Gujarat High Court
Samunnati Finance Pvt. Ltd vs M/S Ramdev International Castor ... on 1 September, 2025
NEUTRAL CITATION
C/CRA/471/2025 JUDGMENT DATED: 01/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CIVIL REVISION APPLICATION NO. 471 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE SANJEEV J.THAKER
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Approved for Reporting Yes No
Yes
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SAMUNNATI FINANCE PVT. LTD.
Versus
M/S RAMDEV INTERNATIONAL CASTOR PRODUCTS PVT LTD.
(FORMERLY KNOWN AS M/S RAMDEV OIL MILLS) & ANR.
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Appearance:
MR UDAY M JOSHI(380) for the Applicant(s) No. 1
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CORAM:HONOURABLE MR.JUSTICE SANJEEV J.THAKER
Date : 01/09/2025
ORAL JUDGMENT
TABLE OF CONTENTS INTRODUCTION.............................................................................................. 2 BRIEF FACTS....................................................................................................2 SUBMISSIONS OF THE APPLICANT...........................................................4 ANALYSIS.......................................................................................................... 5 EFFECT OF UNILATERAL APPOINTMENT OF AN ARBITRATOR ON THE AWARD.............................................................................................................. 6 PARTY AUTONOMY............................................................................................6 PRE 2015 AMENDMENT..................................................................................... 9 POST 2015 AMENDMENT..................................................................................10 EXECUTING COURT AND NULLITY OF DECREE............................................... 17 CONCLUSION................................................................................................. 22 Page 1 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined INTRODUCTION
1. Present Application raises a question as to whether an Arbitral Award passed by a Sole Arbitrator which though ostensibly appointed by a Council, is in fact appointed by one party only, is executable or not.
BRIEF FACTS
2. The present Revision Application has been filed challenging the order dated 29.03.2025, passed by 5th Additional District Judge, Mehsana in Execution Petition No. 1 of 2025.
3. For the sake of convenience, the parties are referred to as per their original status as that in the Execution Proceeding.
4. The brief facts arising in the present Revision Application are that the parties entered into a Sale Agreement dated 12.08.2022, wherein as per Clause 8 the parties were to refer their disputes to a Sole Arbitrator jointly by the parties in case of disputes. At the same time in Clause 8.2 of the said Agreement it was stipulated that all the disputes and differences have to be amicably resolved and failing which, such dispute shall be referred to a sole arbitrator to be appointed by the Applicants.
5. Some disputes arose between the parties, the applicant issued notice to the defendant, dated 14.03.2024 and in the said notice it has been stated that the applicant appointed Dr. Vasudevan S, General Legal Counsel to try to amicably resolve the dispute and if there is no amicable resolution then the applicant shall proceed ahead with Page 2 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined instituting arbitration proceeding against the amount under the provisions of Arbitration Conciliation Act, 1996.
6. In view of the fact that there was no reply from the opponent of a letter dated 26.04.2024, the applicant referred the dispute to the Council of National and International Commercial Arbitration (CNICA) for the appointment of sole arbitrator with respect to the dispute regarding non-payment of claim by the opponent under the agreement. Therefore, the said Council of National and International Commercial Arbitration issued a letter dated 08.05.2024, appointing Mr. K. Mohan as a sole arbitrator to resolve the dispute and said Mr. K. Mohan passed award on 16.10.2024 and the claim of the applicant was allowed and the respondents were jointly and severely liable to pay the sum of Rs.8,47,0481/- with interest at the rate of 27% per annum on the principal outstanding from 08.03.2024, till the date of award i.e. 16.10.2024 and future interest at the rate of 18% per annum on the principal outstanding from the date of award i.e. 16.10.024, till the realization and the sum of Rs.75,000/- was awarded as the cost of the Arbitration.
7. In the said arbitration proceedings, there was no representation from the opponents and the entire arbitration proceeding was conducted ex-parte.
8. In view of the said Award passed by the arbitrator, the applicant filed Execution Petition No.1 of 2025, before the Principal District Judge, Mehsana and after taking into consideration the fact that there was unilateral appointment of the arbitrator, the Executing Court held that the said unilateral appointment was against public policy and Page 3 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined invalid and in view of the fact that though the opponent had not participated in the original proceedings and though the said award has not been challenged under Section 34 of Arbitration and Conciliation Act, the Executing Court held that as the award was passed by the arbitrator appointed unilaterally the same cannot be executed and in view of the same the Execution Petition was dismissed by an order dated 29.03.2025. Aggrieved by the said order, the present Revision Application has been filed.
