Facts
The judgment concerned objections raised in execution proceedings against arbitral awards obtained by M/s. S. E. Investments Ltd., now known as Paisalo Digital Limited.
Source reference: [pp. 7–9, paras. 8–10]The judgment-debtors contended that the arbitrators had been appointed unilaterally before 23 October 2015 and that, in light of Bhadra International (India) Pvt. Ltd. v. Airport Authority of India, the appointments were void ab initio, rendering the awards incapable of execution.
Source reference: [pp. 7–9, paras. 8–10]The decree-holder argued that the 2015 amendments to the Arbitration and Conciliation Act, 1996, particularly Section 12(5), were prospective and that pre-23 October 2015 appointments made in accordance with the contractual arbitration clause had historically been upheld.
Source reference: [pp. 24–26, para. 14]The Execution Court framed two questions: whether unilateral appointment before 23 October 2015 was without jurisdiction and whether the executing court could examine that issue where the award had not been challenged.
Source reference: [p. 2, para. 1]The High Court classified unilateral appointments into three categories: appointments by an evidently interested person; appointments made by a party pursuant to contractual authority; and appointments made without any contractual authority or consent of the other party.
Source reference: [p. 27, paras. 17–18]The execution applications involved awards arising from arbitrations invoked before 23 October 2015.
Source reference: [pp. 8–9, paras. 9–10]Issues
1. Whether a unilateral appointment of an arbitrator made before 23 October 2015 was without jurisdiction and consequently rendered all proceedings and the resulting award void ab initio?
Source reference: [p. 2, para. 1(i); pp. 27–28, paras. 17–20]2. Whether, where the award had not been challenged under the statutory remedies, the executing court could examine the validity of the arbitrator’s appointment and refuse execution of the award?
Source reference: [p. 2, para. 1(ii); pp. 36–37, paras. 25–26]Law Applied
The court applied Sections 7, 11, 12, 13, 16, 18, 21 and 34 of the Arbitration and Conciliation Act, 1996, as they stood before and after the Arbitration and Conciliation (Amendment) Act, 2015.
Source reference: [pp. 56–58, para. 52(i); pp. 66–67, paras. 55–57]Section 21 determines commencement of arbitral proceedings by reference to receipt of the notice invoking arbitration, while Section 26 of the 2015 Amendment makes the amendments prospective in relation to arbitral proceedings commenced on or after 23 October 2015.
Source reference: [pp. 56–58, para. 52(i); pp. 66–67, paras. 55–57]Section 12(5), read with the Seventh Schedule, introduced an express statutory disqualification for specified categories of arbitrators from 23 October 2015 and could be waived only by an express written agreement made after the disputes arose.
Source reference: [pp. 4–6, paras. 4–6; p. 36, para. 25]Before the amendment, challenges based on lack of independence, impartiality or bias were available under Sections 12(3) and 13, and failure to raise such objections could attract waiver under Section 4.
Source reference: [pp. 40–42, paras. 32–33]Relying on Datar Switchgears Ltd. v. Tata Finance Ltd., ACE Pipeline Contracts (P) Ltd. v. Bharat Petroleum Corporation Ltd., Indian Oil Corporation Ltd. v. Raja Transport Pvt. Ltd., Aravali Power Co. (P) Ltd. v. Era Infra Engineering Ltd., Rajasthan Small Industries Corporation Ltd. v. Ganesh Containers Movers Syndicate, S.P. Singla Construction Pvt. Ltd. v. State of Himachal Pradesh, Parmar Construction Company v. Union of India, and the Constitution Bench decision in CORE v. ECI SPIC SMO MCML (JV), the court held that pre-2015 appointments made pursuant to a named arbitrator, designation, or contractual authority to appoint were generally valid.
Source reference: [pp. 27–35, paras. 20–23; pp. 38–40, paras. 29–31]Dharma Prathishthanam v. Madhok Construction (P) Ltd. established the limited rule that where the arbitration clause neither named an arbitrator nor authorised a party to appoint one, a unilateral appointment without the other party’s consent was invalid.
