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: Executing Court Cannot Reject Award If Arbitrator Appointed by
Kochi, – The has firmly ruled that an executing court cannot refuse to enforce an arbitral award on the ground of of the arbitrator when the parties themselves had mutually nominated the arbitrator in their agreement. Justice Easwaran S., presiding over a single bench, set aside an order of the , which had dismissed an execution petition filed by seeking to recover ₹3.47 lakh with 18% interest from Sangeetha A.V.
Background and the Dispute
The case arose from a loan agreement executed between Hedge Finance and Sangeetha A.V. on . The agreement contained an arbitration clause – Clause O(1) – whereby the parties mutually agreed to appoint , as the sole arbitrator for any disputes. When a dispute arose, the arbitrator was appointed and passed an award on , declaring Hedge Finance entitled to the recovery amount.
When Hedge Finance moved the Additional District Court to execute the award (EP(Arb) No.226/2024), the court took a surprising step: it dismissed the execution petition without even hearing the respondent. The lower court relied on a previous decision of the in Hedge Finance Private Ltd. v. Bijish Joseph [ILR 2022 (3) KER 347], which it interpreted as holding that arbitration awards based on unilateral appointments are not enforceable.
Challenging this dismissal, Hedge Finance approached the High Court under .
Two Questions Before the Court
Justice Easwaran S. framed two pivotal questions for adjudication: (i) whether an executing court can raise an objection regarding the executability of an arbitral award, and (ii) whether it can refuse to execute the award on the ground that the arbitrator’s appointment was unilateral.
by Executing Courts
On the first question, the Court traced the power of an executing court to , which allows it to determine whether a decree is a nullity. However, the Court cautioned that this scope is limited and cannot be substituted for a full trial. It observed that under the , the correct remedy for a party aggrieved by an award is to file an application under to set it aside. If a party does not challenge the award, the executing court cannot enlarge its enquiry under Section 47 to obliterate the award unless it is a .
The Court cited the ’s decision in Bhawarlal Bhandari v. Universal Heavy Mechanical Lifting Enterprises [(1999) 1 SCC 558], holding that a person who received notice of arbitration and did not raise an objection under , cannot later object to the executability of the award.
vs.
On the second question, the Court examined the arbitration clause in the loan agreement. It found that the parties had expressly agreed to nominate S. Nidheesh as the independent and impartial sole arbitrator. If parties reduce their bargain to writing and agree on a particular person as arbitrator, the appointment is not unilateral; it is by consent.
The Court clarified that such mutual nomination does not attract the bar under , which prohibits certain persons from acting as arbitrators. The prohibition under Section 12(5), read with the , applies only to unilateral appointments, not to arbitrators nominated by both parties before or after a dispute arises.
Distinguishing the Bijish Joseph Precedent
The lower court had relied heavily on the Bijish Joseph case, but Justice Easwaran S. found that reliance wholly misplaced. In Bijish Joseph , the arbitration clause allowed the financier to appoint the arbitrator unilaterally. Here, the parties jointly nominated the arbitrator. The Court noted that a subsequent single bench in v. Sahala V.P. [OP(C) No.683/2024] had already clarified that Bijish Joseph does not apply when there is a mutually agreed nomination. Another bench in v. Paul M.P. [OP(C) No.1894/2025] followed the same principle.
The Court strongly criticized the lower court’s approach, stating that reliance on Bijish Joseph in these circumstances “amounts to .”
Key Observations
“The parties have themselves agreed to nominate a person as an arbitrator. If the parties chose to reduce their bargain in writing and agreed on a particular person as arbitrator, then his appointment cannot be termed as unilateral and can only be construed as one by consent.”
“If the party has not moved any application for setting aside the award, the enquiry under cannot be enlarged to such an extent, so as to obliterate the award itself unless the award is found to be a nullity.”
The Court further observed that the executing court had dismissed the petition even without issuing notice to the respondent, indicating that “the objection was formulated by itself.”
Final Decision and Directions
The High Court set aside the impugned order and restored EP(Arb) No.226/2024 to the file of the , directing it to proceed with the execution in accordance with law. It also directed the Registry to communicate this judgment to all District Courts, advising them to exercise caution and not to unilaterally dismiss execution petitions on the ground of without examining the factual matrix.
Justice Easwaran S. made it clear, however, that this ruling should not be taken as an for awards passed on unilateral nominations by one party. The protection extends only to cases where parties mutually nominate the arbitrator, either in the agreement or after the dispute arises.
The decision reinforces the limited role of executing courts in arbitral matters and upholds the principle that objections to an arbitrator’s appointment must be raised under , not at the execution stage.