SUBMISSIONS OF THE APPLICANT
9. Learned Advocate for the Applicant has mainly contended that the Executing Court could not have gone beyond the decree that has been passed by Sole Arbitrator.
10. Learned Advocate for the Applicant has also argued that in view of the fact that the Sale Agreement dated 12.08.2022 there is a provision that the applicant had a discretion of appointing arbitrator and exercising the said powers the applicant has appointed arbitrator and the same could not be said unliteral appointment made by the Applicant. It has also been argued that the Respondent has never raised any objection with respect to the appointment of the arbitrator. Moreover, the said award has not been challenged by the respondent under the provision of Section 34 of the Arbitration and Conciliation Act, and therefore, the Executing Court could not have rejected the said execution proceedings.
11. Moreover, it has been argued that the appointment of the sole arbitrator has not been questioned in any manner by the opponent in Page 4 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined any forum, and therefore, the Executing Court could not have rejected the said application.
ANALYSIS
12. By way of the present Petition, a neat question of law falls for consideration of this Court. Can an Award passed by the Arbitral Tribunal, which has been unilaterally appointed, even though unchallenged under Section 34, be executed by the competent Court? Answer to the said question would lie in the inherent maintainability of such an Award.
13. Undoubtedly, the basic tenets of civil law dictate that Executing Court cannot go beyond the decree. However, an exception to the said principle is where the Court passing the decree lacks inherent jurisdiction to pass such a decree.
14. In Sunder Dass v. Ram Prakash, (1977) 2 SCC 662 the Hon'ble Apex Court held as follows:
"Now the law is well settled that an executing Court cannot go behind the decree nor can it question its legality or correctness. But there is one exception to this general rule and that is that where the decree sought to be executed is a nullity for lack of inherent jurisdiction in the Court passing it, its invalidity can be set up in an execution proceeding".
15. The logic behind this principle of law is also not far-fetched.
Execution of a decree, though limited and narrow in scope is not a mere administrative or ministerial action. It is a judicial adjudication Page 5 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined to be carried out in accordance with the prescribed scope. Therefore, if an Executing Court comes to the conclusion that the Court passing the decree had inherent lack of jurisdiction, execution thereof can be denied.
16. However, how far do these principles apply to an Arbitral Award in view of the provisions of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") is the further question which arises in the present Petition. The other question which will have to be answered is, that does unilateral appointment of an Arbitrator make an Award a 'nullity'?
Effect of Unilateral Appointment of an Arbitrator on the Award
17. First thing which is required to be noted at this juncture is that one of the objectives for enactment of the Act to provide an arbitral procedure which is fair and efficient [see: Statement of Objects and Reasons of the Arbitration Act]. The idea of the legislation at any given instance was not to sacrifice fairness of the process for the 'speedy' portion of this dispute resolution. Naturally, that cannot be the founding idea of any dispute resolution mode.
Party Autonomy
18. This sets the stage to now discuss how unilateral appointments of an Arbitrator come into being. Usually, the parties in a Contract with unequal bargaining power see clauses which refer all disputes arising between the parties to an Arbitrator appointed by one of the parties. This clause is set to be protected under the veil of "party Page 6 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined autonomy". In other words, such clauses are defended on the count that since the parties have agreed to such a mode of appointment of Arbitrator, the same must be allowed to pass the muster.
19. This defence, though attractive at the first blush, must be turned down for several reasons.
20. First, the Law Commission of India in its 246 th Report1 (and as recorded by the Hon'ble Apex Court in Central Organisation for Railway Electrification v. M/s. ECI SPIC SMO MCML (JV), 2024 SCC Online SC 3219) has specifically recorded that this party autonomy must not be in disregard to all the principles of fairness, especially in appointment of an Arbitrator.
21. Must be born in mind that the Arbitration Act is based on the UNCITRAL model of commercial arbitration. This model law itself must not be lost sight of while interpreting the present statute, which has in fact being applied and interpreted on several occasions by the Hon'ble Apex Court.
