Arbitrator Named In Arbitration Notice Under Section 21 Of The Arbitration Act Cannot Unilaterally Pass Orders Without Consent Of Other Party

Introduction

In Manjula v. Shriram Transport Finance Co Ltd., [2025:KHC:18406] the Karnataka High Court quashed the entire arbitral proceedings initiated by a private financier against the legal heirs of a deceased borrower. The High Court held that the financier had improperly and unilaterally appointed an arbitrator without complying with the mandatory requirements under the Arbitration and Conciliation Act, 1996 ("Arbitration Act").

The High Court found that the arbitrator had purported to pass an interim order under Section 17 of the Arbitration Act even before a formal notice invoking arbitration had been issued. Further, the appointment had been made unilaterally by the purported claimant without evidence of a valid arbitration agreement or any consent from the legal heirs.