Before the top court, Arth contended that the tribunal was appointed unilaterally despite explicit objections raising allegations of bias and close links between the arbitrator and Shivalik.
Finding no evidence of consent from Arth for the appointment, the Supreme Court held the entire initiation of arbitration to be non est in law.
“We have to remind ourselves that this was done in the wake of the clear objection to the appointment of the Arbitral Tribunal and the allegation of bias raised against the said Arbitral Tribunal. The orders passed at the first instance, are also arbitrary in nature,” the Court said.
Consequently, the top court quashed all three interim orders and directed Shivalik to remit any transferred funds within one week, warning that failure to comply would attract compound interest at 18% per annum.
To ensure proper resolution, the court appointed advocate Mayuri Raghuwanshi as the sole arbitrator to adjudicate the disputes afresh.
The Court clarified that it was not expressing any opinion on the merits of the case.