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CGHC010156132005 2026:CGHC:30412

AFR

HIGH COURT OF CHHATTISGARH AT BILASPUR

Reserved on 16-6-2026

Pronounced on 17-7-2026

MA No. 1490 of 2005

Madhusudan Agrawal s/o Shri Jagdish Prasad Agrawal, aged about

35 years r/o. Bajrang Chowk, Newra, Tahsil Tilda, District Raipur,

Chhattisgarh.

... Appellant/non-applicant/objector

versus

1.Galaxy Exfeen Ltd. (Presently Sunita Finlies Limited) through

managing Director, Registered Office in front of Rajkumar College,

G.E. Road, Raipur, Chhattisgarh

(Applicant/claimant)

2.Yogesh Agrawal, Proprietor Usha Car Service, Samta Colony,

Raipur, Chhatisgarh.

(... Non-Applicant No.2.)

For appellant. :Mrs. Shraddha Mishra, Advocate appears

on behalf of Mr. Prateek Sharma,

Advocate.

For Respondents No.1 & 2:Mr. Mayur Khandelwal, Advocate.

(Hon’ble Mr. Justice Narendra Kumar Vyas)

C A V Order

1.This appeal has been filed by the appellant/objector under Section 37

of the Arbitration & Conciliation Act, 1996 (for short, “the Act, 1996”)

against the order dated 1-10-2005 passed by the District Judge,

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Raipur in Miscellaneous Civil Case No. 133 of 2005 (Madhusudan

Agrawal Vs. Galaxy Exfeen Limited & others) by which an application

filed under Section 34 of the Act, 1996 by the appellant for setting

aside the award dated 2-1-1999 passed by the Arbitrator has been

rejected.

2.The record of the case would demonstrate that the notice to

respondent No. 2 remained unserved despite direction of this Court to

issue fresh notice to respondent No. 2 on the correct address on

payment of process fee as per rules vide order dated 13-06-202 as no

efforts have been made by the appellant to get service of notice upon

respondent No. 2 on the correct address. The record of the case

would further demonstrate that this Court has issued a fixed date SPC

for appearance of respondents No. 1 and 2 vide order dated 24-03-

2026 fixing the matter on 16-04-2026. On 16-04-2026, vakalatnama

was filed on behalf of respondent No. 1, but SPC issued to respondent

No. 2 was unserved due to incorrect address of the respondent No. 2

and no efforts were made by the appellant to get correct address of

respondent No. 2. Thus, from above factual matrix derived from the

record would clearly demonstrate that the appellant is not interested to

serve the notice upon respondent No. 2. Therefore, there was no

option for this Court, except to hear the argument on behalf of the

appellant and respondent No. 1 only on 16-06-2026.

3.This Court has called the record of the Arbitration case as well as

record of the learned District Judge and following facts have been

revealed which are as under:

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(A)An agreement of hire purchase was executed between

respondent No.1/Finance Company and respondent No.2 Yogesh

Agrawal, who was guarantor of third party ie., appellant for

providing finance for purchase of new vehicle and the terms and

conditions were enumerated in the hire purchase agreement. As

per Clause 3 of the Hire Purchase Agreement executed on

27.08.1996, a sum of Rs. 56,282/- was initially payable by the

hirer ie., appellant and a sum of Rs. 1320/- as service charges

both of which shall become the absolute property of the owner

and total sum of Rs. 1,76,484/- is payable by the finance

company for purchase of the vehicle.

(B)Clause No. 21(a) of the Hire Purchase Agreement (hereinafter

referred to as “Agreement”) provides that all disputes, differences

and or claims, arising out of this Agreement whether during its

subsistence or thereafter shall be settled by arbitrator in

accordance with the provisions of Indian Arbitration Act, 1940 or

any statutory amendments thereof and shall be referred to the

Sole Arbitration of an arbitrator nominated by the Managing

Director of the owner. Clause 21 (a) and 21(b) of Hire Purchase

Agreement is reproduced as under:

“(21)(a) All disputes, differences and/or claims, arising out of

this Hire Purchase Agreement whether during its

subsistence or thereafter shall be settled by arbitration in

accordance with the provision of Indian Arbitration Act, 1940

or any statutory amendments thereof and shall be referred

to the sole Arbitration of an arbitrator nominated by the

Managing Director of the Owner. The award given by such

an Arbitrator shall be final and binding on all the parties to

this agreement. It is a term of this agreement that in the

event of such an arbitrator to whom the matter has been

originally referred dying or being unable to act for any

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reason, the Managing Director of the Owner, at the time of

such death of the arbitrator or his inability to act as

arbitrator, shall appoint another person to act as arbitrator.

