M/S. V. K. Jain And Sons vs Neeraj Jain

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment reserved on: 03.11.2026
Judgment pronounced on: 06.11.2026
Judgment uploaded on: 06.11.2026
# CNR No. DLHC010320642025
+ EFA(COMM) 5/2025 & CM APPL. 31472/2025
M/S. V. K. JAIN AND SONS .....APPELLANT
Through: Mr. Anshul Sharma and Mr.
Vishesh Tomar, Advs.

versus
NEERAJ JAIN .....RESPONDENT
Through: Mr. Rajeev Gupta & Mr.
Sandeep Yadav, Advs.

CORAM:
HON'BLE MR. JUSTICE ANIL KSHETARPAL
HON'BLE MR. JUSTICE BHARAT PARASHAR
J U D G M E N T
ANIL KSHETARPAL, J.:
1. The present Execution First Appeal has been preferred by the
Appellant under Section 13 of the Commercial Courts Act, 2015, read
with Order XXI Rule 58 of the Code of Civil Procedure, 1908,
1
assailing the order dated 28.01.2025 passed by the learned District
Judge (Commercial) in Execution (Comm.) No.14/2024, whereby the
objections preferred by the Respondent/Judgment Debtor were
allowed and the execution petition seeking enforcement of the arbitral
2
award dated 31.01.2020 was dismissed.
2. The principal controversy arising in the present Appeal
concerns the validity of the appointment of the Sole Arbitrator by the
Executive Committee of the Paper Merchants Association (Regd.),

1
Hereinafter, the ‘Impugned Order’
2
Hereinafter, the ‘Award’
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Delhi, in terms of the arbitration clause printed on the invoices issued
by the Appellant. The question which falls for consideration is
whether such appointment can be regarded as a unilateral appointment
3
attracting the prohibition contained in Section 12(5) of the
4
Arbitration and Conciliation Act, 1996 , particularly when the
appointment was made by the Executive Committee of the
Association and not by either of the parties themselves.
FACTUAL MATRIX:
3. The relevant facts, necessary for adjudication of the present
Appeal, may be briefly noticed.
4. The Appellant, M/s V.K. Jain & Sons, is engaged in the
wholesale business of sale and purchase of paper. The Respondent,
Mr. Neeraj Jain, was carrying on business as the proprietor of M/s
Sarika Enterprises. The parties admittedly had commercial dealings
with each other, in the course of which the Appellant supplied paper
to the Respondent.
5. According to the Appellant, an amount of Rs.2,18,234/-
remained outstanding against the Respondent in terms of the running
ledger account maintained by it. The Appellant asserts that the
Respondent had issued Cheque No.000074 dated 02.03.2017 for the
aforesaid amount towards discharge of the outstanding liability. The
Appellant further claims that, despite acknowledging the liability, the
Respondent failed to make payment.

