Participation in arbitral proceedings precludes subsequent challenges alleging procedural ignorance or violation of natural justice.

The Appellant and her husband obtained a vehicle loan of Rs. 2,90,000 from Respondent No. 1 on July 1, 2011, governed by a Loan-cum-Hypothecation Agreement

After defaulting on installments, Respondent No. 1 invoked the arbitration clause, leading to an arbitral award dated July 15, 2014, which directed the Appellant to pay Rs. 5,71,000 plus 18% interest per annum

The Appellant challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (the "Act"), claiming she was unaware of the proceedings and that the interest rate was unreasonable

The Section 34 petition was dismissed on October 13, 2016, by the Trial Court

The Appellant subsequently preferred this appeal under Section 37 of the Act

1. Whether the arbitral proceedings suffered from procedural impropriety or a violation of the principles of natural justice

2. Whether the 18% per annum interest rate awarded by the arbitrator was unreasonable or perverse, justifying interference under the Act

The court primarily applied Section 31(7) of the Arbitration and Conciliation Act, 1996, as it existed prior to the 2015 Amendment

Section 31(7)(a) grants the arbitrator discretion to award reasonable interest for the pre-award period, while Section 31(7)(b) establishes a statutory default rate of 18% per annum for post-award interest unless the award directs otherwise

The court further relied on the Supreme Court precedent in Larsen Air Conditioning and Refrigeration Company v. Union of India (2023), which held that for arbitrations governed by the unamended Act, the 18% statutory interest rate is the standard and should generally not be interfered with by Courts

Regarding procedural impropriety, the court found the Appellant’s plea of ignorance to be "per se false" because the record indicated that notices were sent via registered post and that the Appellant’s son and daughter (accompanied by counsel) had appeared before the arbitrator

Crucially, the Appellant had submitted a proposal during the arbitral hearings to settle the debt in 10 installments, which proved her active participation and prior knowledge of the dispute

On the issue of interest, the court determined that the arbitrator’s award of 18% per annum was within the statutory framework of the unamended Section 31(7)(b)

The court noted that the arbitrator exercised balanced discretion by awarding 18%, which was significantly lower than the 36% claimed by the Respondent

Given the narrow scope of interference permitted under Section 37, the court found no perversity or unconscionability in the award

It further held that the 18% interest rate was legally sound and aligned with the legislative intent to deter delays in payment

The High Court found no grounds to interfere with the Trial Court’s order or the arbitral award and disposed of the appeal and pending applications