Such a person shall be entitled to proceed with the

reference from the stage at which it was left by his

predecessor.

21(b) The venue of arbitration proceedings shall be at

Raipur (M.P.). The constants of the aforesaid Agreement

were read out, explained to the Hirer and to the Guarantor/s

in their own language after the said Agreement was fully

filled in and understood by the Hirer and the Guarantor/s

and thereafter the signatures of the Hirer and Guarantor/s

were taken on this Agreement.”

(C)It is also revealed from the record that Respondent No.1 / Galaxy

Exfleen Limited (hereinafter referred to as “Finance Company”) is

a registered Finance Company and respondent No.2 Yogesh

Agrawal, who is proprietor of Usha Car Services, Raipur has got

financed the vehicle Maruti Van on installment for appellant by

receiving margin money of Rs. 56,180/- on 25-8-1996 from the

appellant for total sale consideration of Rs. 1,88,000/-. As per the

Agreement executed between Madhusudan Agrawal and

respondent No. 2 Yogesh Agrawal who was guarantor of the

appellant, the financed amount has to be repaid by the appellant

with interest in 23 equal installments. Accordingly, the appellant

has given 23 blank cheques bearing serial Nos. from 154878 to

154900.

(D)It is also a case of the appellant that respondent No.2 is a man of

confident of respondent No.1 and on his assurance finance was

made, but Maruti Van was not provided to the appellant/objector

despite the payment of margin money on 20-2-1997, as such the

Finance Company in connivance with respondent No.2 Yogesh

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Agrawal has committed fraud. It is also the case of the appellant

that the respondent No. 1 has given demand draft to respondent

No. 2 and also recovered first installment of Rs. 7,750/- despite

this Maruti Van was not provided to the appellant.

(E)It is also the case of the appellant that since respondent No.2 has

not provided the Van therefore, the appellant sent a legal notice

dated 17-02-1997 alleging the fraud committed by respondent No.

1 and also lodged a complaint before the Police Station, Azad

Chowk thana on 30-04-1997. In the meantime the Finance

Company /respondent No.1 invoking its power appointed Suresh

Jain as Sole Arbitrator for resolving the dispute. The Sole

Arbitrator on his appointment as Arbitrator has issued notice to

the appellant. Respondent No. 1 filed his claim alleging that

finance was made to the appellant for purchase of Maruti Van

which was payable to Maruti Udyog New Delhi and the

respondent has given first installment on 25-09-1996 which was

bounced, as such they made demand for payment of installment,

as such he has violated the terms of Agreement. It is also the

case of respondent No. 1 that after obtaining the loan he has not

purchased the vehicle, but utilized the same for own purpose,

thus it has been prayed for passing the award of Rs. 1,68,484/-

with interest from 27-08-1996. Since the appellant could not

appear, therefore, the Sole Arbitrator passed an ex parte award

on 02-01-1998.

(F)The appellant has filed an application under Section 14(2) of

Arbitration Act, 1940 for setting aside ex parte award before the

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learned Third Additional District Judge Raipur who vide order

dated 30-11-1998 has set aside the ex parte award and directed

the appellant to appear before the Sole Arbitrator on 21-01-1999.

(G)After remand, the appellant raised objection regarding the

procedure to be followed while conducting the Arbitration award

proceeding and also regarding appointment of Suresh Jain being

an employee of respondent No.1 as Arbitrator and also submitted

reply on merit denying the claim of the respondent No.1. This

Court to avoid repetition is not mentioning the averments in detail

as in the appeal also same grounds have been raised by the

appellant which will be discussed by this Court in subsequent

paragraphs. The learned Arbitrator rejected the objections and

passed the award on 14-03-2001 which has been challenged by

the appellant by filing an application under Section 34 of the Act,

1996 before the learned District Judge, Raipur. The learned

District Judge Raipur vide impugned order dated 01-10-2005 has

rejected the same. Being aggrieved with this order the appellant

has preferred this appeal under Section 37 of the Act, 1996.

4.Learned counsel for the appellant would submit that since the

Arbitration Act, 1940 has already been repealed and new Act has

already been enacted, therefore, proceeding under Arbitration Act,

1940 is illegal. It has been further contended that no consent of the

applicant was obtained before engagement of Arbitrator, therefore,

engagement of Suresh Jain as Arbitrator is illegal. Learned counsel for

the appellant would further submit that the Sole Arbitrator Mr. Suresh

Jain was paid employee of the Company as he was working as

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Company Secretary and friend of respondent No.1, therefore, in view

of Section 12 (1) of the Act, 1996, he cannot be appointed as

Arbitrator, as such the entire award passed by the learned Arbitrator is

void ab initio. It has been further submitted that no proper opportunity

of hearing to take defence has been given to the applicant, therefore,

the award should have been set aside by the learned District Judge

while hearing the application filed under Section 34 of the Act, 1996.

