4 days ago
Arbitrator can't be appointed unilaterally, rules Karnataka HC
Bengaluru: Karnataka high court has ruled that unilateral appointment of an arbitrator without the other party's consent is impermissible. The ruling emerged from a case involving Shriram Transport Finance Company, which appointed advocate BK Vishwanath as arbitrator to recover a vehicle loan of Rs 28.3 lakh from the family of a deceased.
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Following the death of one Manjunath on Aug 25, 2018, his wife Manjula and son Tarun Gowda received notice from the finance company in July 2019. It had appointed an arbitrator, who authorised the company to repossess the hypothecated vehicles to prevent third-party claims. The family challenged this in court, arguing that the loan agreement didn't specify a named arbitrator, thus preventing a unilateral appointment.
Justice Suraj Govindaraj, upon reviewing the evidence, discovered that the arbitrator's order was issued on July 12, 2019, before the notice dated July 27, 2019. The judge noted: "Shriram has abused the process prescribed under the Arbitration and Conciliation Act, nominated its own person as an arbitrator, who passed an order as an arbitrator even before being appointed."
The court has instructed the DGP to assign an officer of superintendent rank or above to investigate the proceedings. The officer must submit a report within six weeks regarding the seizure of hypothecated vehicles by Shriram Transport Finance Company, executed with police assistance following the arbitrator's order.
