A) ABSTRACT / HEADNOTE

State of Uttar Pradesh & Anr. v. R.K. Pandey & Anr., Civil Appeal No. 10212 of 2014 (Supreme Court; judgment dated 09 January 2025) addresses the enforceability of ex-parte arbitral awards where the employer denies the authenticity of the asserted arbitration agreement. The employee (Respondent No.1) claimed entitlement to a higher age of superannuation and, after a long-pending writ (withdrawn), initiated arbitration relying upon an alleged arbitration agreement dated 01.04.1957. Two ex-parte awards were procured by the employee through unilateral nomination of arbitrators and subsequently sought to be executed against the State and the Principal of GSVM Medical College.

The executing courts declined to set aside the awards on limitation grounds. The Supreme Court, invoking principles of party autonomy, Section 7 of the Arbitration and Conciliation Act, 1996, and precedents on fraud and impartiality of arbitrators, held that existence of a genuine arbitration agreement is sine qua non for arbitration; the purported agreement was neither on official records nor signed by the claimant and was pleaded belatedly. The unilateral self-appointment of arbitrators, absence of authenticated agreement, and indicia of sham proceedings rendered the awards null and void ab initio for want of jurisdiction and for being tainted by fraud. The Court set aside both awards, dismissed execution proceedings and awarded costs to the State.

Keywords: arbitration agreement; ex-parte award; enforceability; lack of subject-matter jurisdiction; unilateral appointment of arbitrator; limitation; fraud.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

R.K. Pandey served as a lab assistant/technician in the T.B. section of DNPBID Hospital, Kanpur, which was taken over by the State in 1956 and provincialized by transfer deed in 1961. The transfer assured staff that service conditions, emoluments, leave and age of retirement would not be adversely affected. In March 1997 the Hospital informed Respondent No.1 he would superannuate on 31.03.1997. Respondent filed a writ in 1997 seeking retirement at 60 years (claiming Municipal Board rules) but that writ remained pending and was eventually withdrawn on 22.04.2009. Nearly a decade after retirement, and while the writ remained pending, Respondent instituted arbitration proceedings (sought reference under Section 11 A&C Act on 11.01.2008), relying upon an alleged arbitration agreement dated 01.04.1957 between the Municipal & Development Board, Kanpur and the Governor of Uttar Pradesh. That petition was withdrawn on 15.02.2008.

Thereafter, two ex-parte awards favouring the employee (dated 15.02.2008 and 25.06.2008) were produced by arbitrators appointed/nominally by the employee. Execution petitions followed. Objections under Section 34 were raised by the State, specifically challenging authenticity of the asserted arbitration agreement and pointing to non-existence of the document in official records and absence of signature/possession by the claimant. The Trial Court and High Court rejected objections on limitation grounds; the State appealed to the Supreme Court. The Supreme Court, after close scrutiny of documentary lacunae, procedural irregularities and authority on fraud in adjudicatory processes, invoked the sine qua non nature of a valid arbitration agreement, held proceedings to be a sham, and set aside the awards as null and void.

D) FACTS OF THE CASE

The material facts, established from the record, reveal that DNPBID Hospital became a State unit and staff were provincialized by an indenture dated 20.06.1961 which expressly preserved service conditions. Respondent No.1 received a retirement notice dated 09.01.1997 to retire 31.03.1997 and filed writ proceedings (1997) claiming later retirement age; that writ remained unresolved until withdrawn in 2009. Despite a pending writ, the respondent filed an arbitration reference petition on 11.01.2008 relying on an alleged arbitration agreement of 01.04.1957 a document that was neither in Municipal/State records nor signed by the claimant and not referred to in the 1961 transfer deed. The Section 11 petition was withdrawn on 15.02.2008; on that very date one ex-parte award was recorded (Rs.26,42,116 at 18% p.a.) and a second ex-parte award (Rs.20,00,000 at 9% p.a.) followed on 25.06.2008.

Both awards recorded that the arbitrators were appointed by the respondent because the opposite party had not nominated arbitrators. Execution petitions were filed on 29.11.2008. The State objected under Section 34 inter alia disputing the existence/authenticity of the arbitration agreement; Municipal records could not verify the photocopy produced. The trial and High Court declined to nullify the awards on limitation grounds; the Supreme Court examined the provenance of the agreement, unilateral nominations, and the timing and found indicia of a contrived process amounting to sham arbitration and fraud.

E) LEGAL ISSUES RAISED

i. Whether an arbitral award can be enforced when the existence and authenticity of the arbitration agreement relied upon by the claimant is disputed by the employer?
ii. Whether unilateral appointment/nomination of arbitrators by one party, without any authenticated arbitration agreement or consensual process, supports a valid arbitration proceeding?
iii. Whether an ex-parte award obtained through such unilateral and potentially fraudulent proceedings is maintainable in execution despite objections under Section 34 of the A&C Act?
iv. What is the effect of limitation under Section 3 Limitation Act, 1963 read with Section 43 A&C Act on belated claims in arbitration?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for Petitioners/Appellants submitted that the purported arbitration agreement of 01.04.1957 is not on official records, not signed by Respondent, not referred to in the 1961 transfer indenture and therefore non-existent; unilateral nomination of arbitrators by the employee flouts the clause requiring mutual nomination; the awards were ex-facie barred by limitation (Section 3 Limitation Act, 1963 read with Section 43 A&C Act) and the proceedings were a sham engineered to procure an unjust benefit; execution should be refused and awards set aside.

