Delhi District Court
Ajaib Singh vs Mahindra And Mahindra Financial ... on 21 June, 2025
IN THE COURT OF MS. PREETI AGRAWAL GUPTA,
DISTRICT JUDGE (COMMERCIAL COURT)-01,
NORTH WEST, ROHINI, NEW DELHI
OMP (COMM) No.116/2022
CNR No.DLNW010104122022
AJAIB SINGH
Proprietor
M/s Galana Constructions 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 08.10.2021, IN
ARBITRATION CASE TITLED AS 'M/S MAHINDRA &
MAHINDRA FINANCIAL SERVICES LTD VS. GALANA
CONSTRUCTION COM & ANR.'.
OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 1/22
(PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01
North-West/Rohini/New Delhi.
21.06.2025
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 : 21.06.2025
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 08.10.2021 passed by Sh. Ravinder Pal Singh, Ld. Sole Arbitrator, in respect of claim of the respondent namely M/s Mahindra & Mahindra Financial Services Ltd. and Anr.. 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 and is placed on record. Original Arbitral Record dated 08.10.2021 alongwith arbitral proceedings, have been appreciated.
5. The present petition has been filed on behalf of Petitioner U/S. 34 of the Arbitration & Conciliation Act, 1996, Digitally signed by PREETI PREETI AGRAWAL OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. AGRAWAL GUPTA Page 2/22 GUPTA Date:
2025.06.21 16:16:34 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 challenging the ex-parte Award passed by Ld. Sole Arbitrator Sh.
Ravinder Pal Singh on 08.10.2021, 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. The impugned Award has been passed ex-parte, without consent of the Petitioner.
(iv) Ld. Arbitrator failed to comply with the mandatory provisions of Section 31(5) of Arbitration and Conciliation Act by ensuring the delivery/supply of signed copy of Award, complete in all respect, upon the petitioner within stipulated period of passing of Award.
(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 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 3/22 PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.21 16:16:40 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 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.
(xii) The copy of the Award was despatched to the petitioner only on 23.07.2022 and was received by the petitioner only on 25.07.2022. The mandatory provision under Section 31(5) of the Arbitration and Conciliation Act, 1996, which mandates providing a signed copy of the award to the applicant/petitioner, has not been complied with and 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 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 4/22 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.21 16:16:48 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 under Section 34 of the Act. The present petition is alleged to be barred by time as per provisions of Section 34(3) of Arbitration and Conciliation Act 1996, whereby objections against any Award can be filed by an aggrieved party within a period of three months from the date of receipt of said Award and extendable to a maximum period of 120 days thereof. It is averred that the Arbitral Award dated 08.10.2021 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 and co- borrower, Shri Ajaib 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 and co-borrower for the hearing on 03.04.2021. As the notices were deemed duly served, the arbitrator proceeded ex-parte against them vide orders dated 03.04.2021. After completing the arbitration proceedings, the arbitrator passed and signed the Award on 08.10.2021. A copy of the award was allegedly sent to the petitioner and the co-borrower, 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 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI AGRAWAL Page 5/22 GUPTA AGRAWAL Date:
GUPTA 2025.06.21 16:16:54 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 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. As per the respondent, the main thrust during arguments, was on the point of maintainability of the present petition, in view of the provisions U/S 34(3) of the Act, raising a legal objection about the very petition U/S 34 of the Act before the Court, as barred by the law of Limitation. It is contended that the petitioner lost his legal right to assail the impugned Award dated 08.10.2021, by lapse of legal time.
