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2025 Supreme(Online)(Ker) 68151

IN THE HIGH COURT OF KERALA AT ERNAKULAM
K. NATARAJAN, J
NEELIMA E, SAJEESH NAIR – Appellant
Versus
M/S B COMPANY – Respondent
OP(C) NO. 892 OF 2025 | E.P.NO.317 OF 2022



Advocates:
For the Appellants/Petitioners: SHRI.SHIBIN K.F., SHRI.SEBY JOSEPH, SMT.ANEENA ROY
For the Respondents: SHRI.ANESH PAUL

Unilateral appointment of an arbitrator without mutual consent undermines the award's validity, raising concerns over fairness and impartiality, thus rendering it non-est in law.

Headnote:(A) Constitution of India - Article 227 - Arbitration and Conciliation Act, 1996 - Unilateral appointment of sole arbitrator - The petitioners challenged the orders related to arbitration proceedings initiated by the respondent, alleging fraudulent documentation in loan agreements and unilateral appointment of the arbitrator, which was deemed to violate legal principles of impartiality and equal treatment. The award passed by the arbitrator was found to be non-est and non-executable in light of the Supreme Court's principles on arbitrator appointments. (Paras 4-11)

(B) Arbitration - Validity of award - The award was declared non-est in law because the arbitrator's appointment was unilateral, raising concerns over independence and fairness, and the petitioner's objections to the validity of documentation were not adequately addressed in prior proceedings. (Paras 6-10)

Facts of the case:
The petitioners contested the validity of an arbitration award issued by a sole arbitrator regarding loan defaults, arguing that the arbitration process was compromised by the unilateral appointment of the arbitrator and fabrication of documents. The petitioners sought to set aside multiple execution-related orders.

Findings of Court:
The court determined that due to the unilateral appointment of the arbitrator, the award was non-est and not executable, thereby allowing the petition and setting aside the orders of the lower court.

Issues: The court addressed the legality of the arbitrator's appointment and the implications of alleged fraudulent documentation concerning the loan agreement.

Ratio Decidendi: The court adhered to the principle that unilateral appointment clauses are contrary to the equality of parties in arbitration and must be scrutinized for fairness. The award was ruled invalid due to procedural irregularities regarding the appointment process.

Result: The petition was allowed, and the orders and the arbitration award were set aside.

Table of Content
1. petitioners challenge arbitration and execution orders. (Para 1 , 3)
2. court's examination of parties' positions. (Para 2 , 6)
3. arguments over unilateral appointment of arbitrator. (Para 4 , 5)
4. legal principles from supreme court on arbitration. (Para 7 , 8)
5. court finds award non-est and sets aside all orders. (Para 10)
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JUDGMENT

(Dated this the 19th day of August, 2025)

The Original petition is filed by the petitioners/judgment debtor under Article 227 of the Constitution of India , praying to set aside the Exhibit-P1 order dated 29.11.2023 in E.A.No..335/2023 in E.P.No.317/2022, set aside the Exhibit-P2 order dated 27.02.2025 in E.A.No.685/2024, the Exhibit-P3 order dated 27.02.2025 in E.A.No.686/2024, and the award passed by the sole arbitrator dated 18.09.2021, and pass any appropriate order.

2. Heard the arguments of the learned counsel for the petitioners and the learned counsel for the respondents.

3. The case of the petitioner is that, the respondent said to be initiated arbitration proceedings before the sole arbitrator one Mr.K.A Mariappan at Chennai alleging that the petitioner said to be borrowed loan by executing five documents from the respondent. A notice was issued by the respondent and subsequently, initiated the proceedings before the sole arbitrator in A.R.C.No.152/2021. A notice was issued to the petitioner, the petitioner said to be appeared before the arbitrator and raised objection mainly on the ground that the arbitrator appointed was unilateral and fraud committed by the claimant. After filing objection with documents further not contested, subsequently an award has been passed by the sole arbitrator on 18.09.2021, a notice also issued to the petitioner mentioning about the passing of the arbitration award. Subsequently the petitioner not chosen to file any petition before the District Judge under Section 34 of the Arbitration and Conciliation Act 1996. Thereafter the respondent filed E.P.No.317/2022 and he has filed E.A.No.335/2023 for attaching the property. Then the petitioner said to be approached the execution court by filing an objection contending that the arbitrator has no power to pass an award as he was appointed unilaterally and not in accordance with law. All the documents were created by the respondent. And after hearing the arguments the execution court dismissed the application on 29.11.2023. Subsequently once again the petitioner filed a Review petition in E.A.No.685/2024 that also came to dismissed on 27.02.2025. Now the execution court proceeded to execute that award by selling the property which was attached, hence the petitioner is before this Court.

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4. Learned counsel for the petitioner seriously contended that, the very appointment of the arbitrator unilaterally by the respondent was illegal and without the consent of the JDR. Even otherwise the respondent, the petitioner said to be executed a loan agreement, which is a forged document, a small piece of paper, where written is a condensed manner mentioned about the loan, but there is no address and other details of the both parties were mentioned. Subsequently notice also issued, there is no mention of the name of the sole arbitrator in the notice issued by the respondent. But subsequently they created a letter in the name of the petitioner, wherein the petitioner said to be given a consent for appointing sole Arbitrator Mr.Mariyappan at Chennai and consented for arbitration procedure at Chennai. Those documents were created by the respondent. Therefore the petitioner also filed a complaint to the Chennai Police and the very award passed by the arbitrator is non-est in the eye of law therefore there is no petition required to to be filed under Section 34 of the Arbitration and Conciliation Act, for setting aside the same. Therefore the award under challenge is non-est in the eye law of and not executable. Therefore prayed for setting aside the same. Consequently, the I.A. filed by the respondent and orde

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