IMPORTANT POINT
Unilateral appointment of an arbitrator does not render an award void ab initio, and objections to ineligibility cannot be raised in enforcement proceedings under Section 36 of the Arbitration and Conciliation Act, 1996.

JUDGMENT :

(Sabyasachi Bhattacharyya, J.) :

1. The petitioner has preferred an application under Section 36 of the Arbitration and Conciliation Act, 1996 (for short, “the 1996 Act”) for enforcement of an ex parte award. The award-debtor challenges the maintainability of the same on the ground that the appointment of the Arbitrator was unilateral on the part of the award-debtor, which vitiates the inherent jurisdiction of the Arbitrator, who was de jure ineligible in terms of Section 12(5), read with the Seventh Schedule, of the 1996 Act, to pass the award. Accordingly, it is contended that the award itself, being a nullity, was void ab initio. Hence, even without any challenge under Section 34 of the 1996 Act having been filed, the inexecutability of the award can be set up as a defence in a proceeding for enforcement of the same.

2. Learned counsel for the award-debtor relies on the language of the Section 36 of the 1996 Act, in particular sub-section (1) thereof, in support of his contentions.

3. Learned counsel for the award-debtor places reliance on the Judgment of Bharat Broadband Network Ltd. v. United Telecoms Ltd., reported at (2019) 5 SCC 755, where the Supreme Court observed that in cases which fall under Section 12(5), Section 14(1)(a) of the 1996 Act gets attracted inasmuch as the Arbitrator becomes, as a matter of law (i.e. de jure), unable to perform his functions under Section 12(5), being ineligible to be appointed as an Arbitrator. This being so, his mandate automatically terminates and he shall then be substituted by another Arbitrator, under Section 14(1) itself.

4. Learned counsel for the judgment-debtor next cites a Division Bench judgment of the Delhi High Court in Kotak Mahindra Bank Ltd. Vs. Narendra Kumar Prajapat, reported at 2023 SCC OnLine Del 3148, where the Division Bench found no infirmity with the view of the Commercial Court which held that an award rendered by a person who is ineligible to act as an Arbitrator by virtue of Section 12(5) is a nullity and, therefore, cannot be enforced. It was observed that a person who is ineligible to act as an Arbitrator lacks the inherent jurisdiction to render an arbitral award under the 1996 Act. It is trite law that a decision by any authority which lacks inherent jurisdiction to make the same cannot be considered as valid and thus, clearly, such an impugned award cannot be enforced.

5. Learned counsel cites an order passed by the Supreme Court in a Special Leave Petition filed against such order, which was dismissed, thereby affirming the same.

6. Learned counsel appearing for the award-debtor next cites Cholamandalam Investment and Finance Company Ltd. vs. Amrapali Enterprises and Another, reported at 2023 SCC OnLine Cal 605, where a co-ordinate Bench of this Court had held that the impugned award which was passed by a de jure ineligible Arbitrator suffers from a permanent and indelible mark of bias and prejudice which cannot be washed away at any stage including the execution proceedings. While Section 47 of the CPC was held to be not directly applicable, similar principles have to be applied in cases of awards passed by Arbitral Tribunals lacking inherent jurisdiction, the learned Single Judge observed.

7. Learned counsel for the award-debtor then places reliance on an unreported judgment of this Court in CO Nos. 39 to 42 of 2019 [SRS Investments Bengal Tiger Ltd. Vs. Rahul Todi and others] where it was held that as far as the commonality of grounds in the proceedings under Section 47, CPC and Section 34 of the 1996 Act are concerned, the same ipso facto does not render the former non-maintainable. There can very well be grounds as contemplated in Section 34 of the 1996 Act which affords grounds to render the award a nullity, bringing those within the domain of Section 47 of the CPC as well.

8. Lastly, learned counsel cites TRF Limited Vs. Energo Engineering Projects Limited, reported at (2017) 8 SCC 377, where the Supreme Court held, in connection w