CASE TITLE
SREI EQUIPMENT FINANCE LIMITED VS SADHAN MANDAL
DATE OF ORDER
11TH APRIL, 2023
BENCH
THE HON’BLE JUSTICE SHEKHAR B. SARAF
PARTIES
APPELLANT – SREI EQUIPMENT FINANCE LTD
RESPONDENT- SADHAN MANDAL
SUBJECT
Whether the arbitral award given by the arbitrator solely appointed by one party holds importance or not even if other party failed to abide by the arbitral award so granted.
OVERVIEW
- The application has been filed under Section 36 of the Arbitration & Conciliation Act, 1996 by the petitioner who is the award holder.
- The petitioner seeks execution of arbitral award passed by sole arbitrator on August 27,2021.
- The arbitral award said the respondent who is the award debtor to pay an amount of INR 65,41,583.12 to the petitioner.
- The award holder and award debtor entered into an Master Lease Agreement on 15th July 2018.
- As per the agreement, an amount of INR 87,83,410 was advanced by award holder to the award debtor in order that the award debtor would hire on lease assets.
- The assets were in form of two vehicles namely Mahindra Balzo 31 Model Vehicles bearing two different engines respectively.
- The award debtor neither paid the due amount nor made over the possession of the assets due to which award holder invoked Arbitration for the solution as per the agreement between the award holder and award debtor.
JUDGEMENT
- The Hon’ble court held that it was clear from the reading of the agreement between the award holder and award debtor that in case any dispute arising out of the agreement will be settled through arbitration under the provisions of Arbitration and Conciliation Act,1996.
- The agreement clearly mentions that the dispute will be referred to sole arbitration of an independent arbitrator. This arbitrator will be appointed by the award holder on its own or on request of the award debtor.
- Court held that in such a case where sole arbitrator is unilaterally appointed by one of the party, the proceedings and award stand vitiated.
- Court held that such arbitrator lacks inherent jurisdiction to solve the issue and the arbitral award stands invalid.
- The Hon’ble Justice held that arbitral award passed by an arbitrator who is unilaterally appointed do not carry privilege of existence in the eyes of law and is null.
- Court held that there was nothing in the application that needs execution since the arbitral award has been passed by unilaterally appointed arbitrator.
- Consequently, the application was dismissed by the Calcutta High Court.
CONCLUSION
The High Court, through this matter, made it clear that even though dispute resolution take place outside the court, the principle of rule of law and principles of natural justice must be followed. Arbitration proceedings should at no cost be biased. Despite of the fact that the parties of an agreement have consented for unilateral appointment of arbitrator for dispute resolution, the proceeding and arbitral award won’t have the privilege of existence and value in the court of law.