He would further submit that learned District Judge should have

considered that the ground raised by the applicant falls within the

ambit of Section 34 of the Act, 1996 where the Court can interfere in

arbitration award. It has been further contended that the documents

and evidences have not been properly appreciated by the learned trial

Court while dismissing the application filed under Section 34 of the

Act, 1996, as such the order dated 01-10-2005 is illegal and same is

liable to be set aside by this Court.

5.On the other hand, learned counsel for respondent No.1/Finance

Company would submit that the learned District Judge after

considering the entire facts and law has passed the well reasoned

order and the applicant is unable to make out any permissible ground

wherein the Court can interfere in the award, as such the impugned

order passed by the learned District Judge is legal and justified which

does not warrant any interference by this Court. It is also contended

that from perusal of Clause 21(a) and 21(b) of the Act, it is quite vivid

that an employee can be appointed as Arbitrator unless the applicant

is able to establish that he has vested or personal interest in the

agreement. He would further submit that at the relevant time, law does

not prohibit the appointment of an employee as Arbitrator. It has also

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been contended that as per the agreement Clause 21 (a)(2), it is quite

vivid that the dispute or claim will be settled by arbitration in

accordance with Arbitration Act, 1940 or any statutory enactment

thereof whereas the Arbitration Act, 1940 was repealed on 16-08-

1996. Section 85 of the Act also provides repeal and saving clause

which provides that the Arbitration (Protocol and Convention) Act,

1937, the Arbitration Act, 1940 and the Foreign Awards (Recognize

and Enforcement) Act, 1961 are hereby repealed and Sub-section 2

provides that notwithstanding such repeal the provision of said

enactment shall apply in relation to arbitration proceeding which

commence before this Act came into force unless otherwise, agreed

by the parties, but this Act shall apply in relation to arbitration

proceeding which commence on or after this Act comes into force.

Thus, the proceedings have to be governed by the Arbitration and

Conciliation Act, 1996 which has been rightly conducted by the

learned Arbitrator. It has also been contended that the learned

Arbitrator while passing the impugned award has mentioned that the

dispute is determined as per Indian Arbitration Act, 1940 or the

statutory amendments made in the provisions and has also taken note

of Section 19(1) and 19(4) of the Act, 1996, therefore, it cannot be

held that proceeding has been conducted under the Arbitration Act,

1940. Thus, this objection raised by the appellant may be rejected.

6.So far as denial of opportunity of hearing is concerned, it has been

contended that the respondent No.1 has appeared before the

Arbitrator and he has participated in the proceeding, therefore, it

cannot be said that the notice or consent has not been obtained from

the respondent as the appellant without any reservation has

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participated in the proceeding, as such, it cannot be held that no

consent of the applicant was obtained before the proceedings initiated

by the Arbitrator or with regard to appointment of the Suresh Jain as

Sole Arbitrator.

7.Lastly, he would submit that the impugned award passed by the

learned trial Court rejecting the application filed under Section 34 of

the Act, 1996 is legal and justified which does not warrant any

interference as no permissible ground available to him under Section

34 of the Act, 1996 is made out by the applicant and would pray for

dismissal of the appeal.

8.I have heard learned counsel for the parties and perused the record of

the trial Court as well as Arbitrator with utmost circumspection.

9.The point emerged for consideration of this Court is whether the award

passed by the Arbitrator is legal and justified and order passed by the

learned District Judge rejecting the application under Section 34 of the

Act, 1996 is legal, justified warranting interference by this Court?

Submission regarding applicability of the Indian Arbitration Act,

1940 or Arbitration & Conciliation Act, 1996:

10.Now this Court is examining whether the proceeding initiated by the

learned Arbitrator has been conducted under the Act of 1940 or Act,

1996. From perusal of the Arbitration award dated 14-03-2001 passed

by the Sole Arbitrator, it is quite vivid that arbitration proceedings were

conducted under the Act of 1996 as the Arbitration Act, 1940 was

repealed on 16-08-1996 and the Agreement was executed on 27-08-

1996. Clause 21 of the Agreement provides that the arbitration

proceedings will be conducted as per Act of 1940 or as per statutory

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amendments made therein, thus the proceeding has to be governed

as per new Act of 1996 which has rightly been initiated by the learned

Arbitrator as in the impugned award of Sole Arbitrator has considered

the procedures provided in Section 19 of the Act, 1996 which provides

determination of rule of procedure and also observed that as per this

provision it will not be bound by the Code of Civil Procedure or Indian

Evidence Act, accordingly, it has held that it has power to regulate the

procedure. The learned Arbitrator has also observed in the award that

since both the parties have not given consent to regulate the

procedure and power conferred upon him under the Act, 1996, it has

regulated the procedure, thus, it is quite vivid that the arbitration

proceedings have been initiated under the Act, 1996, therefore, the

objection raised by the respondents that the proceedings have been

conducted under Act of 1940 is misconceived and deserves to be

rejected.

