Bombay High Court
M/S. Bhushan Petrofils Private Limited vs Sanjay Kakade on 8 May, 2013
Author: Anoop V. Mohta
Bench: Anoop V. Mohta
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CHAMBER SUMMONS (L) NO. 1322 OF 2012
IN
EXECUTION APPLICATION (L) NO. 1465 OF 2012
IN
ARBITRATION AWARD DATED 25 MARCH 2011
WITH
CHAMBER SUMMONS (L) NO. 1323 OF 2012
IN
EXECUTION APPLICATION (L) NO. 1465 OF 2012
IN
ARBITRATION AWARD DATED 25 MARCH 2011
M/s. Bhushan Petrofils Private Limited ...Applicant.
In the matter between
M/s. Bhushan Petorfils Private Limited,
a Company incorporated under the
provisions of the Companies Act, 1956,
having its Registered Office at C-142,
Lajpat Nagar, New Delhi-11024. ....Judgment Creditor.
V/s
Sanjay Kakade, an adult, Indian
Inhabitant, having his office at
Kakade Capital, 1205 Shirole Road,
Near P. Jog Classes, Opposite
Sambhaji Park, J.M. Road,
Shivaji Nagar, Pune-411 004. ....Judgment Debtor.
Mr. Simil Purohit with Mr. Gaurav Mehta with Mr. Amol Bavare with
Mr. Parag Sharma with Mr. Rushabh Javeri i/by Udwadia Udeshi &
Argus Partners for the Judgment Creditor.
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Mr. Venkatesh Dhond, Senior Counsel with Ms. Sneha Phene with Mr.
Akshay Kolsepatil i/by Dastur Dadhich & Kalambi for the Judgment
Debtor.
CORAM : ANOOP V. MOHTA, J.
RESERVED ON : 17 APRIL 2013.
PRONOUNCED ON : 8 MAY, 2013.
P.C.:-
The Applicant-Judgment Debtor, based upon the final Arbitration Award dated 25 March 2011, passed in Mumbai, in terms of consent terms dated 24 March 2011, as signed at Mumbai, filed this Execution Application for its enforcement by invoking Order-21 of the Civil Procedure Code (for short "CPC") in the Court of Ordinary Original Civil Jurisdiction at Bombay.
2 The Applicant has assigned the debt under Deed of Assignment dated 25 August 2012. The Execution Application seeks to execute the award against Judgment Debtor No.1 and also movable and immovable properties and shares of a private company Respondent No.2/ Judgment Debtor No.2, who is a Director of the Company.
3 This Court by order dated 29 August 2012, restrained the Judgment Debtor not to transfer, alienate or encumber or create any 2/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 3 chsl1322.12gp.sxw third party rights in the properties mentioned in clause (j) of the Execution Application. Admittedly, the award was never challenged in any Court by any party. The award therefore, as passed in Mumbai, based upon the consent terms, as averred, needs to be treated as enforceable and executable decree in this "Court" as contemplated under Sections 2(e) and 36 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act).
4The relevant Sections are 2(e) and 36 of the Arbitration Act, which reads as under:-
"2. Definitions.-
(e) "Court" means 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."
"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 (5 of 1908) in the same manner as if it were a decree of the Court."
5 The Judgment Debtor, filed reply dated 27 September 3/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 4 chsl1322.12gp.sxw 2012 and apart from other resistance and opposition to the averments, as well as, the Execution Application, has raised a preliminary objections that this Court has no jurisdiction to entertain, try and dispose of the Execution Application and so also the Chamber Summons, therefore, be dismissed as not maintainable.
6 The learned Counsel appearing for the Applicant however, resisted the same and reiterated the averments and the submissions that this "Court" has jurisdiction, as by consent the award was passed in Mumbai and which has attained finality. This Court, therefore, at Mumbai has jurisdiction, being the "Principal Court" for execution of the award which is enforceable decree as contemplated under the Arbitration Act.
7 Both the counsel argued to decide the issue of jurisdiction first and made their respective submissions accordingly. The Court is also dealing with the specific aspect of jurisdiction in this order.
8 It is necessary, first of all, to consider the scheme of the Arbitration Act with regard to the enforcement and execution of the 4/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 5 chsl1322.12gp.sxw decree by the Principal Court as contemplated under the Arbitration Act and so contemplated under the provisions of the CPC. A Division Bench of this Court in The Akola Janata Commercial Co-Operative Bank Ltd., A Multi State Co-Operative Scheduled Bank, through its Branch Manager, Pradeep Ramchandra Goenka Vs. Raju Natthuji Badhe, Rambhau D. Khedkar, Santosh Punjaji Pohare and Nandkishor Natthuji Badhe 1 has considered the scheme in the following words:-
"5..........It is a settled law vide para (16) of the judgment of the Full Bench of this Court in M/s. Fountain Head Developers and etc. etc. v. Mrs. Maria Arcangela Sequeira deceased by L.Rs. and Ors. AIR 2007 Bom 149 that the District Judge in a District alone is the principal Civil Court of original jurisdiction and does not include any Court subordinate to him. The word "Court" must, therefore, be given the same meaning wherever it appears in Part I of the Arbitration and Conciliation Act, 1996. Thus, the word "Court" occurring in Section 36 must be held to be a Court of District Judge also for the purpose of enforcement of the award."
