Punjab & Haryana High Court: Pre-2015 Arbitral Awards Remain Enforceable Despite Section 12(5) Objections

 

Chandigarh, May 29, 2026: In a landmark judgment affecting hundreds of arbitration-related execution proceedings, the Punjab and Haryana High Court has held that arbitral awards arising from proceedings commenced before the 2015 amendment to the Arbitration and Conciliation Act, 1996 cannot be declared unenforceable merely because the arbitrator would have been ineligible under Section 12(5) of the amended law.

Justice Jasgurpreet Singh Puri delivered the judgment while deciding a batch of seven civil revision petitions filed by government agencies including Punjab State Civil Supplies Corporation Limited (PUNSUP), Punjab State Civil Warehousing Corporation, Punjab State Cooperative Supply and Marketing Federation (MARKFED), and Haryana State Warehousing Corporation.

Background of the Dispute

The dispute arose from arbitration awards passed in favour of various government procurement and warehousing agencies against rice millers and other private entities. Most of the arbitration proceedings had commenced between 2006 and 2015 under contractual clauses permitting appointment of departmental or unilateral arbitrators.

After the awards were passed and execution proceedings were initiated, several executing courts dismissed the execution petitions. The courts held that the awards had become unenforceable because the arbitrators would be ineligible under Section 12(5) of the Arbitration and Conciliation Act, introduced through the 2015 amendment.

Aggrieved by these orders, the government agencies approached the High Court.

Core Legal Question

The principal issue before the Court was:

Whether arbitral awards arising from proceedings initiated before the 2015 Amendment Act can be denied execution on the ground that the arbitrator would be ineligible under Section 12(5) of the amended Arbitration Act?

Court's Analysis

The Court undertook an extensive examination of Section 12 of the Arbitration Act before and after the 2015 amendment.

Justice Puri observed that prior to the amendment, the law primarily focused on disclosure and challenge procedures concerning an arbitrator's independence and impartiality. However, the 2015 amendment fundamentally changed the legal framework by introducing Section 12(5) and the Seventh Schedule, which imposed a statutory disqualification on certain categories of arbitrators.

The Court emphasized that this amendment was intended to strengthen neutrality and independence in arbitration proceedings but could not automatically invalidate appointments made under the pre-amendment regime.

Reliance on Supreme Court Precedents

The High Court relied upon several important Supreme Court decisions, including:

• BCCI v. Kochi Cricket Pvt. Ltd.
• Hindustan Construction Company Ltd. v. Union of India
• Union of India v. Parmar Construction Co.
• S.P. Singla Constructions Pvt. Ltd. v. State of Himachal Pradesh

The Court noted that the Supreme Court has consistently held that the 2015 Amendment Act operates prospectively and does not apply to arbitral proceedings commenced before 23 October 2015 unless the parties expressly agree otherwise.

Why Executing Courts Were Wrong

According to the High Court, executing courts committed a legal error by retrospectively applying Section 12(5) at the execution stage.

The Court held that once an arbitral award was passed by an arbitrator who was validly appointed under the law prevailing at the time of commencement of arbitration proceedings, the executing court could not revisit the issue of eligibility by applying subsequent amendments.

The judgment reiterates the settled principle that an executing court cannot go behind the decree or award and must execute it as it stands.

Important Findings

The Court laid down three important principles:

1. Awards Passed Before 23 October 2015

Where arbitral proceedings commenced and concluded before the 2015 amendment, the amended provisions do not affect vested rights and cannot invalidate such awards.

2. Pending Arbitrations Commenced Before Amendment

Even if the award was passed after 23 October 2015, Section 12(5) cannot be retrospectively applied to arbitral proceedings that commenced before the amendment unless parties specifically agreed otherwise.

3. Execution Proceedings

Execution proceedings relating to pre-amendment arbitral awards cannot be defeated by invoking Section 12(5). Executing courts must proceed with enforcement according to law.

Final Verdict

Allowing all seven revision petitions, the Punjab and Haryana High Court set aside the orders passed by the executing courts and remitted the matters back for fresh consideration.

The Court categorically held:

"Execution of awards arising from arbitral proceedings commenced prior to the 2015 Amendment Act cannot be said to be unenforceable on the ground of being in conflict with Section 12(5) of the Arbitration Act."

Significance of the Judgment

This ruling provides major relief to government corporations, public sector undertakings, procurement agencies, and other entities holding arbitral awards arising from proceedings initiated before October 2015.

The judgment is expected to impact numerous pending execution cases across Punjab, Haryana, and Chandigarh where objections regarding unilateral or departmental arbitrator appointments have been raised after the 2015 amendments.

By clarifying that Section 12(5) operates prospectively, the High Court has reinforced the principles of legal certainty, finality of arbitral awards, and limited interference at the execution stage.

Case Title: Punjab State Civil Supplies Corporation Ltd. v. M/s Ganesh Rice Mills & Ors. and connected matters

Case Nos.: CR-5847-2025, CR-8920-2025, CR-8878-2025, CR-9445-2025, CR-8589-2025, CR-6164-2025 and CR-7999-2025

Court: Punjab and Haryana High Court

Judge: Justice Jasgurpreet Singh Puri

Decision Date: 29 May 2026