Kotak Mahindra Bank Limited vs Shalibhadra Cottrade Pvt. Ltd. And Ors
2024 Latest Caselaw 2237 Cal/2

Calcutta High Court

Kotak Mahindra Bank Limited vs Shalibhadra Cottrade Pvt. Ltd. And Ors on 2 July, 2024

Author: Sabyasachi Bhattacharyya

Bench: Sabyasachi Bhattacharyya

                  IN THE HIGH COURT AT CALCUTTA
                  Ordinary Original Civil Jurisdiction
                           ORIGINAL SIDE

The Hon'ble Justice Sabyasachi Bhattacharyya

                     Execution Case No. 193 2019

                KOTAK MAHINDRA BANK LIMITED
                            VS
           SHALIBHADRA COTTRADE PVT. LTD. AND ORS.

     For the award-holder     :     Mr. Ritoban Sarkar, Adv.
                                    Ms. Shrayashee Das, Adv.
                                    Mr. Rohan Kumar Thakur, Adv.
                                    Mr. Paritosh Sinha, Adv.

     For the
     respondent nos.2 and 3 :       Mr. Reetobroto Kumar Mitra, Adv.

Mr. Aditya Kanodia, Adv.

Ms. Shreya Trivedi, Adv.

     Hearing concluded on     :     25.06.2024

     Judgment on              :     02.07.2024

     Sabyasachi Bhattacharyya, J:-

1. The petitioner has preferred an application under Section 36 of the

Arbitration and Conciliation Act, 1996 (for short, "the 1996 Act") for

enforcement of an ex parte award. 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. Hence, even without

any challenge under Section 34 of the 1996 Act having been filed, the

inexecutability of the award can be set up as a defence in a proceeding

for enforcement of the same.

2. Learned counsel for the award-debtor relies on the language of the

Section 36 of the 1996 Act, in particular sub-section (1) thereof, in

support of his contentions.

3. Learned counsel for the award-debtor places reliance on the Judgment

of Bharat Broadband Network Ltd. v. United Telecoms Ltd., reported at

(2019) 5 SCC 755, where the Supreme Court observed that in cases

which fall under Section 12(5), Section 14(1)(a) of the 1996 Act gets

attracted inasmuch as the Arbitrator becomes, as a matter of law (i.e.

de jure), unable to perform his functions under Section 12(5), being

ineligible to be appointed as an Arbitrator. This being so, his mandate

automatically terminates and he shall then be substituted by another

Arbitrator, under Section 14(1) itself.

4. Learned counsel for the judgment-debtor next cites a Division Bench

judgment of the Delhi High Court in Kotak Mahindra Bank Ltd. Vs.

Narendra Kumar Prajapat, reported at 2023 SCC OnLine Del 3148,

where the Division Bench found no infirmity with the view of the

Commercial Court which held that an award rendered by a person

who is ineligible to act as an Arbitrator by virtue of Section 12(5) is a

nullity and, therefore, cannot be enforced. It was observed that a

person who is ineligible to act as an Arbitrator lacks the inherent

jurisdiction to render an arbitral award under the 1996 Act. It is trite

law that a decision by any authority which lacks inherent jurisdiction

to make the same cannot be considered as valid and thus, clearly,

such an impugned award cannot be enforced.

5. Learned counsel cites an order passed by the Supreme Court in a

Special Leave Petition filed against such order, which was dismissed,

thereby affirming the same.

6. Learned counsel appearing for the award-debtor next cites

Cholamandalam Investment and Finance Company Ltd. vs. Amrapali

Enterprises and Another, reported at 2023 SCC OnLine Cal 605, where

a co-ordinate Bench of this Court had held that the impugned award

which was passed by a de jure ineligible Arbitrator suffers from a

permanent and indelible mark of bias and prejudice which cannot be

washed away at any stage including the execution proceedings. While

Section 47 of the CPC was held to be not directly applicable, similar

principles have to be applied in cases of awards passed by Arbitral

Tribunals lacking inherent jurisdiction, the learned Single Judge

observed.

