Commercial Court (District Judge Level)

Nava Raipur Atal Nagar, Distt. Raipur, Chhattisgarh

(Presiding Judge: Pankaj Sharma)
_________________________________________________
Case No.: Arb. M.J.C. 04 of 2025
CNR No.: CGCC01-000011-2025
Date of Institution: 20/01/2025
Date of order:05/05/2025
_________________________________________________

Md. Irfan Ullah, age- 42 years, S/o- Md. Ikram Ullah,

address- Block-B/1, flat no. 201, V.I.P. Karishma, Shankar
Nagar, Raipur (C.G.) …Applicant

Versus

1- Md. Inam Ullah, age- 44 years, S/o- Md. Ikram Ullah,

R/o- Basera, Jailor Chaal, Raja Talab, Purani Chowk,
Raipur (C.G.)

2- Md. Inayat Ullah, age- 37 years, S/o- Md. Ikram Ullah,

address-A-1, 2 Gulzar Homes, Near Masjid, Moti Nagar,
Raipur (C.G.)
...Non-applicants

_________________________________________________
Shri Lukesh Kumar Mishra, Ld. Advocate for applicant.
Shri S.P. Upadhayaya, Ld. Advocate for non-applicant no. 1.
Shri N.K. Thakur, Ld. Advocate for non-applicant no. 2.
_________________________________________________
::ORDER::
(Passed on 05/05/2025)

01- Transparency and proper opportunity of hearing are two

important tenets of any dispute resolution mechanism,

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whose presence is paramount to avert vitiation of process.

When seen through the focal lens of Section 34 of the

Arbitration and Conciliation Act, 1996, the present case

can be found to be an unfortunate and unusual one, with

every attempt made to carry out the arbitration

proceedings behind the curtains and the hearing

opportunity being reduced to almost an empty formality.

02- The applicant has come before this Court by means of the

present objection application under Section 34 of the

Arbitration and Conciliation Act, 1996 (hereinafter

referred to as “the A&C Act”), calling in question the

legality and validity of the arbitral award dated

01/08/2021 (hereinafter referred to as the “impugned

award”) passed by the Ld. Sole Arbitrator (hereinafter

referred to as the “Sole Arbitrator”).

03- In this order, for the sake of easy reference, parties to

the matter are being henceforth referred to as per their

respective status before the Sole Arbitrator. Md. Inam

Ullah is being referred to as the claimant, and Md. Irfan

Ullah & Md. Inayat Ullah are being referred to as non-

applicant no. 1 and non-applicant no. 2 respectively.

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Pleadings of the non-applicant no. 1 (applicant in the present

objection application)

04- The non-applicant no. 1 has averred that the claimant, in

his individual capacity, had filed an arbitration claim on

20/12/2020 against the non-applicants no. 1 & 2.,

seeking, inter alia, declaratory and prohibitory orders. In

the claim application, the partnership firm Aviva Builders

and Developers and all its partners were not added as

necessary parties. It is stated that as per law, a

declaration suit cannot be adjudicated by a private forum

i.e. a Sole Arbitrator and it can be tried only by a Civil

Court under Section 34 of the Specific Relief Act. The Sole

Arbitrator has taken cognizance of the relief by going

beyond the law. As per order sheet dated 03/12/2020,

the request for arbitration was made jointly by the

claimant and non-applicant no. 2 before the Sole

Arbitrator, but the name of non-applicant no. 2 was later

removed from the request, by manipulating the

documents provided to the non- applicant no. 1.

05- It is further stated that the non-applicant no. 1 moved an

application dated 27/12/2020 before the Sole Arbitrator,

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objecting to the procedure adopted by the Sole Arbitrator

and mentioning that the Sole Arbitrator is acting in an

impractical manner. However, no order was passed

thereon. Later, in conspiracy with claimant, the

documents regarding which objection was raised, were

taken on record behind the back of the non-applicant

no.1. The impartiality of the Sole Arbitrator was thus

doubtful from the beginning.

06- It is stated that before the presentation of claim before

the Sole Arbitrator, no request letter was given to the

non-applicant no.1 by the claimant under the mandatory

provisions of A&C Act. A notice was sent to the non-

applicant no. 1 by the Sole Arbitrator to appear on

13/12/2020 at 3:00 pm, but it was not mentioned that as

to where the non-applicant no. 1 had to appear for

arbitration proceedings. The non-applicant no. 1 appeared

at the residence of the Sole Arbitrator on 13/12/2020 and

submitted an application under Section 12 r/w Section 13

of the A&C Act, challenging the appointment and

impartiality of the Sole Arbitrator. However, the Sole

Arbitrator summarily dismissed the said objection.

07- It is stated that despite having been requested, the

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procedure of arbitration was not determined by the Sole

Arbitrator, which is in contravention of the provisions of

A&C Act. After entering appearance in the arbitral

proceedings, the non-applicant no. 1 had submitted his

reply in rebuttal of the claim with documents on factual

grounds. He had also filed objections on the functioning

and impartiality of the Sole Arbitrator. It was clearly

mentioned in various applications that the Sole Arbitrator

Shri Satbir Singh Walia was the legal advisor of the firm

of the claimant, therefore, his working as the Sole

Arbitrator was completely illegal and was a clear violation

of the provisions of the A&C Act. In this regard, the non-

applicant no.1 had obtained the documents under the

Right to Information and presented before the Arbitrator,

which mentioned about advice having been rendered by

Shri Shashi Prakash Upadhyay and S.S. Walia. As per

documents obtained through Right to Information, the

Sole Arbitrator had himself mentioned to be a family

friend and advisor of the claimant. The documents

presented by the non-applicant no.1 before the Arbitrator

established that there had been a close relationship

between the Sole Arbitrator, claimant and claimant’s

Advocate S.P. Upadhyaya, and despite all these relations,

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the Sole Arbitrator conducted the proceedings of the case

without any declaration of impartiality.

08- The claimant had presented a written acknowledgment

letter of a fake memorandum of partition before the Sole

Arbitrator, wherein, fake and forged signature of the non-

applicant no.1 was made and in the said document also

the Sole Arbitrator had put his signature as executor

witness.

09- An application was also filed seeking declaration under

Section 12(5) from the Sole Arbitrator, but the Sole

Arbitrator, going beyond the said legal provision, not only

refused to give the said declaration, but also made

adverse remarks in the procedural order sheet, violating

the mandatory provisions of the A&C Act.

10- It has further been stated that when the non-applicant

no.1, while continuously submitting the applications

before the Sole Arbitrator, requested for the required

documents to be made available from claimant for

presenting the counter claim, the Sole Arbitrator,

adopting and illegal procedure, in the procedural order

sheet dated 10.02.2021, citing Section 23 of the A&C Act,

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without providing the documents to the non-applicant

no.1, and without bringing the desired document on

record for resolving the matter, by adopting the biased

attitude, started forcing the non-applicant no. 1 to

present the counter claim without documents and

pressurized him to conclude the arbitration proceedings in

six months, whereas said Section 23 does not provide for

any such timeline.

11- The non-applicant no.1 had earlier submitted an

application for determining the procedure under Section

19 of the A&C, Act, which was illegally rejected by the

Arbitrator, which shows the Sole Arbitrator was

completely biased and was working to benefit the

claimant from the very beginning and had been refusing

to give the declaration as per the mandatory provision of

Section 12 of the A&C, Act.

12- The non-applicant no.1 had also filed an application under

Order 11 Rule 12, CPC, along with other applications and

demanded documents from claimant for presenting

counter claim, which were decided by the Sole Arbitrator

on the next date of hearing. The Sole Arbitrator

considered the arguments of counsel of claimant to be

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correct and rejected all the applications of the non-

applicant no.1 without any basis. The Sole Arbitrator had

been giving undue advantage to the claimant.

13- It is further stated that initially the non-applicant no.1

was being provided with a copy of order sheets after

signing each page thereof, however, when objections

were raised regarding functioning and impartiality of the

Sole Arbitrator, thereafter, the Sole Arbitrator, in

suspicious manner, stopped signing each page of the

order sheets. In this regard also, an application was

moved by the non-applicant no.1 before the Sole

Arbitrator. The Sole Arbitrator mentioned in order sheet

that the provisions of the Code of Civil Procedure do not

apply to the arbitration proceedings and there is a

provision for conducting the proceedings of the case as

per Section 19 of the A&C Act. The applications submitted

by the non-applicant no.1 were kept unadjudicated.

14- It is further stated that on one hand there has been

collusion between the Sole Arbitrator and claimant, and

the Sole Arbitrator himself has been a family friend and

legal advisor of claimant, on the other hand, it is also

clear from the said documents that the Counsel of

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claimant and the Sole Arbitrator practiced law together

and both appeared on behalf of claimant in the cases. In

this regard also, objection was presented by the non-

applicant no.1 during arbitral proceedings. When the non-

applicant no. 1 submitted an application seeking

clarification in this regard, in order to prevent the said

collusion from getting exposed, the Sole Arbitrator

suddenly took action and did not reject the applications of

the non-applicant no.1 till the disposal of the case, so

that the clarification and documents in this regard could

not come on record.

