1. Impugned order set aside; execution petition restored; executing court directed to proceed in accordance with law. (Para 18 )
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2026 Supreme(Ker) 1298
IN THE HIGH COURT OF KERALA AT ERNAKULAM
EASWARAN S., J.
M/s. Hedge Finance Limited – Petitioner
Versus
Sangeetha A.V – Respondent
Op(C) No. 2206 Of 2026
Decided On : 04-08-2026
Important Points
Executing court cannot refuse execution of arbitral award on ground of unilateral appointment when parties mutually nominated arbitrator; objections beyond nullity not entertainable if award unchallenged under Section 34.
Subject
Civil Law - Arbitration and Execution
Act Referred
CIVIL PROCEDURE CODE : S.47
ARBITRATION AND CONCILIATION ACT : S.11, S.12(5), S.21, S.30, S.34
CONSTITUTION OF INDIA : Art.227
ARBITRATION AND CONCILIATION ACT : S.11, S.12(5), S.21, S.30, S.34
CONSTITUTION OF INDIA : Art.227
Headnote
(A) Arbitration and Conciliation Act, 1996 - Sections 12(5), 21, 11 - Code of Civil Procedure, 1908 - Section 47 - Constitution of India - Article 227
(B) Executing court cannot entertain objections to the executability of an arbitral award beyond the limited ground of nullity when the party has not challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The power under Section 47 CPC is circumscribed and cannot be enlarged to obliterate the award unless it is a nullity. (Paras 6-8)
(C) Appointment of an arbitrator by mutual consent of the parties in a loan agreement is not unilateral. Such a nomination falls outside the bar under Section 12(5) read with the Seventh Schedule, as the parties have themselves agreed on the arbitrator. The decision in Hedge Finance Private Ltd. v. Bijish Joseph [ILR 2022 (3) KER 347] is distinguishable as it dealt with unilateral appointment by the financier, not mutual nomination. (Paras 9, 11-12, 14-15)
(D) An executing court cannot, on its own motion, dismiss an execution petition on the ground of unilateral appointment without examining the factual matrix, especially when the award has not been set aside and the opposite party has not raised any objection. (Paras 1-2, 17)
Facts of the case:
The petitioner obtained an arbitral award for recovery of Rs.3,47,439/- with interest at 18% per annum based on a loan agreement (Exhibit P3) which contained an arbitration clause mutually nominating an advocate as sole arbitrator. The execution petition (EP(Arb) No.226/2024) was dismissed by the Additional District Court-V, Kozhikode, on the ground that the appointment of the arbitrator was unilateral, relying on Hedge Finance Private Ltd. v. Bijish Joseph, without hearing the respondent.
Findings of Court:
The executing court's reliance on Bijish Joseph was wholly misconceived as the clause in the loan agreement provided for mutual nomination of the arbitrator, not unilateral appointment by the financier. The executing court cannot suo motu raise objections to executability; such objections are limited to nullity and cannot substitute a challenge under Section 34 of the Act. The award is executable.
Issues: (i) Whether the executing court can raise an objection regarding the executability of an arbitral award? (ii) Can the executing court refuse to execute the award on the ground that the arbitrator's appointment is unilateral?
Ratio Decidendi: The executing court's power under Section 47 CPC is limited to examining whether the decree is a nullity. Where parties have mutually nominated an arbitrator in the agreement, the appointment is not unilateral and is not barred by Section 12(5) of the Act. The executing court erred in dismissing the execution petition on its own motion without any objection from the respondent, and the award being unchallenged under Section 34 must be executed.
Result: Ext.P4 order dated 13.7.2026 is set aside. EP(Arb) No.226/2024 is restored to the files of the Additional District Court-V, Kozhikode, to proceed with execution in accordance with law. The Registry is directed to communicate this judgment to all District Courts, advising caution against unilateral dismissal of execution petitions on the ground of unilateral appointment without examining the factual matrix.
(B) Executing court cannot entertain objections to the executability of an arbitral award beyond the limited ground of nullity when the party has not challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996. The power under Section 47 CPC is circumscribed and cannot be enlarged to obliterate the award unless it is a nullity. (Paras 6-8)
(C) Appointment of an arbitrator by mutual consent of the parties in a loan agreement is not unilateral. Such a nomination falls outside the bar under Section 12(5) read with the Seventh Schedule, as the parties have themselves agreed on the arbitrator. The decision in Hedge Finance Private Ltd. v. Bijish Joseph [ILR 2022 (3) KER 347] is distinguishable as it dealt with unilateral appointment by the financier, not mutual nomination. (Paras 9, 11-12, 14-15)
(D) An executing court cannot, on its own motion, dismiss an execution petition on the ground of unilateral appointment without examining the factual matrix, especially when the award has not been set aside and the opposite party has not raised any objection. (Paras 1-2, 17)
Facts of the case:
The petitioner obtained an arbitral award for recovery of Rs.3,47,439/- with interest at 18% per annum based on a loan agreement (Exhibit P3) which contained an arbitration clause mutually nominating an advocate as sole arbitrator. The execution petition (EP(Arb) No.226/2024) was dismissed by the Additional District Court-V, Kozhikode, on the ground that the appointment of the arbitrator was unilateral, relying on Hedge Finance Private Ltd. v. Bijish Joseph, without hearing the respondent.
Findings of Court:
The executing court's reliance on Bijish Joseph was wholly misconceived as the clause in the loan agreement provided for mutual nomination of the arbitrator, not unilateral appointment by the financier. The executing court cannot suo motu raise objections to executability; such objections are limited to nullity and cannot substitute a challenge under Section 34 of the Act. The award is executable.