7. Learned counsel for the award-debtor then places reliance on an

unreported judgment of this Court in CO Nos. 39 to 42 of 2019 [SRS

Investments Bengal Tiger Ltd. Vs. Rahul Todi and others] where it was

held that as far as the commonality of grounds in the proceedings

under Section 47, CPC and Section 34 of the 1996 Act are concerned,

the same ipso facto does not render the former non-maintainable.

There can very well be grounds as contemplated in Section 34 of the

1996 Act which affords grounds to render the award a nullity,

bringing those within the domain of Section 47 of the CPC as well.

8. Lastly, learned counsel cites TRF Limited Vs. Energo Engineering

Projects Limited, reported at (2017) 8 SCC 377, where the Supreme

Court held, in connection with an application under Section 11(6) of

the 1996 Act, that the Managing Director of the respondent himself,

by virtue of the amended provision introducing Section 12(5),

enumerating disqualification in the Seventh Schedule, could not

appoint an Arbitrator.

9. Learned counsel for the award-holder, on the other hand, argues 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. In support of such contention, learned counsel cites Krishna

Kumar Mundhra v. Narendra Kumar Anchalia, reported at 2003 SCC

OnLine Cal 381. Learned counsel next cites an unreported judgment

of a Co-ordinate Bench of this Court in Eastern Gases Limited Vs.

Usha Martin Limited where the learned Single Judge followed the

proposition laid down in Krishna Kumar Mundhra (supra).

10. Learned counsel next cites a judgment of a learned Single Judge of the

Delhi High Court where it was held that a challenge to an award on

the ground of nullity may be initiated in accordance with Section 34 of

the 1996 Act. However, such objection cannot be countenanced in

enforcement proceedings.

11. Learned counsel next relies on Birat Chandra Dagara v. Orissa

Manganese & Minerals Ltd., reported at 2020 SCC OnLine Ori 5, which

was also upheld by dismissal of an SLP by the Supreme Court. In the

said judgment, the learned Single Judge of the Orissa High Court held

that there is no scope for entertaining an objection regarding

inexecutability within the trappings of Section 47 of the Code of Civil

Procedure in an execution proceeding under the 1996 Act, particularly

in absence of challenge to the award under Section 34 of the Act.

12. Learned counsel also relies on an unreported Division Bench

judgment of the Delhi High Court in the matter of Arjun Mall Retail

Holdings Pvt Ltd & Ors. vs. Gunocen INC. [FAO (COMM) 31/2021 & CM

APPL. 5051/2021] where it was observed that the scope of interference

is very limited under Section 34, confined to patent illegality in the

Arbitral Award. If instead of contesting the respondent's claim before

the learned Arbitrator, the appellants remained mute spectators and

only after losing the battle in arbitral proceedings preferred an appeal

under Section 34, the same was not to be entertained.

13. Learned counsel for the award-holder also relies on Perkins Eastman

Architects DPC and another Vs. HSCC (India) Limited, reported at

(2020) 20 SCC 760, for the proposition that even if a Managing

Director of a party to the Arbitration Agreement himself acts as an

Arbitrator or appoints an arbitrator, the same is violative of Section

12(5) of the 1996 Act. However, in the present case, it is argued that a

third-party, being a learned advocate, was appointed as an Arbitrator,

that too, under the relevant arbitration clause between the parties,

which envisages the appointments of an Arbitrator unilaterally by the

award-holder.

14. Lastly, learned counsel cites an unreported judgment in Kotak

Mahindra Bank Limited Vs. Baahubali Ferro Tech and Power Pvt. Ltd.

and Another, where a co-ordinate Bench held that no challenge could

be raised to an Arbitral Award under the garb of an application under

Section 47 of the Code of Civil Procedure.