22. Arbitration is an in personam dispute, the substance of which naturally, is governed by the contractual rights which has been signed between the parties. However, the mode of dispute resolution, i.e., the Arbitration is governed by a combination of the statutory rights flowing from the Arbitration Act, the Contract between the parties and the quasi-judicial status of the Arbitrator. party autonomy is one limb of the Arbitration Act. The other limbs important limbs inter alia, include:
1Para 57 of the Report.
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23. Undoubtedly, these are procedural safeguards installed in the statute.
However, what is pertinent to be noted is that, if these procedural mandates are not complied with, an Award even on the merits can be set aside. Therefore, they are all mandatory procedural safeguards and not directory ones.
24. Party autonomy as a concept under the Arbitration Act therefore, is one with boundaries. Indications of the same are in the statute itself. For instance, under Section 29A of the Act, parties are allowed to mutually agree for extension of the time period for making of the Award for a period of 6 months beyond the stipulated time. However, there cannot be infinite extension of the mandate even though both the parties agree. Hence, in the concept of party autonomy under the Act, there always is a thus far and no further.
25. Therefore, party autonomy to agree upon the procedure for appointment of an Arbitrator is constricted within its bounds. Pertinently, this concept of party autonomy is all the more regulated at the stage of appointment of the Arbitrator. In any case, though party autonomy is a cardinal principle of the Act, it cannot be extended to such an extent to render the process unconscionable.
26. Hon'ble Apex Court in Central Organisation for Railway Electrification ("CORE") (supra) observed (in judgment of Hon'ble Mr. Justice Narasimha, J.) as follows:
Page 8 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined "6. Two important values are inviolable for arbitration to be a viable, effective, and at the same time, credible alternative dispute resolution remedy; they co-exist in the duality of freedom and duty. They are the freedom to contract, constitute, and channel arbitration proceedings, i.e., party autonomy on the one hand, and the duty towards constituting an independent and impartial arbitral tribunal on the other. These values are independent, yet interdependent for a credible and effective dispute resolution."
27. Therefore, it is beyond doubt that party autonomy and independence and impartiality of the Arbitrators are both non-derogable principles of the Act. However, for impartiality of the Arbitrator, party autonomy cannot be read into as a rigid principle and the principle of equal treatment of parties will have to be read into even at the stage of appointment of parties as laid down by the majority judgment of the Hon'ble Apex Court in CORE (supra).
28. Now, the stage is set to discuss the consequences of such unilateral appointments. The Hon'ble Apex Court in its majority judgment in CORE (supra) has held that unilateral Arbitrator appointment clauses in a Contract are violative of Article 14 of the Constitution of India.
29. Therefore, it is without a shred of doubt that since such clauses itself are void, the proceedings thereunder and its culmination into an Award is naturally non est. It would be appropriate to note several judgments of the Hon'ble Apex Court and other High Courts of this country which propound this principle.
Pre 2015 Amendment Page 9 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined
30. Unilateral appointment in the era prior to the 2015 Amendment in the Arbitration Act was not frowned upon. In fact, the Hon'ble Apex Court in Datar Switchgears Ltd. vs. Tata Finance Ltd. and Ors. MANU/SC/0651/2000 held as follows:
When parties have entered into a contract and settled on a procedure, due importance has to be given to such procedure. Even though rigor of the doctrine of "freedom of contract" has been whittled down by various labour and social welfare legislation, still the court has to respect the terms of the contract entered into by parties and endeavor to give importance and effect to it. When the party has not disputed the arbitration clause, normally he is bound by it and obliged to comply with the procedure laid down under the said clause.
31. This was particularly in view of the absence of any provisions to the likes of Section 12(5) of the Arbitration Act. Hence, there was no impediment in allowing the principle of party autonomy stomping over the principles of impartiality or independence of the Arbitrator. However, the law thereafter has developed and in fact, changed.
Post 2015 Amendment
32. Upon recommendation of the Law Commission in its 246th Report titled "Amendment to the Arbitration and Conciliation Act, 1996"
(August 2014), the Parliament enacted the present Amendment Act, i.e., Act 3 of 2016. The Statement of Objects and Reasons of the said Act specifically provide:
(viii) to provide for neutrality of arbitrators, when a person is approached in connection with possible appointment as an arbitrator;Page 10 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025
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33. Therefore, there was a paradigm shift where the statute was consciously amended in order to bring in inter alia, the reforms ensuring impartiality and independence of an Arbitrator. Pursuant to the aforesaid requirement, the Parliament inserted several provisions to the Arbitration Act indicating in unambiguous terms that impartiality of an Arbitrator was also a kingpin of the statutory scheme.