8. On merits of the Award, Ld. Counsel for Petitioner has challenged the impugned Arbitral Award dated 08.10.2021 with the contentions that the Petitioner availed a loan facility from Respondent No.1 on 27.04.2019, and a loan amount of Rs.9,00,000/- was disbursed for the purchase of vehicle with make Fyn Hydraulic Rock Breake, Engine No. F120218044, Chassis No. F120Z18044, vide Loan Agreement No. 6165556 executed between the Petitioner and the Respondent No.1. Respondent no.1 allegedly sent demand notice dated 28.01.2021 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI Page 6/22 AGRAWAL AGRAWAL GUPTA GUPTA Date: 2025.06.21 16:17:01 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 calling upon the petitioner to pay a sum of Rs.8,62,801/-. 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 filed a Suit in the court of Civil Judge, Senior Division, Panchkula, seeking Decree for 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 trough 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. The Sole Arbitrator (Respondent No.2), unilaterally appointed by Respondent No.1, issued an ex-parte award on 08.10.2021, without deciding his jurisdiction 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 of arbitration dated 15.02.2021 and further did not receive any notice of appointment of sole arbitrator allegedly dated 18.02.2021 and accordingly, the arbitration proceedings were initiated by respondent no.2 without any notice/consent to the petitioner. Furthermore, the notice to participate in the arbitration vide letter dated 20.02.2021 was duly responded to by the petitioner vide reply dated 09.03.2021 raising several legal objections pertaining to the legal OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 7/22 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.21 16:17:07 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 appointment of the sole Arbitrator, besides other objections pertaining to jurisdiction of the Arbitrator. It is further contended for the petitioner that copy of Award dated 08.10.2021 was received by the petitioner only on 25.07.2022, which was jointly received in respect of the impugned Award dated 08.10.2021 as well as another Award dated 14.07.2022 that was passed by the Arbitrator for which separate petition U/S 34 of The Arbitration and Conciliation Act has been filed. It is contended that Ld. Arbitrator has not complied with the provisions of Section 31(5) of the Arbitration and Conciliation Act, 1996. It is also submitted that the appointment of the ld. 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. Thus, it is contended that the arbitration proceedings have been held without the knowledge and consent of the applicant since, notice of the arbitration proceedings were never served upon 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 applicant 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.
Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.21 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. 16:17:13 +0530 Page 8/22 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025
10. The petition has been strongly contested on behalf of the respondent asserting that a well reasoned and legally enforceable Award dated 08.10.2021 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 contended that the present petition is barred by limitation as the Arbitral Award was passed on 08.10.2021, copy of which, was duly sent to the petitioner, by post, immediately. However, the petitioner filed the present petition only on 17.10.2022, which is far beyond the prescribed limitation period of three months from the date of receipt of Award. As no sufficient cause has been shown for the delay, nor has an application for condonation of delay been filed. Even otherwise, the petition has not been filed within the maximum extendable period of 120 days from the date of deemed receipt of the impugned Arbitral Award by the petitioner. It is further contended that respondent No.2 (Sole Arbitrator), after entering upon the reference, issued notice on 20.02.2021 to the petitioner and co-borrower, 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. Receipt of any reply allegedly dated 09.03.2021 to the notice of appearance dated 20.02.2021, is outrightly denied. The arbitrator proceeded ex-parte against them, when the petitioner deliberately failed to 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 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by Page 9/22 PREETI PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.21 16:17:20 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 any challenge to the impugned Award, as per law. 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 08.10.2021 was passed by Ld. Sole Arbitrator / respondent no.2 and that the petition be dismissed, as time-barred and on merits.
