MANAPPURAM ASSET FINANCE LTD. Vs. ABDUL SALEEM

JUDGEMENT

(1.) In all these Arbitration Requests, the factual circumstances are identical. All the loan agreements, in all these cases, contain an arbitration clause. Invoking the arbitration clauses, arbitral proceedings were initiated. Awards were passed by the Arbitrators. The petitioners in all these cases sought execution of the award by approaching the Civil Courts concerned. Execution Courts dismissed the Execution Petitions holding that the awards were unenforceable. The rationale for this was that the appointment of arbitrators in all these cases was unilateral. The declarations made by the Execution Courts in all these cases is virtually to the effect that the awards were non est in the eye of law.

(2.) In M/s.Agro Indus Credits Limited v. Mangalan [2026(1) KLT 1] this Court held that once an arbitration award is set aside or declared as nullity, to initiate fresh arbitral proceedings, it is indispensable to make a fresh request as contemplated under Sec. 21 of the Arbitration and Conciliation Act, 1996.

(3.) Once the arbitral award is declared as unenforceable/nullity in the eye of law by a competent court, even during execution proceedings, the impact of such a finding is akin to that of setting aside an award. The outcome remains the same. The award loses its legal sanctity, becomes inoperative and loses all its force. Under such circumstances, also, declaration of law in M/s.Agro Indus Credits Limited would squarely apply. Therefore, if the execution court finds that an arbitral award is unenforceable and invalid for any reason, in order to initiate fresh arbitral proceedings, it is essential to make a fresh request/issue fresh notice as contemplated under Sec. 21 of the Act, 1996.