Interested Party Cannot Appoint Arbitrator Unilaterally, Award Passed By An Ineligible Arbitrator A Nullity: Delhi High Court

A Division Bench of the Delhi High Court has reiterated that a party interested in the dispute cannot unilaterally appoint an Arbitrator, and if any Award is passed as a result of such unilateral appointment, the same would be a nullity.

The Bench, comprising Justices Sanjeev Sachdeva and Manoj Jain, noted that the respondents’ nomination of the Arbitrator was without reference to the court in terms of Section 11 of A&C Act.

Moreover, the respondents had merely intimated the appellants about appointment of the Arbitrator, without concurring from them.

Referring to the Supreme Court’s decision in Perkins Eastman Architects DPC and Anr. v. HSCC (India) Ltd., the Bench opined that reference of an arbitral dispute must be to an independent person.

“…an award rendered by an ineligible Arbitrator would be a nullity as has been held by a Coordinate Bench of this Court in Kotak Mahindra Bank Ltd. vs. Narendra Kumar Prajapat”.

Accordingly, the impugned judgment, whereby appellants’ objections against the Award were dismissed, was set aside alongwith the Award.

Notably, the issue had arisen pursuant to the appellants taking a loan from the respondents for purchasing a car. Following Covid-19 pandemic, they were irregular in certain payments and requested the respondents to defer the payment of EMIs in terms of an RBI circular. But the respondents did not accede to the request.

Ms. Neha Rai, Advocate appeared for appellants

Mr. Puneet Raj, Advocate appeared for respondents

Case Title: Babu Lal and Anr. v. Cholamandalam Investment and Finance Company Ltd. and Anr.

Citation: 2023 LiveLaw (Del) 1118

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