SUBRAMANIYAN Vs. ANWAR

JUDGEMENT

(1.) Petitioner is one of the guarantors to the loan availed by the third respondent from the second respondent for purchasing a vehicle. Ext.P1 is the agreement entered into between the petitioner, second respondent and the third respondent. Ext.P1 agreement provides that all disputes, differences and/or claim arising out of or in connection with the said agreement, whether during its subsistence or thereafter shall be settled by arbitration in accordance with the provision of the Arbitration and Conciliation Act, 1996, or any statutory amendments thereof and shall be referred to the sole arbitration of an arbitrator nominated by the second respondent. The third respondent committed defaults in repaying the loan availed from the second respondent. The second respondent, in the circumstances, invoked the clause aforesaid in Ext.P1 agreement and nominated the first respondent as arbitrator to adjudicate their claim against the petitioner and the third respondent. The first respondent has initiated arbitral proceedings on that basis against the petitioner and the third respondent. Ext.P2 is the claim statement preferred by the second respondent before the first respondent. Along with the claim statement, the second respondent has preferred an interlocutory application also. The first respondent issued notice to the petitioner on the interlocutory application directing the petitioner to appear before him on 30/7/2021. Ext.P3 is the notice issued by the first respondent in this regard. The writ petition is filed thereupon, seeking a declaration that the appointment of the first respondent as the arbitrator by the second respondent to adjudicate the claim of the second respondent against the petitioner is void ab initio. The petitioner also seeks stay of the arbitral proceedings. The case set out by the petitioner in the writ petition is that the clause in Ext.P1 agreement conferring authority on the second respondent to nominate the sole arbitrator to adjudicate the claim of the second respondent against the petitioner is invalid.

(2.) Heard the learned counsel for the petitioner.

(3.) In the light of the amendments made to the Arbitration and Conciliation Act, 1996 (the Act) in terms of the Arbitration and Conciliation (Amendment) Act, 2015 and various decisions of the Apex Court explaining the scope of the said amendments including the decisions in TRF Limited v. Energo Engineering Projects Ltd., (2017)8 SCC 377 and Perkins Eastman Architects DPC and Another v. HSCC (India) Ltd., 2019 SCC OnLine SC 1517, there is certainly force in the contention of the petitioner that the clause in Ext.P1 agreement conferring authority on the second respondent to nominate the sole arbitrator to adjudicate the claim of the second respondent against the petitioner is invalid. But, the question arising for consideration is whether the petitioner is justified in approaching this Court seeking a declaration to that effect invoking the jurisdiction of this Court under Article 226 of the Constitution.