Source reference: [pp. 47–49, paras. 39–42; pp. 68–69, para. 52(vi)]Bhadra International was confined to appointments made after 23 October 2015 in violation of Section 12(5), and its observations could not be read as retrospectively invalidating all pre-2015 appointments.
Source reference: [pp. 42–44, paras. 35–38; pp. 49–51, para. 43]Reasoning
The court distinguished between a genuinely non-consensual appointment and an appointment made pursuant to the parties’ pre-existing contractual agreement.
Source reference: [pp. 47–49, paras. 39–42]In the third category—where the contract did not name an arbitrator or confer appointment authority on either party—Dharma Prathishthanam applied because both the constitution of the tribunal and the reference of the dispute required consent; a unilateral appointment in such circumstances was without jurisdiction.
Source reference: [pp. 47–49, paras. 39–42]However, where the contract named an arbitrator, specified a designation, or authorised one party or an identified authority to appoint, the parties had already consented to that appointment procedure.
Source reference: [pp. 34–40, paras. 22–31]Such appointments had repeatedly been upheld under the pre-2015 legal regime, and Section 12(5) could not be applied retrospectively to invalidate them.
Source reference: [pp. 34–40, paras. 22–31]The court held that Bhadra International dealt with a post-23 October 2015 invocation and an appointment contrary to the newly enacted Section 12(5).
Source reference: [pp. 42–43, paras. 35–37; pp. 49–51, para. 43]Its statement that the 2015 amendment made previously implicit principles explicit did not mean that all pre-2015 contractual appointments were void.
Source reference: [pp. 42–43, paras. 35–37; pp. 49–51, para. 43]The court also relied on Section 26 and the consistent Supreme Court authorities holding that the amended provisions were prospective.
Source reference: [pp. 56–61, paras. 52(i)–(ii)]For pre-2015 appointments, any objection to independence, impartiality or bias had to be raised through the mechanisms under Sections 12 and 13 and, if necessary, in proceedings under Section 34.
Source reference: [pp. 36–42, paras. 25–34]Where no such challenge was made, or where it failed, the judgment-debtor could not ordinarily raise the objection for the first time in execution and thereby defeat enforcement of the award.
Source reference: [pp. 36–42, paras. 25–34]The court further held that the decisions in which awards had been set aside under Section 34 on the facts of particular cases did not establish that every unchallenged pre-2015 unilateral appointment was void ab initio.
Source reference: [pp. 52–55, paras. 47–50]Judicial observations had to be read in their factual and statutory context and not as independent statutory propositions.
Source reference: [pp. 42–47, paras. 35–38]Holding
The court answered the first issue by holding that a unilateral appointment made before 23 October 2015 was not without jurisdiction where the arbitration agreement named the arbitrator, identified the arbitrator by designation, or authorised one party or an identified authority to appoint the arbitrator.
Proceedings and awards arising from such appointments were therefore not void ab initio merely because the appointment was unilateral.
Source reference: [p. 70, para. 54]The exception was a case falling within the Dharma Prathishthanam category, namely, where the agreement contained no named arbitrator and gave no contractual authority to either party to appoint, but one party nevertheless made an appointment without the other party’s consent; such an appointment and the resulting award could be treated as void.
Source reference: [p. 70, para. 54]The second issue did not generally arise in relation to valid pre-2015 contractual appointments.
Source reference: [p. 70, para. 54]In the limited case of a non-consensual appointment lacking contractual authority, the executing court could examine the defect and treat the award as void; however, if the appointment had already been challenged unsuccessfully, the award could not subsequently be treated as void in execution.
Source reference: [p. 70, para. 54]The matters were directed to be listed for further consideration on 15 September 2026.
Source reference: [p. 71, para. 55]Original Court PDF
S E Investments Limited (Now Known As Paisalo Digital Limited)vsSezal Glass Limited (Formerly Known As Sejal Architectural Glass Limited) (Through Its Directors)
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