15. Thus, the questions which arise for consideration in the present case

are as follows:

i) Whether a unilateral appointment of Arbitrator, without any

further allegation of bias under Section 12(5), read with the

Seventh Schedule of the Arbitration and Conciliation Act, 1996

renders the Arbitrator ineligible;

ii) Whether ineligibility under Section 12(5) of the 1996 Act or

otherwise renders an arbitral proceeding and the consequential

award void ab initio;

iii) a) The scope of applicability of the Code of Civil Procedure, in

particular Section 47, in an enforcement proceeding under

Section 36 of the 1996 Act;

b) Whether ineligibility of the Arbitrator can be set up as a

ground of inexecutability of an award in a proceeding under

Section 36 of the 1996 Act.

Issue:

i) Whether a unilateral appointment of Arbitrator, without

any further allegation of bias under Section 12(5), read

with the Seventh Schedule of the Arbitration and

Conciliation Act, 1996 renders the Arbitrator ineligible.

16. In Bharat Broadband Network Ltd. (supra), the Supreme Court

observed that the proviso to Section 12(5) will only apply if subsequent

to disputes having arisen between the parties, the parties waive the

applicability of the same by an express agreement in writing. Thus,

the Supreme Court laid stress on there being an express agreement in

writing to waive such objection. There is no doubt regarding such

legal proposition.

17. However, in the said case, it was observed by the Supreme Court that

in a case which falls under Section 12(5), Section 14(1)(a) of the Act

gets attracted inasmuch as the Arbitrator becomes, as a matter of law

(i.e. de jure) unable to perform his functions under Section 12(5),

being ineligible to be appointed as an Arbitrator. This being so, his

mandate automatically terminates and he shall be substituted by

another Arbitrator under Section 14(1) itself. Importantly, the

Supreme Court also observed that it is only if a controversy occurs

concerning whether he has become de jure unable to perform his

functions as such that a party has to apply to the court to decide on

the termination on the mandate, unless otherwise agreed by the

parties. In paragraph 20 of the said judgment, it was recorded that

the moment the appellant came to know that the appointment itself

would be invalid, it filed an application before the sole Arbitrator for

termination of his mandate.

18. Thus, it was not a case, like the present one, where the objecting party

waited till the arbitral proceeding was over and did not apply at any

point of time objecting to the jurisdiction or capacity of the Arbitrator.

19. Thus, the broad proposition laid down therein cannot have any direct

relevance on the issue at hand.

20. In the unreported case of Cholamandalam Investment and Finance

Company Ltd. (supra), a learned Single Judge of this Court, while

relying on Bharat Broadband Network Ltd. (supra), observed that

awards passed by a unilaterally appointed Arbitrator are non-est in

the eye of law. While Section 47 of the Code of Civil Procedure is not

directly applicable, guidance has to be sought from the jurisprudence

of the Apex Court vis-à-vis decrees passed while lacking inherent

jurisdiction. The court, while doing so, relied inter alia on the

judgment of Perkins Eastman Architects DPC (supra).

21. In order to decide the first issue in the present case, we have to

consider whether a mere unilateral appointment of Arbitrator, without

any further allegation of bias under Section 12(5), read with the

Seventh Schedule of the 1996 Act, renders the Arbitrator ineligible. In

Perkins Eastman Architects DPC (supra) two categories of cases were

considered - first, where the Managing Director of one of the parties

himself is named as an Arbitrator with an additional power to appoint

any other person as an Arbitrator and the second, where the

Managing Director is not to act as an Arbitrator himself but is

empowered or otherwise to appoint any other person of his choice or

discretion as an Arbitrator. The Supreme Court brought both cases

within the purview of ineligibility. Hence, over and above the criteria

of ineligibility as stipulated in Section 12(5), read with the Seventh

Schedule, the Supreme Court added a further ground of unilateral

appointment as a criterion of ineligibility.

22. In TRF Limited (supra) as well, the Supreme Court held that once the

named Arbitrator becomes ineligible by operation of law (there, the

Managing Director of the respondent), he cannot nominate another

person as an Arbitrator. It was observed that once the identity of the

Managing Director as the sole Arbitrator was lost, the power to

nominate someone else as Arbitrator was obliterated as well.