3
Hereinafter, the ‘Section 12(5)’
4
Hereinafter, the ‘A&C Act’
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6. The Appellant relies upon the terms and conditions printed on
the invoices issued during the course of business between the parties.
Clauses 5 and 6 of the said invoice dated 23.12.2016, which form the
basis of the present controversy, read as under:
“5. Subject to “Delhi” Jurisdiction only.
6. In case of any dispute including dispute of non payment in respect
of this bill the same shall be referred to the “Paper Merchant
Association (Regd.) Delhi” for sole arbitration and the judgement
given by the Arbitrator/Arbitrators appointed by the Executive
Committee shall be final & binding on both the parties.”
7. In terms of the aforesaid clause, the Appellant approached the
Paper Merchants Association (Regd.), Delhi, whereupon the
Executive Committee appointed Mr. Satya Narain Gupta as the Sole
Arbitrator. The arbitral proceedings commenced in 2019. The
Respondent did not participate in the proceedings despite notices
being issued to him. The learned Sole Arbitrator ultimately passed an
Award, allowing the principal claim of Rs.2,18,234/-, interest of
Rs.30,475/- and further interest at the rate of 15% per annum until
payment.
8. The Appellant thereafter instituted Execution Petition
No.187/2022 for enforcement of the aforesaid Award. The said
petition was dismissed for non-prosecution. Subsequently, the
Appellant instituted a fresh execution petition, being Execution
(Comm.) No.14/2024, before the learned Commercial Court.
9. During the pendency of the execution proceedings, the
Respondent filed objections, inter alia , contending that the award had
been passed by a unilaterally appointed Arbitrator and was, therefore,
incapable of enforcement. It was specifically contended that the
Respondent had never consented, in writing, after the disputes had
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arisen, to the reference of the dispute to the Paper Merchants
Association or to the appointment of an Arbitrator by its Executive
Committee.
10. The learned Commercial Court, vide the Impugned Order dated
28.01.2025, accepted the objections. It held that the Respondent’s
membership of the Paper Merchants Association had neither been
pleaded nor established by the Appellant. It was further held that the
mere fact that the Respondent had made part-payments against the
invoices did not establish his acceptance of the arbitration clause. The
learned Commercial Court consequently concluded that the
appointment of the Sole Arbitrator, on the request of a member of the
Association, was hit by Section 12(5) and that the award was a nullity.
11. Aggrieved by the aforesaid order, the present Appeal has been
preferred.
CONTENTIONS OF THE PARTIES:
12. Heard learned counsel representing the parties and, with their
able assistance, perused the record.
13. Learned counsel representing the Appellant has assailed the
Impugned Order primarily on the ground that the learned Commercial
Court failed to appreciate the distinction between an appointment
made unilaterally by one of the parties and an appointment made by
an independent body in terms of an arbitration agreement between the
parties. The following submissions have been advanced on behalf of
the Appellant:
i. The arbitration clause printed on the invoices expressly
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provides that disputes between the parties shall be referred to the
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Paper Merchants Association (Regd.), Delhi, for sole arbitration
and that the Arbitrator shall be appointed by its Executive
Committee. The power of appointment, therefore, was neither
vested in the Appellant nor exercised by it. The Executive
Committee, being an independent body, was authorised to
appoint the Arbitrator in terms of the agreed procedure.
ii. Both parties were engaged in the business of paper and
had maintained regular commercial dealings. The Respondent
had accepted the invoices containing the arbitration clause and
had made part-payments in respect of the transactions. Such
conduct, according to the Appellant, constituted acceptance of
the terms and conditions printed on the invoices and established a
valid arbitration agreement within the meaning of Section 7 of
5
the A&C Act .
iii. Reliance is placed upon the judgment of this Court in
6
SRF Limited v. Jonson Rubber Industries Limited , to contend
that an arbitration agreement can be inferred from invoices
containing an arbitration clause where the parties have been
maintaining regular commercial dealings, the invoices have been
received and part-payments have been made.
iv. The learned Commercial Court erred in relying upon
7
Taipack Limited and Others v. Ram Kishore Nagar Mal , since
the arbitration clause in the present case expressly uses the words
‘sole arbitration’ and specifically identifies the Executive
Committee of the Association as the authority competent to

5
Hereinafter, the ‘Section 7’
6
MANU/DE/2009/2024
7
2007 SCC OnLine Del 804
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appoint the Arbitrator. Unlike Taipack (supra) , there was no
contradictory purchase order or competing contractual stipulation
in the present case.
v. Reliance is also placed upon Rajesh Jain Proprietor, M/s
8
Pioneer Paper Agency v. M/s Shiv Shakti Impex , to contend
that the arbitration mechanism of the Paper Merchants
Association has been recognised by this Court and that the
learned Commercial Court failed to appreciate the distinction
between the existence of an arbitration agreement and the
membership of the parties in the Association.
vi. The learned Commercial Court further failed to
appreciate that the Respondent had issued a cheque for
Rs.2,18,234/- towards the outstanding liability. This, according to
the Appellant, corroborates the existence of the underlying
commercial transactions and the acceptance of the liability
arising therefrom.
vii. The learned Commercial Court exceeded the permissible
scope of jurisdiction of an executing court by going behind the
arbitral award and adjudicating upon objections which ought to
have been raised in proceedings under Section 34 of the A&C
9
Act . The Respondent was duly served with notices of the arbitral
proceedings but chose not to participate. He also did not
challenge the award within the period prescribed under Section
34. Reliance is placed upon Punjab State Civil Supplies

