1 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Civil Revision No.94 of 2021 Date of Decision : 05.09.2025 HDB Financial Services Ltd. …… Petitioner Versus Jiwa Nand and others ……Respondents Coram: The Hon’ble Mr. Justice Bipin Chander Negi, Judge Whether approved for reporting?1 No For the Petitioner : Mr. Vipul Dharmani, Advocate, through video conferencing, Mr. Ganesh Barowalia, Mr. Swamin Sharma and Ms. Anamika Sharma, Advocates. For the respondent : Mr. Mukul Sood, Advocate, vice Mr. Vivek Chandel, Advocate. Bipin Chander Negi, Judge (oral) The present petition has been filed for setting aside the order dated 06.09.2021, whereby the execution petition filed by the present petitioner/judgment debtor for execution of the award announced by the sole arbitrator on 01-07-2017 has been dismissed. 2. I have heard learned counsel for the parties and perused the record. 3. Brief facts giving rise, to the present petition, are that a loan facility for a principal amount of Rs. 9,94,908/- was extended by the petitioner to respondent No. 1 for the acquisition of a commercial vehicle. This transaction was formalized through the execution of a Loan Agreement dated 1 Whether reporters of Local Papers may be allowed to see the judgment? 2 22.01.2015, wherein respondent No. 2 undertook the role of a guarantor for the repayment of the said facility. The funds were disbursed, enabling the purchase of a vehicle, i.e., Truck Model: AL 1212 ECOMET bearing registration number HP-65-4575. A dispute subsequently arose between the parties concerning the repayment of the loan instalments. 4. In accordance with the arbitration clause contained within the loan agreement, the dispute was referred to arbitration and a sole arbitrator was appointed by the claimant vide letter dated 14-09-2017. The Sole Arbitrator passed an award dated 20.12.2017, which directed the respondents to pay, a sum of Rs. 5,84,755/- along with interest at the rate of 18% per annum from the date of award until its realization. Consequent to the non-payment of the decreed amount by the respondents, the petitioner initiated proceedings for its enforcement by filing an Execution Petition under Section 36 of the Arbitration and Conciliation Act, 1996 before the Learned District Judge, Mandi. 5. The said petition was dismissed by the Learned District Judge, who held it to be non-maintainable on the ground that an arbitral award rendered by a sole arbitrator unilaterally appointed by one of the parties to the dispute is non-est in the eyes of the law. It is in the backdrop of this judicial order that the petitioner has instituted the present revision petition. 6. The issue for determination in the present case is whether the unilateral appointment of a sole arbitrator by a party to the dispute renders the resultant arbitral award a nullity, can be a ground for an Executing Court to refuse enforcement suo motu due to the fundamental jurisdictional flaw. 3 7. The question with respect to right of/eligiblity a person having an interest in the dispute or in the outcome or decision thereof, to appoint anyone else as an arbitrator came up for consideration in Perkins Eastman Architects DPC v. HSCC (India) Ltd., (2020) 20 SCC 760, at page 779 and the same was answered in the following terms: “21………………………………………. But, in a case where only one party has a right to appoint a sole arbitrator, its choice will always have an element of exclusivity in determining or charting the course for dispute resolution. Naturally, the person who has an interest in the outcome or decision of the dispute must not have the power to appoint a sole arbitrator. That has to be taken as the essence of the amendments brought in by the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016) and recognised by the decision of this Court in TRF Ltd. v. Energo Engg. Projects Ltd (2017) 8 SCC 377. In the aforesaid judgement the view taken was further fortified by the principles of Independence and impartiality as enunciated in the report of the Law Commission and the decision in Voestalpine Schienen GmbH v. DMRC (2017) 4 SCC 665 considered therein. Further it was observed by the apex court that the view taken would help foster a healthy arbitration environment and conducive arbitration culture in the country.” 8. Section 36 of The Arbitration and Conciliation Act, 1996 deals with enforcement of Arbitral Awards which have gained finality. The Section reads as following: “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 4 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).] 2[Provided further that where the Court is satisfied that a Prima facie case is made out that,-- (a) the arbitration agreement or contract which is the basis of the award; or (b) the making of the award, was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award. Explanation.--For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016).” 9. Section 36 establishes that an arbitral award is treated as equivalent to a court decree for enforcement purposes, making it immediately executable through the courts. 10. A decree passed by a court/tribunal which lacked inherent jurisdiction is a nullity and can be declared to be void by any court in which it is presented. Its invalidity can be set up in an execution proceeding. The validity of a decree can be challenged before an executing court only on the 5 ground of an inherent lack of jurisdiction which renders the decree a nullity. In Hira Lal Patni v. Kali Nath AIR 1962 SC 199 the apex Court held thus : “4. … The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed the decree was lacking in inherent jurisdiction in the sense that it could not have seisin of the case because the subject-matter was wholly foreign to its jurisdiction or that the defendant was dead at the time the suit had been instituted or decree passed, or some such other ground which could have the effect of rendering the court entirely lacking in jurisdiction in respect of the subject-matter of the suit or over the parties to it. …” 11. Further in this respect reference can gainfully be made to the authoritative pronouncement of the apex court in case reported as Sunder Dass v. Ram Prakash, (1977) 2 SCC 662, at page 667 (relevant extract is being reproduced herein below) : “3. Now, the law is well settled that an executing court cannot go behind the decree nor can it question its legality or correctness. But there is one exception to this general rule and that is that where the decree sought to be executed is a nullity for lack of inherent jurisdiction in the court passing it, its invalidity can be set up in an execution proceeding. Where there is lack of inherent jurisdiction, it goes to the root of the competence of the court to try the case and a decree which is a nullity is void and can be declared to be void by any Court in which it is presented. Its nullity can be set up whenever and wherever it is sought to be enforced or relied upon and even at the stage of execution or even in collateral proceedings. The executing court can, therefore, entertain an objection that the decree is a nullity and can refuse to execute the decree. By doing so, the executing court would not incur the reproach that it is going behind the decree, because the decree being null and void, there would really be no decree at all. Vide Kiran Singh v. Chaman Paswan and Seth Hiralal Patni v. Sri Kali Nath, it is, therefore, obvious that in the present case, it was competent to the executing court to examine whether the decree for eviction was a nullity on the ground that the civil court had no inherent jurisdiction to entertain the suit in which the 6 decree for eviction was passed. If the decree for eviction was a nullity, the executing court could declare it to be such and decline to execute it against the respondent.” 12. Therefore, an arbitral award passed by a unilaterally appointed Arbitrator cannot be considered as an award under the provisions of the Act and consequently, the same has to be regarded as non est in the eyes of law. 13. In view of above terms, impugned order is upheld and present petition is dismissed, being devoid of merit. The pending miscellaneous application(s), if any, shall also stand disposed of. (Bipin Chander Negi) September 05, 2025 (KS/T.B.) Judge