Summary: Recently, the Bombay High Court canceled a previous arbitration decision against Sangeeta Bhansali and Aditya Bhansali because L & T Finance Ltd. chose the arbitrator without their input. The court decided this went against the rules of fair arbitration.
This case involved L & T Finance Ltd. (previously called L & T Housing Finance Ltd.) and borrowers Sangeeta Bhansali and Aditya Bhansali. The conflict came from loan agreements, leading L & T Finance to choose a single arbitrator to settle the issue.
Sangeeta Bhansali and Aditya Bhansali argued against how the arbitrator was chosen, saying L & T Finance did it on their own. They filed requests under certain sections of the Arbitration and Conciliation Act, 1996, but the arbitrator turned them down in July 2019.
"Choosing a sole arbitrator on one's own is not valid from the start," the court stressed, referring to a decision by the Supreme Court.
On August 7, 2019, the arbitrator ordered Sangeeta Bhansali and Aditya Bhansali to pay over ₹1 crore along with interest and costs. They did not challenge this decision, so L & T Finance tried to enforce the award in court.
On January 17, 2026, Justice Rajesh S. Patil canceled the arbitration decision, referring to a Supreme Court ruling from January 5, 2026. This ruling stressed the need for both sides to be involved in choosing an arbitrator.
The court said, "A decision made in this way has no legal standing or recognition."
The court mentioned several past cases, including a Supreme Court decision in Bhadra International vs. Airport Authority of India, which confirmed that one-sided appointments are not allowed under the Arbitration Act.
The Bombay High Court rejected the application to enforce the decision and allowed the parties to start new arbitration proceedings. The time from when the original arbitration was started until the court's decision will not be counted in the time limit for starting new proceedings.
This case highlights the importance of following fair arbitration practices, ensuring that all parties have an equal say in choosing arbitrators.