34. Amongst other provisions, the Parliament added Section 12(5) and the Seventh Schedule to the Arbitration Act. For convenience, the said Section is reproduced hereinunder:
(5) Notwithstanding any prior agreement to the contrary, any person whose relationship, with the parties or counsel or the subject-matter of the dispute, falls under any of the categories specified in the Seventh Schedule shall be ineligible to be appointed as an arbitrator: Provided that parties may, subsequent to disputes having arisen between them, waive the applicability of this sub-section by an express agreement in writing.
35. Therefore, it is clear that after the 2015 Amendment, irrespective of any prior agreement to the contrary, an Arbitrator who does not meet with the criteria under the Seventh Schedule is ineligible to be appointed as an Arbitrator. Consequently, there is no Arbitrator in the eye of law in such a situation and hence, there is an inherent lack of jurisdiction which any such so called Arbitrator to decide the dispute between the parties. As courts have held, this attracts de jure ineligibility and hence, impinges upon the Arbitral process to its core.
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36. The only exception which has been carved out to give way to the doctrine of party autonomy is that of the proviso to Section 12(5). After the disputes have arisen between the parties and if the parties at that stage agree in writing to waive the Application of Section 12(5), in such a situation, it shall not apply. Hence, the legislature has provided for a counterbalance.
37. Even in the present case, the argument cannot be that since a Council was chosen by the party for selecting the Sole Arbitrator, it cannot be said to be unilateral appointment. In fact, since one of the parties without consent has appointed a Council to choose an Arbitrator will not further the case of the Applicant. On the contrary, adoption of such approach would render Section 11 of the Act otiose. Therefore, such an approach is also impermissible in law. Additionally, the ineligibility attached by way of the Seventh Schedule would also not go away in such a scenario.
38. In Oyo Hotels and Homes (P) Ltd. v. Rajan Tewari, (2021) 1 HCC (Del) 225 : 2021 SCC OnLine Del 446 at page 229 the Delhi High Court held as follows:
26. Mr Panda is right to submit that the notice/recommendation of the respondents with regard to the learned arbitrator was not confirmed. Mr Panda is also right in stating that the respondents should have approached this Court under Section 11 of the Act seeking an appointment of an arbitrator when the petitioner has not confirmed the appointment.
27. Having said so, it must be held in view of the arbitration clause as referred above; the appointment Page 12 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined made by the respondent is non-est and need to be ignored.
The plea of Ms Anand that the present petition is not maintainable as the petitioner under the garb of Section 11 is seeking termination of the mandate of the learned sole arbitrator is not appealing for the reason when the appointment is non-est, being not in accordance with the agreed procedure, the petitioner is within its right to approach the Court for appointment of an arbitrator under Section 11 of the Act. This position of law is well-settled in terms of the Supreme Court judgment in Walter Bau A.G. v. Municipal Corpn. of Greater Mumbai [Walter Bau A.G. v. Municipal Corpn. of Greater Mumbai, (2015) 3 SCC 800] , wherein in paras 8, 9 and 10 the Supreme Court has held as under:
"8. While it is correct that in Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd. [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560] and Pricol Ltd. v. Johnson Controls Enterprises Ltd. [Pricol Ltd. v. Johnson Controls Enterprises Ltd., (2015) 4 SCC 177] , it was opined by this Court that after appointment of an Arbitrator is made, the remedy of the aggrieved party is not under Section 11(6) but such remedy lies elsewhere and under different provisions of the Arbitration Act (Sections 12 and 13), the context in which the aforesaid view was expressed cannot be lost sight of. In Antrix Corpn. Ltd. case [Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd., (2014) 11 SCC 560] , appointment of the arbitrator, as per ICC Rules, was as per the alternative procedure agreed upon, whereas in Pricol Ltd.
case [Pricol Ltd. v. Johnson Controls Enterprises Ltd., (2015) 4 SCC 177] , the party which had filed the application under Section 11(6) of the Arbitration Act had already submitted to the jurisdiction of the arbitrator. In the present case, the situation is otherwise.
