Delhi HC: Arbitral Award Is To Be Executed At A Place Where Judgment Debtor Resides, Carries Business Or Has Assets

 There is no justification for filing an execution petition before the court within whose jurisdiction the arbitral award was passed, and then seek a transfer to the Court which has jurisdiction over the Judgment Debtor or their properties. Irrespective of the place where the award was passed, it is to be executed by a Court within whose jurisdiction the Judgment Debtor resides, carries on business or his property is situated. Since the Judgment Debtor is admittedly residing within the territorial jurisdiction of the courts at Chennai, such courts would certainly have territorial jurisdiction to enforce the arbitral award. Thus, this Court lacks territorial jurisdiction to entertain the present petition. {Para 12}

 IN THE HIGH COURT OF DELHI AT NEW DELHI

 OMP (ENF.) (COMM.) 38/2021, EX.APPL.(OS) 981/2021,

EX.APPL.(OS) 1034/2021 and EX.APPL.(OS) 1367/2021

CONTINENTAL ENGINEERING CORPORATION Vs

SUGESAN TRANSPORT PVT. LTD.

CORAM:

HON'BLE MR. JUSTICE SANJEEV NARULA

Dated:10.01.2022

1. The present petition has been filed under Section 36 of the Arbitration

and Conciliation Act, 1996 [hereinafter referred to as ‘the Act’] read with

Order XXI Rule 10 seeking enforcement and execution of the arbitral award

dated 22nd October 2020 against the Judgment Debtor, seeking inter-alia the

following relief:

“b) Issue against the Judgment Debtor, warrants of attachment of its movable

and immovable assets/ properties, investments, bank accounts, fixed deposits and

to order for sale of the said immovable and movable assets/properties,

investments, bank accounts, fixed deposits, for the purposes of realizing the

awarded amount”.

2. In the present proceedings, initially, this Court vide Order dated 22nd

February, 2021, directed the Judgment Debtor to file an affidavit in the

format given in Annexure B-1 to the judgment dated 5th August, 2020 titled

M/s Bhandari Engineers and Builders Private Limited v. Maharia Raj

Joint Venture,1 [hereinafter, ‘Bhandari Engineers’] along with all the

necessary documents. The said direction was further reiterated by this Court

on 25th February, 2021 and again on 18th May, 2021.

3. Subsequently, Bhandari Engineers was overruled by the Division

Bench in Delhi Chemicals and Pharmaceutical Works Pvt. Ltd. v. Himgiri

Realtors Pvt. Ltd.2 However, in the meantime, the Judgment Debtor had

indeed filed an affidavit dated 10th August 2021 in the format prescribed in

Bhandari Engineers.

4. Mr. Udian Sharma, states that he has instructions to say that the

Judgment Debtor does not have any assets in Delhi, and its only assets are in

Tamil Nadu. He further states that the present proceedings do not lie in this

court as the court lacks territorial jurisdiction. In this light, he has filed an

application [EX APPL.(OS) 981/2021] seeking rejection of the petition.

5. Mr. Anil Kher, senior counsel for the Decree Holder, on the other

hand, points out that in the above referred affidavit, columns numbered 56 to

64 are blank and the Judgement Debtor should be directed to furnish the said

information. On the objection raised by Mr. Sharma regrading the court

lacking jurisdiction to entertain the present petition, Mr. Kher’s primary

submission is that the disclosure of assets by Judgment Debtor is necessary

in order for the Decree Holder to ascertain the court of competent

jurisdiction. He points out that no particulars of bank accounts have been

1 MANU/DE/1497/2020, 2019 SCC OnLine Del 11879.

2 2021 SCC OnLine Del 3603.

given. The Judgment Debtor has not complied with the details as are

required to be disclosed in Form 16A. Therefore, he prays that the Judgment Debtor should first be directed to furnish the said particulars by way filing a fresh affidavit.

6. However, in the opinion of the Court, Decree Holder cannot ask for disclosure in terms of the format prescribed under Bhandari Engineers as the said judgment, today, stands overruled. All that the Court can direct is to call upon the Judgment Debtor to disclose its list of assets as prescribed under Form 16A, Appendix E of the Code of Civil Procedure, 1908

7. Now that the affidavit dated 10th August 2021 disclosing assets of the Judgment Debtor is on record, the Court has perused the same to examine if the requisite information has been given. Bank account particulars have been shown in column number 22, as ‘Corporation Bank’, where the account of the Judgment Debtor is stated to have become NPA on 31st March, 2017. Although the branch is not mentioned, counsel for the Judgment Debtor clarifies to the court that it is the Asset Recovery Management Branch located in Chennai.

