Supreme Court sets aside arbitration for lack of consent

The case concerns a dispute between Arth Micro Finance Private Ltd. and Shivalik Small Finance Bank Ltd. regarding the validity of an Arbitral Tribunal's appointment and the interim orders it passed, which the Supreme Court found to be arbitrary and lacking in consent.

Who it concerns: Appellants: Arth Micro Finance Private Ltd. and others; Respondent: Shivalik Small Finance Bank Ltd.; Bench: Justices J. B. Pardiwala and K. Vinod Chandran.

What the court decided

• Set aside the High Court's order and the interim orders passed by the Arbitral Tribunal (Annexures P5, P6, and P7).
• Declared the initiation of arbitration 'non est in law' due to lack of consent from the appellants.
• Directed that any amounts transferred from the appellants' accounts to the respondent's account be remitted back within one week, with interest to be decided by the new Arbitrator.
• Ordered that if amounts are not remitted, compound interest at 18% per annum shall apply and be set off against any claim in favor of the respondent.
• Directed that any attachment or takeover of movable or immovable properties be set aside and possession restored to the appellants.
• Appointed Ms. Mayuri Raghuwanshi, Advocate, as the Arbitrator to resolve the disputes.
• Rejected any pending applications.

Also in the document

• The Court stated that the appointment of the Arbitral Tribunal was invalid because there was no evidence of consent from the appellants.
• The Court noted that the previous Arbitral Tribunal had close links with the respondent, which was objected to by the appellants.
• The Court explicitly stated it expressed no opinion on the merits of the case, leaving that for the newly appointed Arbitrator.
• The order is marked as 'Non-Reportable'.