15- It is further stated that the biased attitude of the Sole

Arbitrator is evident from the fact that while he accepted

all the applications of claimant on the same date without

hearing any reasonable arguments, on the other hand, he

took suo motu cognizance and rejected all the

applications submitted by the non-applicant no.1 and the

non-applicant no.1 was continuously pressurized to

submit a counter claim without providing any documents.

16- It is further stated that initially the balance sheets were

not present on record and at the subsequent stage,

incomplete and unsigned and uncertified

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documents/balance sheets were presented before the

Sole Arbitrator and the said documents were accepted on

record by the Sole Arbitrator despite the objection of the

non-applicant no.1, which also shows the collusion of the

Sole Arbitrator. The collusion between the Sole Arbitrator

and claimant and his Counsel can be gauged also from

the fact that despite the claimant not making any request

to present the rejoinder, the Sole Arbitrator repeatedly

motivated claimant to present the rejoinder by giving him

time. The non-applicant no.1 had submitted an

application and requested the Sole Arbitrator to resolve

the matter within the scope and ambit of arbitration, but

the said application was also rejected illegally by the Sole

Arbitrator by recording adverse comments.

17- It is further stated that the legal facts have been

overlooked by the Sole Arbitrator during the framing of

the issues and the non-applicant no.1 was not given the

right to object to the issue at the time of framing of the

issues and after the framing. The non-applicant no.1 had

submitted an application and raised objection to the

framing of the issues. Apart from that, other applications

were filed requesting the matter to be sent to the trial

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Court so that the witnesses of both the parties could be

examined and cross-examined. Another application was

submitted under Section 24 of the A&C Act. However, the

Sole Arbitrator, without any cogent reason, by invoking

Section 24 of the A&C Act and stating that according to

Section 24 the case is to be resolved only on the basis of

documentary evidence, without expecting the parties to

certify the documents, has deliberately ignored the

proviso of Section 24 to benefit claimant. The Sole

Arbitrator, adopting a biased attitude, rejected the

application submitted by the non-applicant no. 1 for

calling evidence, without considering it, only on the

ground that he had not submitted a copy for claimant and

non-applicant no. 2.

18- It is stated that when the non-applicant no. 1 submitted

an application under Section 27 of the A&C Act for

evidence on the disputed point, the Sole Arbitrator

deliberately did not mention the applications of the non-

applicant no.1 in the order sheet, and it is for this reason

the non-applicant no.1 was compelled to make a request

on margin of order sheet regarding disposing the

applications by taking them on record.

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19- It is also stated that the Sole Arbitrator has tried to

benefit claimant by taking biased action from the very

beginning and the arbitration proceedings were started

with the intention of benefiting applicant. Documents of

Amin Khatri Associates and Joglekar Mehtra & Co. were

read by the Sole Arbitrator in a confidential manner,

without showing them to the non-applicant no.1 and on

demand of copy by the non-applicant no.1, the same was

refused and it was mentioned that he will not take the

said documents on record. On the other hand, the Sole

Arbitrator passed the award on 01/08/2021 itself without

fixing the case for order and the non-applicant no.1 was

not informed about it, despite being a party.

Grounds of challenge before this Court

20- The impugned award has been challenged on the ground

that the impugned order has been passed by the Sole

Arbitrator by ignoring the legal procedures and going

against the A&C Act, therefore, the award is not

maintainable. The claimant had sought declaration and

permanent injunction in the name of Aviva Builders and

Developers, but claimant had not impleaded Aviva

Builders and Developers as a party in the case nor did the

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Sole Arbitrator order to implead Aviva Builders and

Developers as a party in the case. Thus, the person in

whose favour the declaratory suit was filed before the

Sole Arbitrator was not a party to the case, hence a case

could neither be filed in the name of a third party who

was not impleaded in the case nor could an order or

award be passed in respect thereof. Hearing of the matter

by the Sole Arbitrator was done in contravention of the

provisions of Section 12 of the A&C Act. The Sole

Arbitrator, acting in contravention of the relevant

provisions, not only refused to give a declaration about

having family and business relations with the claimant

and his Counsel, but when an application was filed

seeking a declaration by objecting to this state of affairs,

the Sole Arbitrator exerted undue pressure on the non-

applicant no.1 and his Counsel and in the order sheet

threatened to take action against the non-applicant no.1's

Counsel, which clearly shows that the Sole Arbitrator

violated the provisions of the A&CAct and committed

breach of law. Therefore, the impugned award passed by

the Sole Arbitrator is not sustainable.

21- It is further stated that the Sole Arbitrator did not

conduct the arbitration proceedings as per law under

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Section 12 (5) and Schedule VII of the A&C Act. The

award has come to be passed in blatant violation of the

mandatory provisions of Section 24(3) of the A&C Act and

it becomes clear from this that there was a conspiracy

between the Sole Arbitrator and claimant from the very

beginning, in furtherance whereof, the impugned award

has been passed by going beyond the law to benefit

applicant. The impugned award is illegal and induced by

fraud as per the provisions contained under Section 24(3)

of the A&C Act. The Sole Arbitrator in his impugned

award has illegally concluded that if the partnership

reconstitution deed has been executed on the basis of

fraud, then why has the non-applicant no.1 not filed any

complaint in this regard. The Sole Arbitrator has

deliberately ignored the fact that the non-applicant no.1

had filed a suit in the civil court of competent jurisdiction

to challenge the documents, alleged to have been

executed on the basis of fraud.

22- It is further stated that the Sole Arbitrator has

deliberately ignored the fact that in clause 21 of the

partnership reconstitution deed executed on the basis of

fraud, it was clearly mentioned that only dues are being

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settled between the partners and the said settlement will

also depend on the clearance of the cheques mentioned

in the partnership reconstitution deed. The Sole Arbitrator

has ignored the fact that the cheques given in lieu of

settlement of dues had not been cleared and as per the

said partnership reconstitution deed, the jurisdiction of

the Sole Arbitrator would commence only when the

cheques mentioned in the said deed were cleared. Thus,

the sole arbitrator has illegally conducted the arbitration

proceedings by going beyond the limits of the so-called

agreement.

23- It is stated that the Sole Arbitrator has mentioned in the

impugned award that despite the dismissal of the

application under Sections 12 and 13 of the A&C Act filed

by the non-applicant no. 1 regarding Sole Arbitrator’s

conduct and impartiality during the trial of the case, no

case has been presented by the non-applicant no. 1

regarding challenge to the said orders in the superior

court, hence the order passed by the Sole Arbitrator in

this regard has become final against the non-applicant

no. 1. The Sole Arbitrator has thus deliberately violated

Section 13 of the A&C Act.

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24- It is further stated that the Sole Arbitrator has gone

beyond the limits of the so-called agreement and

resolved the case in respect of the reliefs to be provided

under Section 34 and Section 41 of the Specific Relief

Act. Therefore, the impugned award has been passed by

the Sole Arbitrator in violation of Section 34, Sub-section

(2)(b)(i), by exceeding his legal jurisdiction. The Sole

Arbitrator has initially followed the provisions of the Code

of Civil Procedure till the non-applicant no. 1 sought

clarification, however, suddenly, with the intention of

benefiting the claimant, the Sole Arbitrator passed an

order that the provisions of the Code of Civil Procedure

are not applicable in the case, whereas at subsequent

stages, the applications under the Code of Civil Procedure

have been disposed of.

25- A prayer has thus been made for setting aside of

impugned award.

Pleadings of claimant and non-applicant no. 2 (non-applicant

no. 1 and non-applicant no. 2 in the present objection
application)

26- By way of their separate replies, claimant and non-

applicant no. 2 have stated that the subject property is

the property of the firm, whereas the non-applicant no.1

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is a retiring partner, and hence the retiring partner has

no title, interest and right in the property of the firm.

The non-applicant no.1 has included fabricated and false

statements in the present application, which is

completely unacceptable and not a matter of

consideration under the provisions of Section 34 of the

A&C Act. As per the provision contained under Section

19 of the A&C Act, whatever action the Arbitrator

considers appropriate as per the rules, the same is to be

followed. The conduct of Sole Arbitrator has been

impartial in the present case. The Sole Arbitrator has

heard the case in accordance with the provisions of the

A&C Act. In the absence of an agreement between the

parties regarding the procedure to be adopted, the

Arbitrator determines the proper, fair and legal

procedure. In the present case also, the conduct of Sole

Arbitrator has been as per the prescribed procedure,

which is completely legal.

27- It is further stated that the non-applicant no.1 is legally

barred from raising objection regarding the impartiality of

the Sole Arbitrator, inasmuch as, as per the provisions of

Section 4 of the Act, if the objection is not raised earlier,

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the party is considered to have waived the right to object.

