M/S. Hedge Finance Limited. Vs Mahesh M — Kerala HC (2025) — LawSathi Research

M/S. Hedge Finance Limited. Vs Mahesh M — Kerala HC (2025) — LawSathi Research

What the court decided

AI extract

Outcome

Ext.P4 order in CMA (Arbitration) No.839/2022 of the Additional District & Sessions Court-VIII, Ernakulam dated 11.11.2022 set aside, with a direction to reconsider CMA (Arbitration) No.839/2022, in terms of the judgment dated 05.02.2025 in OP(C) No.1035/2024.

Issue for consideration

Whether the petitioner, whose arbitrator was appointed by mutual consent under Ext.P1 Loan Agreement, is entitled to the same treatment as the petitioner in OP(C) No.1035/2024 in respect of the Ext.P4 order in CMA (Arbitration) No.839/2022, which declared the arbitrator's appointment ex facie bad and the award unenforceable absent production of a Section 12 waiver or affidavit.

Court's answer

Since the issue involved in this case is similar to that in OP(C) No.1035/2024 (disposed of by this Court on 05.02.2025), the petitioner is entitled to the same treatment as that of the petitioner in the above case.

Ratio / Principle

The original petition is disposed of in terms of the judgment dated 05.02.2025 in OP(C) No.1035/2024, setting aside Ext.P4 order in CMA (Arbitration) No.839/2022 on the files of the Additional District & Sessions Court-VIII, Ernakulam dated 11.11.2022, with a direction to reconsider CMA (Arbitration) No.839/2022.

Detailed headnote1 paragraphs

Kerala High Court, Ernakulam (Basant Balaji J.), OP(C) No. 2418 of 2022, decided 18.03.2025 — Hedge Finance Limited, a non-banking finance company, challenged Ext.P4 order dated 11.11.2022 of the Additional District & Sessions Court-VIII, Ernakulam in CMA (Arbitration) No.839/2022. The court below, suo motu enquiring into maintainability and acting in the light of OP(C) No.1263/2022 (dated 02.08.2022), had ordered that the arbitrator — appointed by mutual consent under the Ext.P1 Loan Agreement — was ex facie bad and the award unenforceable, directing the decree holder to produce the appointing order or a post-dispute written agreement waiving applicability of Section 12, or an affidavit. Holding the issue similar to OP(C) No.1035/2024 (disposed of 05.02.2025), the Court disposed of the petition in terms of that judgment, set aside Ext.P4 and directed reconsideration of CMA (Arbitration) No.839/2022.

Procedural history

How this case reached the court

AI extract

Order under challenge
Ext.P4 order in CMA (Arbitration) No.839/2022, by which the court below, having suo motu enquired into maintainability in the light of OP(C) No.1263/2022 (dated 02.08.2022), ordered that the arbitrator's appointment is ex facie bad and the award unenforceable, directing the decree holder to produce the order appointing the arbitrator or a post-dispute written agreement waiving applicability of Section 12, or an affidavit to that effect.¶¶26
Additional District & Sessions Court-VIII, Ernakulam · 11.11.2022
Prior proceeding
Petitioner (a non-banking finance company) and the respondent entered into Ext.P1 Loan Agreement containing an arbitration arrangement; by mutual consent of the parties an Arbitrator was appointed to resolve disputes.¶¶25
Prior proceeding
Exhibit P1: true copy of the Loan Agreement dated 23.12.2019.¶¶57
Prior proceeding
The arbitrator passed Ext.P2 interim order.¶¶25
Prior proceeding
Exhibit P2: interim order of the arbitrator in I.A No.1/2022 in Arbitration Reference No.272/2022, dated 27.7.2022.¶¶58
Prior proceeding
Petitioner filed Ext.P3 CMA(Arbitration) before the Additional District Court-VIII, Ernakulam to execute the Ext.P2 interim order.¶¶25
Prior proceeding
Exhibit P3: CMA (Arbitration) No.839/2022, dated 22.7.2022, pending before the VIIIth Additional District Court, Ernakulam.¶¶59
Prior proceeding
The court below suo motu conducted an enquiry regarding the maintainability of the CMA(Arbitration).¶¶26
Prior proceeding
In the light of the judgment of this Court in OP(C) No.1263/2022 dated 02.08.2022, the court below issued Ext.P4 order dated 11.11.2022 holding the appointment ex facie bad and the award unenforceable.¶¶26
Prior proceeding
By Ext.P4 the decree holder was directed to produce the order appointing the arbitrator, or a written agreement entered post-dispute waiving applicability of Section 12, or file an affidavit to that effect.¶¶31
Prior proceeding
Aggrieved by Ext.P4, the present original petition was filed before the Kerala High Court.¶¶32