Issue of Jurisdiction in relation to Execution of Arbitral Award

An arbitration award or arbitral award is a determination on the merits by an arbitration tribunal, which include interim awards. Domestic awards are governed by Part I whereas foreign awards are governed by part II of the Arbitration and Conciliation Act of India. The arbitrator’s final decision on the case is called the “award.” Once the arbitrator decides that all of the parties’ evidence and arguments have been presented, the arbitrator will close the hearings. This means no more evidence or arguments will be allowed. Although arbitral awards may be subject to being challenge but the grounds of challenge available against arbitral awards are limited. The award given by the arbitrator is equivalent to a decree of a court of law and the same can be executed directly, without making it a decree of the court. Now, the question arises are whether Jurisdiction lies where asset are located? Applicability of the Civil Procedure Code to matters before the Civil Courts under the Arbitration and Conciliation Act, 1996?

Applicability of CPC:- Hon’ble Supreme Court of India, in the case of ITI Ltd. v. Siemens Public Communications Network Ltd (2002) 5 SCC 510 while dealing with Section 5 and Section 36 of the Act and also Section 115 CPC, has laid down the law that the applicability of CPC having not been expressly prohibited in the Act, the High Court’s power under Section 115 CPC, against an order made by the civil court, in an appeal preferred under Section 37 of the Act, is not barred.

Jurisdiction of Court and Challenge to Awards:-  Seven Judges Bench of Supreme Court in the matter of S.B.P. & Co. Vs. Patel Engineering Ltd. & Ors. [(2005) 8 SCC 618], while examining relative scope of Ss.11(6) and 8 of the Act, per majority held that power exercised by the Chief Justice of High Court or CJI under Section 11(6) of the Act is not an administrative power but it is a judicial power by overruling its earlier decision in Konkan Railway Corporation Ltd. & Anr. v. Rani Construction Pvt. Ltd. [(2000) 2 SCC 388]

Question is which District Court has the jurisdiction to decide the petition u/s 34 of Arbitration & Conciliation Act 1996 with regard to the challenge to Arbitral Award? It was held by Rajasthan High Court in Indian Potash Ltd vs Bohra Industries Ltd. And Ors (S.B. Civil Revision No. 55/2016) Rajasthan High Court Jodhpur once Delhi High Court has appointed sole arbitrator to resolve the dispute between parties by exercising its judicial power under Section 11(6) of the Act and though the same was concurred by Rajasthan High Court but it cannot ipso facto confer jurisdiction on the subordinate Courts of Rajasthan to exercise power under Section 34 of the Act. Participation of the respondent in arbitral proceedings conducted by the Tribunal at New Delhi without any demure is yet another significant circumstance to tone down the ambitious plea of respondent that learned Court below is clothed with territorial jurisdiction to entertain its application under Section 34 of the Act.

Jurisdiction and Execution of Awards:-  Previously under Arbitration Act, 1940, which required an award made to be filed in Court and a decree to be passed thereon whereupon it would be executable. However same was amended in Arbitration & Conciliation Act 1996. But Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court were of the opinion: “An award is to be enforced in accordance with the provisions of the said Code in the same manner as if it were a decree of the Court as per Section 36 of the said Act does not imply that the award is a decree of a particular court and it is only a fiction. Thus, the award can be filed for execution before the court where the assets of the judgment debtor are located.”

However, the Madhya Pradesh and Himachal Pradesh High Courts held:“The transfer of decree should first be obtained before filing the execution petition before the Court where the assets are located.”

After discussing various provisions of the Act and the various orders of the High Courts at length, Apex court on conjoint reading of with Code of Civil Procedure with Arbitration Act 1996, it was held in Sundaram Finance Limited v. Abdul Samad, 2018 SCC OnLine SC 121 that enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.

 

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ronak 
on 03 April 2020
Published in Corporate Law
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