8
2023:DHC:5328-DB
9
Hereinafter, the ‘Section 34’
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10
Corporation Ltd. & Anr. v. M/s Atwal Rice & General Mills
11
and Sahayaraj v. Selvakumar .
viii. It is further contended that the learned Commercial Court
erred in holding that the arbitration clause was hit by Section
12(5) of the A&C Act, despite the fact that the Appellant had no
role in the appointment of the Arbitrator and the appointment was
made by the Executive Committee of the Association.
14. Per contra , learned counsel representing the Respondent has
supported the Impugned Order and submitted that the Award sought to
be executed is the result of an arbitration conducted by an Arbitrator
appointed unilaterally, without the Respondent’s consent. The
following submissions have been advanced on behalf of the
Respondent:
i. It is contended that the Respondent was never a member
of the Paper Merchants Association (Regd.), Delhi, and was not
bound by its constitution, rules or regulations. The Appellant,
being a member of the Association, could not invoke its internal
mechanism to secure the appointment of an Arbitrator against a
non-member.
ii. It is further submitted that the Respondent never entered
into any express agreement, after the disputes had arisen,
consenting to the appointment of an Arbitrator by the
Association. The requirement under the proviso to Section 12(5)
is mandatory and cannot be dispensed with merely on the basis of

10
(2017) 8 SCC 116
11
CRP (MD) No.576/2024
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alleged acceptance of invoices or participation in commercial
transactions.
iii. Reliance is placed upon Union of India v. M/s M.V.
12
Omni Projects (India) Ltd. and Kotak Mahindra Bank Limited
13
v. Narendra Kumar Prajapat in support of the proposition that
an award passed pursuant to an appointment which is contrary to
Section 12(5) is unenforceable.
iv. Reliance is also placed upon Taipack Limited (supra)
and Rajesh Jain (supra) to contend that an arbitration clause
printed on an invoice issued unilaterally by a member of an
Association cannot bind a non-member merely because the latter
has entered into commercial transactions with the issuing party.
v. It is further contended that the executing court was
competent to examine whether the award was a nullity for want
of a valid arbitration agreement and that the failure of the
Respondent to institute proceedings under Section 34 would not
validate an award passed without jurisdiction.
15. No other submissions have been advanced by learned counsel
representing the parties.
ANALYSIS AND FINDINGS:
16. This Court has considered the submissions advanced on behalf
of the parties and examined the material placed on record, including
the Impugned Order, the arbitral award and the pleadings filed before
the learned Commercial Court.

