Debtors can challenge unilateral arbitrator appointments during execution, Madras High Court rules; award declared void

The petitioners, judgment-debtors under an arbitral award, challenged an executing court’s order directing the sale of attached properties under Order XXI Rule 66 CPC.

They objected that the award was unenforceable because the arbitrator had been appointed unilaterally.

The executing court rejected the objection, finding no proof of unilateral appointment.

The petitioners sought revision under Section 115 CPC.

The award is identified in the concluding order as dated 21 February 2022.

Whether a judgment-debtor may challenge an award’s enforceability in execution proceedings on the ground that the arbitrator was appointed unilaterally, despite not having challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996.

Whether the executing court could refuse enforcement where the arbitrator’s unilateral appointment was admitted and the award was therefore alleged to be void for lack of inherent jurisdiction.

The Court applied Section 115 CPC in reviewing the executing court’s order and considered the execution court’s authority to determine objections to executability, including the principle under Section 47 CPC that a decree may be challenged in execution where it is void for lack of inherent jurisdiction.

It relied on TRF Ltd. v. Energo Engineering Projects Ltd., Perkins Eastman Architects DPC v. HSCC (India) Ltd. and Central Organisation for Railway Electrification v. ECI SPIC SMO MCML (JV) (“CORE II”) for the proposition that unilateral appointment of an arbitrator is impermissible.

It also relied on Bhadra International (India) Pvt. Ltd. v. Airports Authority of India for the proposition that an objection to inherent lack of jurisdiction may be raised at any stage, and Electrosteel Steels Ltd. v. Ispat Carrier Pvt. Ltd. in support of entertaining a plea of nullity in execution.

The Court held that the absence of a Section 34 challenge did not preclude raising the plea in execution where the award was treated as a nullity.

The Court treated the arbitrator’s unilateral appointment as admitted and concluded that it went to the tribunal’s inherent jurisdiction, rendering the proceedings and award non est.

It rejected the decree-holder’s argument that “any stage” was limited to arbitral or Section 34 proceedings, and held that the execution court could consider the objection because it concerned the award’s executability, not a review of its merits.

It also held that failure to file a Section 34 application after learning of the award did not bar the execution-stage objection.

The judgment states that CORE II’s protection for tribunals constituted before 8 November 2024 did not apply because the award was after that date.

However, the judgment later identifies the award as dated 21 February 2022, creating an apparent inconsistency in its chronology.

It clarified that the respondent could pursue recovery through other lawful proceedings; the connected miscellaneous petition was closed, with no order as to costs.