New Delhi, Sept. 23 -- The Supreme Court has held that arbitral proceedings cannot be conducted in an arbitrary or biased manner, ruling that unilateral appointment of an arbitral tribunal despite objections alleging bias can invalidate the initiation of arbitration.

A Bench of Justices JB Pardiwala and K Vinod Chandran observed that although 'arbitration' rhymes with 'arbitrary', arbitral proceedings cannot result in an arbitrary measure, including in the appointment of an arbitral tribunal.

The Court was hearing an appeal by Arth Micro Finance Private Ltd against interim orders passed by a tribunal appointed at the instance of Shivalik Small Finance Bank Ltd.

The tribunal had frozen several bank accounts of Arth, permitted Shivalik t...