Law Web: Bombay HC: Arbitral Award can be executed by the court which passed it or by the Court to which it is sent for execution

Conclusion:

26. In the light of aforesaid discussion, we find that after an award attains finality and the stage as contemplated by provisions of Section 34 of the Act of 1996 has been crossed, the final arbitral award under Part-I of the Act of 1996 has to be enforced in accordance with the provisions of the Code in the same manner as if it were a decree of the Court. The legal fiction under Section 36 is only for the limited purpose of enforcement of an award as a decree. At that stage, the provisions of Sections 38 and 39 of the Code would come into operation. These provisions permit a decree to be executed either by the Court which passed it [the Court as defined by Section 2(1)(e)(i) of the Act of 1996] or by the Court to which it is sent for execution. The Court which passed the decree can also transfer it for execution to any subordinate Court of competent jurisdiction. Proceedings for execution of an arbitral award are beyond the purview of Section 42 of the Act of 1996, inasmuch as such proceedings are not in the nature of any application under Part-I of the Act of 1996. The view as taken by the Division Bench in Akola Janta Commercial Co-operative Bank Ltd. [supra] that a decree holder must apply for execution of an award to the Court of District Judge who may thereafter execute the award as a decree himself or send it for execution to another Court including a subordinate Court of competent jurisdiction commends itself and we respectfully concur with the same. The modality prescribed therein that all applications for execution of awards be first placed before the District Judge who may then execute the same himself or send it to subordinate Courts under Section 38 read with Section 39(2) of the Code is found appropriate in these circumstances.

27. We are, therefore, in respectful disagreement with the views expressed in the order of Reference in Gemini Bay Transcription Pvt. Ltd. [supra] that a Court subordinate to the Court of District Judge [here the Court of Principal District Judge] cannot be recognized as a Court of competent jurisdiction for the purposes of enforcement of awards under the Act of 1996. The view taken by learned Single Judge in Arunkumar Deedwania [supra] stands affirmed and the view taken in Sanjay Suryakant Mhaske & others [supra] with respect stands overruled.

30. The Reference accordingly stands answered as follows:-

An Award made under Part-I of the Arbitration and Conciliation Act, 1996 can be executed not only by the Court as defined by Section 2(1)(e)(i) but also by the Court to which it is sent for execution under Sections 38 and 39 of the Code of Civil Procedure, 1908.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition Nos. 6066 and 4682 of 2012

Decided On: 16.02.2018

Gemini Bay Transcription Private Ltd. and Ors. Vs. Integrated Sales Service Ltd. and Ors.

Hon'ble Judges/Coram:

R.K. Deshpande, A.S. Chandurkar and M.G. Giratkar, JJ.

Author: A.S. Chandurkar, J.

Citation: MANU/MH/0265/2018, AIR 2018 BOMBAY 89, (2018) 2 MAH LJ 329.

1. The facts leading to this reference to the Full Bench are that the respondent No. 1 in Writ Petition Nos. 6066 of 2012 and 4682 of 2012 being the decree holder initiated execution proceedings under Section 48 of the Arbitration & Conciliation Act, 1996 [for sake of brevity, "the Act of 1996"] for enforcement of the foreign Award dated 29th March, 2001. The learned Principal District Judge assigned this matter to District Judge-10 in exercise of powers under Section 16 of the Maharashtra Civil Courts Act, 1869 [for sake of brevity, "the Act of 1869"]. The Petitioners-judgment debtors took the stand that in view of provisions of Section 2(1)(e) of the Act of 1996, the proceedings could not have been so transferred and the execution proceedings ought to have been prosecuted in the Court of Principal District Judge himself. The objection in that regard was rejected on 21st August, 2012 which is the subject-matter of challenge in both the Writ Petitions. When the Writ Petitions were pending before the learned Single Judge, they were amended for challenging Office Order dated 17th November, 2011 whereby the Principal District & Sessions Judge, Nagpur, issued directions in exercise of powers under Sections 38 and 39 of the Code of Civil Procedure, 1908 [for sake of brevity, "the Code"] and allocated execution applications filed for executing Awards passed under the provisions of the Act 1996 to various District Judges mentioned therein. The aforesaid Writ Petitions were, therefore, placed before the Division Bench.

2. While considering the challenge to the aforesaid Office Order dated 17th November, 2011, the Division Bench referred to the judgment of the Full Bench in Fountain Head Developers Vs. Maria Arcangela Sequeria through legal heirs [ MANU/MH/0208/2007 : 2007 (3) Mh.L.J. 744 (FB) ] and observed that the District Judge [now the Principal District Judge] was found to be the Principal Civil Court of original jurisdiction by the Full Bench. The Division Bench then considered the judgment in Akola Janta Commercial Co-operative Bank Ltd. Vs. Raju Natthuji Badhe [2001 (2) Mh.L.J. 427] rendered by another Division Bench. It noted that the Division Bench in Akola Janta Commercial Cooperative Bank Ltd. [supra] had held that the Award has to be treated as a decree passed by the District Judge which may be executed either by the District Judge himself or by any Court to which it is sent by such District Judge. It was further observed that when the judgment of the Full Bench in Fountain Head Developers [supra] was read in the backdrop of the aforesaid observations, the words "including a subordinate Court of competent jurisdiction" militate with the concept of principal Civil Court of original jurisdiction as expounded therein. It was further observed that the provisions of Section 39(1) of the Code cannot be construed independently of Section 2(1)(e) of the Act of 1996 and a Court subordinate to the Court of District Judge [the Court of Principal District Judge] cannot be recognized as Court of competent jurisdiction for the purposes of enforcement of Awards under the Act of 1996. On that premise, the Division Bench in Gemini Bay Transcription Pvt. Ltd. Vs. Integrated Sales Service Ltd. & others [Writ Petition No. 6606 of 2012] found itself not in a position to concur with the judgment of the Division Bench in Akola Janta Commercial Co-operative Bank Ltd. [supra]. In paragraph 14 of its order dated 01st March, 2013, it observed as under:-

"The issue is whether Office Order No. A-1(3)/43/B/2011 dated 17th November, 2011 by the Principal District Judge, Nagpur transferring the execution of award under the Arbitration and Conciliation Act, 1996 to the Courts of Additional District Judges (District Judge-3, District Judge-4 etc.) is in consonance with the provisions of the Arbitration and Conciliation Act, 1996."

