POORAM FINSERV PVT. LTD. Vs. SANTHOSH KUMAR ROBINSON

JUDGEMENT

(1.) This appeal is filed challenging the Order dtd. 5/7/2024 of the Additional District Court, Thrissur in Arb.O.P.No.792 of 2017. Appellant herein was the respondent in the said Arb.O.P. The Arb.O.P. had been filed before the District Court by the respondent herein invoking Sec. 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act of 1996') seeking to set aside an arbitration award.

(2.) Arbitration proceedings had been initiated by the appellant seeking to recover amounts due from the respondent under a loan agreement. Though notice issued by the arbitrator had been received by the respondent, he did not choose to participate in the arbitration proceedings. An award for an amount of Rs.37,60,547.00 with interest and cost was rendered against the respondent by the arbitrator on 20/8/2017. The said award was challenged by the respondent before the District Court by filing the above Arb.O.P. The learned Judge, after hearing both sides, concluded that the arbitration had been conducted violating the mandates of Ss. 11 and 12 of the Act of 1996. The District Court relied on the dictum laid down by this Court in M/s.Hedge Finance Private Limited v. Bijish Joseph (ILR 2022 (3) KER. 947), wherein it was held that "post-2015 amendment era, there are only two modes of appointment of a sole Arbitrator (i) by express agreement in writing between the parties, post the dispute, agreeing to waive the applicability of Sec. 12 of the Act or (ii) by order of appointment by the High Court under Sec. 11 of the Act. If the appointment of a sole arbitrator is made other than by the above two methods, the appointment is ex facie bad and is in contravention of the provisions of the Act, which goes to the roots of the matter, and the Arbitrator becomes de jure ineligible to act as an arbitrator by the operation of law". Thus following the proposition laid down by this Court that there should be neutrality not only for the arbitrator, but also in the arbitrator selection process as well, the learned District Judge set aside the award and allowed the Arb.O.P. filed by the respondent. The said Order of the District Court is challenged in this Arb.Appeal.

(3.) We heard Sri.P.B.Krishnan, Senior Advocate instructed by Sri.Sabu George learned counsel for the appellant.