11.The record of the case would further demonstrate that the appellant

has filed an application under Section 34 of the Act, 1996 before the

learned District Judge Raipur wherein the learned District Judge has

also observed in paragraph of 11 of its judgment that the learned

Arbitrator has conducted the arbitration proceeding under the Act,

1996 cannot be held to suffer from perversity or illegality warranting

interference by this Court.

12.The learned Arbitrator relying upon Clause 21 (b) of the Agreement

has conducted the proceedings under the Act, 1996 which is as per

the Agreement and the Clause of the Agreement which provides

Arbitration has been rightly considered by the Arbitrator and

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conducted the proceeding as per the Act, 1996. How the

agreement/contract has to be interpreted is always subject matter of

examination before the Hon’ble Supreme Court and the Hon’ble

Supreme Court in the case of Disortho S.A.S vs. Meril Life

Sciences Private Limited, reported in (2026) 2 SCC 599 has held

that the interpretation of a contract involves determining of the

meaning that a reasonable person with all relevant backgrounds,

knowledge available to the parties at the time of contract would deploy

from the documents and also held that the law governing the

arbitration agreement means its validity, scope and interpretation has

to be determined in accordance with the Indian law. Thus, from the

Clause 21(b), it is quite vivid that the arbitration has to be governed

from the Arbitration Act, 1940 or its statutory amendments made

therein, it means through the Act prevailing on the date of agreement

which is Act, 1996. Thus, the procedure followed by the Arbitrator has

strictly been conducted in accordance with the Act, 1996, as such, the

objection/submission raised by the appellant regarding conduction of

proceeding deserves to be rejected and accordingly it is rejected. The

Hon’ble Supreme Court in Disortho S.A.S (Supra) has held in

paragraphs 29 to 32 as under:

“29. In Arnold v. Britton,31 the Supreme Court of United

Kingdom observed as under:

“When interpreting a written contract, the court is

concerned to identify the intention of the parties by

reference to “what a reasonable person having all the

background knowledge which would have been available

to the parties would have understood them to be using the

language in the contract to mean”, to quote Lord

Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd

[2009] AC 1101, para 14. And it does so by focussing on

the meaning of the relevant words, in this case clause

3(2) of each of the 25 leases, in their documentary, factual

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and commercial context. That meaning has to be

assessed in the light of (i) the natural and ordinary

meaning of the clause, (ii) any other relevant provisions of

the lease, (iii) the overall purpose of the clause and the

lease,

(iv) the facts and circumstances known or assumed by the

parties at the time that the document was executed, and

(v) commercial common sense, but (vi) disregarding

subjective evidence of any party’s intentions […].

30. The interpretation of a contract involves determining the

meaning that a reasonable person, with all relevant background

knowledge available to the parties at the time of the contract,

would derive from the document. A similar principle is outlined in

Chitty on Contracts,32 which, when discussing inconsistent

terms, observes:

“Where the different parts of an instrument are

inconsistent, effect must be given to that part which is

calculated to carry into effect the purpose of the contract

as gathered from the instrument as a whole and the

available background, and that part which would defeat it

must be rejected. The old rule was, in such a case, that

the earlier clause was to be received and the later

rejected; but this rule was a mere rule of thumb, totally

unscientific, and out of keeping with the modern

construction of documents. When considering how to

interpret a contract in the case of alleged inconsistency,

the courts distinguish between a case where the contract

makes provision for the possibility of inconsistency and

the case where there is no such provision. In the latter

case the contract documents should as far as possible be

read as complementing each other and therefore as

expressing the parties’ intentions in a consistent and

coherent manner.” 31 2015 AC 1619.

