In a recent development, the Bombay High Court canceled a decision made by an arbitrator against Sangeeta Bhansali and co-borrower Aditya Bhansali. The court found that the way the arbitrator was chosen was not valid, affecting the enforcement of a big financial claim.
The case started when L & T Finance Ltd. gave a loan to Sangeeta Bhansali, with Aditya Bhansali as a co-borrower. Disagreements led L & T to use an arbitration agreement, appointing a single arbitrator to settle the issue.
The Bhansalis argued against how the arbitrator was chosen, saying it was done by L & T alone and broke fair practice rules. Despite their complaints, the arbitrator went ahead and, on August 7, 2019, ordered the Bhansalis to pay over Rs. 1 crore plus interest and costs.
"The one-sided appointment of a single arbitrator is completely invalid," the court emphasized.
Judge Rajesh S. Patil pointed out a recent Supreme Court decision that supported the need for fair treatment in picking arbitrators. This decision made such one-sided appointments invalid, leading to the award's dismissal on January 17, 2026.
The court mentioned several cases, including Perkins Eastman Architects DPC vs. HSCC (India) Limited and Bharat Broadband Network Ltd. vs. United Telecoms Ltd., which backed the argument against one-sided arbitrator appointments.
"A challenge to an arbitrator’s ineligibility could be raised at any stage," the court noted, showing that the award couldn't be enforced.
The court dismissed the request to enforce the award, allowing L & T Finance to start new arbitration proceedings, as long as they follow the correct legal steps. The time from the first arbitration attempt until now will not count towards any time limits.
The court also thanked Mr. Rubin Vakil, the court-appointed advisor, for his valuable help with the case.
This decision highlights the importance of fair arbitration practices and sets an important example for future cases involving one-sided arbitrator appointments.