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 08.10.2021 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, did not appear, was proceeded ex-parte and the claimant filed its Statement of Claim, affidavit of evidence. The petitioner has claimed having issued reply to the notice of arbitration dated 20.02.2021 by way of the reply dated 09.03.2021, raising objections of the appointment of the Arbitrator on any valid agreement between the parties qua the arbitration. However, the said receipt of reply dated 09.03.2021, during pendency of the OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI AGRAWAL Page 10/22 PREETI GUPTA AGRAWAL Date:
GUPTA 2025.06.21 16:17:27 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 arbitral proceedings, has been outrightly denied on behalf of respondent no.1 and does not find mention in the arbitral Award passed by the sole Arbitrator as on 08.10.2021. The Arbitrator proceedings were concluded after final hearing, leading to passing of the impugned Award dated 08.10.2021. 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 08.10.2021, 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 Invocation dated 18.02.2021. The Petitioner never appeared before the Ld.Sole Arbitrator, to either consent to the unilateral appointment of the Sole Arbitrator or to defend the claim, whatsoever. It may be pertinent to take note of the claim of the petitioner of having replied and issued a letter of objection for appointment of the Arbitrator in respect of the notice dated 20.02.2021 issued by the arbitrator for appearance before Atbitral Tribunal/Sole Arbitrator. However, as considered, this fact remained only a bald assertion without any reliable document or circumstances such as the postal receipt in respect of alleged reply dated 09.03.2021 to show that infact notice of objection was issued by the petitioner to the Arbitrator. The arbitration OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 11/22 PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.06.21 16:17:33 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 proceedings, which led to the impugned Award dated 08.10.20221, also finds no mention of any such letter of objection. 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 08.10.2021, 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 to on the aspect of lapse of time, in terms of provisions U/S 34 (3) of the Act stating that the Award dated 08.10.2021 was duly despatched to the petitioner by the Arbitral Tribunal vide postal receipt dated 11.10.2021 and deemed served upon the petitioner as well as co-borrower. Neither postal receipt nor tracking report alleging delivery of the registered post upon the objector/petitioner has been filed. Respondent has not filed any postal receipt to show the despatch of the impugned arbitral award to ascertain the alleged lapse of period of 90 days for extendable period from the date of receipt of the impugned Award by the petitioner. It is the case of the petitioner that the knowledge of the impugned Award dated 08.10.2021 was got known to him, only on receipt of the copy of the impugned Award dated 14.07.2022. It shall be relevant to consider the legal position in respect of the applicability of Section 34(3) of the Arbitration and Conciliation Act,1996, to ascertain the maintainability of the present petition, as per law.
Digitally signed by PREETI PREETI AGRAWAL AGRAWAL GUPTA OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. GUPTA Date:
2025.06.21 Page 12/2216:17:38 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025
14. The aspect of limitation under Section 34(3) of the Arbitration and Conciliation Act, 1996, has been considered by this Court. The statutory provision by virtue of Section 34(3) of the Arbitration and Conciliation Act, 1996, provides that an application for setting aside an arbitral award should be made within three months from the date on which the party receives the arbitral award. However, in accordance with the proviso to Section 34 (3) of the Arbitration Act, "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."
15. The Hon'ble Delhi High Court recently in the judgment of 'National Research Development Corporation & another vs Chromous Biotech Pvt. Ltd.', O.M.P. (COMM) 238/2023, I.As. 12522/2023, 12523/2023 & 12524/2023, dated 08.01.2024, has been pleased to rely upon the judgment of the Hon'ble Apex Court in 'Union of India v. Popular Construction', (2001) 8 SCC 470, and observed that : -
"the scheme of the Arbitration and Conciliation Act, 1996 lends credence to the conclusion that the time- limit prescribed under Section 34 of the Arbitration and Conciliation Act, 1996 is absolute. The Delhi High Court further clarified that the intent of the legislature to make the time limit absolute for filling an application and use of the words "but not thereafter" in the proviso. Reliance was placed on the judgment of the Hon'ble Apex Court in Simplex Infrastructure Ltd. v. Union of India (2019) 2 SCC OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI Page 13/22 AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.21 16:17:44 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 455, to conclude that these words made it abundantly clear that as far as the limitation for filing an application for setting aside an arbitral award is concerned, the statutory period prescribed is three months which is extendable by another period of upto thirty days (and no more) subject to the satisfaction of the Court that sufficient reasons are provided for the delay."
