Calcutta High Court | While dismissing the application seeking execution of an arbitral award, Shekhar B. Saraf*, J., held that the said award itself stands vitiated as the same is passed by a unilaterally appointed arbitrator, thus lacking inherent jurisdiction to adjudicate disputes between the parties.
In the instant matter, a dispute arose between the petitioner-award holder and respondent-award debtor, after the respondent failed to pay either the due amount or make over the possession of the assets as per Master Lease Agreement (the agreement) entered on 15-07-2018. By virtue of the said agreement, an amount of INR 87,83,410/- was advanced by the petitioner to the respondent to hire on lease assets in the form of two vehicles along with their necessary accessories by the respondent. On 24-01-2020, the petitioner invoked arbitration and unilaterally appointed Mr. Samrat Mukherjee as the Sole Arbitrator as per arbitration clause contained in the agreement. The Sole Arbitrator passed an ex-parte arbitral award dated 27-08-2021 directing the respondent to pay a sum of INR 65,41,583.12/- to the petitioner. The petitioner filed an application under S. 36 of the Arbitration & Conciliation Act, 1996 seeking the execution of duly passed arbitral award.
Relying on Cholamandalam Investment and Finance Company Ltd. v. Amrapali Enterprises, 2023 SCC OnLine Cal 605, the Court observed that an “arbitral award passed by unilaterally appointed arbitrators do not carry the privilege of existence before the eyes of law and should be regarded as a nullity.”
The Court observed that an arbitrator lacks inherent jurisdiction to adjudicate disputes between the parties, if he/she is appointed unilaterally by one party only and as a result both the arbitral proceedings and the award itself stand vitiated.
Hence, the Court dismissed the present application and provided liberty to the parties to re-agitate their claims/counterclaims in properly constituted arbitration proceedings.
[Srei Equipment Finance Ltd. v. Sadhan Mandal, 2023 SCC OnLine Cal 831, decided on 11-04-2023]
*Judgment by Justice Shekhar B. Saraf
Advocates who appeared in this case :
Mr. Anik Banerjee, Mr. Rajib Mullick and Ms. Sonia Mukherjee, Counsel for the Petitioner;
Mr. Priyankar Saha, Counsel for the Respondent.