Participation in arbitration bars challenging award validity at execution stage despite jurisdictional irregularities.

JUDGMENT

The Original Petition has been filed challenging Ext.P6 order dated 13.08.2024 in EA No.553 of 2024 in EP No.127 of 2023 in ARC No.1035 of 2018 of the 1st Additional Sub Judge, Kozhikode, whereby the application filed by the Judgment Debtor stating that the award has become non-est has been accepted by the court, and it has been held that the award is not executable.

2. The respondent had availed of a loan from the petitioner to the tune of Rs.48,00,000/- in 2015. When there was default, proceedings were initiated before the Arbitrator, which culminated in Ext.P2 award. The respondent participated in the proceedings as can be seen from the award. However, in the petition for execution of the award before the Sub Court, Kozhikode, the respondent took a stand that, since the petitioner had granted the loan outside its area of operation, the award itself was liable to be treated as non-est. The court below relied on Ext.A1 series of information furnished under the Right to Information Act, which stated that the petitioner Bank had no jurisdiction beyond Kozhikode Corporation/ Taluk. It is stated that the Judgment Debtor’s property was situated in Thamarassery Taluk and since the loan was granted beyond the jurisdictional limit, it cannot be realised. It is also found that the membership given to the Judgment Debtor is against law.

3. The reasoning of the court below cannot be accepted.

The loan was granted on the basis of an agreement between the parties and it is towards enforcement of the said agreement that the arbitration proceedings have also been initiated. Certain irregularities in granting a loan to a person who was outside the area of operation will not by itself negate the contract between the parties. In the execution proceedings, the court was not called upon to decide on whether the membership granted to the Judgment Debtor was bad in law. The respondent having participated in the arbitration proceedings and given a statement cannot be allowed to challenge the proceedings at the stage of execution.

In the result, the Original Petition is allowed. Ext.P6 is set aside. The court below is directed to take back the execution petition on file and dispose it in accordance with law.