16. The Court has further considered the legal position in the facts of the present case. Ld. Counsel for respondent has relied upon the pronouncement of Hon'ble Delhi High Court in 'Sapna Tuteja & Anr Vs. L&T Finance Ltd.', OMP No.112/2014 and IA No.1787/2014, with the contention that the postal receipts annexed on the arbitral award passed by the sole arbitrator, alongwith tracking report, clearly establishes that the arbitral award in question was duly served upon the petitioner and the co-borrower as on 16.10.2021 and that the present petition has been filed beyond the permissible period of 90 days plus extendable period of 30 days, as per provisions under Section 34(3) of the Arbitration and Conciliation Act. However, upon careful consideration of the judgment relied upon by ld. Counsel for the respondent, facts of the present case are clearly distinguished wherein the matter in hand before the Hon'ble High Court of Delhi, contains facts wherein acknowledgment cards were received back by the Arbitrator bearing signature of the recipient which is not the case here. On the contrary, the petitioner has strongly disputed receipt of copy of the Arbitral Award in question, prior to 25.07.2022, where an envelop is admittedly received by the petitioner containing the impugned Award in question, as well as copy of another impugned Award OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI AGRAWAL Page 14/22 AGRAWAL GUPTA GUPTA Date:
2025.06.21 16:17:50 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 dated 14.07.2022 passed in another claim filed by respondent no.1 herein, for which a separate petition U/S 34 of the Act has been filed.
17. The aspect of presumption of service has been widely considered by Hon'ble Apex court and Hon'ble High Court of Delhi in several matters in light of Section 27 of General Clauses Act, 1897 and Section 114 of Indian Evidence Act, 1872 (erstwhile Act). It has been considered in 'Krishna Kumar Gupta Vs. Manoj Kumar Sahu', S.C.C. Revision No. - 144 of 2018, Allahabad High Court on the aspect as under:-
"The controversy before this Court is as to when service of notice shall be treated sufficient. To deal with present controversy, Section 114 of Indian Evidence Act, 1872 (hereinafter referred to as "Act, 1872") as well as Section 27 of Act, 1897 is relevant provision of law, in light of which controversy has to be decided, therefore, the same is quoted below; Section 114 of Act, 1872 "Section 114- Court may presume existence of certain facts.- The Court may presume the existence of any fact which it thinks likely to have happened. regard being had to the common course of natural events human conduct and public and private business, in their relation to the facts of the particular case.
Illustrations The Court may presume-
(f) That the common course of business has been followed in particular cases;
Section 27 of Act, 1897 "27. Meaning of service by post. - Where any Central Act or Regulation made after the commencement of this Act authorizes or requires any document to be served by post, whether the expression serve or either of the expressions give or send or any other expression is used, then, unless a different intention appears, the service shall be deemed to be effected by properly addressing, pre- paying and posting by registered post, a letter containing the document, and, unless the contrary is proved, to have Digitally signed by PREETI OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI AGRAWAL GUPTA AGRAWAL Date:
Page 15/22GUPTA 2025.06.21 16:17:56 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 been effected at the time at which the letter would be delivered in the ordinary course of post."
The Hon'ble High Court in the afore-cited matter further considered that :-
"Here the presumption in respect of registered letter applies only if otherwise is not proved. In the present case letters have been received back with endorsement "not met" and that being so there cannot be a presumption that registered letter must be deemed to have been proved. Here is also not a case where letter has been received with endorsement of 'refusal'."
18. It was further considered that in 'Sukumar Guha Vs. Naresh Chandra Ghosh' AIR 1968 Cal. 49, a Single Judge (Hon'ble Amresh Roj, J.) referring to Section 114, Illustration (f) of Act, 1872, Section 106 of Act, 1882 and Section 27 of Act, 1897 said that presumption under Section 27 of Act, 1897 can arise only when a notice is sent by registered post while there may arise a presumption under Section 114 of Act, 1872 when notice is sent by ordinary post or under certificate of posting. Both the presumptions are rebuttable. When the cover containing notice has been returned to the sender by postal authorities, then that fact is direct proof of the fact that the notice sent by post was not delivered to the party to whom it was addressed. Similarly, presumption under Section 114, illustration (f) of Evidence Act also, in my view, has no application in the case in hand.