Issues: (i) Whether the executing court can raise an objection regarding the executability of an arbitral award? (ii) Can the executing court refuse to execute the award on the ground that the arbitrator's appointment is unilateral?
Ratio Decidendi: The executing court's power under Section 47 CPC is limited to examining whether the decree is a nullity. Where parties have mutually nominated an arbitrator in the agreement, the appointment is not unilateral and is not barred by Section 12(5) of the Act. The executing court erred in dismissing the execution petition on its own motion without any objection from the respondent, and the award being unchallenged under Section 34 must be executed.
Result: Ext.P4 order dated 13.7.2026 is set aside. EP(Arb) No.226/2024 is restored to the files of the Additional District Court-V, Kozhikode, to proceed with execution in accordance with law. The Registry is directed to communicate this judgment to all District Courts, advising caution against unilateral dismissal of execution petitions on the ground of unilateral appointment without examining the factual matrix.
Legal Category Hierarchy
- arbitration and conciliation
- practice and procedure
Advocates Appeared:
For The Petitioner: Adv Sri.Shiju Varghese
For The Petitioner: Adv Sri.Shiju Varghese
Table of Contents
2. What is the scope of an executing court to examine an arbitration award's executability under Section 47 CPC?
The executing court can examine if the award is a nullity, but cannot enlarge the enquiry to set aside the award when no Section 34 application is filed. (Para 6 , 7 , 8 )
3. Can an executing court refuse to execute an award on the ground that the arbitrator's appointment was unilateral?
No, if the parties mutually agreed on the arbitrator in the agreement, the appointment is by consent and not unilateral; the court must consider the factual matrix. (Para 9 , 11 , 12 , 13 , 14 , 15 , 16 , 17 )
4. What is the effect of mutual nomination of an arbitrator by parties in an agreement?
Such nomination is not unilateral and does not violate Section 12(5) of the Arbitration Act; it saves the appointment from the mischief of the Seventh Schedule. (Para 9 , 11 , 12 )
5. Can a party invoke Section 11(6) of the Arbitration Act after a sole arbitrator has been appointed by mutual consent?
No, once the parties have mutually appointed an arbitrator, the arbitration agreement cannot be invoked again for a second appointment under Section 11(6). (Para 10 )
JUDGMENT :
EASWARAN S., J.
The petitioner secured an award (Ext.P2) in an arbitration proceeding declaring that it is entitled to recover a sum of Rs.3,47,439/- together with interest @ 18% per annum. The appointment of the arbitrator was pursuant to an agreement of loan (Ext.P3) entered into between the petitioner and the respondent on 16.12.2019. When the award was put to execution, the Additional District Court-V, Kozhikode took a view that unilateral appointment of an arbitrator cannot be sustained in view of the decision of this Court in Hedge Finance Private Ltd. v. Bijish Joseph [ILR 2022 (3) KER 347]. Accordingly, the execution petition was dismissed. Pertinently, the dismissal of the execution petition by Ext.P4 was even without hearing the respondent. Thus, presumably, the objection was formulated by itself. The order (Ext.P4) dismissing the execution petition is thus impugned in the original petition.
2. The question which this Court required to address is whether the executing court can entertain an objection regarding the executability of the award passed under the provisions of the Arbitration and Conciliation Act, 1996. This Court felt it necessary to examine this issue since, repeatedly, the courts, where such an award is put to execution, have proceeded to hold that the award is not executable, despite the party not raising a dispute. Surprisingly, it appears that the court itself had taken up the task of deciding this issue, thus necessitating a closer judicial scrutiny.
3. Heard Sri.Shiju Varghese, the learned counsel appearing for the petitioner.
4. In the nature of the order/decision which this Court proposes to pass/issue, this Court feels that it is not necessary to put notice to the respondent.
5. On a conspectus analysis of the issues required to be addressed, this Court feels it necessary to address the following questions:
i) Whether the executing court can raise an objection regarding the executability of the award passed by an arbitrator?
ii) Can the executing court refuse to execute the award passed by an arbitrator on the ground that his appointment is unilateral?
6. Question-i). The power of the executing court to decide the executability of a decree can be traced to Section 47 of the Code of Civil Procedure, 1908. No doubt, the executing court can examine whether the decree sought to be executed is a nullity or not. But then, while exercising the power under Section 47, the scope of enquiry is limited and cannot be substituted with a full trial of the issues.
7. In the scheme of the Arbitration and Conciliation Act, 1996, the opposite party, if aggrieved by the award, has to apply for setting aside the same by filing an application under Section 34 of the Act. If the party has not moved any application for setting aside the award, the enquiry under Section 47 of the CPC cannot be enlarged to such an extent, so as to obliterate the award itself unless the award is found to be a nullity.
8. In Bhawarlal Bhandari Vs Universal Heavy Mechanical Lifting Enterprises [(1999) 1 SCC 558], the Supreme Court held that if a person has received notice in an arbitration proceedings and did not raise objection under Section 30 of the Arbitration Act, 1940, he cannot later raise an objection that the award passed by the arbitrator is not executable. The executing court cannot entertain such an objection.
9. Question -ii) The sole reason why the executing court dismissed the execution petition is that the appointment of the arbitrator is unilateral. A perusal of Ext.P3 agreement shows that the parties have themselves agreed to nominate a person as an arbitrator. If the parties chose to reduce their bargain in writing and agreed on a particular person as arbitrator, then his appointment cannot be termed as unilateral and can only be construed as one by consent. Therefore, it is unfathomable as to how the executing court concluded that the appointment of the arbitrator is unilateral.
10. The question as to whether, after nomin
