[Cites 13, Cited by 0]
Bombay High Court
L And T Finance Ltd (Formerly Known As L ... vs Sangeeta Bhansali (Borrower) And Anr on 17 January, 2026
2026:BHC-OS:1344
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f
Digitally
signed by
KANCHAN
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
KANCHAN VINOD
VINOD MAYEKAR
MAYEKAR Date:
2026.01.17
18:43:51
+0530
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL EXECUTION APPLICATION (L) NO. 5277/2022
ALONGWITH
INTERIM APPLICATION NO. 1950/2022
IN
COMMERCIAL EXECUTION APPLICATION (L) NO. 5277/2022
L & T Finance Ltd. )
(Formerly Known As L & T Housing )
Finance Ltd) )
Having its registered office at )
Brindavan, Plot No. 177, CST Road, )
Kalina Santacruz (East), )
Mumbai - 400 098 )
HEAD OFFICE AT )
th
15 floor, Rupa Solitaire, Office Nos. 1508 )
and 1509, Building No.A-1, Sector -1, )
Mahape, Millennium Business Park, )
Navi Mumbai - 400 710 )
BRANCH OFFICE )
th
5 floor, DCM Building, )
16 Barakhamba Road Connaught Place, )
New Delhi - 110 001 ) ..... Applicant
(Judgment Creditor)
VS
1) Sangeeta Bhansali (Borrower) )
A-102, B Wing, Juhu Trishul Building, )
Gulmohar Cross Road No.6, JVPD Scheme, )
Vile Parle (W), Mumbai )
2) Aditya Bhansali (Co-borrower) )
A-102, B Wing, Juhu Trishul Building, )
Gulmohar Cross Road No.6, JVPD Scheme, )
Vile Parle (W), Mumbai ) ..... Respondents
(Judgment Debtor)
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Adv. Disha Karambar i/b. Disha Karambar & Associates for the
Applicant.
Adv. Abhishek Sawant a/w. Adv. Vaishali Sanghavi, Adv. Pratik Shetty,
Adv. Ameet Mehta i/b. M/s.Solicis Lex for the Respondent.
Adv. Rubin Vakil - Amicus Curiae is present.
CORAM : RAJESH S. PATIL, J.
RESERVED ON : 14 JANUARY, 2026
PRONOUNCED ON : 17 JANUARY, 2026
JUDGMENT :
-
1) The dispute between the parties is arising out of Loan
Agreements. The Respondent no. 1 is Borrower who had approached
and applied for mortgaged loan facilities from the Applicant-claimant.
The Respondent no. 2 is the Co-Borrower for the loan advanced to the
Respondent no. 1. Since the dispute arose between the parties under
the said agreement, the claimant invoked Arbitration Clause, hence
the lender - L & T Finance, appointment Sole Arbitrator, and the
matter was referred to Arbitration.
2) Before the Sole Arbitrator, the Judgment Debtor initially
raised the issue of unilateral appointment of Sole Arbitrator, by filing
an Application under Sections 12, 16 r/w. ground no. 22 of the Fifth
Schedule of the Arbitration and Conciliation Act, 1996 (for short "Act,
1996"). The said Application filed by the Judgment Debtor was
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rejected by the Sole Arbitrator by its Order dated 23 July, 2019.
3) Similarly, before the Sole Arbitrator, the Judgment Debtor
had filed an Application u/s 13(2) of the Act, 1996, for termination of
the mandate of the Sole Arbitrator. The said Application filed by the
Judgment Debtor was also rejected by an Order dated 30 July, 2019.
4) The Sole Arbitrator proceeded further with the arbitration
hearing and by his Order dated 7 August, 2019 passed an Award
directing the Judgment Debtor to pay to the Claimant a sum of
Rs.1,01,12,482/- and a sum of Rs.1,57,559/- in respect of two loan
accounts and further to pay interest on the said principal amount
along with costs and fees of the Arbitrator.
5) Admittedly, the Judgment Debtor did not challenge the
Award by filing an Application under Section 34 of the Act, 1996.
6) Since the decreetal amount was not paid, the Claimant,
filed this Commercial Execution Application before this Court, in
which an Interim Application for disclosure of assets along with other
reliefs was sought. In reply to the said Interim Application, the
Judgment Debtor has once again raised an issue about Unilateral
appointment of the Sole Arbitrator is void ab-initio.
7) Learned Single Judge of this Court (Coram : Abhay Ahuja,
J.) by order dated 14 October, 2025 appointed Counsel Mr. Rubin
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Vakil as an Amicus Curiae in the present proceeding.