19. Having considered the relevant statutory provisions and well settled law on the aspect and considering the acts of the present case, the presumption raised for alleged service upon the OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. PREETI Digitally signed by PREETI AGRAWAL Page 16/22 GUPTA AGRAWAL Date:
GUPTA 2025.06.21 16:18:04 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 petitioner in respect of the Award in question is entirely based upon the concept of 'deemed service' in accordance with Section 27 of GC Act. However, it is well settled preposition of law that the presumption of a deemed service is a rebuttable presumption and the burden lies upon the petitioner to show that the service of receipt of copy of the impugned Award was not effected upon the petitioner, as claimed by the respondent. In the present case the petitioner has categorically averred that the service was effected upon the petitioner in respect of the impugned Award in question as on 25.07.2022. In order to support the averments, copy of the envelop alongwith AD card has been filed by the petitioner showing the despatch in his favour, as on 23.07.2022. It is also an admitted fact on behalf of the respondent that another arbitral Award dated 14.07.2022 was passed by the same Ld. Sole Arbitrator/Respondent no.2 herein, between the same parties, as on 14.07.2022. It is also not disputed by respondent no.1 that the said impugned Award was despatched in favour of the petitioner on 23.07.2022. The averments in the petition are duly supported with the affidavit of the petitioner, verifying the facts of the petition. Furthermore, copy of the envelop and the AD card alongwith postal receipt dated 23.07.2022 has been filed with the contention that the impugned award in the present case dated 08.10.2021 was received by him and thus, notified to him only when the service of the other arbitral award dated 14.07.2022 was served upon him. It has already been considered and well settled position of law that presumption of 'deemed service' is a rebuttable presumption, which in the facts of the present case, has been duly rebutted by the petitioner. It has been established OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed Page 17/22 by PREETI PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.21 16:18:09 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 on record that the present petition has been filed within a statutory period of 90 days in accordance with Section 34(3) of the Act from the date of knowledge of the impugned award dated 08.10.2021 assailed in the present petition, upon the petitioner as on 25.07.2022. Hence, it is considered that the present petition has been filed by the petitioner within the limitation period prescribed, as per law, which is now being examined on merits of the petition, as hereinafter.
20. On merits of the petition, the petition U/S 34 of the Act, has been filed on behalf of petitioner against the impugned Arbitral Award dated 08.10.2021. 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 08.10.2021 has been passed pursuant to the Invocation of the Arbitration Agreement by the respondent. The Sole Arbitrator has passed an ex-parte Award dated 08.10.2021, 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.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed Page 18/22 by PREETI PREETI AGRAWAL GUPTA AGRAWAL Date:
GUPTA 2025.06.21 16:18:15 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 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.
21. 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.
22. 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.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 19/22 PREETI AGRAWAL AGRAWAL GUPTA Date:
GUPTA 2025.06.21 16:18:20 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 waiver.
23. 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.
24. 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.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Digitally signed by PREETI Page 20/22 PREETI AGRAWAL AGRAWAL GUPTA GUPTA Date:
2025.06.21 16:18:25 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 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."
25. In the present case, the impugned award dated 08.10.2021, 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. The very appointment of the Sole Arbitrator suffers from a permanent and 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, it is matter of record 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 Digitally signed by PREETI PREETI AGRAWAL OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. AGRAWAL GUPTA Page 21/22 GUPTA Date:
2025.06.21 16:18:32 +0530 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 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.
26. Accordingly, this Court is satisfied that the Award dated 08.10.2021 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 21st day of June, 2025 PREETI Digitally signed by PREETI AGRAWAL GUPTA AGRAWAL Date: GUPTA 2025.06.21 16:18:39 +0530 (PREETI AGRAWAL GUPTA)
District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025 OMP (Comm.) 116/2022 Ajaib Singh Vs. Mahindra & Mahindra Financial Services Ltd. Page 22/22 (PREETI AGRAWAL GUPTA) District Judge (Commercial Court)-01 North-West/Rohini/New Delhi.
21.06.2025