The Telangana High Court, in the case of M/s. India Media Services Private Limited v. M/s. SBPL Infrastructure Limited, Civil Revision Petition No. 507 of 2021 dated 09.06.2022, held that only the Court where an application under Section 9 and/or Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) has been filed would have the exclusive jurisdiction to entertain an application for execution of Arbitral Award.
M/s. India Media Services Private Limited (hereinafter referred to as the “Petitioner”) and M/s. SBPL Infrastructure Limited (hereinafter referred to as the “Respondent”) entered into a Nomination Agreement (hereinafter referred to as the “Agreement”) on 05.12.2005.
Subsequently, disputes arose between the parties and the Petitioner invoked the Arbitration Clause. Under Section 11 of the Act, an Arbitrator was appointed by the Calcutta High Court, who later recused himself.
On recusal of the Arbitrator, the Calcutta High Court again appointed another Arbitrator and directed the Arbitrator to conclude the proceedings by the end of 2020.The proceedings were concluded on 09.08.2020, and the Arbitral Award was passed on 27.10.2020. The Petitioner challenged the Arbitral Award under Section 34 of the Act before the Calcutta High Court.
The Respondent also filed an Arbitration Application under Section 9 of the Act, and appeal against Orders in the said application was pending before the Calcutta High Court.
During the pendency of the aforementioned Application and Appeal, the Respondent filed an Execution Petition under Order XXI Rule 11 (2) and Section 151 of the Civil Procedure Code, 1908 (hereinafter referred to as “CPC”) before the IX Additional Civil Judge, City Civil Court, Hyderabad (hereinafter referred to as the “Civil Judge”), seeking enforcement of the Arbitral Award. The Civil Judge allowed the Execution Petition, without providing an opportunity to the Petitioner to be heard. Hence, this Revision Petition was filed by the Petitioner.
ISSUE BEFORE THE HIGH COURT
Whether the Court before which the Applications under Section 9 or Section 34 of the Act are filed, has the exclusive jurisdiction under Section 42 of the Act to deal with all the matters including Execution of the Arbitral Award?
CONTENTIONS OF THE PARTIES
The Petitioner contended that the Civil Judge did not have jurisdiction to entertain the Execution Petition, and hence, the order is illegal and void ab initio. The Petitioner further submitted that as per Section 42 of the Act, the Court before which Section 9 or Section 34 applications are filed, has the jurisdiction for execution of the Arbitral Award.
The Respondent contended that once an Arbitral Award has been passed by the Arbitrator, the Award can be enforced anywhere as a civil decree, specially where the property is located. Thus, as the property is situated in Hyderabad, the Civil Judge had the jurisdiction to entertain the Execution Petition.
DECISION AND FINDINGS
The Telangana High Court observed that Section 9 of the Act can be invoked for interim relief before the commencement of Arbitral proceedings or during the Arbitral proceedings, either before the Principal Civil Judge or the High Court.
It further noted that after the Arbitral Award is passed, the Award can be challenged under Section 34 of the Act, before the Principal Civil Judge or the High Court, with whom the jurisdiction lies. The High Court stated that Section 36 of the Act provides for the execution of the Arbitral Award.
The High Court opined that the CPC provides for the filing of Execution Petition for execution of a decree in any Court other than the Court which granted the decree, which causes long delays in enforcing a decree. However, the High Court noted that the Act was introduced with the primary objective to eliminate delays in dispute resolution.
The High Court opined that Section 42 of the Act states that the Court where the Application under Section 9 and/or Section 34 of the Act is filed, shall only have the jurisdiction to deal with other incidental matters such as enforcement, and no other Court shall have such jurisdiction.
The High Court relied upon the decision of the Supreme Court in State of Bengal and Ors. v. Associated Contractors [(2015) 1 SCC 32] and observed that:
“Hon’ble Supreme Court held Section 9 applications and Section 34 are applications to set aside arbitral awards being applications made to a Court, are applications within the scope of Section 42. It is thus clear that Section 42 is applicable to post arbitral award and an application for execution of the arbitral award has to be filed in the Court where an application under Section 9 and/or Section 34 application was earlier filed.”
The High Court, taking note of Section 42 of the Act and the law laid down by the Supreme Court in Associated Contractors (supra), observed that applications under Section 9 and Section 34 of the Act were filed before the Calcutta High Court by the Respondent and the Petitioner respectively.
Hence, the High Court held that as per Section 42 of the Act, only the Calcutta High Court possesses the jurisdiction to entertain the Execution Petition for enforcement of the Arbitral Award. The High Court further observed that the Civil Judge did not have the jurisdiction to entertain the Execution Petition for enforcement of Award under Section 36 of the Act. Thus, the High Court allowed the Revision Petition.
The Telangana High Court held that when an Application under Section 9 or Section 34 of the Act is pending before a particular Court, that Court has the exclusive jurisdiction under Section 42 of the Act, to deal with all incidental matters including enforcement of Arbitral Award.
The High Court’s decision is in line with the primary objective of the Act of providing speedy dispute resolution and the law laid down by the Supreme Court in Associated Contractors (supra).
When various matters incidental to the Arbitration proceedings is pressed before different Courts situated throughout the country, the entire purpose of the Act would be defeated as it would result in lengthy litigation and delayed dispute resolution. Thus, the High Court adopted a wide interpretation of Section 42 of the Act to including applications for enforcement of Arbitral Award within the scope of “all subsequent applications arising out of the arbitration agreement”.
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