31 Clause 16.5 is clear and unambiguous. It explicitly states that

the entire agreement shall be governed by and construed in

accordance with the laws of India, and all matters arising from

the agreement shall fall under the jurisdiction of the courts in

Gujarat, India. Given this, it is reasonable to assume that, when

drafting this clause, the parties were fully aware of Clause 18,

which provides for arbitration and conciliation under the

Arbitration and Conciliation Centre of the Chambers of

Commerce in Bogota. In our view, Bogota has been designated

as the venue for conciliation and arbitration, while the courts in

Gujarat, India, retain exclusive jurisdiction over disputes. This

must, unless there is a divergence in lex arbitri, include

jurisdiction over appointments and act as a conduit for the

arbitration in Bogota, Colombia.

32. The law governing the arbitration agreement, being Indian

law, means that its validity, scope, and interpretation will be

determined in accordance with Indian law. But which national

courts—those in India or Colombia—exercise supervisory

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jurisdiction over the arbitration proceedings? Does the A&C Act

apply to these arbitration proceedings? Upon a consistent

reading of the Distributor Agreement, it is clear that only the

courts in Gujarat, India, are referenced. While it is acknowledged

that the venue for arbitration is Bogota, Colombia, and that the

procedural rules of the Arbitration and Conciliation Centre at the

Chambers of Commerce in Bogota are to apply, this does not

diminish the supervisory powers of Indian courts, as explicitly

outlined in Clause 16.5.”

Submission regarding appointment of an employee as Arbitrator:

13.Further submission regarding appointment of Suresh Jain as Sole

Arbitrator who was an employee of the company is being examined by

this Court. Section 12 of the Act, 1996 provides ground for challenge

of appointment of an Arbitrator and Section 12 of the Act, 1996 as it

stood prior to amendment on 23-10-2015 at the time of appointment of

Sole Arbitrator reads as under:

“12. Grounds for challenge.- (1) When a person is approached

in connection with his possible appointment as an arbitrator, he

shall disclose in writing any circumstances likely to give rise to

justifiable doubts as to his independence or impartiality.

(2) An arbitrator, from the time of his appointment and throughout

the arbitral proceedings, shall, without delay, disclose to the

parties in writing any circumstances referred to in sub-section (1)

unless they have already been informed of them by him.

(3) An arbitrator may be challenged only if-

(a) circumstances exist that give rise to justifiable doubts as to

his independence or impartiality, or

(b) he does not possess the qualifications agreed to by the

parties.

(4) A party may challenge an arbitrator appointed by him, or in

whose appointment he has participated, only for reasons of

which he becomes aware after the appointment has been made.”

14.From perusal of the said provisions of Section 12 of the Act, 1996 as

stood prior to amendment, it is quite vivid that there is no bar

regarding appointment of employee as Arbitrator unless the appellant

is able to doubt as to independency or impartiality of the Arbitrator. In

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absence of any justifiable apprehension about his independency or

impartiality, the appointment of Mr Suresh Jain as Arbitrator could not

be rendered invalid and enforceable. The record of the case further

demonstrates that the Arbitrator in the present arbitration proceeding

is neither dealing authority in regard to the contact or was directly sub-

ordinate to the officers whose decision is subject matter of dispute.

The learned Arbitrator in its award has categorically mentioned that he

has orally and in writing intimated the appellant and the respondent

that the Sole Arbitrator has no interest over the dispute for which he

has been appointed as Arbitrator. Accordingly, it has rejected the said

objection regarding his appointment as Arbitrator while passing the

award. The record of the case would further clarify that the dispute

arose due to Hire Purchase Agreement executed between the

appellant, respondent No. 1 and 2, where the Arbitrator has no role to

play, thus, the objection regarding appointment of Arbitrator has rightly

been turned down by the District Judge. The learned District Judge

while rejecting the objection has also taken note of the fact that earlier

also the objection regarding appointment of Arbitrator was raised

which has been rejected by the learned 3

rd

Additional District Judge

vide its order dated 30-11-1998 which has not been challenged before

any higher forum, as such it has attained finality, thus reason of

rejection cannot be found faulty warranting any interference by this

Court.

15.The objection regarding appointment of an employee as Arbitrator

before the amendment on 23-10-2015 has been considered by the

Hon’ble Supreme Court in case of Aravali Power Company Private

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Limited vs. Era Infra Engineering Limited reported in (2017) 15

SCC 32, wherein the Hon’ble Supreme Court has held as under:

“22. The principles which emerge from the decisions referred to

above are:-

A. In cases governed by 1996 Act as it stood before the

Amendment Act came into force:-

(i) The fact that the named arbitrator is an employee of one

of the parties is not ipso facto a ground to raise a

presumption of bias or partiality or lack of independence

on his part. There can however be a justifiable

apprehension about the independence or impartiality of an

employee arbitrator, if such person was the controlling or

dealing authority in regard to the subject contract or if he is

a direct subordinate to the officer whose decision is the

subject-matter of the dispute.

