An award obtained through a unilaterally appointed arbitrator lacks enforcement validity; mutual consent in appointment is essential.

JUDGMENT

(Dated: 5^th December, 2025)

[OP(C) Nos.3076/2025, 3070/2025]

Both the petitions have been filed by the petitioner/judgment debtor, challenging the execution petition filed by the respondents/decree holder in E.P.Nos.415 of 2019 and 414 of 2019, pending on the files of the Additional District Court - II, Manjeri.

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

3. The case of the petitioners is that the respondents obtained the award in ACP Nos.123 of 2018 and 124 of 2018, for realisation of money, and thereafter filed Execution Petitions before the Additional District Court - II, Manjeri, for execution of the award. The petitioners, being the judgment debtors in both the cases filed these petitions, contending that the arbitration proceedings initiated by the decree holder before the Arbitrator, who was appointed unilaterally, which is illegal, and therefore, the execution cannot proceed against the petitioners. Hence prayed for declaring that the execution petitions are based on ex parte award passed by the Arbitrator, who was appointed unilaterally, which is illegal, null and void, and to be set aside.

4. The only contention of the petitioners is that the award of the arbitrator is not maintainable, since the award was made by the sole arbitrator, who was unilaterally appointed by the respondents without the knowledge of the petitioners and without the order of the court; therefore, the award is not executable. Therefore, prayed for setting aside the orders.

5. The loan documents produced by the very petitioners reveal that the loan agreement was executed by the petitioners and the respondents jointly at the time of borrowing the loan, at clause 7 of the loan agreement. Here, it is mentioned that, if any dispute or difference arises between the parties, the agreement shall be referred to the arbitrator, Sri. O.V. Rajeev at Thrissur, was the sole arbitrator who was mutually agreed upon by both parties. Once the petitioners and respondents have signed the agreement, the sole arbitrator should be appointed by mutual consent of both parties. The contention of the petitioners is that the arbitrator appointed unilaterally by the respondent is not acceptable.

6. In this regard, this Court, in similar cases, where the execution petition has been dismissed by the execution court, on the ground that the arbitrator was appointed unilaterally without the consent of the petitioner, has set aside and remitted the matter back.

7. This court, following the judgment of the co-ordinate bench of this court in O.P.(C) No.683 of 2024 dated 18.3.2025, in the case ofM/s. Hedge Finance Limited, v. Sahala V.P. and Another, and another case in O.P.(C) No.1035 of 2024 dated 05.02.2025, in the case of Vadakkemuriyil Finance Company Limited v. K.M. Jose and Another , wherein both the said cases, the co-ordinate benches of this court has held that, both parties have mutually agreed in the loan agreement itself for appointing a sole arbitrator named in the agreement; thereafter, they cannot rescind from the same. Based upon the judgment, this court also passed judgment in O.P.(C) 1562 of 2025, wherein a similar contention was negatived by this Court. Therefore, the petitions are devoid of merit and are dismissed, even without issuing notice to the respondent.

Accordingly, both petitions are dismissed.