23. Although it was a case under Section 11 and not under Section 36 of

the 1996 Act, nonetheless, the proposition laid down in the above

judgments unerringly indicates that, in addition to the grounds

specifically mentioned in Section 12(5) read with the Seventh

Schedule, including the ground of bias, unilateral appointment of

Arbitrator by one of the parties itself has also been brought under the

purview of disqualification by ineligibility. Thus, the first issue is

decided in the affirmative, holding that even a unilateral appointment

of Arbitrator, without any further allegation of bias, renders the

Arbitrator ineligible.

Issue:

ii) Whether ineligibility under Section 12(5) of the 1996 Act or

otherwise renders an arbitral proceeding and the

consequential award void ab initio.

24. The next question which is required to be considered is whether the

ineligibility of an Arbitrator under Section 12(5) of the 1996 Act

renders an Arbitral Proceeding and the consequential award void ab

initio. As held above, unilateral appointment by one of the parties has

itself been brought within the purview of ineligibility as an extension

to the grounds enumerated in Section 12(5), read with the Seventh

Schedule. However, it is required to be ascertained whether such

ineligibility, per se, renders the Arbitral Proceeding and the

consequential award void ab initio. Although the issue came up for

consideration in TRF Limited (supra), the court therein was

considering the scope of an application under Section 11(6) of the

1996 Act. It was 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;

in the said case, plea pertaining to statutory disqualification of the

nominated Arbitrator was permitted to be raised.

25. In Perkins Eastman Architects DPC (supra) as well, the court was

considering an appointment under Section 11 of the 1996 Act and it

was observed that unilateral appointment would render ineligible an

Arbitrator. However, in none of the cases, the issue as to whether

such ineligibility goes to the very root of the matter and renders the

Arbitral Proceedings and consequential award void ab initio, if not

taken at any stage before or throughout the Arbitral Proceeding, was

never considered.

26. An important consideration here would be that the proviso to Section

12(5) of the 1996 Act provides an option to the parties, subsequent to

disputes having arisen between them, to waive the applicability of the

sub-section by an express agreement in writing. The said sub-section

itself provides that notwithstanding any prior agreement to the

contrary, any person whose relationship with the parties or counsel or

the subject-matter of the dispute falls under any of the categories

specified in the Seventh Schedule shall be ineligible to be appointed as

an Arbitrator. Thus, the ineligibility or an arbitrator has been made

post facto waivable by the parties.

27. True, if no such express agreement in writing is entered into, the said

ineligibility clause applies. However, the fact remains that the very

existence of such provision for waiver makes the right a waivable right

in principle. On a fundamental premise, as the objection as to

ineligibility has been made waivable under the said proviso, it cannot

be said that such ineligibility is an absolute bar, since an absolute bar

or an inherent lack of jurisdiction would vitiate the entire proceeding

and the consequential award, going to the root of the matter and

rendering the arbitral proceeding void ab initio. Such an inherent lack

of jurisdiction or absolute bar could not be made post facto rectifiable

by waiver in any manner, be it in writing or otherwise.

28. If the bar is absolute, it would vitiate the very premise of assumption

of jurisdiction by the arbitrator and render the proceeding itself and,

hence, the consequential award void ab initio. At the same time, if

such proceeding is void ab initio, that is at the inception, there could

not be any scope of subsequent waiver, by writing or otherwise.

29. Thus, the very fact that the proviso contemplates subsequent waiver

of the objection as to ineligibility also unerringly indicates that the

ineligibility does not render the entire proceeding void ab initio or a

nullity at the inception. If it were to be so, it would be non est and

could not exist in the eye of law. Such a fundamental defect cannot

be cured subsequently even by express waiver in writing.

30. Hence, in view of the provision of waivability under the proviso to

Section 12(5), the bar of ineligibility partakes of a character of not

being an absolute bar which would hit at the root of the very

assumption of jurisdiction at the inception, rendering the award a

nullity.