12
OMP (COMM.) 355/2023
13
2023:DHC:3705-DB
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17. The controversy essentially requires examination of three
aspects: first , whether the arbitration clause printed on the invoices
constitutes an arbitration agreement within the meaning of Section 7;
second , whether the appointment of the Sole Arbitrator by the
Executive Committee of the Paper Merchants Association amounts to
a unilateral appointment attracting Section 12(5); and third , whether
the executing court was justified in refusing enforcement of the award
on the ground that it was a nullity.
I. Whether the arbitration clause constitutes a valid
arbitration agreement:
18. Section 7 defines an arbitration agreement and recognises that
such an agreement may be contained in a contract or in the form of a
separate agreement. The statutory requirement is that the agreement be
in writing. Section 7(4) further recognises an arbitration agreement
contained in an exchange of communications or other means of
communication which provide a record of the agreement, as well as an
exchange of statements of claim and defence in which the existence of
the agreement is alleged by one party and not denied by the other.
19. It is, therefore, not necessary that an arbitration agreement must
invariably be contained in a separately executed document bearing the
signatures of both parties. The essential requirement is that the
material placed on record must demonstrate consensus ad idem
between the parties to refer their disputes to arbitration.
20. In the present case, the arbitration clause relied upon by the
Appellant is not an ambiguous stipulation merely referring disputes to
the Paper Merchants Association for resolution. The clause expressly
provides that disputes, including disputes relating to non-payment,
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shall be referred to the Association for ‘sole arbitration’. It further
identifies the Executive Committee as the authority which would
appoint the Arbitrator and stipulates that the decision rendered by the
Arbitrator would be final and binding upon both parties.
21. The language of the clause, therefore, clearly manifests an
intention to refer disputes to arbitration. The mere fact that the clause
is contained in an invoice issued by the Appellant would not, by itself,
render it incapable of constituting an arbitration agreement. The
question would be whether the invoices were received and accepted
by the Respondent and whether the surrounding circumstances
demonstrate acceptance of the arbitration stipulation.
22. In SRF Limited (supra) , this Court considered a similar
objection concerning an arbitration clause incorporated in invoices
exchanged between parties having regular commercial dealings. The
Court held that an arbitration agreement need not be separately signed,
provided the requirements of Section 7 are otherwise satisfied. The
Court also noticed the significance of the receipt of invoices, the
existence of a running account and the making of part-payments while
examining whether the parties had accepted the arbitration clause.
23. The aforesaid judgment, however, was rendered in proceedings
under Section 11 of the A&C Act, where the Court was examining
whether a prima facie case for reference to arbitration had been made
out. The decision cannot be understood as laying down that every
invoice containing an arbitration clause automatically binds the
recipient, irrespective of whether the invoice was received or whether
the terms contained therein were accepted. Nevertheless, the principle
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that an arbitration agreement can be inferred from the commercial
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dealings and conduct of the parties is equally relevant while
examining the requirements of Section 7.
24. The learned Commercial Court, in the present case, rejected the
Appellant’s reliance upon part-payments by observing that payment
against an invoice does not necessarily amount to acceptance of the
arbitration clause printed thereon. Such a proposition, if understood as
an absolute rule, cannot be accepted. The acceptance of invoices
containing an arbitration clause, particularly in the context of a
continuing commercial relationship and part-payments made against
such invoices, is a relevant circumstance in determining the existence
of consensus between the parties.
25. The cheque relied upon by the Appellant, however, requires to
be considered in its proper perspective. The issuance of a cheque
towards an outstanding commercial liability may corroborate the
existence of the underlying transaction and the liability claimed by the
Appellant. It does not, by itself, establish acceptance of the arbitration
clause or validate the appointment of the Arbitrator. The question of
consent to arbitration must be determined from the invoices and the
surrounding circumstances, and cannot be inferred merely from an
acknowledgment of monetary liability.
26. In this regard, reliance placed upon Taipack Limited (supra) by
the Respondent also requires consideration. In the said case, this Court
found that the arbitration stipulation relied upon by the claimant was
