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Sundaram Finance Ltd Wins: Allows Execution of Awards Despite Unilateral Arbitrator Appointment
The has reaffirmed that an Executing Court cannot dismiss an for an solely on the ground that the arbitrator was unilaterally appointed. Justice P.B. Balaji, allowing two civil revision petitions by , set aside the dismissal orders passed by courts in Coimbatore and directed that the awards be executed "as it stands."
The Case: Dismissal of Execution Petitions
Sundaram Finance had obtained arbitral awards against A. Arun Kumar and Ayyasamy in one matter, and against S. Maheswari and N. Selvakumar in another. When the company approached the , and the , to execute these awards, both courts dismissed the execution petitions. Their reasoning: the arbitrator had been appointed unilaterally by Sundaram Finance.
Crucially, the —the respondents in both cases—never challenged the awards under , nor did they appear to contest the execution proceedings.
Petitioner's Argument: Executing Court Exceeded Jurisdiction
Represented by advocate , Sundaram Finance argued that the Executing Courts had overstepped their authority. The company contended that in the absence of any challenge by the , the courts could not independently raise the issue of and dismiss the petitions. The petitioner further pointed out that the had already ruled on this very point in an earlier case——where it held that the Executing Court cannot exercise power to dismiss an .
Court's Reasoning: Precedent and Principle
Justice Balaji agreed with Sundaram Finance, noting that despite specific directions in the earlier revision petition—which had explicitly restrained the Executing Court from exercising power—one of the two courts had still proceeded to dismiss the petition. The judge observed that the had not chosen to come forward to contest the execution proceedings, and in the absence of any challenge to the executability of the awards, the Executing Courts ought not to have independently raised the issue.
Key Observations from the Judgment
The court's reasoning is captured in these pivotal observations:
"Admittedly, in the present cases, the award sufferers have neither challenged the awards in a manner known to law, by filing a Section 34 application under the, nor even come forward to contest the execution petitions as well. In the absence of any such challenge on the side of the award sufferers, the Executing Court cannotexercise a right to dismiss the execution petitions, on finding that the appointment of the Arbitrator was unilateral."
The court also noted the disregard of its earlier directive:
"Despite specific directions in the earlier revision petition by this Court in CRP.No.5197 of 2024, one of these two revision petitions have been dismissed by the very same Court. The learned Presiding Judge was directed to dispose of the execution petitions on merits and especially when it was specifically directed by this Court that the Executing Court should not exercisepower and dismiss the, still the Executing Court has exercisedpower and proceeded to dismiss the."
The Verdict: Execution Must Proceed
Allowing both civil revision petitions, Justice Balaji set aside the orders dated
in E.P.No.326 of 2026 and
in E.P.No.53 of 2025. The court declared that the
"Executing Court is bound to execute the awards as it stands."
In a significant administrative direction, the court ordered the Registry to circulate this order to all courts handling execution of arbitral awards. This step aims to prevent similar instances where Executing Courts improperly dismiss execution petitions on the ground of of an arbitrator.
Implications for Arbitration Enforcement
This judgment reinforces a fundamental principle of arbitration law: the Executing Court's role is limited to enforcing the award, not reviewing its validity. Once an award has attained finality—either because it was not challenged under Section 34 or the challenge failed—the Executing Court cannot refuse enforcement on grounds that could have been raised in a challenge proceeding. The decision serves as a clear warning to lower courts against exceeding their jurisdiction and provides valuable guidance for facing similar obstacles.