All the proceedings have been conducted by the Sole

Arbitrator in a lawful manner and by following the

prescribed procedure of law. All the documents were also

made available to both the parties, and the Sole

Arbitrator has not violated any provisions of the A&C Act,

in any manner whatsoever. The relevant documents

presented by both the parties have been taken into

consideration by the Sole Arbitrator and after proper

scrutiny thereof, the order has come to be passed in

accordance with law. The Sole Arbitrator has given a fair

opportunity to both the parties to be heard and has

passed an impartial order.

28- It is further stated that the non-applicant no. 1 has made

statements contrary to the provisions of the A&C Act. In

any arbitration proceedings, the award is passed by the

Arbitrator as per the agreement between the parties on

the basis of written documents in relation to any dispute.

In the present case also, a proper award has been passed

on documentary basis by the Sole Arbitrator only after

mutual consent of both the parties as per the provisions

of the A&C Act. The arbitral award is binding on both the

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parties, and the non-applicant no.1 has no right to

challenge it on false grounds. The non-applicant no.1 has

made fabricated statements with the malicious intent to

mislead and gain sympathy of the Court. As per the

provisions of section 12 (4) of the A&C Act, the non-

applicant no.1 does not have the legal right to raise the

above objection.

29- It is further stated that the award passed by the Sole

Arbitrator is neither induced by fraud or corruption nor

made in violation of the basic tenets of Indian law nor

passed in contravention of the most basic concepts of

morality or justice nor passed in violation of provisions of

the A&C Act.

30- It is further stated that the non-applicant no.1 retired

from the partnership firm on 24/07/2018 whereafter the

claimant and non-applicant No. 2 have received their

capital balance from the firm and separated themselves.

They do not have any ownership, interest and any legal

right on the property of the firm. The firm has sole

ownership, possession and legal interest on the said

property. All the partners of the firm had been taking

legal advice from the Sole Arbitrator and his appointment

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was also done on the basis of mutual consent of the

claimant and the non-applicants.

31- A prayer has thus been made for dismissal of the

objection application.

Settled position

32- Before delving into the issues as projected in the matter,

it is prudent to encapsulate the settled legal position qua

scope of judicial interference under Section 34 of the A&C

Act. The law is trite that an Arbitral award can be set

aside only on the grounds enumerated under sub-section

(2) of section 34 and on no other ground.

33- Grounds for challenge to anaward under Section 34 of the

A&C Act have come to be discussed by Hon'ble Supreme

Court in the judgments Associate Builders Vs. DDA, (2015)

3 SCC 49, and Ssangyong Engg. & Construction Co. Ltd.

Vs.NHAI, (2019) 15 SCC 131.The Hon’ble Supreme Court

in judgement MMTC Limited Vs. Vedanta Limited (2019) 4

SCC 163, has held that the Court does

not sit in appeal over the decisions of the arbitrator and

cannot go meticulously into the evidence or analysis of

the Arbitrator. The Hon’ble Supreme Court further held

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that Court may interfere with the arbitral award only if

the conditions in terms of Section 34 of A&C Act are met,

but such interference does not entail a review on the

merits of dispute and is limited to the situation where the

findings of the arbitrator are arbitrary, capricious or

perverse or when the conscience of the Court is shocked

or when the illegality is not trivial but goes to the root of

the matter.

34- Hon’ble High Court of Chhattisgarh in Chief Executive

Officer Naya Raipur Development Authority Vs. Jitf Water

Infrastructure Ltd. 2020 SCC OnLineChh 811 has

observed and held as under: -

“11. It needs no authority to state the well settled

legal position that while entertaining challenge to
the legality and validity of award passed by the
Arbitrator, the Court entertaining application under
Section 34 of the Act of 1996 does not act as a
Court of appeal much less Court of appeal on facts.
The scope of interference against an award is
expressly limited by the provisions contained under
the Act of 1996. The approach of the Court would
not be to undertake an independent assessment of
the oral or documentary evidence led by the parties
to dispute before the Arbitrator, to arrive its own
independent conclusion and finding on facts. The
law is settled that while entertaining an application
under Section 34 of the Act of 1996, the Court is
required to see whether the award suffers from
those defects which have been specifically
enumerated as ground of challenge to award. The
grounds, on which, the award can be challenged

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have been exhaustively enumerated in Section 34

itself. If any of such grounds or more than one
grounds are made out, it would be permissible for
the Court to interfere with the award. However, in a
case where none of the grounds as mentioned in
Section 34 are made out, then the hands of the
Court are tied and no interference against the
award would be permissible, even if there is an
error of fact or even mere error of law.
**********
**********
15.... the effect and impact of the Amendment Act
of 2015, was considered by the Hon'ble Supreme
Court, in a recent decision in the case of Ssangyong
Engineering & Construction Co. Ltd. (supra),
clarifying that the extension of “Public policy of
India” in Oil & Natural Gas Company Limited v. Saw
Pipes Limited and Oil & Natural Gas Company
Limited v. Western GECO International Limited,
(supra), has been done away with and a new
ground of “Patent illegality” with exception, has
been introduced. The development of law, effect of
Amendment act of 2015 and the permissible
grounds of challenge as also what is impermissible
for the Courts while entertaining challenge to an
award was interpreted and stated as below:—
**********
**********
“26. Insofar as domestic awards made in
India are concerned, an additional ground is
now available under sub-section (2A), added
by the Amendment Act, 2015, to Section 34.
Here, there must be patent illegality
appearing on the face of the award, which
refers to such illegality as goes to the root of
the matter but which does not amount to
mere erroneous application of the law. In
short, what is not subsumed within “the
fundamental policy of Indian law”, namely, the
contravention of a statute not linked to public
policy or public interest, cannot be brought in
by the backdoor when it comes to setting
aside an award on the ground of patent

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illegality.
27. Secondly, it is also made clear that re-
appreciation of evidence, which is what an
appellate court is permitted to do, cannot be
permitted under the ground of patent illegality
appearing on the face of the award.
28. To elucidate, paragraph 42.1 of Associate
Builders (supra), namely, a mere
contravention of the substantive law of India,
by itself, is no longer a ground available to set
aside an arbitral award. Paragraph 42.2 of
Associate Builders (supra), however, would
remain, for if an arbitrator gives no reasons
for an award, that would certainly amount to
a patent illegality on the face of the award.
29. The change made in Section 28(3) by the
Amendment Act really follows what is stated
in paragraphs 42.3 to 45 in Associate Builders
(supra), namely, that the construction of the
terms of a contract is primarily for an
arbitrator to decide, unless the arbitrator
construes the contract in a manner that no
fair-minded or reasonable person would; in
short, that the arbitrator's view is not even a
possible view to take. Also, if the arbitrator
wanders outside the contract and deals with
matters not allotted to him, he commits an
error of jurisdiction. This ground of challenge
will now fall within the new ground added
under Section 34(2A).
30. What is important to note is that a
decision which is perverse, as understood in
paragraphs 31 and 32 of Associate Builders
(supra), while no longer being a ground for
challenge under “public policy of India”, would
certainly amount to a patent illegality
appearing on the face of the award. Thus, a
finding based on no evidence at all or an
award which ignores vital evidence in arriving
at its decision would be perverse and liable to
be set aside on the ground of patent illegality.
Additionally, a finding based on documents
taken behind the back of the parties by the
arbitrator would also qualify as a decision

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based on no evidence inasmuch as such

decision is not based on evidence led by the
parties, and therefore, would also have to be
characterized as perverse.”
**********
**********
20. The settled legal position that if there are two
possible view, interpretation of the terms of the
contract, interpretation of the Arbitrator has to be
accepted and the Court under Section 34 cannot
substitute its opinion over the Arbitrator's view, was
re-stated in the case of Madhya Pradesh Power
Generation Company Limited (supra), as below:—
25. The limit of exercise of power by Courts
under Section 34 of the Act has been
comprehensively dealt with by Justice R.F.
Nariman in the case of Associate Builders v.
Delhi Development Authority. Lack of judicial
approach, violation of principles of natural
justice, perversity and patent illegality have
been identified as grounds for interference
with an award of the Arbitrator. The
restrictions placed on the exercise of power of
a Court under Section 34 of the Act have been
analyzed and enumerated in Associated
Builders (supra) which are as follows:
(a) The Court under Section 34(2) of the Act,
does not act as a Court of appeal while
applying the ground of “public policy” to an
arbitral award and consequently errors of fact
cannot be corrected.
(b) A possible view by the arbitrator on facts
has necessarily to pass muster as the
Arbitrator is the sole judge of the quantity and
quality of the evidence.
(c) Insufficiency of evidence cannot be a
ground for interference by the Court. Re-
examination of the facts to find out whether a
different decision can be arrived at is
impermissible under Section 34(2) of the Act.
(d) An award can be set aside only if it shocks
the conscience of the Court.

