This case arose out of two Execution Petitions filed by Sundaram Finance Ltd. ("the Petitioner") before the District Court, Kottayam, seeking enforcement of interim measures granted by an arbitral tribunal under Section 17 of the Arbitration and Conciliation Act, 1996 ("the Act"). The measures were issued against borrowers ("the Respondents") who had defaulted on loan repayments.

In line with the arbitration clause in the loan agreement, the Petitioner had approached the Madras Chamber of Commerce and Industry ("MCCI"), which was designated in the agreement to appoint a sole arbitrator. The MCCI, acting as an independent institution, appointed the arbitrator accordingly. After obtaining interim orders from the tribunal for attachment of the Respondents' properties, the Petitioner moved to enforce the same through execution proceedings.

The Respondents objected, citing the Kerala High Court's decision in Hedge Finance Pvt. Ltd. v. Bijish Joseph1 ("Hedge case"), arguing that the arbitrator's appointment was invalid. The District Court upheld the objection and dismissed the Execution Petitions. The Petitioner then appealed the dismissal before the Kerala High Court, asserting that the Hedge case dealt with unilateral appointments by disqualified parties, which was not the situation here. To determine the validity of the appointment, the High Court turned to the Supreme Court's decision in Nandan Biomatrix Ltd. v. D1 Oils Ltd.2, which emphasized that an arbitration agreement's intent must be ascertained from the language of the clause.

Upon examining Article 22 of the loan agreement, the Court found that the parties had clearly agreed to resolve disputes through institutional arbitration, not an ad-hoc arrangement. This, the Court held, was a valid exercise of party autonomy under Sections 2(6) and 19(2) of the Act, which allow parties to designate an institution and adopt its rules. It was also noted that the Respondents had failed to challenge the tribunal's jurisdiction under Section 13 of the Act and only raised the objection after the interim award was sought to be enforced. The Court viewed this as an afterthought, done to undermine the procedural integrity of the arbitration.

Here, the arbitrator was not appointed by one party but nominated by a neutral institution. The Court noted that the institution followed its own independent procedure and rules, thereby ensuring neutrality and transparency. As such, this could not be equated with a unilateral appointment of the kind that was terminated in the Hedge case. The Court concluded that the appointment of the arbitrator through an institutional mechanism, mutually agreed upon in the loan agreement, was lawful and did not fall foul of the statutory requirements under Section 12 or the Hedge case.

This judgment offers clarity on the validity of institutional arbitrator appointments in India. It affirms that where parties, through a pre-dispute agreement, choose to resolve disputes through an institution, the institution's appointment of an arbitrator pursuant to its rules does not amount to unilateral appointment. Instead, it reflects a legitimate and valid exercise of party autonomy under the Act.