The papers were accordingly placed before the Hon'ble the Chief Justice who has been pleased to constitute this Bench for answering the Reference.

3. We have accordingly re-framed the question to be considered and answered as under:

"Whether an Award made under Part-I of the Arbitration and Conciliation Act, 1996 has to be executed only by the Court as defined by Section 2(1)(e)(i), or, whether it can also be executed by the Court to which it is sent for execution under Section 38 of the Code of Civil Procedure, 1908?"

4. At the outset, a brief reference to the judgments leading to the Reference is required to be made.

In Rajashree Shrinivas Joshi Vs. Omega Information Systems, Sangli [MANU/MH/0085/2009 : 2009 (3) Mh.L.J. 303], proceedings for executing an Award were filed in the Court of Joint Civil Judge [Senior Division]. An objection was raised by the judgment debtors in those proceedings to the jurisdiction of the Joint Civil Judge [Senior Division], but the same was rejected. It was held by the executing Court that the Court of Civil Judge [Senior Division] was competent to proceed with the execution proceedings of the Award. The learned Single Judge observed that the Award had become final and it was, therefore, an executable decree in accordance with the provisions of the Code. The learned Single Judge referred to the judgment of the Full Bench in Fountain Head Developers [supra] and observed that the District Court was the Court for the purposes of executing the Award passed under the Act and it was the Principal Civil Court of original jurisdiction in a district. The impugned orders passed by the executing Court were quashed and the matter was remanded for re-consideration.

The aforesaid decision indicates that the order passed by the executing Court that the Court of Civil Judge [Senior Division] was competent to proceed with the execution proceedings was set aside and the matter was remanded for fresh consideration.

5. In Fountain Head Developers [supra], the Full Bench of this Court considered the question as to whether it would be the Civil Judge [Senior Division] or the District Court that should be construed as being the Principal Court of original jurisdiction for the purpose of a petition under Section 34 of the Act. It was held that the definition of the expression "Court" as per provisions of Section 2(1)(e) of the Act of 1996 was inclusive in nature and it was the Court of "District Judge" in a district which was the Court of principal civil jurisdiction. The Reference was answered by holding that the Principal Civil Court of original jurisdiction in a district for the purposes of a petition under Section 34 of the said Act is the District Court and does not include any Court inferior to the District Court.

The Full Bench while answering the aforesaid Reference was concerned only with a petition filed under Section 34 of the said Act. Section 34 specifically refers to the recourse that could be taken for setting aside an arbitral Award by approaching the Court.

6. In Akola Janta Commercial Co-operative Bank Ltd. [supra], the Division Bench was considering the challenge raised to the order passed by the learned Single Judge. Before the learned Single Judge, an order passed by the Court of Civil Judge [Senior Division] recalling the warrant issued in execution proceedings was under challenge. The executing Court had recalled the warrant in view of the law laid down in Rajashree Shrinivas Joshi [supra] where it was held that the only Court entitled to execute an Award under the Act is the District Court. The learned Single Judge upheld that order passed by the executing Court. The Division Bench turned down the challenge and concurred with the view expressed by the learned Judge in Rajashree Shriniwas Joshi [supra]. The Division Bench thereafter considered the manner of enforcement of an Award as a Decree of the Court. After referring to the provisions of Sections 37 to 39 of the Code, S.A. Bobde, J. [as His Lordship then was] held that in view of the aforesaid provisions of the Code, an Award must be treated as a Decree passed by the District Judge and it could be executed either by the District Judge himself or by any Court to which it may be sent by such District Judge for execution in terms of Section 38 of the Code. It was observed that a decree holder must apply for execution of an Award to the Court of District Judge who may either execute the Award as a decree himself or send it for execution to another Court including a subordinate Court of competent jurisdiction. The Division Bench thereafter issued directions that all applications for execution of Awards made to the Civil Judges [Senior Division] be placed before the District Judge who could either execute the Awards as decrees himself or send them for execution by way of transfer to subordinate Courts under Section 38 read with Section 39(2) of the Code.

From the aforesaid decision, it is clear that the Division Bench considered the manner in which an Award could be executed as a decree as contemplated by Section 36 of the Act of 1996. Though the application for execution of an Award was required to be made before the District Judge, the Award as a decree could be executed either by the District Judge himself or by any Court to which it may be sent for execution in the light of the provisions of Sections 38 and 39 of the Code.