G) RESPONDENT’S ARGUMENTS

The counsels for Respondent submitted that an arbitration agreement existed and could be relied upon; awards, being ex-parte, were rendered by arbitrators in terms of the clause permitting sole arbitrator if other party failed to nominate; objections under Section 34 were barred by limitation and beyond condonation; execution ought to be allowed and awards enforced.

H) RELATED LEGAL PROVISIONS 

i. Section 7, Arbitration and Conciliation Act, 1996 — definition and scope of arbitration agreement.
ii. Section 11, A&C Act, 1996 — court assistance in appointment of arbitrator (noting withdrawn petition).
iii. Section 34, A&C Act, 1996 — grounds to set aside arbitral award (fraud, jurisdictional defect).
iv. Section 47, CPC, 1908 — execution stage objections to decree (fraud and lack of jurisdiction).
v. Section 3, Limitation Act, 1963 read with Section 43, A&C Act — limitation for filing reference/claim in arbitration.

I) JUDGEMENT

The Supreme Court, authored by Sanjiv Khanna, CJI, examined documentary provenance, timing and conduct of proceedings. The Court reiterated the fundamental premise that arbitration rests on party autonomy and therefore existence of an arbitration agreement is indispensable for vesting jurisdiction in an arbitral tribunal. The purported 01.04.1957 agreement was not on Municipal or State records, not signed by the claimant, and not referred to in antecedent transfer documents. The Court observed that the unilateral self-appointment of arbitrators by Respondent, without reciprocal nomination or a validated invocation of the clause by the other party, contradicted the text of the agreement as pleaded and undermined impartiality and procedural fairness.

The chronology writ filed in 1997, arbitration invoked only in 2008, withdrawal of Section 11 petition and concurrent awards by arbitrators appointed by the claimant suggested contrivance. Precedent was applied: Bilkis Yakub Rasool v. Union of India & Ors. (on fraud) and Central Organisation of Railway Electrification v. ECI PIC SMO MCPL (JV) (on equity and standards of arbitrators) were relied upon to show that fraud cannot be permitted to stand and that arbitrators must meet exacting standards of impartiality. The Court held that where the arbitration agreement is not authenticated, the awards lack jurisdictional foundation and are vitiated by sham processes; accordingly both ex-parte awards (15.02.2008 and 25.06.2008) were set aside as null and void, execution dismissed and costs awarded to the State.

The High Court’s reliance on limitation to deny relief was rejected because the core defect was jurisdictional and fraudulent invocation of arbitration, which cannot be remedied by mere time-bar technicalities.

a. RATIO DECIDENDI

The operative ratio is that a valid and authentic arbitration agreement is a precondition to arbitration jurisdiction; absence of authenticated agreement, coupled with unilateral appointment of arbitrators and indicia of fraud, renders awards non-enforceable. The Court held that courts must scrutinize provenance of arbitration agreements where authenticity is challenged and refuse enforcement when proceedings amount to a sham. Equity and standards of impartiality guide courts when appointment and procedure are tainted.

b. OBITER DICTA 

The Court reiterated that arbitrators are expected to meet standards of impartiality and independence akin to judicial temperament; unilateral appointments and ex-parte ad hoc proceedings that circumvent consensual mechanisms undermine arbitration’s integrity. The observation that fraud and justice never dwell together (citing Bilkis Yakub Rasool) serves as a caution that litigants cannot benefit from contrived arbitration. The Court also emphasized the role of Section 47 CPC at execution stage to police fraud and jurisdictional defects.

c. GUIDELINES

The judgment yields practical guidance:
• Where authenticity of an arbitration agreement is disputed, courts must demand authenticated / official proof or credible chain of custody of the document.
• Unilateral nomination of arbitrators must comply strictly with the text of the arbitration clause; courts will scrutinize deviations that produce sole arbitrators without lawful basis.
• Execution courts have jurisdiction under Section 47 CPC to deny enforcement where fraud or lack of jurisdiction infects the award.
• Limitation cannot cloak or validate proceedings that are fundamentally a sham; jurisdictional nullities override procedural time-bars.
• Courts should apply equitable standards during appointment and oversight of arbitrators to preserve due process and impartiality in arbitration.

J) CONCLUSION & COMMENTS

The decision underscores that arbitration cannot be converted into a vehicle for unilateral or fraudulent adjudication; party autonomy is foundational but not unbounded. Authentication of the arbitration agreement and observance of the clause’s nomination mechanism are essential jurisdictional predicates. Execution courts retain supervisory power to examine fraud and jurisdictional defects even at the execution stage. The judgment strengthens judicial oversight against manufactured awards and reiterates that limitation cannot validate awards that lack the foundational consent required for arbitration. Practitioners must ensure authenticated documentary basis before invoking arbitration and must respect the clause’s procedure for appointing arbitrators to avoid nullity.

K) REFERENCES

a. Important Cases Referred
i. State of Uttar Pradesh & Anr. v. R.K. Pandey & Anr., Civil Appeal No. 10212 of 2014, [2025] 1 S.C.R. 403 : 2025 INSC 48.
ii. Bilkis Yakub Rasool v. Union of India & Others, [2024] 1 S.C.R. 743 : (2024) 5 S.C.C. 481.
iii. Central Organisation of Railway Electrification v. ECI PIC SMO MCPL (JV), 2024 INSC 857.

b. Important Statutes Referred
i. Arbitration and Conciliation Act, 1996 (Act No. 26 of 1996).
ii. Code of Civil Procedure, 1908 (pertaining to execution and s.47).
iii. Limitation Act, 1963 (s.3).