8) I have heard learned Counsel for the Decree Holder,
Judgment Debtor and learned Amicus Curiae. I have also gone
through the documents on record and judgments cited by the counsel.
9) Supreme Court in its recent judgment, decided on 5
January, 2026, in the matter of Bhadra International (India) Pvt. Ltd.
and others vs. Airport Authority of India, Civil Appeal No. 37-38 of
2026, was dealing with the facts where the sole arbitrator passed an
Award whereby claims and counter claims of the respective parties
were rejected. Aggrieved by the dismissal of its claim, the appellant
challenged the award u/s 34 before the Single Judge of Delhi High
Court. While the said application u/s 34 was pending, the appellant
sought to amend its application and to contend that since the
arbitrator was appointed 'unilaterally', the award was liable to be set
aside. The said amendment application of the appellant was rejected
by the Single Judge. Being aggrieved by the said rejection, the
appellant preferred an appeal u/s 37, before the Division Bench,
which was also dismissed, pursuant to which the appellant preferred
an SLP before the Supreme Court.
10) The Supreme Court by its judgment dated 5 January,
2026, allowed the appeal and set aside the impugned judgment
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passed by the Division Bench of the Delhi High Court and further set
aside the award passed by the sole arbitrator. The Supreme Court in
its analysis in paragraph no.33 has held that the principle of 'equal
treatment of the parties' means that the parties must have the
possibility of participating in the constitution of the arbitral tribunal
on equal terms. Further in paragraph no.38, it held that one another
good reason to hold the aforesaid is that, although Section 11(2) of
the Act, 1996, stipulates that the parties are free to agree on a
procedure for appointing the arbitrator, yet this freedom is not
unbridled. The exercise of party autonomy must operate within the
framework of the Act, 1996. In case of conflict, mandatory provisions
of the Act, 1996, prevail over the arbitration agreement. And
furthermore, in paragraph no. 67, it held that once the Chairman is
rendered ineligible by operation of law, he cannot nominate or
appoint another person as an arbitrator. To illustrate, one who cannot
sit on a chair himself cannot authorise another to sit on it either.
11) So also, in paragraph no. 68, it held that the present case
was squarely covered by the decisions of Supreme Court in Perkins
Eastman Architects DPC & ANR. vs. HSCC (India) Limited, reported
in (2020) 20 SCC 760 and Bharat Broadband Network Ltd. vs. United
Telecoms Ltd., reported in (2019) 5 SCC 755. Hence, the unilateral
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appointment of a sole arbitrator is void-ab-initio, and the sole
arbitrator so appointed is de-jure ineligible to act as an arbitrator in
terms of Section 12(5) read with the VII Schedule of the Act, 1996. It
further held in paragraph no.98, that thus, all the High Court
decisions taking a contrary view to the present judgment would stand
overruled.
12) Furthermore, in paragraph nos. 113 and 116, it held that
a challenge to an arbitrator's ineligibility could be raised at any stage
and even in execution. Paragraph nos. 113 and 116 read as under:-
113. A challenge to an arbitrator's ineligibility could be
raised at any stage because an award passed in such
circumstance is non-est, i.e., it carries no enforceability or
recognition in law. We say so because an arbitrator does not
possess the jurisdiction to pass an award. In arbitration, the
parties vest the jurisdiction in the tribunal by virtue of a valid
arbitration agreement and an appointment made in
accordance with the provisions of the Act, 1996. The
jurisdiction is grounded in the consent of the parties as
explained in the foregoing paragraphs of this judgment.
116. This Court, in catena of decisions, has held that
the validity of a decree can be challenged even in execution
proceedings if the court passing such decree lacked subject-
matter jurisdiction over the dispute. As a decree passed by a
court without jurisdiction goes to the root of the matter. Any
decision passed by a court lacking jurisdiction would be coram
non judice, since a court cannot give itself jurisdiction. No act
of the parties can cure an inherent lack of jurisdiction.
[ Emphasis supplied ]
13) The Bench further referred to the earlier judgments of
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Supreme Court passed in (i) Hira Lal Patni v. Kali Nath , reported in
1961 SCC OnLine SC 42, (ii) Hindustan Zinc Ltd. vs. Ajmer Vidyut
Vitran Nigam Ltd., reported in (2019) 17 SCC 82 and (iii) Kiran Singh
vs Chaman Paswan, reported in AIR 1954 SC 340, which held that it
is a fundamental principle well-established that a decree passed by a
court without jurisdiction is a nullity, and that its invalidity could be
set up whenever and wherever it is sought to be enforced or relied
upon, even at the stage of execution and even in collateral
proceedings.
