Arbitral Award – Powers of Executing Court – Unilateral appointment of Arbitrator

In the dispute over a loan transaction, the petitioner-claimant referred the matter to the sole Arbitrator.  The Award was passed on 13.2.2018 directing the respondents to pay Rs.1,68,047.26 ps with interest.

The claimant filed petition for execution of the Award.

The learned Judge, however, suo motu dismissed the execution petition vide order dated 14.11.2024 on the ground that the Award is invalid since the Arbitrator was unilaterally appointed.

The Executing Court cannot suo out anull the award when the respondents did not challenge the award on the said ground of ineligibility of Arbitrator and it would amount to waiver of Section 12(5) AA requirement.

HELD that the proviso to sub-section (5) of Section 12 provides that the parties may waive the applicability of sub-section (5) by express agreement in writing.  Thus, an objection can be raised. But so long as there is no objection raised; it cannot be said that a merely unilateral arbitrator appointment would vitiate the entire arbitration proceedings.  Mere ineligibility does not vitiate the entire arbitral proceedings as void ab initio. Moreover, section 34 application is necessary to set-aside the award on that ground.

Order dated 27.1.2025 of the High Court of Madras in C.R.P.No.5197 of 2024 of M/s. Sundaram Finance Limited   Vs.  S.M.thangaraj and others