, notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator. It is held that in such an eventuality, when the arbitration clause finds foul with the amended provisions i.e. Section 12(5) of The Act, the appointment of an arbitrator would be beyond pale of arbitration agreement, empowering the Court to appoint such arbitrator(s), as may be permissible. Other party cannot insist for appointment of an arbitrator in terms of the arbitration agreement. In such situation, that would be the effect of non-obstante clause contained in OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 31 of 33 Section 12(5) of The Act.
36. Supreme Court in case of HRD Corporation (Marcus Oil and Chemical Division) vs. Gail (India) Limited (Formerly Gas Authority of India Ltd.), 2017 SCC OnLine SC 1024 has held that if the learned arbitrator fails to file disclosure in terms of section 12(1) of The Act read with Fifth Schedule of The Act, the remedy of the party aggrieved in that event would also be to apply under section 14(2) of The Act to the court to decide about the termination of the mandate of the arbitral tribunal on that ground.
37. As aforesaid, there is non compliance of the elicited mandate of Section 12 of The Act by Ld. Sole Arbitrator as he did not send the disclosure in prescribed form specified in the Sixth Schedule of The Act to the present petitioners embodying existence or otherwise of the grounds giving rise to justifiable doubts as to his independence or impartiality of arbitrator including arbitrator's relationship with the claimants/ Counsel for claimants.
38. The facts and circumstances embodied in the precedents relied upon by Ld. Counsel for respondent no 1 are entirely different and distinguishable to the facts and circumstances of the case in hand, so they are of no help to respondent no. 1 for dismissal of the present petition.
39. In view of law laid down in the cases of (i) TRF Ltd. (supra); (ii) Bharat Broadband Network Limited (supra); (iii) OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 32 of 33 Perkins Eastman Architects DPC (supra); (iv) HRD Corporation (supra); (v) Proddatur Cable TV Digi Services (supra) and (vi) M/s Omcon Infrastructure Pvt. Ltd. (supra), no arbitrator can be unilaterally appointed by the respondent no. 1/claimant and in this case at the outset vide the letter dated 24/12/2018, Authorized Representative of respondent no. 1 company had appointed respondent no. 2 as Ld. Sole Arbitrator. Even the mandatory disclosure in terms of Fifth and Seventh Schedule of The Act in the format of Sixth Schedule of The Act was not conveyed by Ld. Sole Arbitrator to the petitioners. The impugned award is accordingly liable to be set aside, under Section 34(2)(a)(iii), Section 34(2)(a)(v) of The Act and also under Section 34 (2A) of The Act as the impugned award is vitiated by patent illegality appearing on the face of the award, as elicited in detail herein above. Reliance placed upon the cases of Associate Builders (supra) and Ssangyong Engineering & Construction Co. Ltd. (supra). Also as elicited above, order dated 23/12/2019 of Ld. Sole Arbitrator for extension of time in making of the award was not proper.
40. For the foregoing reasons, the petition is allowed and the impugned award is set aside.
41. The parties are left to bear their own costs.
42. File be consigned to record room.
ANNOUNCED IN (GURVINDER PAL SINGH) OPEN COURT District Judge (Commercial Court)-02
on 29th July, 2021. Patiala House Court, New Delhi.
(Deepika) OMP (COMM.) No. 13/2021 Radhey Shyam Parashar & Anr. Vs M/s Pooja Finelease Ltd. & Anr. Page 33 of 33