vague and incomplete and that the parties had exchanged documents
containing inconsistent terms. The Court, therefore, held that there
was no consensus between the parties to refer their disputes to
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arbitration.
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27. The facts of the present case, insofar as the language of the
arbitration clause is concerned, are materially distinguishable. The
clause expressly provides for sole arbitration and identifies the
authority competent to appoint the Arbitrator. There is no material in
the pleadings before this Court to suggest that the Respondent had
issued a purchase order containing a contradictory dispute-resolution
mechanism. The ratio of Taipack (supra) , therefore, cannot be
mechanically applied to invalidate the arbitration clause in the present
case.
28. Similarly, the judgment in Rajesh Jain (supra) does not lay
down that a person who is not a member of the Paper Merchants
Association is, in all circumstances, incapable of entering into an
arbitration agreement which identifies the Association as the
appointing authority. The said judgment considered the applicability
of the Association’s constitution and regulations where both parties
were members and had agreed to be bound by those regulations. It
distinguished Taipack (supra) on its facts, particularly having regard
to the absence of membership of one party and the existence of
contradictory contractual stipulations.
29. The distinction which emerges from the aforesaid decisions is
that membership of the Association may be relevant for determining
whether its internal rules and regulations bind a particular party.
However, membership is not, by itself, the only legally permissible
basis on which a person may agree to have disputes referred to an
arbitral mechanism administered or facilitated by an Association. A
party may independently agree, through a written contractual
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stipulation, to refer its disputes to an arbitral tribunal appointed by a
specified third-party institution or body.
30. In the present case, the arbitration clause expressly identifies
the Paper Merchants Association as the forum for arbitration and its
Executive Committee as the appointing authority. The fact that the
Respondent’s membership of the Association has not been established
cannot, without further examination of the contractual stipulation and
the parties’ conduct, be treated as conclusive proof that no arbitration
agreement existed between them.
II. Whether the appointment of the Arbitrator was hit by
Section 12(5) of the A&C Act:
31. Having considered the existence of the arbitration agreement, it
is necessary to examine whether the appointment of the Sole
Arbitrator was contrary to the statutory requirements governing
independence and impartiality.
32. Section 12(5), introduced by the Arbitration and Conciliation
(Amendment) Act, 2015, provides that notwithstanding any prior
agreement to the contrary, a person whose relationship with the
parties, counsel or the subject matter of the dispute falls within any of
the categories specified in the Seventh Schedule shall be ineligible to
be appointed as an Arbitrator.
33. The proviso to Section 12(5) permits the parties, subsequent to
disputes having arisen between them, to waive the applicability of the
said provision by an express agreement in writing.
34. The statutory prohibition under Section 12(5), therefore, is
attracted where the Arbitrator himself or herself has a relationship
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with the parties, their counsel or the subject matter of the dispute
which falls within one of the categories enumerated in the Seventh
Schedule. The mere fact that the appointment has been made through
a particular contractual mechanism does not, by itself, establish that
the person appointed is ineligible under the said provision.
35. In Perkins Eastman Architects DPC & Anr. v. HSCC (India)
14
Ltd. , the Supreme Court held that a person who is himself ineligible
to act as an Arbitrator cannot exercise the power to nominate another
person as an Arbitrator. The principle was founded upon the
requirement that a party interested in the outcome of the dispute
cannot have exclusive control over the appointment of the person who
is to adjudicate that dispute.
36. The aforesaid principle has also been considered by the
Supreme Court in Bhadra International (India) Pvt. Ltd. v. Airports
15
Authority of India , wherein the Court examined the scope of
Section 12(5), the relationship between Sections 12(5) and 14(1)(a) of
the A&C Act, and the requirement of an express agreement in writing
for waiver of statutory ineligibility. The Supreme Court reiterated that
an Arbitrator who falls within the categories specified in the Seventh
Schedule is de jure ineligible to act, and that the statutory requirement
of waiver cannot be dispensed with by merely relying upon the
conduct or participation of the parties.
37. The aforesaid judgments, however, proceed on the premise that
the appointment is made by a person who is himself ineligible under
Section 12(5), or that the Arbitrator appointed has a relationship

