Indian Kanoon - Search engine for Indian Law

13. In the present petition, the grounds raised for challenging the arbitration award are that, the very Orders KABC0A0036992020 Constitution of the arbitral tribunal is contrary to law since no opportunity was given to the petitioners to nominate their arbitrator, no cause of action has arisen in Chennai and hence the arbitration seat in Chennai is defective, notice of the arbitration was not served upon the petitioners. These grounds are in respect of the constitution of the arbitral tribunal and violation of principles of natural justice. Apart from these grounds, the legal grounds raised are that, the petitioner No. 2 who is described as guarantor in the award is a minor and therefore, the impugned award which imposes liability upon the minor is illegal and contrary to fundamental principles of Indian law. It is further contended that, there is absolutely no finding recorded by the learned arbitrator and the arbitration award is a non-speaking order. Finally, it is contended that, the rate of interest ordered by the learned arbitrator at 3 percent per month from date of arbitration proceedings till date of award is excessive and contrary to section 31 (7) (b) of the Arbitration And Conciliation Act, 1996.

17. In the case on hand, the award is dated 07/03/2019.

18. However it is crucial to note that, the limitation of 3 months begins to run not from the date of the arbitration award but from the date of intimation of the same to the parties. In the case on hand, there is no material to show that, after the passing of the award, the learned arbitrator had intimated the same to the petitioners herein. On the other hand, in the present petition, at paragraph 7 it is specifically stated that, the copy of the award was not received from the learned arbitrator and the petitioner No. 1 came to know about the award only on receiving the notice in Orders KABC0A0036992020 Ex. No. 25324/2019 and thereafter, she applied for certified copy of the award and at paragraph 20 of the petition, it is stated that, the petitioner No. 1 received the copy of the arbitration award only on 20/03/2020. It is to be noted that, the respondent No. 1 - bank has not filed any objections opposing these petition averments. The certified copy of the award produced along with the present petition substantiates the say of petitioner No. 1 that, she received the certified copy of the Award only on 20/03/2020. Therefore, under section 34 (3) of the act, the limitation period begins to run from 20/03/2020, which should be considered as the date of intimation of the award to the Petitioners. Therefore, the period of 3 months would end on 20/06/2020. However, it is to be noted that, as per the ruling of Hon'ble Apex Court in Suo-Motu Writ Petition No. (C) 03/2020 dated 10/01/2022, it held as follows;

23. In considering the grounds raised in present petition, challenging the arbitration award, the first ground raised is that, the Constitution of the arbitral tribunal and the seat of the arbitration is improper, since, there are no option given to the borrowers/petitioners to nominate the arbitrator and when the entire cause of action has arisen in Bangalore, Orders KABC0A0036992020 holding the arbitration in Chennai is not proper. As against this, in the arbitration award which is impugned herein at paragraph 3C of page 4 of the award, the learned arbitrator has extracted clause 11.16 of the loan agreement as follows;

32. Apart from this, I also find that, the contention raised in the petition that, there is absolutely no reasoning or findings recorded by the learned arbitrator, deserves acceptance. As already noted supra, in the entire award, even the quantum of loan advanced, the date of the loan agreement and other particulars are not stated. The learned arbitrator although refers to Ex. A5 as the statement of accounts maintained by the claimant bank in the regular course of business has not even bothered to mention what was the amount found due to the claimant bank, as per the said statement of accounts. The entire burden of reasoning of the learned arbitrator is found in one sentence at paragraph 7 of the award wherein the learned arbitrator has observed that, "there is nothing Orders KABC0A0036992020 available on records produced to disprove or deny the claim of the claimant, as well as the documents executed by the respondents". The learned arbitrator has not recorded any finding as to what was the loan amount taken by the respondents, what was EMI, and what was the balance amount due by the respondents (Petitioners herein) to the claimant bank as per the statement of accounts as on the date of filing of the claim statement. Without recording findings on these points, passing the award by simply allowing the claim on the ground that, there is nothing on record to disbelieve the same amounts to total non- application of mind by the learned arbitrator and in fact, it is clear that, without mentioning any particulars, the Award is passed in cyclostyled format. Be that as it may, the award passed without recording any findings, is a nonspeaking award. It is fundamental policy of Indian law that every judicial / quasi judicial order should be supported by reasons. Therefore, the conclusion is that, when there is absolutely no findings or reasonings recorded in the Orders KABC0A0036992020 impugned Award and when the records of the arbitration proceedings are not produced for this court to verify that the arbitration award correctly reflects the amount due by the respondents (Petitioners herein) to the claimant bank, in such circumstances, the court has no option but to set-aside the arbitration award on the ground of total non-application of mind and for being a nonspeaking award i.e. by holding that the passing of award in such a manner is opposed to basic notions of morality and justice and therefore, the ground under section 34 (2) (b) (ii) read with Explanation 1 (iii) is attracted and therefore, this is another ground for setting aside the impugned award.