Kusha purchased a vehicle on loan from PI Financing Ltd., for which a loan cum hypothecation agreement dated February 24, 2020 was entered between the parties. The agreement allowed appointment of sole arbitrator by the

Answer 4(a) The facts of the given situation are similar to the case Cholamandalam Investment and Finance Company Ltd. Vs Amrapali Enterprises and Anr- 14-03-2023- High Court of Calcutta . The present application was filed under Section 36 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') by Cholamandalam Investment and Finance Company Ltd (hereinafter referred to as the 'award holder') seeking execution of an arbitral award dated November 22, 2021 (hereinafter referred to as the 'impugned award') passed by Sole Arbitrator. The award debtors were Amrapali Enterprises represented by proprietor Mohammad Jahangir (hereinafter referred to as the 'borrower') and Saif Khan (hereinafter referred to as the 'guarantor'). It was submitted that the impugned award has been challenged under Section 34 of the Act before the City Civil Court. However, the court understood that the same may be time barred. From the submissions made by the parties and perusal of the arbitral award, it is apparent that the Sole Arbitrator was unilaterally appointed by the award holder vide its letter dated June 24, 2021. Further, the arbitral proceedings were conducted without participation of the award debtors and consequently, the arbitral award was passed ex-parte. The position of law on unilateral appointment of an arbitrator is no more res integra and has been settled by the Supreme Court through various judicial pronouncements. The proscription under section 12(5) read with schedule VII of the Act was extended to persons unilaterally appointed to act as an arbitrator. Such persons who are unilaterally appointed lack inherent jurisdiction unless an express written approval is given by the parties subsequent to disputes having arisen. Firstly, in the case of HRD Corporation -vs- GAIL reported in (2018) 12 SCC 471 , the Apex Court ruled that when a person directly falls under Schedule VII, ineligibility goes to the root of the appointment as per prohibition under Section 12(5) read with Schedule VII. Such person lacks inherent jurisdiction. The Court said that I find myself in complete concurrence with the aforesaid judgments, and in my view, the impugned award is unsustainable and non-est in the eyes of law. It is a settled principle of law that compliance with Section 12(5) read with Schedule VII is sine qua non for any arbitral reference to gain recognition and validity before the Courts. In the present facts in hand, an arbitral reference which itself began with an illegal act has vitiated the entire arbitral proceedings from its inception and the same cannot be validated at any later stage. Thus, it would be a logical inference to consider the aforesaid arbitral proceedings as void ab initio. The High Court said that in my view, the impugned award, which was passed by a dejure ineligible arbitrator, suffers from a permanent and indelible mark of bias and prejudice which cannot be washed away at any stage including the execution proceedings. Infact, as the arbitrator was dejure ineligible to perform his functions and therefore lacked inherent jurisdiction or competence to adjudicate the disputes in hand, the impugned award cannot be accorded the privileged status of an award. In view of the above mentioned judgement whose facts are similar to the given case, Kusha's contention is tenable.