The High Court of Calcutta, while disposing of an application filed by the award debtor under Section 36 of the Arbitration and Conciliation Act, 1996 for enforcement of an ex parte award, held that the courts, in a proceeding under Section 11 of the Act, can exercise the jurisdiction to nullify the appointments made by the authorities when there has been failure of procedure or ex facie contravention of the inherent facets of the Arbitration Clause.
Brief Facts:
The award-debtor challenges the maintainability of the same on the ground that the appointment of the Arbitrator was unilateral on the part of the award-debtor, which vitiates the inherent jurisdiction of the Arbitrator, who was de jure ineligible in terms of Section 12(5), read with the Seventh Schedule, of the 1996 Act, to pass the award. Accordingly, it is contended that the award itself, being a nullity, was void ab initio.
Contentions of the Respondent:
The learned counsel appearing on behalf of the Respondent submitted that Section 36 of the 1996 Act creates a legal fiction regarding enforcement of an award being in terms of the Code of Civil Procedure. However, Section 47 of the Code of Civil Procedure is not applicable, as Section 34 itself prescribes the grounds of a challenge to an arbitral award.
Observations of the court:
The court noted that even a unilateral appointment of the Arbitrator, without any further allegation of bias, renders the Arbitrator ineligible.
The Court observed that the courts, in a proceeding under Section 11 of the Act, can exercise the jurisdiction to nullify the appointments made by the authorities when there has been failure of procedure or ex facie contravention of the inherent facets of the Arbitration Clause. The Court said that the ineligibility of the Arbitrator cannot be set up as a ground for inexecutability of an award in a proceeding under Section 36 of the 1996 Act for the first time.
The Court observed that the petitioner chose not to challenge the ineligibility of the Arbitrator before the Arbitrator and/or prefer a challenge under Section 34 of the 1996 Act against the final award of the Arbitrator. Having thus kept silent all along, the award-debtor cannot, for the first time, in the proceeding for enforcement of the award under Section 36 of the 1996 Act, raise the issue of ineligibility. Hence, the last issue is also decided against the award-debtor.
The decision of the Court:
The Calcutta High Court, disposing of the petition, held that the objections raised as to the maintainability of the enforcement application under Section 36 of the 1996 Act are turned down.
Case Title: Kotak Mahindra Bank Limited v Shalibhadra Cottrade Pvt. Ltd. And Ors.
Coram: Hon’ble Justice Sabyasachi Bhattacharyya
Case No.: Execution Case No. 193 2019
Advocate for the Petitioner: Mr. Ritoban Sarkar
Advocate for the Respondent: Mr. Reetobroto Kumar Mitra
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