31. If a contrary interpretation is to be drawn, it would give rise to the

absurdity that in cases where there is a written agreement between

the parties, the proceeding and the consequential award would be

valid whereas in cases where there is no such consent, the invalidity

would revert back to the date of assumption of jurisdiction for

appointment of the Arbitrator, rendering the entire proceeding void ab

initio. Such a contradictory position, leaving it entirely to the whims

of one of the parties to convert a fundamental legal bar applicable at

the inception of a proceeding and an inherent lack of jurisdiction to a

valid proceeding, cannot be read into the statute. It is well-settled

that a provision of a statute cannot be interpreted by attributing

absurdity to the intention of the Legislature.

32. Hence, although unilateral appointment creates an ineligibility, the

same is not of such a high stature as to tantamount to an implicit and

inherent lack of jurisdiction rendering the entire proceedings and the

consequential award a nullity altogether.

33. Thus, this issue is decided in the negative, holding that an ineligibility

of unilateral appointment by one of the parties, which comes within

the broader connotation of Section 12(5) of the 1996 Act, does not

render an arbitral proceeding and the consequential award void ab

initio.

Issue:

iii) a) The scope of applicability of the Code of Civil Procedure,

in particular Section 47, in an enforcement proceeding

under Section 36 of the 1996 Act;

b) Whether ineligibility of the Arbitrator can be set up as a

ground of inexecutability of an award in a proceeding

under Section 36 of the 1996 Act.

34. The above two sub-issues, being interconnected, are taken up together

for adjudication.

35. In order to assess the scope of applicability of the Code of Civil

Procedure, in particular Section 47 thereof, to an enforcement

proceeding under Section 36 of the 1996 Act, the language of Section

36 is to be looked into. The said Section is as follows:

"36. Enforcement.--(1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court.

(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.

(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:

Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908)."

36. Sub-section (1) of Section 36, importantly, provides that subject to the

provisions of sub-section (2), an award shall be enforced in accordance

with the provisions of the Code of Civil Procedure, in the same manner

as if it were a decree of the court.

37. Hence, the two expressions used are "shall be enforced in accordance

with the provisions of the Code of Civil Procedure" and "in the same

manner as if it were a decree of the court".

38. The question which arises is whether such language accommodates

the applicability of the entire plethora of provisions attending the

execution of a decree of a civil court, particularly as enumerated in

Section 47 and Order XXI of the Code of Civil Procedure.

39. A cue can be derived from the fact that sub-section (1) and sub-

section (2) of Section 36 connects the enforcement of an arbitral award

with Section 34. While sub-section (1) provides that enforcement can

be effected only after the expiry of the time for preferring a challenge

under Section 34 for setting aside of the award, sub-section (2) deals

entirely with Section 34, providing that mere filing of such an

application shall not by itself render the award unenforceable unless

the court grants an order of stay in accordance with sub-section (3) of

Section 36. It is sub-section (3) of Section 36 which confers the power

on the court to grant stay of operation of the arbitral award. Hence,

sub-sections (2) and (3) of Section 36, read together, confirms the view

that the enforcement of an award is entirely dependent on an

application under Section 34. Even the power of grant of stay in

connection with an application under Section 34 is conferred on the

executing court by sub-section (3) of Section 36 and not under Section

34 itself. Hence, the inevitable conclusion is that Sections 34 and 36

are linked inextricably within the scheme of the 1996 Act.

40. Seen from such perspective, it is to be considered whether the

expression "shall be enforced", which is to be in terms of the

provisions of the Code of Civil Procedure and in the same manner as if

it were a decree of the court, should be read as restricted only to the

modality of enforcement or whether all the trappings of the relevant

provisions of the Code of Civil Procedure, including Order XXI Rules

97 to 101 and Section 47 of the Code are also made applicable by

virtue of the said expression in Section 36(1) of the 1996 Act. The

former restrictive view is to be favoured due to several reasons.

41. First, Section 5 of the 1996 Act, in no uncertain terms, provides that

notwithstanding anything contained in any other law for the time

being in force, no judicial authority shall intervene except where so

provided in the said Part, that is, Part-I which also includes Sections

34 and 36. The said provision is to be read in conjunction with

Section 19(1), also coming under Part-I, which stipulates that the

Arbitral Tribunal shall not be bound by the Code of Civil Procedure.

