Executing courts cannot annul arbitral awards based on unilateral appointment of arbitrators if the parties do not challenge it; such awards remain valid until set aside as per legal procedure.

ORDER :

1. Challenging the order of the Executing Court/II Additional Subordinate Judge, Coimbatore, dated 14.11.2024, suo motu, dismissing the Execution Petition in E.P.No.640 of 2018 in Arbitration case No. CP No.RJ/SF/302/2017, the decree holder has come up with the present revision petition.

2. The revision petitioner is the claimant and the respondents are the respondents in the arbitration case in CP No.RJ/SF/302/2017 arose out of a dispute over a loan transaction. The revision petitioner, a financial institution, referred the matter to the sole arbitrator to adjudicate the dispute that arose between the respondents and themselves. The sole arbitrator passed an award on 13.02.2018 whereby the respondents were directed to pay to the revision petitioner a sum of Rs.1,68,047.26 together with interest from 31.07.2017 till date of realization of the said amount in full and also to pay a sum of Rs.1700/- towards arbitrator's fee and a sum of Rs.800/- towards expenses incurred by the arbitrator. On the basis of the award, the revision petitioner initiated an execution proceedings to get executed the award which was taken on file by the learned II Additional Subordinate Judge, Coimbatore, in E.P.No.640 of 2018.

3. The learned Judge, however, suo motu, dismissed the execution petition by order dated 14.11.2024 holding that the arbitrator was appointed unilaterally and that the award made by the sole arbitrator is invalid due to a lack of inherent jurisdiction; as a result, the award made by the sole arbitrator in the arbitration case in CP No. RJ/SF/302/2017 was not enforceable and could not be regarded as a valid award.

4. This court, by order dated 17.12.2024, admitted the revision petition and directed the notice to be served on the respondents both through court as well as privately. However, on 20.01.2025, when the matter came up for hearing, the learned counsel for the revision petitioner had given up the claim against the respondents 1 and 3. Despite service of notice, the 2nd respondent did not enter appearance either in person or through counsel, and hence, the matter was ordered to be listed today, printing the name of the 2nd respondent on the cause list. Accordingly, it is listed today, and despite the name having been printed on the cause, the 2nd respondent has not entered appearance either in person or through counsel. Therefore, this court has no other option except to proceed with the matter further and pass orders on the merits.

5. Heard Mr.Arvind P.Datar, learned senior counsel for Mr.M.Arunachalam, learned counsel on record for the revision petitioner.

6. Mr.Arvind P.Datar, learned senior counsel, would submit that the executing court cannot suo motu annul the award when a party to the agreement did not challenge the award on the ground of ineligibility of the arbitrator under Section 12 (5) of the Arbitration and Conciliation Act, 1996. According to the learned senior counsel, when the party to the arbitral proceedings did not choose to challenge the appointment of the arbitrator, the same would, in the eye of law, amount to a waiver of applicability of provision to (5) of the Arbitration and Conciliation Act, 1996.

7. Mr.Arvind P.Datar would further submit that the bar of ineligibility partakes of a character of not being an absolute bar which would hit at the root of the very assumption of jurisdiction at the inception, rendering the award