8. Section 36 of the Arbitration and Conciliation Act, 1996 stipulatesthat the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court. In the instant case, the relevant provisions for grant of execution of a money decree would apply. Order XXI, Rule 30 of the Civil Procedure Code 1908, provides that “Every decree for the payment of money, including a decree for the payment of money as the alternative to some other relief, may be executed by the

detention in the civil prison of the judgment-debtor, or by the attachment and sale of his property, or by both.” Therefore, for the Court to execute the decree, it must first proceed to attach and sell the Judgment Debtor’s assets.

9. Judgment Debtor herein is a company carrying on its business inChennai, Tamil Nadu. It does not have any office/ asset located in Delhi. Decree Holder has also failed to prove that the Judgment Debtor has any assets located in Delhi. Apart from the above, the affidavit filed by the Judgement Debtor does not disclose any moveable or immoveable assets within the jurisdiction of this court.

10. At this stage, Mr. Kher places reliance on Section 42 of the Act and submits that the Court should transfer the decree for execution before the court of competent jurisdiction in Chennai.

11. However, this request cannot be entertained in view of ample judicial

precedents on this issue. In fact, it is now conclusively settled by the

Supreme Court in Sundaram Finance v. Abdul Samad,3 that an arbitral

award is not equal to a decree passed by a Court, and execution proceedings

can be straightaway filed in the court where the Judgement Debtor’s assets

are located. The Supreme Court made the following remarks, which are

directly on the point raised by Mr. Kher, relevant portion whereof is

extracted below:

“17. (…) Thus, when an award is already made, of which execution is sought,

the arbitral proceedings already stand terminated on the making of the final

award. Thus, it is not appreciated how Section 42 of the said Act, which deals

with the jurisdiction issue in respect of arbitral proceedings, would have any

relevance. It does appear that the provisions of the said Code and the said Act

have been mixed up.

18. It is in the aforesaid context that the view adopted by the Delhi High

Court in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd. records that

Section 42 of the Act would not apply to an execution application, which is not an

arbitral proceeding and that Section 38 of the Code would apply to a decree

passed by the Court, while in the case of an award no court has passed the

decree.

3 2018 3 SCC 622.

21. The Madras High Court in Kotak Mahindra Bank Ltd. v. Sivakama

Sundari & Ors. referred to Section 46 of the said Code, which spoke of precepts

but stopped at that. In the context of the Code, thus, the view adopted is that the

decree of a civil court is liable to be executed primarily by the Court, which

passes the decree where an execution application has to be filed at the first

instance. An award under Section 36 of the said Act, is equated to a decree of the

Court for the purposes of execution and only for that purpose. Thus, it was

rightly observed that while an award passed by the arbitral tribunal is deemed to

be a decree under Section 36 of the said Act, there was no deeming fiction

anywhere to hold that the Court within whose jurisdiction the arbitral award was

passed should be taken to be the Court, which passed the decree. The said Act actually transcends all territorial barriers.

Conclusion

20. We are thus unhesitatingly of the view that the 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.

21. The effect of the aforesaid is that the view taken by the Madhya Pradesh

High Court and the Himachal Pradesh High Court is held to be not good in law

while the views of Delhi High Court, Kerala High Court, Madras High Court,

Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court

and Karnataka High Court reflect the correct legal position, for the reasons we

have recorded aforesaid.”

[Emphasis supplied]

12. There is no justification for filing an execution petition before the court within whose jurisdiction the arbitral award was passed, and then seek a transfer to the Court which has jurisdiction over the Judgment Debtor or their properties. Irrespective of the place where the award was passed, it is to be executed by a Court within whose jurisdiction the Judgment Debtor resides, carries on business or his property is situated. Since the Judgment Debtor is admittedly residing within the territorial jurisdiction of the courts at Chennai, such courts would certainly have territorial jurisdiction to enforce the arbitral award. Thus, this Court lacks territorial jurisdiction to entertain the present petition.

13. Accordingly, the instant petition must be dismissed, with liberty to the

Decree Holder to approach the executing court of competent jurisdiction.

14. Although the affidavit dated 10th August 2021 clarifies the above facts

as to the location of the Judgment Debtor’s assets, nevertheless, the

Judgment Debtor is directed to file an affidavit in terms of the submissions

made by its counsel before court today. The said affidavit be filed within a

period of two week from today, with a copy thereof to the counsel for

Decree Holder.

15. The present petition along with all pending applications also stand

disposed of.

SANJEEV NARULA, J

JANUARY 10, 2022

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