Submissions:

7. It is in this aforesaid backdrop that we have heard the learned counsel for the parties. Shri A.G. Gharote, learned counsel for the petitioner in Writ Petition No. 4682 of 2012 submitted that as per the provisions of Section 2(1)(e)(I) of the Act of 1996, it is only the Principal Civil Court of original jurisdiction in a district which is competent even to enforce an award as a decree. Except that Court, no other Civil Court inferior to it can do so. The expression "Court" as defined is intended to cover all proceedings and applications under the Act of 1996 and the same would also include proceedings for enforcement of the award as a decree. Referring to the provisions of Section 36(1) and Section 42 of the Act of 1996, it was urged that it was only principal Civil Court that could execute the award, especially when under Section 42 it was clarified that said Court alone would have jurisdiction over the arbitral proceedings as well as all subsequent applications arising out of that agreement. Execution of the award being one of the stages as contemplated, no other Court could be assigned the task of enforcement of the award. He then referred to the scheme of the Act of 1869 to urge that an Additional District Judge as contemplated by provisions of Section 14 of the Act of 1869 was subordinate to the District Judge meaning the Principal District Judge. The Additional District Judge was conferred with jurisdiction to adjudicate original proceedings only on account of such assignment under Section 16 and the latter part of Section 16 clearly indicates that an appeal from a decree or order of the Additional District Judge lies before the District Judge or the High Court as per valuation of the subject-matter. Merely because certain original proceedings are referred to him under Section 16, the same would not make the Additional District Judge the Principal Court of civil jurisdiction. A Notification under Section 19 of the Act of 1869 was required to be issued by the State Government so as to exclude the jurisdiction of the District Judge to that extent. In support of his submissions, the learned counsel referred to the judgment of the Full Bench in Fountain Head Developers [supra] and emphasized the aspect of Courts inferior to the Court of District Judge. He also referred to the judgment of the Hon'ble Supreme Court in Executive Engineer, Road Development Division No. III, Panvel & another Vs. Atlanta Ltd. [MANU/SC/0031/2014 : AIR 2014 SC 1093] to urge that it was only the superior most Court exercising original civil jurisdiction that had been chosen to adjudicate disputes arising out of arbitration agreements, arbitral proceedings and arbitral awards. Reference was also made to the decision in State of West Bengal & others Vs. Associated Contractors [MANU/SC/0793/2014 : (2015) 1 SCC 32] in that regard. He also referred to the decisions in [1] M/s. I.T.I. Ltd. Allahabad Vs. District Judge, Allahabad & other [MANU/UP/0549/1998 : AIR 1998 Allahabad 313], [2] Northern Coalfields Ltd., Singrauli, (M.P.) through Chairman-cum-M.D. Vs. Aluminium Industries Ltd. Kerala [ MANU/UP/0837/2013 : (2013) 5 Allahabad Law Journal 150], [3] I.C.D.S. Ltd. Vs. Mangala Builders Pvt. Ltd. & others [MANU/KA/0991/2001 : AIR 2001 Karnataka 364], [4] M/s. S.M. Suparies Vs. Karnataka Bank Ltd. [MANU/KA/1410/2010 : AIR 2011 Karnataka 38] as well as judgment in Sanjay Suryakant Mhaske & others Vs. Zilla Parishad, Jalna; decided on 11th June, 2015 by learned Single Judge at the Aurangabad Bench. He brought to the notice of the Court the subsequent judgment of learned Single Judge in Union of India Vs. Aruunkumar Deedwania [MANU/MH/0828/2017 : 2017 (4) Mh.L.J. 130].

It was, thus, submitted that in the light of aforesaid, it was not permissible for the Principal District Judge to assign matters with regard to execution of an award as a decree to other Additional District Judges/District Judges and the execution was required to be carried out by the Principal District Judge.

8. Shri S. Dewani, learned counsel for the petitioner in Writ Petition No. 6066 of 2012, supplemented the aforesaid contentions and referred to the provisions of the Commercial Courts, Commercial Division & Commercial Appellate Division of High Courts Act, 2015 [for sake of brevity, "the Act of 2015"]. According to him, in view of the enforcement of the Act of 2015 as well as the provisions of Section 2(1)(e) of the Act of 1996, it was only the District Judge who was competent to entertain applications with regard to enforcement of an award. He referred to the Notification dated 30th June, 2016 that was issued in exercise of powers conferred by Section 3(1) and (3) of the Act of 2015, by which the District Judge-1 posted at each district was appointed as the Judge of the Commercial Court constituted in that district.

9. Shri D.V. Chauhan, learned counsel appearing for the respondent No. 1 in both the Writ Petitions, submitted that when provisions of Section 2(1)(e) of the Act of 1996 are read along with provisions of Sections 38 and 39 of the Code, it was clear that District Judges other than the Principal District Judge were included in the definition of the expression "Court" and, therefore, they were also competent to entertain proceedings for execution of an award as a decree. He referred to the judgment of the Full Bench of the Calcutta High Court in West Bengal Housing Infrastructure Development Corporation Vs. M/s. Impression [MANU/WB/0424/2016 : AIR 2016 Calcutta 236] to urge that Additional District Judges were not statutorily incompetent or inferior to the Principal District Judge, but they exercised equal judicial powers. It was concluded therein that the Additional District Judge was also the Principal Civil Court in the district. He also referred to the judgment of the Hon'ble Supreme Court in Paramjeet Singh Patheja Vs. ICDS Ltd. [MANU/SC/4798/2006 : (2006) 13 SCC 322] in that regard.

10. Shri R.L. Khapre, learned counsel, after seeking permission of the Court to address it on the aforesaid question, submitted that the term "Court" as defined by Section 2(1)(e) of the Act of 1996 did not refer to the District Judge as "persona designata". The object of the Act of 1996 being one to reduce litigation, the provisions ought to be interpreted in a manner that would facilitate achieving that object. Execution proceedings for enforcing an award were not proceedings under the Act of 1996, but were proceedings under the Code. For said purpose, he sought to draw support from the judgment of the Hon'ble Supreme Court in Paramjeetsingh Patheja [supra]. He also submitted that even an order passed under Section 9 of the Act of 1996 with regard to grant of interim measures could be executed by having regard to the provisions of Section 36 of the Code. He referred to the scheme of execution of orders and decrees under the Code and submitted that assignment of proceedings for execution and enforcement of awards as decrees was permissible. He referred to the decisions in [1] M/s. I.T.I. Ltd. Vs. M/s. Siemens Public Communications Network Ltd. [MANU/SC/0502/2002 : AIR 2002 SC 2308], [2] State of Maharashtra & another Vs. Chandrakant Vasudeo Somshetty since deceased by his heirs Shantabai & others [MANU/MH/0045/1991 : 1991 (1) Mh.L.J. 392] and [3] State of Maharashtra & another Vs. Keru Baban Avhad [MANU/MH/0371/2008 : 2008 (6) Bom.C.R. 706] to demonstrate the effect of an adjudication when it has the character as a decree.