14
(2020) 20 SCC 760
15
2026 INSC 6
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falling within the Seventh Schedule. They do not render every
appointment made through a contractual mechanism invalid merely
because one of the parties to the dispute is a member of the institution
or association which has made the appointment.
38. In the present case, the arbitration clause does not confer the
power of appointment upon the Appellant. It specifically provides that
the disputes shall be referred to the Paper Merchants Association and
that the Arbitrator shall be appointed by its Executive Committee. The
distinction between the Appellant and the appointing authority is
material. The Appellant may have invoked the arbitration clause, but
the appointment itself was made by the Executive Committee.
39. The learned Commercial Court has proceeded on the basis that,
since the Respondent was not shown to be a member of the
Association, the appointment made by the Executive Committee at the
instance of a member of the Association was necessarily unilateral and
consequently hit by Section 12(5). In doing so, the learned
Commercial Court has not identified the particular relationship of the
appointed Arbitrator with either party which would attract any of the
categories specified in the Seventh Schedule of the A&C Act.
40. There is no finding in the Impugned Order that the learned Sole
Arbitrator was an employee, consultant, advisor or had any other
business relationship with the Appellant. Equally, there is no finding
that the Arbitrator was himself a member of the management of the
Appellant or otherwise had an interest in the outcome of the dispute.
The Impugned Order does not identify any specific item of the
Seventh Schedule which rendered the Arbitrator ineligible.
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41. The distinction between a unilateral appointment by a party and
an appointment by an independent third-party body cannot be
overlooked. In the former situation, the appointing party itself
exercises control over the constitution of the Arbitral Tribunal. In the
latter, the appointment is made by an independent body in accordance
with the mechanism agreed upon between the parties. The latter
arrangement cannot be equated with the former merely because one
party happens to be a member of the institution concerned.
42. It is also necessary to clarify that the fact that the Executive
Committee was the appointing authority does not, by itself, establish
that the appointment was necessarily neutral. If the constitution or
rules of the Association, or the circumstances surrounding the
appointment, demonstrate that the appointing authority was effectively
controlled by or was acting in the interest of one of the parties, the
appointment would have to be examined in the light of the principles
of independence, impartiality and equal treatment embodied in
Sections 12 and 18 of the A&C Act. However, such a conclusion must
be founded upon material demonstrating the relevant relationship or
control and cannot be presumed merely from the membership of one
party.
43. The Appellant’s submission that both parties had equal rights to
refer their disputes to the Association also requires some qualification.
The arbitration clause provides for appointment by the Executive
Committee and not by either of the parties. Thus, the parties did not
possess an independent right to appoint the Arbitrator. Their right
under the clause was to invoke the agreed arbitral mechanism.
Whether the Executive Committee was, in fact, an independent
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appointing authority is a separate consideration from the question
whether the Arbitrator appointed by it was ineligible under Section
12(5).
44. The mere absence of proof of the Respondent’s membership of
the Association cannot, therefore, be treated as sufficient to establish
that the Executive Committee was an interested party or that the
Arbitrator appointed by it fell within any of the categories of the
Seventh Schedule. The learned Commercial Court has conflated the
question of membership and the applicability of the Association’s
internal regulations with the distinct statutory question of the
Arbitrator’s eligibility under Section 12(5).
45. Insofar as the Respondent has relied upon M.V. Omni Projects
(supra) , the said judgment concerned an appointment mechanism
under which the power to appoint the Sole Arbitrator was vested in an
authority of one of the parties to the dispute. Similarly, in Narendra
Kumar Prajapat (supra) , the Supreme Court declined to interfere
where the Arbitrator had been unilaterally appointed by the Bank and
his ineligibility under Section 12(5) was an admitted position.
46. The aforesaid decisions do not assist the Respondent in the
absence of material demonstrating that the Executive Committee of
the Paper Merchants Association was itself an interested or ineligible
appointing authority, or that the Arbitrator appointed by it suffered
from any disqualification under the Seventh Schedule of the A&C
Act. The factual foundation necessary to attract the ratio of those
decisions is absent in the present case.
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47. It is also pertinent to note that the requirement of an express
agreement in writing under the proviso to Section 12(5) arises only
where the Arbitrator is otherwise rendered ineligible under the
substantive provision. The proviso cannot be invoked independently
to invalidate an appointment where no relationship falling within the
Seventh Schedule has been established in the first place.
48. Consequently, the absence of a separate written agreement
executed after the disputes had arisen cannot, by itself, render the
appointment invalid. The question of waiver would arise only after the
statutory ineligibility contemplated under Section 12(5) has been
established. The learned Commercial Court has not undertaken this
anterior exercise.
49. At the same time, the Appellant’s contention that the
Respondent’s failure to participate in the arbitral proceedings or to
challenge the award under Section 34 would amount to a waiver of
any objection under Section 12(5) cannot be accepted. In Bhadra
International (supra) , the Supreme Court has reiterated that the
statutory requirement of an express agreement in writing cannot be
substituted by acquiescence, participation or conduct. Thus, the
Respondent’s absence from the arbitral proceedings would not, by
itself, cure an appointment which is otherwise hit by Section 12(5).
50. The finding of the learned Commercial Court that the
appointment of the Sole Arbitrator was necessarily unilateral and
contrary to Section 12(5), therefore, cannot be sustained on the
reasoning adopted in the Impugned Order.

