Arbitration and Conciliation Act, 1996 — Section 12(5) r/w Seventh Schedule — Unilateral appointment of sole Arbitrator — Ineligibility — Jurisdiction —
Arbitration award passed by sole Arbitrator appointed unilaterally by Finance Company through its Legal Manager — Such appointing authority having direct interest in dispute falls within ineligibility under Seventh Schedule — Held, a person who is ineligible to act as Arbitrator is equally ineligible to nominate another Arbitrator — Unilateral appointment of sole Arbitrator is invalid and violative of Article 14 — Arbitrator lacked inherent jurisdiction to adjudicate dispute — Award is non est and without jurisdiction.
(Paras 31–34, 43)
Arbitration — Award — Executability — Lack of inherent jurisdiction —
Held, where Arbitrator lacks inherent jurisdiction due to statutory ineligibility under Section 12(5), the award itself is void and incapable of execution — Execution proceedings based on such award are unsustainable.
(Paras 32–34, 43)
Arbitration — Section 4 — Waiver — Scope — Distinguished from Section 12(5) —
Plea that petitioner waived objection by not participating in arbitration — Held, waiver under Section 4 applies only to procedural irregularities — Ineligibility under Section 12(5) is a matter of law and cannot be waived except by express agreement in writing after disputes arise — Absence of such express agreement → no waiver — Section 4 has no application.
(Paras 36–42)
Arbitration — Section 12(5) Proviso — Express waiver — Requirement —
Held, waiver of ineligibility must be by clear, unequivocal written agreement after disputes arise — Mere silence or non-objection does not amount to waiver — Statutory ineligibility cannot be cured by implication.
(Paras 36, 42)
Arbitration — Jurisdictional objection — Stage —
Held, objection relating to inherent lack of jurisdiction of Arbitrator can be raised at any stage, including in collateral proceedings and execution — Such defect strikes at root and is not curable.
(Paras 27, 12, 43)
Arbitration — SARFAESI proceedings — Co-existence —
Held, arbitration proceedings and SARFAESI proceedings are cumulative remedies and can proceed simultaneously — However, said issue not pressed in present case.
(Para 8)
Result / Directions —
Held, unilateral appointment of Arbitrator invalid — Award suffers from lack of jurisdiction — Consequential execution proceedings including attachment order liable to be set aside — Parties at liberty to proceed in accordance with law.
(Para 43)
RATIO DECIDENDI
A unilateral appointment of a sole arbitrator by an interested party or its official, who is statutorily ineligible under Section 12(5) read with the Seventh Schedule, renders the arbitrator devoid of inherent jurisdiction, and consequently the arbitral award is void, non est and incapable of execution, such defect not being curable by implied waiver under Section 4 and capable of being raised at any stage.