Consideration:

11. At the outset, reference may be made to certain relevant statutory provisions that have a bearing on the issue in hand. Section 2(1)(e) of the Act of 1996 defines "Court" and the same reads thus:-

"2. Definitions.- (1) In this Part, unless the context otherwise requires,-

(e) "Court" means-

(I) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

(ii) in the case of international commercial arbitration, the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to that High Court."

Chapter-VIII of Part-I of the Act of 1996 relates to finality and enforcement of arbitral awards. After an arbitral award becomes final and binding, it can be enforced in the manner prescribed by Section 36. Section 36(1) reads thus:-

"36. Enforcement.- (1) Where the time for making an application to set aside the arbitral award under Section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the Court."

Section 42 of the Act 1996 specifies the jurisdiction under the Act of 1996 and stipulates that with respect to an arbitration agreement, if any application under Part-I has been made in a Court, that Court alone would have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court. Part-II of the Act of 1996 deals with enforcement of certain foreign awards. The conditions for enforcement of foreign awards are laid down in Section 48. Under Section 49 of the Act of 1996, if the Court is satisfied that the foreign award is enforceable under Chapter-I of Part-II, the Award shall be deemed to be a decree of that Court. Similarly, under Chapter-II in Part-II pertaining to Geneva Convention Awards, Section 58 specifies the manner in which a foreign award would be enforceable and it would be deemed to be a decree of the Court.

On perusal of the provisions of the Act of 1996, it is apparent that the scheme with regard to enforcement of a domestic award under Part-I is distinct from the manner in which a foreign award can be enforced. While provisions of Section 36 of the Act of 1996 permit enforcement of a domestic award as per the provisions of the Code as if the said award were a decree of the Court, Section 49 does not refer to such enforcement with the aid of the provisions of the Code.

12. Section 2(4) of the Code defines the expression "District" to mean the local limits of the jurisdiction of a Principal Civil Court of original jurisdiction [called "District Court"] and includes the local limits of the ordinary original civil jurisdiction of a High Court. Section 2(8) of the Code defines the expression "Judge" to mean Presiding Officer of a Civil Court. Section 37 defines the expression "Court which passed a decree." Section 37 reads thus:-

"37. Definition of Court which passed a decree.- The expression "Court which passed a decree", or words to that effect, shall, in relation to the execution of decrees, unless there is anything repugnant in the subject or context, be deemed to include,-

(a) where the decree to be executed has been passed in the exercise of appellate jurisdiction, the Court of first instance, and

(b) where the Court of first instance has ceased to exist or to have jurisdiction to execute it, the Court which, if the suit wherein the decree was passed was instituted at the time of making the application for the execution of the decree, would have jurisdiction to try such suit.

Explanation.- The Court of first instance does not cease to have jurisdiction to execute a decree merely on the ground that after the institution of the suit wherein the decree was passed or after the passing of the decree, any area has been transferred from the jurisdiction of that Court to the jurisdiction of any other Court; but, in every such case, such other Court shall also have jurisdiction to execute the decree, if at the time of making the application for execution of the decree it would have jurisdiction to try the said suit."

Under Section 38 of the Code, a decree may be executed either by the Court which passed it or by the Court to which it is sent for execution. Section 39 of the Code deals with transfer of a decree and the same reads thus:-

"39. Transfer of decree.- (1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court of competent jurisdiction,-

(a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally works for gain, within the local limits of the jurisdiction of such other Court, or

(b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or

(c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or

(d) if the Court which passed the decree considers for any other reason which it shall record in writing, that the decree should be executed by such other Court.

(2) The Court which passed a decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction.

(3) For the purposes of this Section, a Court shall be deemed to be a Court of competent jurisdiction if, at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed.

(4) Nothing in this Section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction."

From the aforesaid, it can be seen that the term "District" means the local limits of the jurisdiction of Principal Civil Court of original jurisdiction. It does not refer to a District Judge as a species, but refers to the District Court as genus. Under Section 38 of the Code, the decree could be executed by the Court passing it or the Court to which it is sent for execution. Under Section 39(1) of the Code, the Court passing a decree can send it for execution to another Court of competent jurisdiction on the application of the decree holder. Under Sub-section (2), it can also on its own motion send the decree for execution to any subordinate Court of competent jurisdiction. Provisions of Order-XXI of the Code along with all other provisions dealing with the execution of a decree are, thus, available as observed by the Hon'ble Supreme Court in Punjab State Civil Supplies Corporation Ltd. Vs. Atwal Rice & General Mills [MANU/SC/0819/2017 : (2018) 1 Mh.L.J. 506].

13. Section 7 of the Act of 1869 specifies that the Principal Court of original civil jurisdiction in the district within the meaning of the Code is the District Court. Section 7 reads thus:-

"7. The District Court shall be the Principal Court of original civil jurisdiction in the district, within the meaning of the Code of Civil Procedure."

Under Section 16 of the Act of 1869, the District Judge can refer to any Additional District Judge subordinate to him any original suits or proceedings of a civil nature.

