Summary: The Madras High Court overturned a decision made by an arbitrator in a loan dispute, citing problems with the evidence and legal steps taken.
Shabana and Ashkar Ali, the people who brought the case, challenged a decision made by an arbitrator on February 25, 2023. This decision was about a loan agreement from April 12, 2018, where Shabana borrowed Rs. 13 lakhs, and Ashkar Ali promised to pay if she couldn't. The person they were against, N. Manoharan, claimed the loan wasn't paid back and started the arbitration process.
The first arbitration resulted in a decision made without Shabana and Ashkar Ali being present on October 31, 2019. This decision was later thrown out, and a new arbitrator was chosen. The new decision, which Shabana and Ashkar Ali disagreed with, relied a lot on documents they said were fake.
Shabana and Ashkar Ali argued that the loan papers were not properly shown to be real by N. Manoharan. They also questioned whether N. Manoharan had enough money to lend such a big amount, noting he didn't file his income tax returns.
"N. Manoharan never had the financial means to lend the loan amount."
N. Manoharan's lawyer argued that the decision was correct and should not be changed under a specific section of the Arbitration Act.
Justice N. Anand Venkatesh found that the arbitrator did not properly look at the evidence and used the wrong legal rules, especially about how the loan papers were signed and registered.
"The sole Arbitrator has ignored to appreciate the vital portion of the evidence."
The court found that the decision was clearly wrong and unfair. As a result, it canceled the decision and ordered N. Manoharan to pay Rs. 1,00,000 in costs to Shabana and Ashkar Ali.