9. Unless the appointment of the arbitrator is ex facie valid and such appointment satisfies the Court exercising Page 13 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined jurisdiction under Section 11(6) of the Arbitration Act, acceptance of such appointment as a fait accompli to debar the jurisdiction under Section 11(6) cannot be countenanced in law. In the present case, the agreed upon procedure between the parties contemplated the appointment of the arbitrator by second party within 30 days of receipt of a notice from the first party. While the decision in Datar Switchgears Ltd. v. Tata Finance Ltd. [Datar Switchgears Ltd. v. Tata Finance Ltd., (2000) 8 SCC 151] may have introduced some flexibility in the time- frame agreed upon by the parties by extending it till a point of time anterior to the filing of the application under Section 11(6) of the Arbitration Act, it cannot be lost sight of that in the present case the appointment of Shri Justice A.D. Mane is clearly contrary to the provisions of the Rules governing the appointment of arbitrators by Icadr, which the parties had agreed to abide in the matter of such appointment. ..."
39. I shall now proceed to rely and refer on relevant excerpts of certain judgments of the Hon'ble Apex Court which govern the field.
40. In TRF Ltd. vs. Energo Engineering Projects Ltd.
MANU/SC/0755/2017 upon analyzing the provisions of Section 12(5), the Hon'ble Apex Court held as follows:
In such a context, the fulcrum of the controversy would be, can an ineligible arbitrator, like the Managing Director, nominate an arbitrator, who may be otherwise eligible and a respectable person. As stated earlier, we are neither concerned with the objectivity nor the individual respectability. We are only concerned with the authority or the power of the Managing Director. By our analysis, we are obligated to arrive at the conclusion that once the arbitrator has become ineligible by operation of law, he cannot nominate another as an arbitrator. The arbitrator becomes ineligible as per prescription Page 14 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined contained in Section 12(5) of the Act. It is inconceivable in law that person who is statutorily ineligible can nominate a person. Needless to say, once the infrastructure collapses, the superstructure is bound to collapse. One cannot have a building without the plinth. Or to put it differently, once the identity of the Managing Director as the sole arbitrator is lost, the power to nominate someone else as an arbitrator is obliterated. Therefore, the view expressed by the High Court is not sustainable and we say so.
41. Thereafter, the Hon'ble Apex Court elaborated the said principle further in Perkins Eastman Architects DPC and Ors. vs. HSCC (India) Ltd. MANU/SC/1628/2019 as follows:
We thus have two categories of cases. The first, similar to the one dealt with in TRF Limited MANU/SC/0755/2017 : (2017) 8 SCC 377 where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself but is empowered or authorised to appoint any other person of his choice or discretion as an arbitrator.
If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases. We are conscious that if such deduction is drawn from the decision of this Court in TRF Limited MANU/SC/0755/2017 : (2017) 8 SCC 377, all Page 15 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined cases having clauses similar to that with which we are presently concerned, a party to the agreement would be disentitled to make any appointment of an Arbitrator on its own and it would always be available to argue that a party or an official or an authority having interest in the dispute would be disentitled to make appointment of an Arbitrator.
42. Hon'ble Apex Court at every given instance has also laid down that such an appointment is bad in the eye of law to the extent that it becomes void. Hence, constitution of such an Arbitral Tribunal itself is void. In Bharat Broadband Network Limited vs. United Telecoms Limited MANU/SC/0543/2019, the Hon'ble Court laid down the following principle Whether such ineligible person could himself appoint another arbitrator was only made clear by this Court's judgment in TRF Ltd. (supra) on 03.07.2017, this Court holding that an appointment made by an ineligible person is itself void ab initio. Thus, it was only on 03.07.2017, that it became clear beyond doubt that the appointment of Shri Khan would be void ab initio. Since such appointment goes to "eligibility", i.e., to the root of the matter, it is obvious that Shri Khan's appointment would be void. There is no doubt in this case that disputes arose only after the introduction of Section 12(5) into the statute book, and Shri Khan was appointed long after 23.10.2015. The judgment in TRF Ltd. (supra) nowhere states that it will apply only prospectively, i.e., the appointments that have been made of persons such as Shri Khan would be valid if made before the date of the judgment. Section 26 of the Amendment Act, 2015 makes it clear that the Amendment Act, 2015 shall apply in relation to arbitral proceedings commenced on or after 23.10.2015. Indeed, the judgment itself set aside the order appointing the arbitrator, which was an order dated 27.01.2016, by which the Managing Director of the Respondent nominated a former Judge of this Court as sole arbitrator Page 16 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined in terms of Clause 33(d) of the Purchase Order dated 10.05.2014. It will be noticed that the facts in the present case are somewhat similar. The APO itself is of the year 2014, whereas the appointment by the Managing Director is after the Amendment Act, 2015, just as in the case of TRF Ltd. (supra). Considering that the appointment in the case of TRF Ltd. (supra) of a retired Judge of this Court was set aside as being non-est in law, the appointment of Shri Khan in the present case must follow suit.