14. It is to be borne in mind that an Award under Part-I of the Act of 1996 becomes final after adjudication of proceedings under Sections 34 and 37 thereof. It also becomes final after the time for making an application for setting aside the Award under Section 34 of the Act of 1996 has expired. Once that stage is reached, there would be no question of going back to the provisions of the Act of 1996 and the final award has to be executed in the same manner as a decree of the Court in accordance with the provisions of the Code. Thus, the Court dealing with execution proceedings is concerned with the manner of execution of a decree and would be governed by the provisions of the Code. Such Court could either be the Court which passed the award or the Court to which it is sent for execution. The Court to which the decree is sent for execution could either be a Court of competent jurisdiction or any subordinate Court of competent jurisdiction. The words "..... such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court" as appearing in Section 36(1) of the Act of 1996 have to be given their full effect. The manner in which a decree can be executed has been stipulated by Sections 38 and 39 of the Code and hence resort to these provisions has to be made in that regard. Or else the aforesaid words in Section 36(1) of the Act of 1996 would be rendered otiose. In fact, such interpretation would facilitate a more convenient manner of execution of a decree as a result of the final award.

15. In Paramjeetsingh Patheja [supra], the provisions of Section 15 of the Arbitration Act, 1899 were considered in the light of provisions of the Presidency Towns Insolvency Act, 1909. The words "as if" as appearing in Section 15 of the 1899 Act were found to be in pari materia with Section 36 of the Act of 1996. The observations in paragraphs 28, 29 and the conclusion in paragraph 42 being relevant are reproduced hereunder:-

"28. It is settled by decisions of this Court that the words "as if" in fact show the distinction between two things and such words are used for a limited purpose. They further show that a legal fiction must be limited to the purpose for which it was created.

29. Section 36 of the Arbitration & Conciliation Act, 1996 which is in pari materia with Section 15 of the 1899 Act, is set out hereinbelow:

"36. Enforcement.- Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, 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."

(emphasis supplied)

In fact, Section 36 goes further than Section 15 of the 1899 Act and makes it clear beyond doubt that enforceability is only to be under the CPC......."

"42. The words "as if" demonstrate that award and decree or order are two different things. The legal fiction created is for the limited purpose of enforcement as a decree. The fiction is not intended to make it a decree for all purposes under all statutes, whether State or Central."

It can, thus, be seen that enforceability of the award after it becomes final can be done only under the Code and the legal fiction created is only for the limited purpose of enforcement of the award as a decree.

16. We are principally concerned with the expression "the Principal Civil Court of Original Jurisdiction in a District" in Section 2(1)(e) (I) of the Act of 1996. Since the matter pertains to enforcement of an Award as a decree of the Court in accordance with the provisions of the Code, Section 2(4) of the Code would, therefore, be relevant. On a reading of Section 2(4) of the Code along with Section 7 of the Act of 1869, it is clear that it is the District Court which the principal Civil Court of original jurisdiction. The expression "Court" or for that matter "District Court" cannot be co-related with the Principal District Judge. The expressions used in Section 2(1)(e) of the Act of 1996, Section 2(4) of the Code and Section 7 of the Act of 1869 clearly indicate that the emphasis is on the District Court and not on the Principal District Judge. Even for the purposes of Section 34 of the Act, 1996, the Full Bench in Fountain Head Developers [supra] has referred to the expression "District Court." Merely because Section 5 of the Act of 1869 refers to a District Judge who shall preside over the District Court, or, for that matter, provisions of Sections 16 and 17 of the Act of 1869 specifying the jurisdiction of Additional District Judges, that would not mean that the expression "Court" under Section 2(1)(e) of the Act of 1996 is required to be given a narrow meaning so as to limit its application only as regards the Principal District Judge in relation to Section 36 of the Act of 1996. The emphasis is on the expression "District Court" and the reason is obvious as "the Principal District Judge" has not been contemplated as persona designata, at least in the matter of execution of an Award as a decree. In this regard, observations in paragraph 13 of the judgment of the Constitution Bench in M/s. S.B.P. & Company Vs. M/s. Patel Engineering Ltd. & another [MANU/SC/1787/2005 : AIR 2006 SC 450] may be referred to. It was observed that persona designata, according to Black's Law Dictionary means a person considered as an individual rather than as a member of a class. He is a person selected to act in his private capacity and not in his capacity as a Judge. A person so designated normally cannot delegate his power to another.

17. As held in Paramjeetsingh Patheja [supra], the legal fiction created by the words "as if" in Section 36(1) of the Act of 1996 is only for the limited purpose of enforcement of an award as a decree.

There is yet another aspect of the matter that is required to be taken into consideration. The use of the expression "Court" in Section 36(1) of the Act of 1996 has to be construed in the context in which it appears. It may be noted that Section 2(1) of the Act of 1996 which defines various expressions clarifies that those definitions are to be attributed the necessary meanings unless the context otherwise requires. If the expression "Court" were to be interpreted to mean the Principal District Judge, execution of decrees would become cumbersome and would also burden the Court of the Principal District Judge in that matter. It is a recognized principle of interpretation that the context in which a particular expression that has been defined in the statute has been used cannot be ignored. Reference to the following observations in Vanguard Fire & General Insurance Co. Ltd., Madras Vs. Fraser & Ross [MANU/SC/0196/1960 : AIR 1960 SC 971] would be apposite:-

"(6). ........................................................................................ It is well settled that all statutory definitions or abbreviations must be read subject to the qualification variously expressed in the definition clauses which created them and it may be that even where the definition is exhaustive inasmuch as the word defined is said to mean a certain thing, it is possible for the word to have a somewhat different meaning in different sections of the Act depending upon the subject or the context. That is why all definitions in statutes generally begin with the qualifying words similar to the words used in the present case, namely, unless there is anything repugnant in the subject or context. Therefore in finding out the meaning of the word "insurer" in various Sections of the Act, the meaning to be ordinarily given to it is that given in the definition clause. But this is not inflexible and there may be Sections in the Act where the meaning may have to be departed from on account of the subject or context in which the word has been used and that will be giving effect to the opening sentence in the definition Section, namely, unless there is anything repugnant in the subject or context. In view of this qualification, the Court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words under the circumstances......."

