Supreme Court nullifies tribunal's interim orders, calling arbitration initiation unlawful
The Supreme Court overturned three interim orders issued by an arbitral tribunal, ruling the arbitration was not lawfully started due to lack of consent and alleged bias.
In a September 17 decision, the Supreme Court dismissed the interim orders of an arbitral tribunal in the case of Arth Micro Finance versus Shivalik Small Finance Bank. Justices JB Pardiwala and K Vinod Chandran concluded that the arbitration had not been validly initiated because the appellants had not given consent and had raised objections over the tribunal members' connections to the respondent bank. The court labeled the three orders—freezing accounts at IDBI Bank, Bank of Baroda, HDFC Bank and ICICI Bank, permitting seizure of movable and immovable property, and directing transfer of deposits to the bank—as arbitrary and void.
It ordered the return of any transferred funds within a week and the restoration of seized assets. Additionally, the bench appointed advocate Mayuri Raghuwanshi as a fresh arbitrator to resolve the underlying dispute.
Why it matters
The ruling curtails arbitrary arbitration actions and safeguards parties from unlawful asset seizures.
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