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(e) Illegality must go to the root of the matter

and cannot be of a trivial nature for
interference by a Court. A reasonable
construction of the terms of the contract by
the arbitrator cannot be interfered with by the
Court. Error of construction is within the
jurisdiction of the Arbitrator. Hence, no
interference is warranted.
(f) If there are two possible interpretations of
the terms of the contract, the arbitrator's
interpretation has to be accepted and the
Court under Section 34 cannot substitute its
opinion over the Arbitrator's view.”

Discussion and analysis

35- Before dealing with rival contentions, at the very outset,

it has to be observed that the events leading up to the

origin of arbitral proceedings and the constitution of

Arbitral Tribunal appear to be rather mysterious and

completely out of ordinary. The claimant has purportedly

written a letter to one Shri Satbir Singh Walia, the

apparently designated Sole Arbitrator, for initiation of

arbitral proceedings on account of breach of terms of

partnership reconstitution deed dated 02/04/2018 at the

hands of the non-applicant no. 1. Pertinently, this letter

addressed to the Sole Arbitrator also mentions about the

filing of a civil suit by non-applicant no. 1 before the Civil

Court in spite of provision for arbitration of disputes in

term of clause 15 of the partnership deed. Accordingly, a

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request has been made to initiate the arbitral process and

to make a decision thereon.

36- It would appear that on the basis of this letter, the Sole

Arbitrator has drawn order sheet dated 03/12/2020 and

decided that conduct of arbitral process is necessary, and

other party namely, Md. Irfan Ullah is required to be

heard in the matter. Hence, notice has been directed to

be issued and proceedings have been fixed for

13/12/2020. Interestingly, the order sheet also mentions

about prospect of drawing of ex-parte proceedings as

against Md. Irfan Ullah on his failure to appear in spite of

service of notice to be issued by the Sole Arbitrator.

37- Evidently, the very initiation of arbitration proceedings

and the preliminary steps pursuant thereto viz.

Assumption of the role of Arbitrator by Mr. Satbir Singh

Walia, grant of time to the claimant for filing of statement

of claim etc., have all been given effect to in the absence

of the non-applicant no.1 and without his knowledge or

consent.

38- Curiously enough, the proceedings dt. 03/12/2020 are

preceded by two undated correspondences, one by Md.

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Inayat Ullah and the other by Md. Inam Ullah whereby,

two separate requests for initiation of arbitration appear

to have been made. However, during the filing of

statement of claim, for no apparent reasons, said Md.

Inayat Ullah has come to be impleaded as non-applicant

no. 2 in the matter.

39- The proceedings drawn on 03/12/2020 are somewhat

unknown to law. It is clear that if the claimant desired to

have any dispute purportedly resolved through the

arbitration mechanism, he ought to have sent a notice to

the non-applicant no. 1 in terms of Section 21 A&C Act

for invocation of arbitral proceedings and it is only after

the service of said notice on the non-applicant no.1, the

arbitral proceedings could legally be said to have

commenced.

40- Coming to the arbitral proceedings dated 13/12/2020, on

being noticed, the non-applicant no.1 Md. Irfan Ullah has

appeared along with his advocate and straightaway filed

objection under Section 12 & 13 of the A&C Act

questioning the impartiality of the arbitrator and his

capacity to act as an arbitrator in the matter.

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41- A perusal of the above referred objection application

shows that the non-applicant no. 1 has made specific

contentions that the Sole Arbitrator has been a close and

integral friend and legal advisor to the claimant and has

also been working as legal adviser to the Aviva Builders

and Developers firm, and therefore, he is not eligible as

an Arbitrator in terms of Section 12 r/w schedule 7 of the

A&C Act on account of his questionable independence and

impartiality. It is also contended that before initiation of

arbitral proceedings, the Sole Arbitrator has not disclosed

about his personal and professional involvement in the

matter in terms of 5th and 6th schedule of the A&C Act.

Further contentions have been made that a civil suit has

already been filed in the competent Civil Court

questioning the execution of partnership reorganization

deed, and therefore, the arbitral proceedings are not

tenable. Thereafter, a disclosure of personal and

professional involvement of arbitrator with the claimant

has also been sought.

42- How the Sole Arbitrator has dealt with this application

under Section 12 & 13 of A&C as filed by non-applicant

no. 1 renders the propriety of conduct of arbitral

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proceedings totally questionable. Instead of coming up

with the requisite disclosure in terms of Section 12 A&C

Act with regards to circumstances as to the existence of

any past or present relationship with, or interest in any of

the parties, or in relation to the subject matter in dispute

likely to give rise to justifiable doubts as to his

independence or impartiality, the Sole Arbitrator has

chosen to give a complete go-by to the legal mandate in

this regard and sought to browbeat the non-applicant no.

1 by threatening to issue a letter to State Bar Council

against his Advocate.

43- It would be in the fitness of things if the relevant portion

of the order sheet dated 13/12/2020 is reproduced to see

the absolute illegal and absurd approach adopted by the

Sole Arbitrator while dealing with the objections of the

non-applicant no. 1. It would appear that instead of

playing the role of an impartial and independent

arbitrator, the Sole Arbitrator has taken it upon himself to

virtually play the role of being a party to the proceedings

and counter the assertions of the non-applicant no. 1

himself.

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44- The relevant portion of the ordersheet dated 13/12/2020

is reproduced as below: -

“eksgEen bjQku mYyk ds }kjk /kkjk&12 ,oa lgifBr /kkjk&13 ds

varxZr ,d e/;LFkrk ds :i esa e/;LFk dh fu;qfä fu"i{kdrk ,oa
e/;LFk ds :i esa dk;Z djus ds laca/k esa pqukSrh ,oa vkifÙk nh xbZ gS]
mä vkosnu i= ds lkFk dksbZ Hkh nLrkost çLrqr ugh fd;s x;s gSA bl
vkosnu i= ij mUgsa lquk x;k mijksä vkosnu i= dh dafMdk dekad&1
ds laca/k esa tks dFku fd;s x;s gS mlds laca/k esa buds }kjk vkns'k
if=dk fnukad 03@12@2020 ,oa mlds lkFk layXu nLrkostksa dk
voyksdu ugha fd;k x;k gS blh çdkj fou; ukxnso vf/koäk ds }kjk
;g crk;k x;k Jh eksgEen bjQku mYyk muds dk;kZy; paxksjkHkkBk ls
lkFk esa vk;s gS blfy, fnukad 21@12@2015 ds laca/k esa tks feF;k
vkjksi yxk;s x;s gS] mudh iqf"V esa dksbZ Hkh nLrkost çLrqr ugh fd;s
x;s gS] blh çdkj dafMdk&3 ls ysdj 5 ds laca/k esa çfrmÙkj ;g gS fd
buds }kjk Hkkxhnkjh iquZxBu foys[k fnukad 02@04@2018 dh
dafMdk&25 dk voyksdu ugha fd;k x;k gS] fnukad 03@12@2020 ds
vkns'k if=dk esa dafMdk dekad&25 dk Li"V mYys[k gS] blh çdkj
ekuuh; NÙkhlx<+ mPp U;k;ky; esa ekuuh; U;k;k/khifr egksn; lat;
ds vxzoky th ds }kjk flfoy fjohtu ua-&26@2014 esa fnukad
16@09@2016 dks ikfjr vkns'k esa ;g Li"V :i ls mYysf[kr fd;k
x;k gS fd ;fn dksbZ i{kdkj çoapuk ds vk/kkj ij e/;LFk ds le{k
dk;Zokgh ysus ls badkj djrk gS] o mä e/;LFk dh dafMdk ds laca/k esa
çoapuk ds vk/kkj ij 'kwU; ?kksf"kr djkus gsrq nkok çLrqr djrk gS] rc
og O;ogkj okn çpyu ;ksX; ugha gS] blh çdkj dafMdk dekad 7 esa
vfook fcYMlZ Jh eksgEen buke mYyk rFkk buk;r mYyyk ds lkFk
vius O;fäxr ,oa O;olkf;d lafnX/krk e/;LFk ds lkFk mtkxj djrs
gS] o e/;LFk ls çdVhdj.k gsrq nLrkost dh ekax dh xbZ gS] ftlls ;g
Li"V gksrk gS fd eksgEen bjQku mYyk e/;LFk dh dk;Zokgh ls cpuk
pkgrs gS ,oa e/;LFk ds mij fcuk fdlh nLrkost ds vyXu vkjksi
yxk;s x;s gS] tks mudh fu;r dks Li"V djrk gS] vkSj blds lkFk gh
voS/k —R;ksa ds vfHkopu dk lgkjk fy;k x;k gS] bl laca/k esa eksgEen
bjQku mYyk ,oa muds vf/koäk ls nLrkost dh ekax dh xbZ] vkSj
mUgksua s us mä vk'k; ds nLrkost e/;LFk ds le{k çLrqr ugh fd;s]
ftlds dkj.k e/;LFk muds le{k mifLFkr vf/koäk dh Hkh fuUnk djrk
gS vkSj bl gsrq jkT; fof/kK ifj"kn dks buds fo#) mfpr dk;Zokgh
djus gsrq i`Fkd ls i= Hkh mä vkosnu dh çfr layXu dj çsf"kr fd;k
tkosA”

45- A perusal of the order sheet as reproduced above makes

it clear that, first of all, the Sole Arbitrator has given

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scant regard to the fact that a civil suit has already been

pending, pertaining to the very dispute that is being

sought to be raised by way of arbitration proceeding.