Similarly, in Special Officer and Competent Authority, Urban Land Ceilings, Hyderabad Vs. P.S. Rao [MANU/SC/0044/2000 : (2000) 2 SCC 451], it has been held that when the application of the definition to a term in a provision containing that term makes it unworkable and otiose, it can be said that the definition is not applicable to that provision because of contrary context.

Hence, the context in which the expression "Court" is used in Section 36(1) of the Act of 1996 supports the conclusion that for the purposes of enforcement of an award as a decree under the Code, the meaning of the expression "Court" as ascribed for the purposes other than execution cannot be so applied while executing/enforcing a final award as a decree. In that view of the matter, the provisions of Section 39(1) of the Code would have to be construed independent of the provisions of Section 2(1)(e)(i) of the Act of 1996.

18. On a combined reading of the provisions of Sections 2(1)(e), 9, 34, 36 and 42 of the Act of 1996, it can be clearly gathered that the "Court" as defined by Section 2(1)(e)(i) is concerned with making interim measures under Section 9 before or during arbitral proceedings or at any time after making of the arbitral award but before it is enforced in accordance with Section 36 of the Act of 1996. Once the arbitral award is made under Section 31, the party aggrieved can apply to the "Court" for setting aside the same. It is only after the award becomes final that can it be enforced in accordance with the Code in the same manner as if it were a decree of the "Court." As noted above, applications contemplated by Section 42 do not relate to the aspect of execution after the arbitral award has become final.

There is no provision under the Code restricting execution of a decree by a particular Court. The scheme of Sections 37 to 39 of the Code is, in fact, otherwise. The object is obvious and it is the smooth and expeditious execution of the decree. This aspect of the matter stands fortified in the light of provisions of Sections 37 to 39 of the Code. The award after becoming final has to be enforced in accordance with the provisions of the Code in the same manner as if it were a decree of the Court. Under the Code, a decree could be executed by the Court which passed it or by the Court to which it is sent for execution. The decree could also be transferred for the purpose of execution to any other Court of competent jurisdiction or it could be sent for execution to any subordinate Court of competent jurisdiction. Construing the expression "Court" as only the Court of the Principal District Judge for the purposes of execution of an Award as decree under the Code would make the scheme of Sections 38 and 39 of the Code unworkable and, therefore, such interpretation cannot be adopted.

19. In Sanjay Suryakant Mhaske & others Vs. Zilla Parishad, Jalna [Writ Petition No. 2218 of 2015; decided at the Aurangabad Bench on 11th June, 2015], the learned Single Judge was considering the validity of the order passed by the Principal District Judge rejecting the request made by the petitioners therein to transfer execution proceedings from the Court of District Judge-2 to the Court of Principal District Judge. After considering the provisions of the Act of 1869, it was observed that as per that Act, the District Judge is a singular authority and all other Judges, Joint and/or Additional District Judges are placed on a little different par from that of a District Judge. It was, thus, held that in the light of provisions of Section 2(1)(e) of the Act of 1996, which was a central enactment, it was not open for the Principal District Judge to exercise powers under the Act of 1869, a State enactment and delegate or assign his powers to deal with proceedings under the Act of 1996 to any other Judge. The order passed by the Principal District Judge assigning the matters was set aside and he was directed to dispose of the proceedings expeditiously. In this judgment, the learned Single Judge in the light of provisions of the Act of 1869 has held that the District Judge is a singular authority and being the Principal Civil Court of original jurisdiction in a district as contemplated by Section 2(1)(e) of the Act of 1996, delegation or assignment of his powers to any other Judge for dealing with proceedings under the Act of 1996 was not permissible. The judgment of the Division Bench in Akola Janta Commercial Cooperative Bank Ltd. [supra] was, however, not brought to the notice of learned Single Judge.

20. In Union of India Vs. Arun Kumar Deedwania [MANU/MH/0828/2017 : 2017 (4) Mh.L.J. 130], after the Award attained finality, execution proceedings under Section 36 of the Act of 1996 were presented before the District Court. The judgment debtor filed an application that said proceedings be dismissed for want of jurisdiction as the same were not filed before the Principal District Judge who was the Principal Civil Court of original jurisdiction. This application was rejected by the executing Court. This order was challenged before the learned Single Judge. The judgments of the Full Bench in Fountain Head Developers, Akola Janta Commercial Co-operative Bank Ltd. and Sanjay Suryakant Mhaske [supra] were considered by the learned Single Judge. It was observed that the ratio laid down by the Full Bench in Fountain Head Developers [supra] could not be read to mean that the District Judge or the District Court means only a Court of Principal District Judge. Differing with the view taken by the learned Single Judge in Sanjay Suryakant Mhaske [supra], it was held by placing reliance on the judgment of the Division Bench in Akola Janta Commercial Bank Ltd. [supra] that a decree holder was required to apply for execution of an Award as a decree to the Court of District Judge who may either execute it himself or send it for execution to another Court including a subordinate Court of competent jurisdiction. The challenge as raised to the impugned order therein was turned down.