(ii) unless the cause of action for invoking jurisdiction

under Clauses (a), (b) or (c) of sub-section (6) of Section

11 of 1996 Act arises, there is no question of the Chief

Justice or his designate exercising power under sub-

section (6) of Section 11.

(iii) The Chief Justice or his designate while exercising

power under sub-section (6) of Section 11 shall endeavour

to give effect to the appointment procedure prescribed in

the arbitration clause.

(iv) While exercising such power under sub section (6) of

Section 11, If circumstances exist, giving rise to justifiable

doubts as to the independence and impartiality of the

person nominated, or if other circumstances warrant

appointment of an independent arbitrator by ignoring the

procedure prescribed, the Chief Justice or his designate

may, for reasons to be recorded ignore the designated

arbitrator and appoint someone else.

B. In cases governed by 1996 Act after the Amendment Act has

come into force:-

If the arbitration clause finds foul with the amended

provisions, the appointment of the Arbitrator even if

apparently in conformity with the arbitration clause in the

agreement, would be illegal and thus the Court would be

within its powers to appoint such arbitrator(s) as may be

permissible.

23. The observations of the High Court in paragraphs 37-38 as

quoted above show that the exercise was undertaken by the

High Court, “in order to make neutrality or to avoid doubt in the

mind of the petitioner” and ensure that justice must not only be

done and must also be seen to be done. In effect, the High

Court applied principles of neutrality and impartiality which have

been expanded by way of Amendment Act, even when no cause

of action for exercise of power under Section 11(6) had arisen.

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The procedure as laid down in unamended Section 12

mandated disclosure of circumstances likely to give rise to

justifiable doubts as to independence and impartiality of the

arbitrator. It is not the case of the Respondent that the

provisions of Section 12 in unamended form stood violated on

any count. In any case the provision contemplated clear and

precise procedure under which the arbitrator could be

challenged and the objections in that behalf under Section 13

could be raised within prescribed time and in accordance with

the procedure detailed therein. The record shows that no such

challenge was raised within the time and in terms of the

procedure prescribed. As a matter of fact, the Respondent had

participated in the arbitration and by its communication dated

04.12.2015, had sought extension of time to file its statement of

claim.”

Submission regarding consent of appointment for appointment

of Arbitrator:

16.Further submission of learned counsel for the appellant that the

respondent No. 1 before appointment has not obtained consent of the

appellant, therefore, the appointment of the Arbitrator is illegal, as

such, the entire award passed by the learned Arbitrator is void ab initio

is being considered by this Court.

17.The record of the case would show that the objection raised by the

appellant regarding consent deserves to be rejected on the count that

as per Clause 21(a) of Act, 1996 the Managing Director of the

Company has exclusive jurisdiction to appoint the Arbitrator and as

per Section 11(2) of Act, 1996 which provides that the parties are free

to agree on a procedure for appointing the arbitrator or arbitrators

accordingly, as per the agreement the Managing Director is the

authority to appoint the Arbitrator which he has appointed, thus, there

is no illegality in appointing Suresh Jain as Sole Arbitrator. Learned

District Judge while deciding the application filed under Section 34 of

the Act, 1996 has taken into consideration the factum of rejection of

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objection regarding appointment by the learned Third Additional

District Judge in Civil Case No. 6B/1998 vide its order dated 30-11-

1998 and recorded its finding that the said order has attained finality,

as such issue with regard to appointment of Suresh Jain as Arbitrator

cannot be reopened or re-agitated which does not suffer from

perversity or illegality warranting interference by this Court,

accordingly, this submission also deserves to be rejected and

accordingly, it is rejected.

Submission regarding no opportunity of hearing:

18.Further submission of the appellant regarding no opportunity of

hearing is being considered by this Court. This Court has requisitioned

the record of the case and from perusal of the record, it is quite vivid

that after the remand by the learned Third Additional District Judge the

appellant appeared along with his counsel before the learned

Arbitrator on 21-01-1999 and sought time accordingly, the

proceedings were adjourned to 13-02-1999. On 13-02-1999, since the

original records from the Courts were not received, therefore, the

matter was adjourned to 01-03-1999 and again the matter was

adjourned to 20-03-1999. The records were received on 19-03-1999,

on 20-03-1999, the appellant appeared and sought time to file reply to

the statement of claim filed by the respondent No.1, accordingly

proceeding was adjourned to 10-04-1999. The record of the case

would show that respondent No.2 was not appearing, therefore, an

application was filed for publication of the notice in the newspaper

which was considered and allowed. Accordingly, the same was

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published in the newspaper on 09-04-1999 and the same was taken

on record.