Rather surprisingly, the Sole Arbitrator has himself

rendered a finding that the proceedings of the civil suit

are not maintainable. Further, the Sole Arbitrator has

simply discarded the objection of non-applicant no. 1 for

want of production of any document to substantiate the

same.

46- Here again, the Sole Arbitrator has adopted an absolutely

illegal and perverse approach by expecting the production

of documents to corroborate the assertions of the

objection application, whereas he simply ought to have

taken steps for disclosure of circumstances, since specific

facts relating to his association with claimant were

brought on record by non-applicant 1. It appears that the

Sole Arbitrator has, intentionally and with motives clearly

not above-board, not disclosed in terms of legal mandate

as contained under Section 12 A&C Act. The failure of the

Sole Arbitrator to disclose such circumstance has had

grave adverse legal implication on the very validity of

arbitral proceedings, inasmuch as, they have effectively

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been rendered non est, having been conducted by a

legally ineligible arbitrator in terms of Sec. 12(5) read

with Schedule 5 & 7 A&C Act.

47- In this regard, postulating the authoritative legal position,

The Hon’ble Supreme Court in Bharat Broadband Network

Ltd. Vs. United Telecoms Ltd., (2019) 5 SCC 755 has held

as under: -

“15. Section 12(5), on the other hand, is a new

provision which relates to the de jure inability of an
arbitrator to act as such. Under this provision, any
prior agreement to the contrary is wiped out by the
non obstante clause in Section 12(5) the moment any
person whose relationship with the parties or the
counsel or the subject-matter of the dispute falls
under the Seventh Schedule. The sub-section then
declares that such person shall be “ineligible” to be
appointed as arbitrator. The only way in which this
ineligibility can be removed is by the proviso, which
again is a special provision which states that parties
may, subsequent to disputes having arisen between
them, waive the applicability of Section 12(5) by an
express agreement in writing. What is clear, therefore,
is that where, under any agreement between the
parties, a person falls within any of the categories set
out in the Seventh Schedule, he is, as a matter of law,
ineligible to be appointed as an arbitrator. The only
way in which this ineligibility can be removed, again,
in law, is that parties may after disputes have arisen
between them, waive the applicability of this sub-
section by an “express agreement in writing”.
Obviously, the “express agreement in writing” has
reference to a person who is interdicted by the
Seventh Schedule, but who is stated by parties (after
the disputes have arisen between them) to be a
person in whom they have faith notwithstanding the

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fact that such person is interdicted by the Seventh

Schedule.

*** *** ***

17. The scheme of Sections 12, 13 and 14, therefore,

is that where an arbitrator makes a disclosure in
writing which is likely to give justifiable doubts as to
his independence or impartiality, the appointment of
such arbitrator may be challenged under Sections
12(1) to 12(4) read with Section 13. However, where
such person becomes “ineligible” to be appointed as
an arbitrator, there is no question of challenge to such
arbitrator, before such arbitrator. In such a case i.e. a
case which falls under Section 12(5), Section 14(1)(a)
of the Act gets attracted inasmuch as the arbitrator
becomes, as a matter of law (i.e. de jure), unable to
perform his functions under Section 12(5), being
ineligible to be appointed as an arbitrator. This being
so, his mandate automatically terminates, and he shall
then be substituted by another arbitrator under
Section 14(1) itself. It is only if a controversy occurs
concerning whether he has become de jure unable to
perform his functions as such, that a party has to
apply to the Court to decide on the termination of the
mandate, unless otherwise agreed by the parties.
Thus, in all Section 12(5) cases, there is no challenge
procedure to be availed of. If an arbitrator continues
as such, being de jure unable to perform his functions,
as he falls within any of the categories mentioned in
Section 12(5), read with the Seventh Schedule, a
party may apply to the Court, which will then decide
on whether his mandate has terminated. Questions
which may typically arise under Section 14 may be as
to whether such person falls within any of the
categories mentioned in the Seventh Schedule, or
whether there is a waiver as provided in the proviso to
Section 12(5) of the Act. As a matter of law, it is
important to note that the proviso to Section 12(5)
must be contrasted with Section 4 of the Act. Section
4 deals with cases of deemed waiver by conduct;
whereas the proviso to Section 12(5) deals with
waiver by express agreement in writing between the
parties only if made subsequent to disputes having
arisen between them.

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*** *** ***

20. This then brings us to the applicability of the

proviso to Section 12(5) on the facts of this case.
Unlike Section 4 of the Act which deals with deemed
waiver of the right to object by conduct, the proviso to
Section 12(5) will only apply if subsequent to disputes
having arisen between the parties, the parties waive
the applicability of sub-section (5) of Section 12 by an
express agreement in writing. For this reason, the
argument based on the analogy of Section 7 of the Act
must also be rejected. Section 7 deals with arbitration
agreements that must be in writing, and then explains
that such agreements may be contained in documents
which provide a record of such agreements. On the
other hand, Section 12(5) refers to an “express
agreement in writing”. The expression “express
agreement in writing” refers to an agreement made in
words as opposed to an agreement which is to be
inferred by conduct. Here, Section 9 of the Contract
Act, 1872 becomes important. It states:

“9. Promises, express and implied.—Insofar as the

proposal or acceptance of any promise is made in
words, the promise is said to be express. Insofar as
such proposal or acceptance is made otherwise than
in words, the promise is said to be implied.”

It is thus necessary that there be an “express”

agreement in writing. This agreement must be an
agreement by which both parties, with full knowledge
of the fact that Shri Khan is ineligible to be appointed
as an arbitrator, still go ahead and say that they have
full faith and confidence in him to continue as such.
The facts of the present case disclose no such express
agreement. The appointment letter which is relied
upon by the High Court as indicating an express
agreement on the facts of the case is dated 17-1-
2017. On this date, the Managing Director of the
appellant was certainly not aware that Shri Khan could
not be appointed by him as Section 12(5) read with
the Seventh Schedule only went to the invalidity of the
appointment of the Managing Director himself as an
arbitrator. Shri Khan's invalid appointment only
became clear after the declaration of the law by the
Supreme Court in TRF Ltd. [TRF Ltd. v. EnergoEngg.

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Projects Ltd., (2017) 8 SCC 377 : (2017) 4 SCC (Civ)

72] which, as we have seen hereinabove, was only on
3-7-2017. After this date, far from there being an
express agreement between the parties as to the
validity of Shri Khan's appointment, the appellant filed
an application on 7-10-2017 before the sole arbitrator,
bringing the arbitrator's attention to the judgment in
TRF Ltd. [TRF Ltd. v. EnergoEngg. Projects Ltd.,
(2017) 8 SCC 377 : (2017) 4 SCC (Civ) 72] and
asking him to declare that he has become de jure
incapable of acting as an arbitrator. Equally, the fact
that a statement of claim may have been filed before
the arbitrator, would not mean that there is an
express agreement in words which would make it clear
that both parties wish Shri Khan to continue as
arbitrator despite being ineligible to act as such. This
being the case, the impugned judgment is not correct
when it applies Section 4, Section 7, Section 12(4),
Section 13(2) and Section 16(2) of the Act to the facts
of the present case, and goes on to state that the
appellant cannot be allowed to raise the issue of
eligibility of an arbitrator, having itself appointed the
arbitrator. The judgment under appeal is also incorrect
in stating that there is an express waiver in writing
from the fact that an appointment letter has been
issued by the appellant, and a statement of claim has
been filed by the respondent before the arbitrator. The
moment the appellant came to know that Shri Khan's
appointment itself would be invalid, it filed an
application before the sole arbitrator for termination of
his mandate.”

48- It can hardly be overlooked that the non-applicant no. 1

has continued to raise questions about the impartiality

and independence of the Sole Arbitrator in conducting

arbitration proceedings on account of his past association

with the claimant. However, the Sole Arbitrator appears

to have found one reason or other to somehow discard

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his objections and appears to have been hell-bent on

going ahead with the arbitration proceedings, come what

may.

49- Indubitably, the past association of the Sole Arbitrator

with the claimant and with the firm Aviva Builders and

Developers is beyond cavil, having not been denied at all.

Even otherwise, the relevant documents in this regard

have duly been brought on record on behalf of non-

applicant no. 1 in anticipation that better sense may

prevail with the Sole Arbitrator to recuse from the matter.