In the aforesaid decision, filing of execution proceedings before the District Court was under challenge. The distinction between the terms "Court" and "Judge" was noted and it was observed that the judgment of the Division Bench in Akola Janta Commercial Cooperative Bank Ltd. [supra] had not been placed before the learned Single Judge in Sanjay Suryakant Mhaske [supra].

21. In Associated Contractors [supra], the question as to which Court would have jurisdiction to entertain and decide an application under Section 34 of the Act of 1996 was referred to a Bench of three learned Judges. In that context, the provisions of Section 2(1)(e) of the Act of 1996 were considered and it was held that the same is an exhaustive definition marking out only the principal Civil Court of original jurisdiction in a district or a High Court having original civil jurisdiction in the State and no other Court as "Court" for the purpose of Part-I of the Act, 1996. With regard to provisions of Section 42 of the Act of 1996, it was held that the expression "with respect to an arbitration agreement" made it clear that Section 42 would apply to all applications made before or during arbitral proceedings or after award is pronounced under Part-I of the Act of 1996. Section 42 was applicable only to applications made under Part-I.

It is to be noted that the provisions of Section 42 refer to the term "applications" under Part-I. It can be noticed that the term "application" appears in Section 34(2) of the Act of 1996 wherein for the purposes of setting aside an arbitral award, a party can make an application. It is, thus, clear that the applications contemplated under Section 42 after the award is pronounced would be an application filed under Section 34(2) for setting aside the Award. Reference in that regard can also be made to the provisions of Section 36(2) and (3) of the Act of 1996 which provision contemplates an application for setting aside the award. Section 36(1) does not contemplate making of any application as such, but it contemplates having the award enforced in accordance with the provisions of the Code as if it were a decree of the Court. This view finds support from the observations made in the Associated Contractors [supra]. The Award after it becomes final partakes the form of a decree and proceedings for its enforcement cannot be treated to be an application after an Award is pronounced as contemplated by Section 42 of the Act of 1996.

22. In Madhya Pradesh State Electricity Board & another [supra], the Division Bench of the Madhya Pradesh High Court considered the question as to whether the Additional District Judge has inherent jurisdiction to hear an application under Section 34 of the Act of 1996 in the light of provisions of Section 2(1)(e) and Section 42 of that Act, or, whether it is the District Judge alone who has jurisdiction to deal with the lis. The Division Bench took into consideration the provisions of Section 7(2) of the Madhya Pradesh Civil Courts Act, 1958 and found that in the State of Madhya Pradesh, the Additional District Judge is equated with the Principal Civil Court of original jurisdiction. It, therefore, held that the Additional District Judge met the requirements as engrafted under Section 2(1)(e) of the Act of 1996 and, therefore, the objection raised under Section 34 of the Act of 1996 could be dealt with by the Additional District Judge.

Section 7(2) of the Madhya Pradesh Civil Courts Act, 1958 that was taken into consideration reads thus:-

"7. (1) ............

(2) An Additional Judge to the Court of a District Judge, an Additional District Judge and an Additional Judge to the Court of an Additional District Judge shall discharge any of the functions of a District Judge, including the functions of Principal Civil Court of original jurisdiction which the District Judge may, by general or special order, assign to him and in the discharge of such functions he shall exercise the same powers as the District Judge."

The aforesaid view is based on the provisions of Section 7(2) of the Madhya Pradesh Civil Courts Act, 1958 and such pari material provisions cannot be found in the Act of 1869.

23. The Full Bench of the Calcutta High Court in West Bengal Housing [supra] considered the question as to whether the Court of learned Additional District Judge is a "Court" within the meaning of Section 2(1)(e) of the Act of 1996. It referred to the provisions of Section 8(2) of the Bengal, Agra and Assam Civil Courts Act, 1887 as well as Article 236 of the Constitution of India and observed that in view thereof, there was no subordination as between an Additional District Judge to exercise revisional powers under Section 115 of the Code in respect of orders passed by the Court of an Additional District Judge. The position of an Additional Judge was equated to that of the District Judge of the district having identical powers as may be conferred. It, thus, held that Court which can be excluded from the purview of Section 2(1)(e) of the Act of 1996 is the Civil Court of a grade inferior to the principal Civil Court or any Court of Small Causes. It concluded that as Additional District Judges are not statutorily incompetent or inferior to the Principal District Judge and that they exercise equal judicial powers, it held that the Additional District Judge was a Court within the meaning of Section 2(1)(e) of the Act of 1996. The judgment of the Full Bench of this Court in Fountain Head Developers [supra] was referred to and it was observed that the provisions of the Act of 1869 as considered by the Full Bench of this Court were not in pari materia with the provisions of the Bengal, Agra and Assam Civil Courts Act, 1887.

It is, however, to be noted that while considering provisions of Section 8(2) of the Bengal, Agra and Assam Civil Courts Act, 1887, learned Single Judge of the Allahabad High Court in I.T.I. Ltd. Allahabad [supra] held that proceedings under Section 34 of the Act of 1996 could not be entertained by the Additional District Judge and transfer of such proceedings by the District Judge to the Additional District Judge was not permissible. This decision of the learned Single Judge has been affirmed by the Division Bench of the Allahabad High Court in Northern Coalfields Ltd. Singraulii [supra].

24. The decisions in Associated Contractors, Madhya Pradesh State Electricity Board, West Bengal Housing, ITI Ltd., Allahabad and Northern Coalfields Ltd. Singrauli [supra] are in relation to the provisions of Section 34 of the Act of 1996. We are principally concerned with enforcement of an award as contemplated by Section 36 of the Act of 1996. That stage is post Section 34 after the award has become final. It has to be enforced according to the Code like a decree of the Court. In the light of the provisions of Sections 38 and 39 of the Code which also permit execution of a decree even by a Court other than the one which passed it, the ratio of these decisions cannot be applied while considering the provisions of Section 36 of the Act of 1996.