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III. Scope of interference by an Executing Court:
51. The next question which arises is whether the learned
Commercial Court was justified in examining the validity of the
arbitral award in execution proceedings, particularly when the
Respondent had not instituted any proceedings under Section 34.
52. Section 35 of the A&C Act provides that an arbitral award shall
be final and binding upon the parties. Section 36 provides for
enforcement of the award in the same manner as if it were a decree of
the Court, subject to the statutory requirements contained therein.
53. The scope of jurisdiction of an executing court has been
explained by the Supreme Court in Punjab State Civil Supplies
(supra) . The Supreme Court held that an executing court is ordinarily
required to execute the decree as it stands and cannot go behind it or
undertake an inquiry into the merits of the adjudication. However, the
executing court retains a limited power to examine jurisdictional
issues which go to the root of the decree and may render it a nullity.
54. The aforesaid principle is relevant in the context of an arbitral
award as well. An award which is sought to be enforced under Section
36 of the A&C Act cannot ordinarily be subjected to a fresh
examination on merits in execution proceedings. At the same time,
where an objection is raised that the award is a nullity for want of
jurisdiction, the executing court is not precluded from examining such
an objection within the limited scope recognised by law.
55. In the present case, the Respondent’s objection was not founded
upon any alleged error in the appreciation of evidence by the
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Arbitrator or any infirmity in the computation of the amount awarded.
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The objection went to the very constitution of the Arbitral Tribunal
and the authority of the Arbitrator to adjudicate the dispute. Such an
objection, if established, would go to the root of the award and could
not be rejected merely on the ground that the Respondent had not
preferred a petition under Section 34.
56. The Supreme Court in Bhadra International (supra) has also
reiterated that an objection concerning the inherent jurisdiction of an
Arbitral Tribunal cannot be treated as waived merely because it was
not raised at an earlier stage of the proceedings. The distinction,
however, is between an objection which genuinely establishes
inherent lack of jurisdiction and an objection which merely seeks to
reopen an issue that has attained finality.
57. Therefore, the Appellant’s contention that the executing court
had no jurisdiction whatsoever to examine the objection raised by the
Respondent cannot be accepted. The learned Commercial Court was
entitled to examine whether the award was a nullity for want of a valid
arbitration agreement or on account of the appointment of an
ineligible Arbitrator. However, such examination had to remain
confined to the jurisdictional defect alleged and could not extend to a
general reassessment of the arbitral proceedings.
58. The fact that the Respondent did not institute proceedings under
Section 34 within the prescribed period would ordinarily result in the
award attaining finality and becoming enforceable under Section 36 of
the A&C Act. However, the expiry of the limitation period cannot, by
itself, confer jurisdiction upon an Arbitral Tribunal which inherently
lacked authority to adjudicate the dispute. The question, therefore, is
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not merely whether the Respondent failed to challenge the award
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NARAYAN
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within time, but whether the objection raised by him establishes that
the award was a nullity.
59. The reliance placed by the Appellant upon Sahayaraj (supra) ,
to contend that a party which remained absent during arbitration and
did not challenge the award under Section 34 cannot subsequently
raise objections in execution, need not be examined any further. The
present decision does not proceed on the basis that the Respondent
waived a statutory objection by remaining absent. It proceeds on the
basis that the particular statutory disqualification relied upon by the
Respondent has not been established.
CONCLUSION:
60. For the reasons discussed hereinabove, the Respondent has
failed to establish that the appointment of the Sole Arbitrator by the
Executive Committee of the Paper Merchants Association violated
Section 12(5) of the A&C Act merely because the Respondent was not
a member of the Association. Therefore, the learned Commercial
Court could not have declared the arbitral award a nullity on this
ground alone.
61. Consequently, the Impugned Order dated 28.01.2025 passed by
the learned District Judge (Commercial) in Execution (Comm.)
No.14/2024 is set aside.
62. The objections filed by the Respondent/Judgment Debtor,
insofar as they challenge the enforceability of the arbitral award solely
on the ground of an alleged unilateral appointment attracting Section
12(5) of the A&C Act, are rejected.
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NARAYAN
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63. The execution petition is restored to its original number and is
remitted to the learned Commercial Court for proceeding further in
accordance with law. The learned Commercial Court shall proceed
with the execution of the award without reopening the question of the
validity of the appointment on the grounds decided herein.
64. The learned Commercial Court shall consider any other
permissible objections, if surviving and not already adjudicated,
strictly within the limited jurisdiction available to an executing court.
65. The present Appeal is allowed in the aforesaid terms. The
pending application also stands closed.

ANIL KSHETARPAL, J.

BHARAT PARASHAR, J.
NOVEMBER 06, 2026
s.godara/shah
Signature Not Verified
Signed By:JAI
NARAYAN
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