However, the attempts in this regard appear to have

fallen on deaf ears. The documents such as, record of

meetings between partners of the firm dated 23/11/2010,

17/12/2015, 21/12/2015 & 07/01/2016 are plain enough

to easily discern that the Sole Arbitrator has remained

deeply involved with the partnership dispute as

emanating between the parties and has also acted as a

counsel to try and resolve those disputes.

50- Now, if the Sole Arbitrator had remained involved with

and was privy to the subject matter of dispute between

the parties, it was totally improper for him to have opted

to act as an arbitrator in respect of those very disputes,

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notwithstanding any purported stipulation in the

partnership deed dt. 02/04/2018 in connection therewith.

The Clauses 15 & 16 of the 7th Schedule read with Sec.

12(5) A&C Act precisely provide for ineligibility of an

arbitrator on the very grounds of relationship of the

arbitrator to the dispute. For the sake of easy reference,

same are being reproduced as under:-

“Relationship of the arbitrator to the dispute

15. The arbitrator has given legal advice or provided

an expert opinion on the dispute to a party or an
affiliate of one of the parties.
16. The arbitrator has previous involvement in the
case.”

51- As has been held by Hon’ble Supreme Court, any

relationship of arbitrator with the parties as mentioned

under the 7th schedule renders the Arbitrator to be legally

ineligible to arbitrate and makes the arbitral proceedings

totally void. The conduct of arbitral proceedings by such

legally incompetent arbitrator can only be saved by a

written agreement as entered between the parties in

terms of the proviso to Section 12(5) A&C Act. But that

too has to happen only after the emergence of dispute

and not prior thereto, and thus any preceding written

agreement can be of no avail.

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52- The claimant may argue that the appointment of the

arbitrator has been made with consensus of the parties in

terms of partnership reorganisation deed dated

02/04/2018, however, admittedly, there is no written

agreement between the parties waiving the requirement

of Section 12(5) A&C Act so as to accord legal sanctity to

the arbitrator and the proceedings carried out by him.

53- Coming to another ground of challenge to the arbitral

award, it has been argued on behalf of non-applicant no.

1 that the Sole Arbitrator has adopted a blatantly partial

approach and allowed the claimant to file some suspicious

documents in a clandestine manner, copies whereof have

not even been provided to non-applicant no. 1. Though

the Sole Arbitrator vide order sheet dated 01/08/2021

has mentioned to have taken the copy of opinion as given

by Amin Khatri Associates and Joglekar Mehtra & Co. only

for perusal, and further mentioned in clear terms that

those reports would not be taken on record and thus

supply of their copy to the other party is not necessary,

still, while dealing with issue no. 3, the Sole Arbitrator

has referred to those very reports in the impugned award

and relied upon the same in arriving at its perverse

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findings. And therefore, the findings as rendered by the

Sole Arbitrator are absolutely illegal and perverse as the

documents, whereupon the said findings have been

based, have not even been provided to the non-applicant

no. 1.

54- This Court finds a lot of substance in the above

contentions of non-applicant no. 1 and cannot but feel

astonished and amazed with the manner in which the

Sole Arbitrator has so callously and brazenly relied upon

those reports which clearly flies in the face of his own

procedural ruling that those reports were not being taken

on record and being looked at only for the purpose of

perusal. Acting in breach of Section 24(3) of A&C Act, the

Sole Arbitrator has committed patent illegality by not

supplying the copy of those reports to the non-applicant

no. 1. The statutory mandate in the form of Section 24(3)

A&C Act provides as under: -

“24(3) All statements, documents or other

information supplied to, or applications made to the
arbitral tribunal by one party shall be communicated
to the other party, and any expert report or
evidentiary document on which the arbitral tribunal
may rely in making its decision shall be
communicated to the parties.”

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55- Therefore, the findings based upon those documents

stand irredeemably vitiated and award passed

consequent thereupon is found to be in breach of Section

18, Section 24(3) and Section 34 (2)(a)(iii) A&C Act, as

also in breach of Sec. 34 (2)(b)(ii) A&C Act on account of

being in conflict with the public policy of India.

56- The impugned award has also been challenged on the

ground that in spite of non-applicant no. 1’s assertion

that the partnership deed dated 02/04/2018 has been got

executed by fraud and therefore, the dispute is not liable

to be dealt with by way of arbitration, as a civil suit is

already pending, the Sole Arbitrator has still gone ahead

and conducted the arbitral proceedings and passed the

impugned award. It is argued that serious questions of

fraud, misrepresentation etc. requiring adduction of

substantial evidence, both oral as well as documentary,

could not have properly been adjudicated by way of

arbitration proceedings which generally are summary in

nature. Reliance in this regard has been placed on

judgment of N. Radhakrishnan Vs. Maestro Engineers,

(2010) 1 SCC 72.

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57- Though the legal pronouncement made through N.

Radhakrishnan (supra) no longer obtains, having been

stood overruled in terms of Vidya Drolia Vs. Durga

Trading Corpn. (2021) 2 SCC 1, even keeping aside the

question of arbitrability of the issue, what perturbs this

court is the manner in which the Sole Arbitrator has

thought fit to deal with such a serious issue during the

arbitral proceedings.

58- At the very outset, the non-applicant no. 1 has raised

serious objections with regards to the execution of

partnership reorganisation deed dated 02/04/2018,

inasmuch as, claiming the same to have been obtained

fraudulently. Pertinently, this very aspect has remained

pending before the civil Court of competent jurisdiction

even prior to initiation of arbitration proceedings. Still,

the Sole Arbitrator has simply sidestepped this vital

aspect and gone ahead with the arbitral proceedings. Not

only this, the Sole Arbitrator has thought fit to frame

specific issues in the form of issue nos. 1 & 2 as to

whether the parties have executed the partnership deed

dated 02/04/2018 and whether said deed has been got

executed fraudulently.

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59- It is beyond comprehension as to how exactly the Sole

Arbitrator intended to deal with such complicated aspects

without affording the opportunity of adduction of oral

evidence or other substantive piece of evidence. It is

beyond reason as to how Sole Arbitrator chose to proceed

further for determination of these complicated issues

when a civil Court of competent jurisdiction was said to

have already been in seisin of the matter. Quite

obviously, the Civil Court’s jurisdiction must have been

invoked precisely to deal with such complicated issues

requiring detailed and complex set of evidence. Hence,

there was no reason for the Sole Arbitrator to have gone

for his own roving enquiry in order to deal with such

issues.

60- Now coming to the manner in which these issues have

been dealt with; qua issue no. 1, as to whether the deed

has been executed or not, the Sole Arbitrator has made

very interesting observation that the non-applicant no. 1

has acknowledged his signature, having been obtained

fraudulently. Further, on account of the claimant as well

as non-applicant no. 2 having also admitted their

signatures, the execution of the partnership deed is found

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to be proved. It is beyond comprehension as to how any

person’s acknowledgment of his signature though claimed

to have been obtained fraudulently, could be deemed to

be an acknowledgement of a valid execution.

61- Similarly, while considering the aspect of alleged

fraudulent execution of deed, it has been held that the

burden was on non-applicant no. 1 to prove that the

signature was obtained fraudulently, and he was

expected to submit documentary evidence in this regard.

But he has not tendered the original documents, so as to

ascertain that his signature was obtained fraudulently.

Also, the non-applicant no. 1 could have raised issue

before proper forum or before police, but he has not filed

any such document and therefore, it is clear that no fraud

has been committed with non-applicant no. 1.

62- This line of reasoning is inherently flawed and perverse in

view of the limited opportunity as granted by the Sole

Arbitrator to the parties to prove their case. When the

non-applicant no. 1 has come up with an application for

examination of some witnesses on his behalf, same has

been repelled by the Sole Arbitrator vide order sheet

dated 27/07/2021 by holding that in terms of Section 24

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of A&C Act, the matter is to be decided only on the basis

of documentary evidence and adduction of oral evidence

is not in the scheme of law.

63- Clearly, the Sole Arbitrator has stifled the attempts on

the part of non-applicant no. 1 in producing evidence to

substantiate its version, and thus not provided proper

opportunity to him to present his case.

64- This Court finds substance in the argument of Ld. Counsel

for non-applicant no. 1 that on the basis of assertions as

contained in the claim petition the kind of relief that was

sought could not have been granted legally, as the

partnership firm Aviva Builders and Developers, in whose

name declaration of title to property was sought, was not

even made a party, whereas, personal properties of the

parties were sought to be declared as the property of the

said firm.

65- The patent illegality in the conduct of arbitral proceedings

and perverse approach adopted by the Sole Arbitrator get

amply borne out further from the record in terms of

procedural order sheet dated 10/02/2021. In these

proceedings, the non-applicant no. 1, by way of

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applications, marked as A-1 to A-5, had sought disclosure

of various documents from the claimant. The cursory

manner in which the Sole Arbitrator has dealt with these

applications is absolutely illegal, to say the least. All these

applications appear to have been rejected on flimsy

grounds without assigning any cogent reason. Instead of

dealing with the aspect of propriety of furnishing of such

documents, the Sole Arbitrator appears to have brought

in his own peculiar reasons in discarding the prayer for

disclosure of those documents.

