Case Name: – Babu lal & Anr. Vs. Cholamandalam Investment & Finance Co. Ltd. & Anr.; FAO (COMM) 135/2023
The Delhi High Court has held 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.
In this case counsel for the appellant submits that the appointment of the Arbitrator was unilateral and contrary to the judgment of the Supreme Court in Perkins Eastman Architect DPC and Anr. vs. HSCC (India) Ltd.: (2020) 20 SCC 760 and as such the award rendered by the Arbitral Tribunal is a nullity. On the other side counsel for the respondents submits that prior to the appointment of an Arbitrator, a notice was sent to the appellant on 18.01.2021 whereby the Arbitrator was appointed and intimation was given to the appellant of the appointment of the Arbitrator.
Against which appellant counsel submits that mere receipt of the letter would not validate an invalid appointment. The Court observed that nomination of the Sole Arbitrator was done by the respondents on their own without any concurrence from the appellant. Letter dated 18.10.2021 is merely an intimation to the appellant of nomination of the Sole Arbitrator. Said nomination was without reference to the Court in terms of Section 11 of the Arbitration & Conciliation Act, 1996.
Consequently, an award passed by an ineligible Arbitrator would be a nullity. Reliance was placed by the court on the Judgment in case of Kotak Mahindra Bank Ltd. v/s Narendra Kumar Prajapat: 2023 SCC OnLine Del 3148. Therefore, award was set aside and appeal was allowed.

Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate

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