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. of the seeking the execution of duly passed arbitral award.
Relying on Cholamandalam Investment and Finance Company Ltd. v. Amrapali Enterprises, , 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, , 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.
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