66- The Sole Arbitrator has failed miserably in giving effect to

the provisions of Section 24 A&C Act with regard to oral

hearing to the parties to establish their case. Pertinently,

the non-applicant no. 1 had filed an application under

Section 27 A&C Act seeking approval of Arbitral Tribunal

to apply to the Court for assistance in taking evidence.

However, here also, Sole Arbitrator appears to have given

no proper opportunity to the non-applicant no. 1 to

present his case and rejected his request in this regard by

relying upon Section 24 A&C Act. The Sole Arbitrator

appears to have observed that said Sec. 24 purportedly

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provides for decision of the matter only on the basis of

documentary evidence.

67- It would appear that the Ld. Arbitrator has remained

under a severe misconception that Section 24 A&C Act

only provides for submission of documentary evidence by

a party to establish its case and oral hearings/oral

evidence cannot be allowed to be adduced thereunder.

Clearly, the Ld. Arbitrator has completely misread Section

24 A&C and unjustly deprived the non-applicant no. 1

from adduction of oral evidence in support of his case.

Such deprivation is doubly serious when issues such as

fraudulent conduct on the part of the claimant has been

attributed in the matter and remained under

consideration in the form of issue nos. 1 & 2.

68- Coming back to Section 24 A&C Act, the legal mandate is

very clear that unless the parties have agreed to dispense

with oral hearings/ oral evidence during the conduct of

arbitral proceedings, the Arbitral Tribunal is bound to hold

oral hearings for presentation of evidence or for oral

arguments. The refusal of Arbitral Tribunal to a party to

produce oral evidence would certainly amount to

deprivation of a party in properly presenting its case and

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this, in itself, would be a sufficient ground for setting

aside award. In this regard, observation of Hon’ble

Bombay High Court in Vinay Bubna Vs. Yogesh Mehta,

1998 SCC OnLine Bom 399 is pertinent, being reproduced

as under: -

“59. That takes us to the next challenge namely

that the petitioners were denied opportunity of
leading evidence. The proviso to sub-section (1) of
section 24 is clear. If the parties before the arbitral
tribunal seek to lead oral evidence it must be
granted as the expression is shall hold oral hearings
at the request of the parties. It may be that even in
the expression ‘shall’ in a limited number of cases
wherein in fact no evidence is required to be led,
the tribunal can reject such an application. In the
instant case, however the petitioner had pointed
out the need to examine the witnesses. The
tribunal on the express language of the proviso to
section 24(1) could not have denied that
opportunity. On that count also the Award is liable
to be set aside.”

69- Similarly, the Hon’ble Madras High Court in the matter of

Alandur Municipal Corporation, Alandur Vs. IVRCL

Infrastructures & Projects Ltd., 2010 SCC OnLine Mad

6048 has impressed upon the need to afford opportunity

of oral hearing to the parties in the following manner: -

“16. In the context of Section 24 of the Arbitration

and Conciliation Act, 1996 which is as follows:

“Section 24. Hearings and written proceedings.—

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(1) Unless otherwise agreed by the parties, the

Arbitral Tribunal shall decide whether to hold oral
hearings for the presentation of evidence or for
oral argument, or whether the proceedings shall be
conducted on the basis of documents and other
materials:

Provided that the Arbitral Tribunal shall hold oral

hearings, at an appropriate stage of the
proceedings, on a request by a party, unless the
parties have agreed that no oral hearing shall be
held.

(2) The parties shall be given sufficient advance

notice of any hearing and of any meeting of the
Arbitral Tribunal for the purposes of inspection of
documents, goods or other property.

(3) All statements, documents or other information

supplied to, or Applications made to the Arbitral
Tribunal by one party shall be communicated to
the other party, and any expert report or
evidentiary document on which the Arbitral
Tribunal may rely in making its decision shall be
communicated to the parties.”

The Arbitral Tribunal has no jurisdiction to hold that it

is not necessary to have any oral hearing, especially
when that has been required by the Petitioner.”

70- Upholding the setting aside of an arbitration award on

account of non-affording of opportunity of oral hearing to

a party, the Hon’ble High Court of Himachal Pradesh in

the matter of Rakesh Kumar Vs. State of H.P., 2004 SCC

OnLine HP 54 has held as under:-

“7. A plain reading of proviso to Section 24 of the Act

would show that the arbitral tribunal is obliged to
grant oral hearing, at an appropriate stage of the
proceedings, if the request is made by either of the

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party, unless the parties had agreed that no oral

hearing shall be held.

8. In the present case, there is nothing on record to

show that the parties had agreed that no oral hearing
shall be held.

9. Now the question arises whether the award can be

set aside on this ground ? The question is no longer
res integra. The Apex Court in Oil & Natural Gas
Corporation Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705
: 2003 (2) Arb. LR 5 (SC), held that the jurisdiction or
the power of the arbitral tribunal is prescribed under
the Act and if the award is de hors the said
provisions, it would be, on the face of it, illegal. As
the tribunal cannot make the award in breach of any
provision of substantive law under which such arbitral
tribunal exercise its jurisdiction, Their Lordships in
para 13 observed:

“In our view, reading Section 34 conjointly with

other provisions of the Act, it appears that the
legislative intent could not be that if the award is in
contravention of the provisions of the Act, still
however, it could not be set aside by the Court. If
it is held that such award could not be interfered, it
would be contrary to the basic concept of justice. If
the arbitral tribunal has not followed the
mandatory procedure prescribed under the Act, it
would mean that it has acted beyond its
jurisdiction and thereby the award would be
patently illegal which could be set aside under
Section 34.”

10. In the present case, the arbitral tribunal travelled

beyond its jurisdiction when it declined oral hearing to
the petitioner-claimant in disregard to the proviso to
Section 24 of the Act. The award, being without
jurisdiction, is liable to be set aside under Section 34
of the Act.”

71- Again, the Hon’ble Madras High Court in the matter of

ADV Consultant Vs. Pioneer Equity Trade (India) Pvt. Ltd.

2009 SCC OnLine Mad 1072 has impressed upon the need

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to afford opportunity of oral hearing to the parties in the

following manner: -

“6. Regarding the first submission as to the request

for oral hearing by the petitioner including cross-
examination, the learned Arbitrator in the award has
admitted that the petitioner has made a request to
have oral hearing including cross-examination,
however, the same was denied and the said finding is
in single line, viz., ‘the Arbitrator denied the
respondent's request for oral hearing and filing of
affidavits by witnesses’. While Section 24(1) of the
Arbitration and Conciliation Act, 1996 (in short, “the
Act”) contemplates for a decision by the Arbitral
Tribunal as to whether oral hearing should be allowed
to a party for presentation of evidence or for oral
argument, the proviso makes it clear that on request
by a party to have oral hearing, it shall be the duty of
the Arbitral Tribunal to conduct oral hearing unless
the parties agreed not to have oral hearing. Section
24 is as follows:

“24. Hearings and written proceedings:—

(1) Unless otherwise agreed by the parties, the
arbitral tribunal shall decide whether to hold oral
hearings for the presentation of evidence or for
oral argument, or whether the proceedings shall
be conducted on the basis of documents and other
materials:
Provided that the arbitral tribunal shall hold oral
hearings, at an appropriate stage of the
proceedings, on a request by a party, unless the
parties have agreed that no oral hearing shall be
held.
(2) The parties shall be given sufficient advance
notice of any hearing and of any meeting of the
arbitral tribunal for the purposes of inspection of
documents, goods or other property.
(3) All statements, documents or other
information supplied to, or applications made to
the arbitral tribunal by one party shall be
communicated to the other party, and any expert

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report or evidentiary document on which the

arbitral tribunal may rely in making its decision
shall be communicated to the parties.”
7. Section 19 of the said Act enables for
determination of rules of procedure saying that the
Arbitral Tribunal is not bound by the Code of Civil
Procedure, 1908 or the Indian Evidence Act, 1872,
but the parties are free to agree to follow the
procedures to be followed by the arbitral Tribunal and
in case where the parties have not agreed for a
procedure, the Arbitrator has to conduct the
proceedings following the procedure in the manner
which he considers appropriate. Section 19 is as
follows:

“19. Determination of rules of procedure.-

(1) The arbitral tribunal shall not be bound by the
Code of Civil Procedure, 1908 (5 of 1908) or the
Indian Evidence Act, 1872 (1 of 1872).
(2) Subject to this part, the parties are free to
agree on the procedure to be followed by the
arbitral tribunal in conducting its proceedings.
(3) Failing any agreement referred to in subsection
(2), the arbitral tribunal may, subject to this Part,
conduct the proceedings in the manner it considers
appropriate.
(4) The power of the arbitral tribunal under sub-
section (3) includes the power to determine the
admissibility, relevance, materiality and weight of
any evidence.”
8. A combined reading of section 24(1) and section
19 of the said Act makes it clear that on the factual
situation of this case, the petitioner has requested for
oral hearing, which has been denied by the Arbitrator
without assigning any reason. By virtue of the proviso
to section 24(1) of the Act, that is, when one of the
parties requests for oral hearing, it is the duty of the
Arbitral Tribunal to conduct the same unless consent
of the parties have been formulated by the Arbitral
Tribunal agreeing not to have oral hearing. In the
absence of any reason adduced by the learned
Arbitrator, it has necessarily to be construed that the
denial of oral hearing requested by the petitioner, by

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the Arbitrator is against the provisions of the Act. In

such circumstances, the contention of the learned
counsel for the petitioner in this regard has to be
accepted.”