43. Therefore, the position of law is clear that appointment of an Arbitrator in a unilateral manner:
i. Is violative of Article 14 of the Constitution of India [see:
CORE Para i. Is violative of Section 12(5) (unless it falls in the manner provided in the proviso therein).
i. Makes the person "ineligible" to be appointed as an Arbitrator [see: TRF, Perkins, Seventh Schedule] i. Ineligibility goes to the root of the arbitral process and hence, appointment of such person as an Arbitrator is void. [Bharat Broadband]
44. It is therefore clear that not only unilateral clauses are impermissible and violative of the Article 14, but also go to root of the matter making the Arbitrator itself ineligible for appointment, making such appointment void. Therefore, once the appointment of the Arbitrator itself is void, any Award passed by such Arbitrator cannot be said to be a valid Award in the eyes of law.
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45. Having noticed the implication of an Award which has culminated from a unilateral clause, the consequential question which arises is that is such an Award enforceable? Even if no Section 34 Application has been filed challenging such an Award, is it possible for the Executing Court exercising power under Section 36 of the Arbitration Act to refuse such execution on the ground that appointment was made unilaterally?
46. Answer to this question must be in the affirmative. This is for a simple reason. If the Arbitrator was "ineligible" to be appointed as one, an Award passed by such an Arbitrator does not hold any validity in the eye of law. The Executing Court, though cannot go behind a decree, does not perform mere ministerial function. As a Court of law, it is required to ensure that the decree/award being sought to be enforced/executed does not suffer from the vice of inherent lack of jurisdiction.
47. In Kiran Singh and Ors. vs. Chaman Paswan and Ors.
MANU/SC/0116/1954 the Hon'ble Apex Court held as follows:
The answer to these contentions must depend on what the position in law is when a Court entertains a suit or an appeal over which it has no jurisdiction, and what the effect of section 11 of the Suits Valuation Act is on that position. It is a fundamental principle well-established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by consent of parties. If the Page 18 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non-judice, and that its judgment and decree would be nullities.
48. Even in Harshad Chiman Lal Modi vs. DLF Universal and Ors.
MANU/SC/0710/2005 the Hon'ble Apex Court held as follows:
A decree passed by a court having no jurisdiction is non-est and its validity can be set up whenever it is sought to be enforced as a foundation for a right, even at the stage of execution or in collateral proceedings. A decree passed by a court without jurisdiction is a coram non judice.
49. It is therefore a settled principle that if a decree/award which is set to be executed is a nullity, the Executing Court must consider the said objection as well. In case of the Arbitration Act, execution proceedings are also to be conducted as per the Code of Civil Procedure.
50. Hence, the Court is required to look into the objections regards nullity of an Award insofar execution of the same is concerned. As noted above, an Arbitral Proceeding suffering from the vice of unilateral appointment of the Arbitrator is a non-est proceeding. The Award is nullity. Therefore, the Executing Court can and must refuse enforcement of such an Award irrespective of whether or not a challenge to the Award has been set up in a Section 34 proceeding.
Page 19 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined
51. Recently, Hon'ble the Apex Court has propounded this principle in State of Uttar Pradesh and Ors. vs. R.K. Pandey and Ors. MANU/SC/0046/2025 as follows:
We have made our observations in the context of Section 47 of the Code of Civil Procedure, 1908, which even at the stage of execution, permits a party to object to the decree, both on the grounds of fraud, as well as lack of subject matter jurisdiction. It is apparent that the arbitration proceedings were a mere sham and a fraud played by Respondent No. 1, R.K. Pandey, by self-appointing/nominating arbitrators, who have passed ex-parte and invalid awards. To reiterate, Respondent No. 1, R.K. Pandey, is not a signatory to the purported arbitration agreement. Moreover, the parties thereto, DNPBID Hospital and the Governor of Uttar Pradesh, do not endorse any such agreement. From the cumulative facts and reasons elucidated above, this is a clear case of lack of subject matter jurisdiction.