25. In Chandrakant Vasudeo Somshetty [supra], the Collector determined the amount of compensation payable towards acquisition of land under the Maharashtra Industrial Development Act, 1961. The claimants thereafter approached the District Court under Section 34(1) of that Act for enhancement of compensation. The learned Assistant Judge enhanced the amount of compensation. The State Government challenged that adjudication by filing a Writ Petition under Articles 226 and 227 of the Constitution of India. The question arose as regards maintainability of the Writ Petition. Referring to the provisions of Section 34(1) of that Act, it was held that the award once passed by the District Judge becomes a decree and is, thus, appealable under Section 96 of the Code. It was further held that the expression "decision of the Court" in Section 34(2) of that Act could not be restricted only to the principal Civil Court of original jurisdiction but extended to the decision of the Court according to the hierarchy of Courts. It was, thus, held that an appeal under Section 96 of the Code was maintainable and the Writ Petition was not tenable. This decision has been followed in Keru Baban Avhad [supra]. Similarly, in P.S. Sathappan [supra], it was held that the finality clause in a statute unless attached to an order passed in appeal would not take away the right of appeal expressly provided.

These decisions recognize the right of appeal according to the hierarchy of Courts.

Conclusion:

27. The Full Bench in Fountain Head Developers [supra] was dealing only with the provisions of Section 34 of the Act of 1996. It is a stage prior to the enforcement of a domestic award and was, thus, concerned with the aspect of the Principal Court of original jurisdiction for the purposes of petition under Section 34 of the Act of 1996. It is not the ratio of the decision of the Full Bench that the expression "Principal Civil Court of original jurisdiction in a district" employed in Section 2(1)(e)(i) of the Act of 1996 means only the Court of Principal District Judge. The Division Bench in Akola Janta Commercial Cooperative Bank Ltd. [supra] was dealing with the question as regard enforcement/execution of a domestic award under Section 36 of the Act of 1996. It is while considering the manner of execution of such award that it was held that the aid of the provisions of Sections 38 and 39 of the Code could be taken. The aid of Sections 38 and 39 of the Code can be taken for the purposes of Section 36 and not Section 34 of the Act of 1996. Thus, the Full Bench as well as the Division Bench were dealing with awards under Part-I of the Act, 1996. In Gemini Bay Transcription Pvt. Ltd. [supra], the enforcement of the foreign award under Part-II of the Act of 1996 was in issue. Section 49 of the Act of 1996 does not use the expression "as if it were a decree of the Court" as found in Section 36. It merely deems the award to be a decree of the Court that records satisfaction as contemplated by Section 48 of the Act of 1996.

In our view, the question as answered by the Full Bench in Fountain Head Developers [supra] was with regard to a petition under Section 34 of the Act of 1996 and that by the Division Bench in Akola Janta Commercial Co-operative Bank Ltd. [supra]- was with regard to the provisions of Section 36 of the Act of 1996. The ratio of these decisions was not of much assistance while considering the enforcement of a foreign award under Section 49 of the Act of 1996. We have also noted above that in the context in which the expression "Court" has been used in Section 36 of the Act of 1996, the provisions of Section 39(1) of the Code have to be construed independent of the provisions of Section 2(1)(e)(i) of the Act of 1996. We are, therefore, in respectful disagreement with the views expressed in the order of Reference in Gemini Bay Transcription Pvt. Ltd. [supra] that a Court subordinate to the Court of District Judge [here the Court of Principal District Judge] cannot be recognized as a Court of competent jurisdiction for the purposes of enforcement of awards under the Act of 1996. The view taken by learned Single Judge in Arunkumar Deedwania [supra] stands affirmed and the view taken in Sanjay Suryakant Mhaske & others [supra] with respect stands overruled.

28. The aforesaid view taken by us is fortified by the recent decision of the Hon'ble Supreme Court in Sundaram Finance Ltd. Vs. Abdul Samad & another [Civil Appeal No. 1650/2018; decided on 15th February, 2018, Coram : J. Chelameswar & Sanjay Kishan Kaul, JJ.], wherein it has been held that while enforcing an award, execution proceedings 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. It has been further observed that arbitral proceedings stand terminated in view of Section 32 of the Act of 1996 on the making of the final award and provisions of Section 42 of the Act of 1996 do not have relevance at that stage.

29. As regards enforcement of foreign awards under Chapter-I in Part-II of the Act of 1996, Section 49 of the Act of 1996 stipulates that when a foreign award becomes enforceable, it is deemed to be a decree of that Court. The expression "that Court" would mean the Court as defined by Section 2(1)(e)(ii). It would, thus, mean the High Court in exercise of its ordinary original civil jurisdiction having jurisdiction to decide the questions forming the subject-matter of the arbitration if it had been the subject-matter of a suit and in other cases, a High Court having jurisdiction to hear appeals from decrees of Courts subordinate to the High Court. Order-XLIX, Rule 3 of the Code as applicable to this Court does not exclude the application of the provisions of Order-XXI of the Code in the matter of execution of decrees.

Thus, as regards enforcement of foreign awards under Chapter-I in Part-II of the Act of 1996, same can be executed by the Court as defined by Section 2(1)(e)(ii) of the Act of 1996 with the aid of the provisions of Sections 38, 39 and Order-XXI of the Code.

30. The Reference accordingly stands answered as follows:-

The Writ Petitions may now be placed before the Division Bench for adjudication on merits.

We place on record our appreciation for the efforts taken by learned counsel who have addressed the Court while deciding the Reference.

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Sunday, 22 December 2024

Bombay HC: Arbitral Award can be executed by the court which passed it or by the Court to which it is sent for execution

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