14) The view taken by Supreme Court in Bhadra International
(supra) is squarely applicable to the present proceeding.
15) The learned Amicus Curiae referred to the judgment
passed by the Division Bench of the Delhi High Court in Kotak
Mahindra Bank vs. Narendra Kumar Prajapati reported in 2023 SCC
OnLine Del 3148 in which the Division Bench was considering the
appeal of a bank, which challenged the order passed by the Single
Judge, where the Bank's application for enforcement of an ex-parte
arbitral award was rejected. Considering the judgment passed by
Supreme Court in TRF Ltd. vs. Energo Engineering Projects Ltd.,
reported in (2017) 8 SCC 377, Perkins Eastman (supra), Bharat
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Broadband Network Limited (supra), the Division Bench dismissed the
appeal. The bank carried the matter to the Supreme Court by way of
an Special Leave Petition. The Supreme Court by its order dated 12
December, 2023, dismissed the Special Leave Petition on the ground
that the arbitrator was unilaterally appointed and hence was ineligible
to be appointed as an arbitrator by virtue of Section 12(5) of the Act,
1996. Hence, the view taken by Delhi High Court, was accepted.
16) So also, a Single Judge of the Gujarat High Court in the
case of Samunnati Finance Pvt. Ltd. vs. M/s. Ramdev International
Castor Products Pvt.Ltd. reported in Civil Revision Application No.471
of 2025 dated 1 September, 2025 was deciding a question about
whether an arbitral award passed by an arbitrator who was appointed
by one party only, is executable or not ? Considering the judgment of
the Supreme Court passed in Sunder Dass vs. Ram Prakash reported in
(1977) 2 SCC 622 and the judgment passed in Core vs. ESI Spic SMO
MCML (JV), 2024 SCC OnLine SC 3219 , TRF Limited (supra),
Perkins Eastman (supra), Bharat Broadband Network Ltd (supra), and
the judgment of Division Bench of Delhi High Court in Kotak
Mahindra Bank Ltd. vs. Narendra Kumar Prajapat , reported in 2023
SCC Online Del 3148 , set aside the arbitration award holding that the
award as void ab initio and held that the award cannot be enforced,
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as not a legal decree and thus is non executable.
17) I am in agreement with the view taken by the Delhi High
Court Division Bench and the Single Judge of Gujarat High Court.
18) As far as the two other authorities referred in the present
proceedings, one of which was decided by me i.e. M/s. Truly Pest
Solution Private Limited vs. Principal Chief Mechanical Engineering
(P.C.M.E.) Central Railway dated 11 November, 2024 in Arbitration
Petition No. 43 of 2023, in paragraph no. 19, it has been specifically
recorded by me that the claimants have by letter dated 18 December,
2020 signed waiver form and on their signature, they had sent it
across to the respondents (Railways). The waiver letter also had a
covering letter of the claimants wherein the claimants repeated its
desire to waive as per the provisions of the, proviso to section 12(5) of
the Arbitration Act.
18.1) Single Judge of Madras High Court in Sundaram Finance
Ltd. vs. S.M.Thangaraj reported in 2025 SCC OnLine Mad 5428 has
held that the executing court cannot go behind the decree unless it is
shown that it was passed by a court inherently lacking jurisdiction.
The learned Single Judge according to me in a true sense did not
consider the findings recorded by the Supreme Court in TRF Limited
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(supra) and Perkins Eastman (supra), though referred. And in any
case, in the judgment of Bhadra International (supra) passed recently
by the Supreme Court, in paragraph no. 98, it held that all the High
Courts decision taking a contrary view would stand overruled.
Therefore, in my view, even the finding recorded by the Single Judge
of Madras High Court in Sundaram Finance Ltd. (supra) will not be
helpful to the applicant in the present proceedings.
19) Therefore, considering the law laid down by the Supreme
Court specifically in Bhadra International (supra), I have reached to a
conclusion that the Award and the Commercial Execution Application
needs to be set aside.
20) Hence, Arbitral Award dated 7 August, 2019 passed by
the sole arbitrator is set aside and the commercial execution
application also stands dismissed.
20.1) In sequel, interim application, also stands disposed of
accordingly.
21) It would be open to the parties to initiate fresh arbitration
proceedings in accordance with law.
22) As far as limitation is concerned, the period from
invocation of arbitration till today be excluded in initiating fresh
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arbitration proceedings.
23) This Court also expresses its appreciation for the valuable
assistance and contribution rendered by the learned Amicus Curiae,
Mr. Rubin Vakil.
(RAJESH S. PATIL, J.)