Hence, the limited scope of applicability of the Code of Civil Procedure

either to the Tribunal or in respect of court proceedings under the

1996 Act would be insofar as it is provided in the 1996 Act and not

otherwise.

42. Interpreted against the said backdrop, if it is to be construed that

Section 36(1), merely by use of the expression that the enforcement

shall be in accordance with the provisions of the Code of Civil

Procedure and in the same manner as if it were a decree of the court,

also brings in the additional provisions of Order XXI and Section 47

within the purview of such an enforcement, the very purpose of the

1996 Act, that is, expeditious alternative dispute resolution without

the procedural wrangles and red-tapism of a regular court

adjudication, would be frustrated.

43. The underlying theme of the Arbitration and Conciliation Act, 1996 as

in all other modes of Alternative Disputes Resolution (ADR) is

expeditious disposal of disputes outside the judicial hierarchy of the

system, thus relieving the courts of the burden of excessive litigation,

while at the same time, granting an opportunity to the parties to settle

matters as per their chosen mode of resolution with utmost

expedition.

44. If the provisions of Order XXI are applied through the small window

provided by the language of sub-section (1) of Section 36 of the 1996

Act, the provisions of Order XXI Rules 97 to 101 would also enter the

fray, which would provide an entire hierarchy of adjudication of

disputes akin to a civil court in respect of even third-parties to the

arbitration agreement, which would be patently contrary to the

definition of "party" in Section 2(1)(h) of the 1996 Act, which means a

party to an Arbitration Agreement. It is well-settled that third-parties

cannot invoke the jurisdiction of the Tribunal and/or the court within

the contemplation of the 1996 Act, if they were not parties to the

Arbitration Agreement in the first place. A broad reading of Section

36(1) would introduce the scope of adjudication of third-party disputes

which in turn, within the contemplation of Rule 103 of Order XXI of

the Code of Civil Procedure, would be deemed to be a decree,

amenable to provisions of first and second appeals as a regular decree

of a civil court. Such a hierarchical super-structure of appeals is alien

to the Arbitration Act and cannot be read into the provisions of

enforcement of an arbitral award.

45. In similar tune, Section 47 of the Code of Civil Procedure also cannot

be read into Section 36 of the 1996 Act, for the simple reason that it

would open up a channel of resisting the enforcement on grounds

which are already provided for under Section 34(2)(b)(i) of the 1996

Act.

46. Thus, the scope of applicability of the Code of Civil Procedure, in

particular Section 47 and in general the other extraneous provisions

in an enforcement proceeding under Section 36 of the 1996 Act

cannot be held to be permitted. Hence, the first component of the

present issue, that is, Issue: (iii)(a) is answered as follows:

The provisions of Order XXI of the Code of Civil Procedure and allied

provisions of the Code are applicable to an enforcement proceeding

under Section 36 of the 1996 Act only to the limited extent insofar as

the modes and modalities of enforcement are concerned. Thus, for

example, the modes of execution has enumerated in Rules 30 to 96 of

Order XXI shall be applicable mutatis mutandis, insofar as the said

provisions facilitate and aid the enforcement of the award, at the same

time not creating any obstruction or hindrance thereto, such as the

provisions under Rules 97 to 103 of Order XXI would do.

47. While taking up the second component of the present issue as to

whether the ineligibility of the Arbitrator can be set up as a ground of

inexecutability of an award in a proceeding under Section 36, it is

noteworthy that Section 34(2)(a)(i) provides precisely the ground of

incapacity of a party, whereas sub-clause (v) provides, as a ground of

challenge, that the composition of the Arbitral Tribunal or the Arbitral

Procedure was not in accordance with the agreement of parties unless

such agreement was in conflict with the provision of Part-I from which

the parties cannot derogate or, failing such agreement, not in

accordance with the said Part.

