IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CMPMO No.540/2025 Date of Decision: 02nd December, 2025. Veena Thakur .....Petitioner Versus Srei Equipment Finance Limited and Anr. ...Respondents Coram The Hon’ble Mr. Justice Bipin Chander Negi, Judge. Whether approved for reporting?1 For the Petitioner: Mr. Vipin Pandit, Advocate. For the Respondents: Mr. Kunal Thakur, Advocate, for respondent No.2. Respondent No.1 is proceeded against ex parte. Bipin Chander Negi, Judge (oral). The present petition has been preferred against the order dated 09.05.2025, passed in Case No.14/2018, titled Srei Equipment Finance Limited Vs. Veena Thakur, pending consideration before the Court of the learned District and Sessions Judge, Solan, whereby warrant of attachment has been issued against the property of the present petitioner being judgment debtor No.1 in the decree sought to be executed by present respondent No.1/decree holder. 2. In pursuance to the aforesaid impugned order, report of the Collector qua warrant of attachment in the execution petition was received before the Executing Court on 28.06.2025. The same was put up for consideration on 14.07.2025. On 14.07.2025, as per the report of the Tehsildar, Solan, property of present respondent No.2/JD No.2 before the Executing Court was stated to have been attached. In the 1 Whether reporters of Local Papers may be allowed to see the judgment? Yes 2 aforesaid facts and attending circumstances, a warrant of attachment was also issued against the property of the petitioner/JD No.1. The same was made returnable for 06.09.2025. In the aforesaid backdrop, not only has the challenge been laid to the impugned order, but a challenge has also been laid to the execution petition itself. 3. Heard counsel for the parties and perused the impugned order and the documents appended along with the present petition. 4. The present petitioner had entered into a loan-cum- hypothecation agreement dated 22.09.2006 with present respondent No.1. Respondent No.2 had stood guarantee on behalf of the present petitioner. The total amount lent by present respondent No.1 to the present petitioner in pursuance to the aforesaid agreement was worth Rs.18,28,750/-. The amount was to be repaid in 35 monthly instalments of Rs.52,250/-. The amount has been lent to the present petitioner by respondent No.1 for the purchase of an Excavator Loader along with all its accessories. 5. The contract inter se the parties is stated to have been terminated vide letter dated 07.09.2011 and immediately thereafter, one Mr. Santosh Kumar, Advocate, for respondent No.1(claimant) had requested the Arbitrator in the case at hand one Sh. Pulin Behari Das to enter upon the reference for adjudication of disputes that had arisen between present respondent No.1 and the present petitioner. The Arbitrator had 3 been appointed in pursuance to Clause 22, as contained in the loan-cum-hypothecation agreement dated 22.09.2006 entered inter se the present petitioner and respondent No.1. 6. The award in the case at hand was passed by the learned Arbitrator on 29.02.2012. Execution proceedings in furtherance of the award so passed were initiated. Precepts were issued by the High Court at Calcutta under the provision of Section 46 of the Code of Civil Procedure with respect to execution of the Award dated 29.02.2012. In pursuance to order dated 21.11.2017, passed by the then Hon’ble Acting Chief Justice of Calcutta High Court, certificate qua non- satisfaction of the award and percept along with the certified copy of the award passed by the Arbitrator in the case at hand were forwarded to the Court of the District and Sessions Judge, Solan, HP. 7. In the execution proceedings so forwarded to the District and Sessions Judge, Solan, present respondent No.2 had filed objections. One objection, which had been raised by present respondent No.2/objector pertained to the unilateral appointment of the Arbitrator by respondent No.1(Claimant), who it was alleged had an interest in the outcome or decision of the dispute and therefore, on the principle of independence and impartiality was debarred from acting upon the reference so made to adjudicate the dispute inter se the parties. 8. The objection so raised was dismissed by the Executing Court (District Judge Solan) vide order dated 21.04.2025. While 4 rejecting the plea so raised, the Executing Court was of the view that arbitration award in the case at hand had been passed on 29.02.2012, which was passed much prior to the amendments made in the Arbitration and Conciliation Act, 1996, whereby Section 12(v) and 7th Schedule had been incorporated in the Arbitration and Conciliation Act with effect from 23.10.2015, therefore, the Executing Court was of the view that the Award in the case at hand could not be held to be violative of the principle of neutrality. 9. 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 moto due to the fundamental jurisdictional flaw. 10. The question with respect to right of/eligibility 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 5 (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.” 11. The argument that Sub-section 5 of Section 12 read with Seventh Schedule to the Act shall not be applicable to the facts of the case, more particularly when the agreement between the parties herein was executed prior to the insertion of Sub-section 5 of Section 12 read with Seventh Schedule of the Act needs to be rejected in view of the law laid down by the Apex Court in 2021 (17) SCC 248 Jaipur Zila Dugdh Utpadak Sahkari Sangh Limited and Ors. Vs. Ajay Sales and Suppliers. The relevant whereof is reproduced herein below:- “6.3 So far as the submission on behalf of the petitioners that the agreement was prior to the insertion of Subsection (5) of Section 12 read with Seventh Schedule to the Act and therefore the disqualification under Subsection (5) of Section 12 read with Seventh Schedule to the Act shall not be applicable and that once an arbitrator – Chairman started the arbitration proceedings thereafter the High Court is not justified in appointing an arbitrator are concerned the aforesaid has no substance and can to be accepted in view of the decision of this Court in Trf Ltd vs Energo Engineering Projects Ltd, (2017) 8 SCC 377; Bharat Broadband Network Limited vs United Telecoms Limited, (2019) 5 SCC 755; Voestalpine Schienen GMBH vs. Delhi Metro Rail Corporation 6 Limited, (2017) 4 SCC 665. In the aforesaid decisions this Court had an occasion to consider in detail the object and purpose of insertion of Sub section (5) of Section 12 read with Seventh Schedule to the Act. In the case of Voestalpine Schienen GMBH (Supra) it is observed and held by this Court that the main purpose for amending the provision was to provide for ‘neutrality of arbitrators’. It is further observed that in order to achieve this, Subsection (5) of Section 12 lays down 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, he shall be ineligible to be appointed as an arbitrator. It is further observed that in such an eventuality i.e. when the arbitration clause finds foul with the amended provisions (Subsection (5) of Section 12 read with Seventh Schedule) the appointment of an arbitrator would be beyond pale of the arbitration agreement, empowering the court to appoint such arbitrator as may be permissible. It is further observed that, that would be the effect of non obstante clause contained in subsection (5) of Section 12 and the other party cannot insist on appointment of the arbitrator in terms of the arbitration agreement.” 12. 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 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 7 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).” 13. 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. 14. 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 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 8 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. …” 15. 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 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.” 9 16. In view of the aforesaid, present petition is allowed and impugned order and execution proceedings are quashed and set aside. 17. In view of the aforesaid, present petition stands disposed of, so also the pending miscellaneous application(s), if any. (Bipin Chander Negi) Judge 02nd December, 2025 (Gaurav Rawat)