The appointment of an arbitrator in violation of the Arbitration and Conciliation Act renders the interim award unenforceable, emphasizing the necessity of proper notice and jurisdictional compliance.

JUDGMENT

Aggrieved by the order in CMA (Arb) No.530/2022 of the Court of Additional District Judge – VIII, Ernakulam, the petitioner before the court below has filed this original petition.

2. The skeletal facts relevant for the determination of the original petition are: the petitioner is a public limited company registered with the Reserve Bank of India as a non-banking finance company engaged in providing loans on a hypothecation and guarantee basis. The respondent and his guarantor had entered into Ext.P1 hypothecation agreement with the petitioner to purchase a motor car on hypothecation. It was, inter-alia, agreed by the parties that in the case of any dispute between them, the same would be settled in arbitration at Ernakulam. The respondent committed a breach of the agreement. The petitioner invoked Clause 20 of Ext.P1 agreement and issued a notice under Section 21 of the Arbitration and Conciliation Act, 1996 (in short ‘Act’) by suggesting the name of an Arbitrator. Even though the respondent received the notice, he did not send any reply. Inferring that the respondent had accepted the name of the arbitrator suggested by the petitioner, the petitioner appointed a sole Arbitrator. The petitioner filed its claim petition before the nominated Arbitrator along with an application filed under Section 17 (1) of the Act for interim relief. The Arbitrator passed Ext.P2 ad-interim award permitting the petitioner to repossess the vehicle. The petitioner then filed CMA (Arb)No.530/2022 (Ext.P3), under Section 17(2) of the Act, to enforce the Ext.P2 interim award. Along with Ext.P3, the petitioner filed Ext.P4 application to appoint an Advocate Commissioner to repossess the vehicle. Nevertheless, the court below, on a finding that the respondent is residing in Kottayam, by the impugned Ext.P5 order, held it has no jurisdiction and ordered the return of the original petition for representation to the proper Court. Ext.P5 order is irregular and unsustainable in law. Hence, the original petition.

3. Heard; Sri.Shiju Varghese, the learned counsel for the petitioner.

4. Sri. Shiju Varghese argued that Ext.P5 order is patently wrong and erroneous because the court below has failed to consider the provisions of the Act and the law laid down by this Court on the point, in its proper perspective. The Arbitration and Conciliation Act is a self-contained enactment emphasising party autonomy. An interim award can be enforced by the Court situated at the seat as agreed by the parties to the agreement. There is no necessity to file the original petition where the respondent is residing as contemplated under the Code of Civil Procedure, which has no application. He placed reliance on the decision of the Honourable Supreme Court in Sundaram Finance Limited v. Abdul Samad and another [ (2018) 3 SCC 622 ] and the decision of this Court in Muthoot Vehicle and Asset Finance Ltd. v. Gopalan Kuttappan [ 2009 KHC 5086 ] to canvass the position that an award can be enforced anywhere in India and the property can be attached before judgment by a court even if the subject matter is outside its jurisdiction. Hence, he submitted that the original petition may be allowed.

5. When this Court was proposing to admit the original petition and order notice to the respondent, the learned counsel drew the attention of this Court to the decision in HDFC Bank Ltd v. Manaf Arakkaveettil [2018 (4) KHC 84] and argued that this Court has dispensed with the issuance of prior notice to the respondent in cases of such nature, as it may entail in the vanishing of the security sought to be attached. He also relied on the decisions of this Court in Sakthi Finance Ltd. v. Shanavas and others [2018 (5) KHC 739] and Pradeep K.N v. Station House Officer, Perumbavoor and another [2016 (2) KHC 714] to drive home the contentions that the enforcement court constituted under Section 17 (2) of the Act is not expected to conduct an enquiry on the interim award passed by the Arbitrator like