48. Also, under Section 34(2)(b)(ii), if the arbitral award is in conflict with

the public policy of India, the same also furnishes a ground of

challenge under Section 34. Public policy has been explained in

Clause (iii) under Explanation 1 of the said Clause to include when the

award is in conflict with the basic notions of morality or jurisdiction.

A broad framework has been provided in Section 34 itself to challenge

an arbitral award also on the ground of ineligibility.

49. Thus, importing the provisions of Section 47 of the Code of Civil

Procedure to an enforcement proceeding under Section 36 of the 1996

Act would be entirely extraneous and superfluous and would overlap

with Section 34. Hence, it cannot be said that the provisions of

Section 47 are, in any manner, applicable to Section 36 of the 1996

Act.

50. In Kotak Mahindra (supra), the Division Bench of the Delhi High Court

observed that an award rendered by a person who is ineligible to act

as an Arbitrator by virtue of the provisions of Section 12(5) of the 1996

Act is a nullity and therefore, cannot be enforced as the authority

lacks inherent jurisdiction to make such a decision. However, with

utmost respect, the said view does not take into consideration the

discussions discussed hereinabove, particularly as to a similar ground

for challenge being provided in Section 34 and the enforcement under

Section 36 of the 1996 Act being made subject to the expiry of the

time for preferring a challenge under Section 34.

51. Also, the ratio laid down in the said judgment is in conflict with

Krishna Kumar Mundhra (supra) where a Division Bench of this Court

had categorically observed that Section 34 of the 1996 Act also

prescribes the grounds when an award can be challenged and after

the question is decided the award becomes final in terms of Section

35. If no application under Section 34 is made, it was held, then after

the expiration of the period of limitation the award becomes

enforceable in terms of Section 36 which also does not provide that

the provisions of the Code as such would become applicable. It was

rightly observed by the Division Bench that Section 36 creates a

fiction that it would be enforceable as if it were a decree of the Court

within the scope of Order XXI, CPC. This enforcement of the award

under Order XXI would not attract the application of Section 47

simply by reason of the expressions used in Section 36. It was held

that Section 36 cannot be read independent of the other provisions

contained in the Act itself. It was also held by the Division Bench that

the legislature, in its wisdom, thought it fit to incorporate a scope

similar to Section 47 of the CPC in Section 34 of the Act in order to

bring finality before the decree become executable. The same

procedure cannot be expected to be incorporated in a statute twice

over. The Legislature never intends repetition and at the same time,

the object of the 1996 Act is directed towards speedy and hazard-free

finality with a view to avoid long-drawn procedure based on

technicalities. Therefore, it was held, having regard to the provisions

of Sections 4, 5, 12, 13, 16, 34 and 35, Section 36 cannot be

interpreted in a manner inconsistent with any of those provisions to

attract the provisions contained in the Civil Procedure Code in its

entirety.

52. The judgments in Eastern Gases Ltd. (supra) and Birat Chandra Dagra

(supra), respectively of this Court and the Orissa High Court, are also

in similar tune. In Hindustan Zinc Ltd. Vs. National Research

Development Corporation, reported at 2023 SCC OnLine Del 330, the

Delhi High Court also observed that an award can be held to be a

nullity only under Section 34 and not in a proceeding under Section

36 of the 1996 Act.

53. Thus, on a comprehensive consideration of the above judgments, it is

crystal-clear that the ineligibility of the Arbitrator cannot be set up as

a ground of inexecutability of an award in a proceeding under Section

36 of the 1996 Act for the first time.

54. In the present case, 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 award

under Section 36 of the 1996 Act, raise the issue of ineligibility.

Hence, the last issue is also decided against the award-debtor.

55. In such view of the matter, the objections raised as to maintainability

of the enforcement application under Section 36 of the 1996 Act are

turned down. It is, thus, held that the present proceeding under

Section 36 is very much maintainable.

56. In view of the above conclusion, the award-debtors are directed to file

their affidavit of assets within three weeks from date.

57. The matter shall next be listed in the monthly list of August, 2024 for

passing further orders.

( Sabyasachi Bhattacharyya, J. )