Accordingly, we allow the present appeal and set aside the two ex parte Awards dated 15.02.2008 and 25.06.2008. Both the Awards shall be treated as null and void and non- enforceable in law. Resultantly, the judgment passed, and the subject matter of the appeal shall be treated as set aside. The execution proceedings shall stand dismissed. The Appellants will be entitled to costs of the entire proceedings as per the law.
52. Therefore, it is clear that the Arbitral Awards with unilateral appointment are non-est and cannot be enforced in the eye of law. Hon'ble Division Bench of this Court in Integro Finserv Private Limited vs. Dhirubhai Govabhai Sagthiya and Ors. MANU/GJ/1787/2024 held as follows:
In the instant case, it is palpably clear that an arbitral award passed by a unilaterally appointed Arbitrator will not survive the Section 34 challenge. Section 36 provides no scope of Page 20 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined adverse interference with an arbitral award except executing it as a decree of the court. However, there is no denying the fact that the Act is a complete code in itself. Therefore, the question would be when the award sought to be executed is a nullity for lack of inherent jurisdiction can be set aside in an executing proceeding. Analogy can be drawn for the same from the Code of Civil Procedure. Section 47 of the Code of Civil Procedure governs the challenge to a court decree at an execution stage. Such similar provision is not provided in the Arbitration Act. The award so enforced under Section 36 of the Act is a nullity for lack of inherent jurisdiction. Therefore, it goes to the root of the competence of the court to try the case and an award. Therefore, the executing court can, therefore, entertain an objection that the decree is a nullity and can refuse to execute the decree. The executing court under Section 36 cannot shut its eyes to the grave irregularity that will occur if it does not interfere. This issue was categorically considered in the case of Cholamandalam Investment and Finance Company Ltd. v. Amrapali Enterprises and Anr., by Division Bench of High Court At Calcutta in EC No. 122 of 2022. Therefore, we do not find any reason to interfere with the observations made by the executing court. An arbitral award passed by a unilaterally appointed arbitrator cannot be considered to be a void award under the provisions of the Act and that being regarded as non- est in the eyes of law, the executing court while deciding application under Section 36 will have power to declare such award as illegal and with manifest lack of jurisdiction.
53. Moreover, Division Bench of the Delhi High Court has also held in the case of Kotak Mahindra Bank Ltd. v. Narendra Kumar Prajapat, 2023 SCC Online Del 3148 that an execution Petition for an Award passed by a unilaterally appointed Arbitrator is non est. It is pertinent to note that the Hon'ble Apex Court has confirmed the said decision with the following remarks in Kotak Mahindra Bank Page 21 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025 NEUTRAL CITATION C/CRA/471/2025 JUDGMENT DATED: 01/09/2025 undefined Limited vs. Narendra Kumar Prajapat MANU/SCOR/158070/2023 From paragraph 6 of the impugned order, it appears to be an admitted position that the Arbitrator unilaterally appointed by the petitioner was ineligible to be appointed as an arbitrator by virtue of Section 12(5) of the Arbitration and Conciliation Act, 1996. Hence, in view of this peculiar factual position, no case for interference is made out in exercise of our jurisdiction under Article 136 of the Constitution of India. The Special Leave Petition is accordingly dismissed. Pending application also stands disposed o Conclusion
54. Therefore, it is stated and clarified that an Award passed by an Arbitrator who has been unilaterally appointed is not executable under Section 36 of the Arbitration Act.
55. In view of the above discussions, the award dated 02.01.2018 passed by the Ld. Arbitrator found unenforceable as the award passed by the ineligible arbitrator which is void ab initio and not non-est in the eye of law as mandated in the above judgments. The award cannot be enforced as not a legal decree and thus is non executable.
56. Hence, the present Revision Application stands dismissed and disposed of accordingly.
(SANJEEV J.THAKER,J) Manoj Kumar Rai Page 22 of 22 Uploaded by MANOJ KR. RAI(HC01072) on Tue Sep 02 2025 Downloaded on : Tue Sep 02 23:22:01 IST 2025