19.The record of the case further demonstrates that an application was

filed by the appellant for adjournment and fixing the matter on 24-04-

1999. The learned Arbitrator rejected the application for stay of the

proceeding in absence of any order of the High Court and fixed the

matter on 24-04-1999. Again on 24-04-1999 the respondent moved an

application for adjournment and to stay the proceedings. Learned

Arbitrator fixed the matter on 08-05-1999 for reply on the said

application, on 08-05-1999, the appellant has not appeared therefore,

proceedings were adjourned to 22-05-1999. Since no one is

appearing, therefore, the learned Arbitrator intimated the date of

hearing to the counsel for the appellant over telephone which was

accepted by him. On 22-05-1999, arguments were heard, the

appellant has also made his submission through his counsel and the

proceedings were adjourned to 31-05-1999 for order on this

application and finally order was passed on 05-06-1999 rejecting the

said application for stay of the proceedings till the matter is finally

decided by the High Court. The order sheets show that the appellant

intended to install the proceedings on various reasons. Thereafter, on

31-07-1999, the appellant raised an objection regarding continuation

of the proceeding which was rejected and again adjournment was

sought to file reply to the statement of claim filed by respondent No. 1.

The respondent moved various applications to install the proceedings

and finally he has submitted reply as well as written argument on 04-

03-2001.

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20.The record of the arbitration proceedings would further demonstrate

that respondent No. 1 was examined before the Arbitrator and the said

witness was cross-examined by the counsel of the appellant

extensively. The appellant was also examined before the Arbitrator

and he was also cross-examined by the respondent No. 1 on 04-03-

2001, thereafter, the impugned award was passed by the learned

Arbitrator wherein it has recorded its finding that the appellant is

unable to pay Rs. 1,68,484/- through 23 installments which has

caused financial loss to the respondent No. 1. It has also recorded its

finding that the appellant is unable to follow the conditions of the

Agreement which is his responsibility.

21.From perusal of the aforesaid facts derived from record of the

arbitration case, it is quite vivid that learned Arbitrator has given

opportunity of hearing in every aspect of the matter and objections

raised by the appellant have also been dealt and thereafter, by a

reasonable and possible explanation, it has been decided. Thus, the

submission made by learned counsel for the appellant that no

opportunity of hearing has been given to the appellant and on this

count the impugned award or the order of the learned District Judge

deserves to be set aside is misconceived and accordingly, it is

rejected.

Submission regarding non-interference in arbitrational award by

the learned District Judge while deciding the application under

Section 34 of the Arbitration and Conciliation Act, 1996:

22.From the above stated discussion and considering the evidence,

material placed on record before the Arbitrator who has passed the

20

well reasoned award dated 04-03-2001, it is quite vivid that neither the

impugned award nor the order dated 01-10-2005 passed by the

learned District Judge while rejecting the application under Section 34

of the Act, 1996 falls within the circumstances stipulated under Section

34 of the Act, 1996 where this Court can interfere. The Hon’ble

Supreme Court in case of Punjab State civil Supplies Corporation

Limited and another vs. Sanman Rice Mill and others, reported in

2024 SCC Online SC 2632 has held as under:

“12. It is pertinent to note that an arbitral award is not liable

to be interfered with only on the ground that the award is

illegal or is erroneous in law that too upon reappraisal of the

evidence adduced before the arbitral trial. Even an award

which may not be reasonable or is non-speaking to some

extent cannot ordinarily be interfered with by the courts. It is

also well settled that even if two views are possible there is

no scope for the court to reappraise the evidence and to

take the different view other than that has been taken by

the arbitrator. The view taken by the arbitrator is normally

acceptable and ought to be allowed to prevail.

13. In paragraph 11 of Bharat Coking Coal Ltd. v.

L.K.Ahuja,4 it has been observed as under:

“11. There are limitations upon the scope of interference in

awards passed by an arbitrator. When the arbitrator has

applied his mind to the pleadings, the evidence adduced

before him and the terms of the contract, there is no scope

for the court to reappraise the matter as if this were an 4

(2001) 4 SCC 86 appeal and even if two views are

possible, the view taken by the arbitrator would prevail. So

long as an award made by an arbitrator can be said to be

one by a reasonable person no interference is called for.

However, in cases where an arbitrator exceeds the terms of

the agreement or passes an award in the absence of any

evidence, which is apparent on the face of the award, the

same could be set aside.”