72- The conduct of arbitral proceedings also gets vitiated on

account of apparent breach by the Ld. Tribunal of the

mandate as contained under Section 19 A&C Act. Section

19 provides that Arbitral Tribunal shall not be bound by

the CPC or Indian Evidence Act, and parties are free to

agree on the procedure to be followed by the Arbitral

Tribunal in conducting its proceeding. Also, where parties

fail to agree in that respect, the Arbitral Tribunal may

conduct the proceedings in the manner it considers

appropriate.

73- Now, in terms of Section 19 A&C Act, though the Arbitral

Tribunal has been vested with the discretion to adopt its

own procedure in absence of parties arriving at an agreed

procedure to be followed for conduct of arbitral

proceedings, the procedure to be adopted can, by no

means, be in teeth of principles of natural justice or

whimsical or biased.

74- The procedural ordersheet dated 27/12/2020 reflects that

the non-applicant no. 1 has filed an application for

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determination of procedure to be followed during the

arbitral proceedings. However, the Sole Arbitrator

appears to have taken it otherwise and instead of

determining the requisite procedure for the conduct of

arbitration proceedings, he has simply chosen to state

about maintenance of transparency in the proceedings

and his conduct of proceedings impartially and on the

basis of documents. Thereafter, the application of the

non-applicant no. 1 is stated to have been disposed of.

75- Clearly, the approach of Sole Arbitrator is absolutely

faulty and perverse. It was incumbent upon the Sole

Arbitrator to set down the rules of procedure for conduct

of arbitration proceedings right at the beginning when he

entered upon the reference. Manifestly, the parties do not

appear to have given any agreed set of procedure to be

followed for the conduct of arbitral proceedings;

therefore, it was imperative for the arbitrator to have laid

down the manner in which he intended to conduct the

arbitral proceedings. This was necessary from the aspect

of certainty and assurance to the parties as to how the

proceedings would go forward and eventually culminate.

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76- Lack of set rules of procedure also becomes questionable

when the Sole Arbitrator has apparently sought to take

recourse to provisions of CPC during certain portions of

the proceedings. Whereas, during some other portions of

the proceedings, a stand has been taken that provisions

of CPC are not applicable to the arbitration proceedings.

This lack of certainty about the procedure being adopted

for conduct of arbitration proceedings has severely

affected the nature of the proceedings. The conduct of

the arbitration proceedings is so fraught with uncertainty,

peculiarity and inconsistency that the issues in the matter

have only come to be framed on the penultimate date of

the arbitration proceedings i.e. on 27/07/2021, while final

proceeding taking place on 01/08/2021, including the

sudden and unscheduled passing of Award on that very

day.

77- The proceeding of 01/08/2021 in itself raises a big

question mark about the objectivity and neutrality of the

Sole Arbitrator in conducting the arbitration proceedings.

The date of 01/08/2021 has apparently been fixed for the

submission of final arguments by the parties in the

matter. However, so much has transpired on this day that

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taking into consideration everything, it can only be

deemed a miraculous and otherworldly effort on the part

of Sole Arbitrator to have managed to pass the impugned

Award on that day itself.

78- As discussed hereinbefore, some purported reports issued

by Amin Khatri Associates and Joglekar Mehtra & Co.

have only come to see the light of day for the first time in

the matter attached with the written arguments on behalf

of applicant. In spite of asking for, the non-applicant no.1

has been deprived from copy of these reports on the

pretext that they are being taken only for perusal and

shall not be taken on record. Now, most extraordinarily,

the Sole Arbitrator appears to have somehow managed to

go through and analyse all these reports, voluminous

documents on record as also the written submissions of

the parties and come up with the impugned award at

08:30 p.m. on 01/08/2021 itself. This sudden turn of

events leading to unscheduled delivery of award, on the

day originally fixed for submission of arguments, raises

an existential question mark over the very authenticity

and credibility of the impugned award.

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Conclusion

79- In light of the aforestated discussion, the impugned

award becomes questionable and liable to be set aside

under Section 34(2) (a) (iii) A&C Act, inasmuch as, the

conduct of arbitral proceedings by the Sole Arbitrator has

rendered the non-applicant no. 1 unable to present his

case. The impugned award is rendered void ab initio on

account of having been passed by a legally ineligible

Arbitrator in breach of Section 12(5) r/w Schedule 7 A&C

Act. The impugned award is also liable to be set aside

under Section 34(2) (b) (ii) A&C Act, being in conflict with

the public policy of India, inasmuch as, non-applicant no.

1 has not been afforded full opportunity to present his

case in terms of Section 18, 19, 24 A&C Act. The

impugned award is also liable to be set aside under

Section 34(2-A) A&C Act on account of being vitiated by

patent illegality and suffering from perverse findings as

rendered by the Sole Arbitrator.

80- Consequently, by allowing the present application under

Section 34 of A&C Act, the impugned award dated

01/08/2021 is hereby set aside.

81- Parties shall bear their own costs.

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82- Before parting with the matter, it would be necessary to

reflect back on the manner in which the arbitration

proceedings have been undertaken by the Sole Arbitrator,

who incidentally has been mentioned to be an

experienced Advocate, presumably having sufficient legal

knowledge and expertise insofar as the legal provisions

and their true purport and meaning is concerned.

83- Right at the beginning of the arbitral proceedings, it has

become clear as daylight that the Sole Arbitrator has

remained privy to the dispute between parties, having

even played the role of an advisor to the parties, the

claimant/applicant in particular. In spite of such apparent

conflict of interest, the Sole Arbitrator has assumed the

responsibility of performing the onerous task of an

arbitrator, purportedly in terms of partnership deed dated

02/04/2018.

84- Manifestly, the non-applicant no. 1, from the very outset,

has raised a serious question of propriety as against the

Sole Arbitrator and duly sought disclosure in terms of

Section 12 A&C Act. However, for reasons best known to

the Sole Arbitrator, he has not cared to make the desired

disclosure, which he was legally mandated to do. The

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apprehensions on the part of non-applicant no. 1 are of

such a degree and conviction that he has continued to

constantly raise them throughout the course of arbitration

proceedings with regards to impartiality and

independence of the Sole Arbitrator. Again, instead of

allaying the doubts and fears of non-applicant no. 1 by

making the requisite disclosure, the Sole Arbitrator has

sought to adopt an iron fist approach and even gone on

to severely rebuke the conduct of non-applicant no. 1 and

his Counsel.

85- It is beyond comprehension as to why, in spite of being

questioned again and again for non-discloser in teeth of

Sec. 12 A&C Act, that too for apparently genuine reasons

on account of past association with the claimant, the Sole

Arbitrator has, instead of complying in this regard,

chosen to steadfastly continue with the arbitral

proceedings, by giving a complete go-by to various

statutory provisions of A&C Act as well as the very basic

principles of natural justice, as discussed and analysed

hereinbefore. Resultantly, the whole arbitration exercise

has turned out to be a completely partial and farcical

exercise, resulting in pointless wastage of time and

resources.

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86- The whole edifice of the arbitration process for resolution

of dispute between the parties is based on the solemn

factors of party autonomy and consensus. Hence, when a

party shows strong inclination to not accede to the

imposition of an arbitrator on account of genuine and

valid apprehensions, is it not proper and conscionable for

the arbitrator concerned to pause and introspect by

taking into account the remonstrations of a party and its

apparent lack of faith in him? Why go on and conduct a

forcible arbitration proceeding, in teeth of established

rules of procedure, against a party who, from the very

outset, has reposed no faith whatsoever in the arbitrator?

Why bring the very process of arbitration into disrepute

so as to dissuade prospective parties from choosing the

medium of arbitration for resolution of their disputes?

This, when so much emphasis is being laid presently on

the resort to arbitration mechanism as a speedy,

alternative and effective means for resolution of disputes.

Just some poignant points, the Sole Arbitrator in the

present case would like to ponder over.

Digitally signed by PANKAJ
PANKAJ SHARMA SHARMA
Date: 2025.05.05 18:01:08 +05'30'

Nava Raipur Atal Nagar (C.G.) (Pankaj Sharma)

Date: 05/05/2025 Judge,
Commercial court (District Judge Level)
Nava Raipur Atal Nagar, Distt. Raipur,
Chhattisgarh

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