The Himachal Pradesh High Court in the case Divisional Manager v. Prem Lal observed and has held that the arbitral proceedings which is being conducted by a unilaterally as the appointed arbitrator are void ab initio and the consequent award is non-est.
The bench comprising of Justice Jyotsana Rewal Dua in the case observed and has held that the award has been passed by the arbitration by a unilaterally who is being appointed as the sole arbitrator is not enforceable under Section 36 of the Arbitration & Conciliation Act.
Further, it has been held by the court that as per Section 12(5) would also apply to arbitration agreement entered into before the 2015 amendment came into effect. It has also been held by the court that mere participation in the arbitration proceedings before the ineligible arbitrator would be of no such consequence.
Facts of the Case:
In the case the parties entered into an agreement dated 20.03.2012 with regards to the extraction of resin and delivery thereof. In the case a dispute arose between the parties when allegedly the respondent failed to extract the relevant quantity of the resins, wherein it has been demanded by the petitioner the compensation, however, it has also been invoked the arbitration and has unilaterally appointed the arbitrator when the respondent refused to pay the demanded sum.
In favour of the petitioner, an award has been passed by the arbitrator. Therefore, the said petitioner put the award for enforcement under Section 36 of the said Act. It has also been refused by the court for enforcing the award on the ground that it was not a valid award having been passed by an ineligible arbitrator.
The petitioner approached the High Court, aggrieved with the same.
The court while considering the facts and circumstances of the case held that an arbitration award passed by a unilaterally appointed sole arbitrator is not enforceable under Section 36 of the A&C Act. Further, the court held that Section 12(5) would also be apply to arbitration agreement entered before the 2015 amendment came into effect. It has also been held by the court that mere signature of the respondent on the arbitration agreement and participation in the arbitration proceedings before the ineligible arbitrator would be of no consequence.
Therefore, the court further observed that there being no infirmity in the order of the lower court and it had rightly refused to enforce a void arbitration award.
Accordingly, the court dismissed the plea.