18. Recently a three-Judge Bench in Konkan Railway

Corporation Limited v. Chenab Bridge Project

Undertaking7 referring to MMTC Limited (supra) held that

the scope of jurisdiction under Section 34 and Section 37 of

the Act is not like a normal appellate jurisdiction and the 6

(2019) 4 SCC 163 7 (2023) 9 SCC 85 courts should not

interfere with the arbitral award lightly in a casual and a

cavalier manner. The mere possibility of an alternative view

21

on facts or interpretation of the contract does not entitle the

courts to reverse the findings of the arbitral tribunal.

20. In view of the above position in law on the subject, the

scope of the intervention of the court in arbitral matters is

virtually prohibited, if not absolutely barred and that the

interference is confined only to the extent envisaged

under Section 34 of the Act. The appellate power of Section

37 of the Act is limited within the domain of Section 34 of the

Act. It is exercisable only to find out if the court, exercising

power under Section 34 of the Act, has acted within its limits

as prescribed thereunder or has exceeded or failed to

exercise the power so conferred. The Appellate Court has

no authority of law to consider the matter in dispute before

the arbitral tribunal on merits so as to find out as to whether

the decision of the arbitral tribunal is right or wrong upon

reappraisal of evidence as if it is sitting in an ordinary court

of appeal. It is only where the court exercising power

under Section 34 has failed to exercise its jurisdiction vested

in it by Section 34 or has travelled beyond its jurisdiction

that the appellate court can step in and set aside the order

passed under Section 34 of the Act. Its power is more akin

to that superintendence as is vested in civil courts while

exercising revisionary powers. The arbitral award is not

liable to be interfered unless a case for interference as set

out in the earlier part of the decision, is made out. It cannot

be disturbed only for the reason that instead of the view

taken by the arbitral tribunal, the other view which is also a

possible view is a better view according to the appellate

court.

21. It must also be remembered that proceedings

under Section 34 of the Act are summary in nature and are

not like a full-fledged regular civil suit. Therefore, the scope

of Section 37 of the Act is much more summary in nature and

not like an ordinary civil appeal. The award as such cannot

be touched unless it is contrary to the substantive provision

of law; any provision of the Act or the terms of the

agreement.”

23.Thus, the submission made by the learned counsel for the appellant

that the learned District Judge should have interfered in the award is

misconceived and deserves to be rejected and accordingly, it is

rejected.

24.Accordingly, the point determined by this Court is answered against

the appellant and in favour of the respondent No. 1.

22

25.From the above factual and legal position, it is quite vivid that there is

no patent illegality on the face of the award, secondly the award is

speaking award with findings and interpretation based upon reasons.

Moreover, there is apparently no violation of fundamental policy of any

Indian law or the basic norms of morality and justice to enable the

Courts to interfere with the award. The Hon’ble Supreme Court in case

of Jan De Nul Dredging India Pvt. Ltd. v. Tuticorin Port Trust

reported in 2026 INSC 34 decided on 07.01.2026 has held that

appeal under Section 37 of Act, 1996 has a must narrow scope of

intervention particularly when the arbitration award has been upheld

under Section 34 of the Act. The Hon’ble Supreme Court in paragraph

51 has held as under:

“51. Before parting, we consider it proper to note that the Act is

a special enactment which aims to resolve

contractual/commercial disputes through arbitration with the

minimum intervention of the court, if not without the intervention

of the court. In the event, the courts are allowed to step in at

every stage and the arbitral awards are subjected to challenge

before the courts in hierarchy before court of first instance,

through regular appeals and finally by means of SLP/Civil

Appeal before the Supreme Court, it would obviate/frustrate

and defeat the very purpose of the Act. It is therefore,

necessary to accept the arbitral award if it is not patently illegal

or does not fall within the scope of intervention under Section

34 of the Act. The appeal thereof has a much narrower scope

of intervention particularly when the arbitral award has been

upheld under Section 34 of the Act. The appellate jurisdiction

acquires little significance only when the arbitral award has

been erroneously upheld or set aside by the court in exercise of

its power under Section 34 of the Act as discussed earlier, but

has no authority of law to consider the matter which was before

the Arbitral Tribunal on merits.”

26.Thus, there is no patent illegality nor the arbitration award is against

the public policy of India which can be interfered by this Court while

hearing Arbitration Appeal under Section 37 of the Act, 1996, as such,

23

the appeal is sense merit, liable to be dismissed and accordingly, it is

dismissed.

27.The interim order passed by this Court on 17-01-2006 is vacated.

Sd/-

(Narendra Kumar Vyas)

Judge

Raju

24

Head Note:

The appellate jurisdiction has a much narrow scope of intervention

particularly when the arbitration award has been upheld under

Section 34 of the Act, 1996.

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