"6.........From a conjoint reading of these provisions, it is clear that an award must be treated as a decree passed by the District Judge and, therefore, it may be executed either by the District Judge himself or by any Court to which it may be sent by such District Judge for execution vide Section 38 of the Code of Civil Procedure. The transfer of decree by the District Judge would be governed by Section 39 of the Code of Civil Procedure. Thus, a decree holder must apply for execution of an award to the Court of District Judge, who 1 2011 Vol. 113 (1) Bom.L.R. 0314 5/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 6 chsl1322.12gp.sxw may either execute the award as a decree himself or send it for execution to another Court including a subordinate Court of competent jurisdiction. Thus, we are in agreement with the views of the learned Single Judge in Rajashree's case (supra) and we see no reason to allow this appeal.
9 In Rajashree Shrinivas Joshi & Ors. Vs. Omega Information Systems, Sangli 2, I have held by noting above Full Bench Judgment M/s. Fountain Head Developers and etc. (Supra), as under:-
12. In view of above, there remain no doubt that the District Court is the "Court" for the purposes of executing the Award passed under the Arbitration Act. In view of above, the District Court is the Principal Civil Court of the original jurisdiction in a District."
10 The another view of the Karnataka High Court in I.C.D.S. Ltd. Vs. Mangala Builders Pvt. Ltd. & Ors. (Supra) is as under:-
"4. This is also implied from the wordings of Section 36 itself. A right to enforce the award arises only after the period for setting aside the arbitral award under Section 34 has expired or such an application having been made is rejected. That is to say, the Court executing the decree has to satisfy itself, before entertaining the application for execution that, the period for setting aside the award has expired or such an application having been made has been refused. If that be so, inferentially, the Court that can exercise the power under Section 34 of the Act can alone entertain the steps to enforce the arbitral award. It means the "Court" as understood in 2 2009(3) Mh.L.J. 303 6/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 7 chsl1322.12gp.sxw Section 34 has alone the jurisdiction to entertain the enforcement of the arbitral award."
11 Recently, the Apex Court in Leela Hotels Ltd. (Supra) reiterated that the language used in Section 36 of the Arbitration Act, makes it very clear that such an Award has to be enforced under the CPC in the same manner as it were a decree of the Court. Paragraph 30 reads as under:-
"30. Regarding the question as to whether the Award of the learned Arbitrator tantamounts to a decree or not, the language used in Section 36 of the Arbitration and Conciliation Act, 1996, makes it very clear that such an Award has to be enforced under the Code of Civil Procedure in the same manner as it were a decree of the Court. The said language leaves no room for doubt as to the manner in which the Award of the learned Arbitrator was to be accepted."
12 The relevant Sections of the CPC are as under:-
"36. Application to orders.- The provisions of this Code relating to the execution of decrees (including provisions relating to payment under a decree) shall, so far as they are applicable, be deemed to apply to the execution of orders (including payment under an order)."
"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,-7/14 ::: Downloaded on - 09/06/2013 13:27:15 :::
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(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.]"
"38. Court by which decree may be executed.- A decree may be executed either by the Court which passed it, or by the Court to which it is sent for execution."
"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 8/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 9 chsl1322.12gp.sxw 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.]"
"Order-21 Rule 10. Application for execution.- Where the holder of a decree desires to execute it, he shall apply to the Court which passed the decree or to the officer (if any) appointed in this behalf, or if the decree has been sent under the provisions hereinbefore contained to another Court, then to such Court or to the proper officer thereof."9/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 10
chsl1322.12gp.sxw 13 Considering the scheme of CPC, it is clear that the trial Court and/or the Court which has passed the decree is the basic "Court" even for the execution. The Trial Court and/or the executing Court may be the same and/or different subject to the facts and circumstances, apart from the available provisions of CPC. The value and/or valuation of the property for execution, is indeterminative.
Under the CPC also, "Court executing the decree" is not specifically defined. But this means, the executing Court, where the Plaintiff and/or the decree-holder moved the application for execution is the Court, for the purpose of as contemplated under the CPC, as well as, under the Arbitration Act.
14 In the present case as recorded above, the consent award was passed in Mumbai. The challenge to such award under Section 34 of the Arbitration Act would have been in this Court only. This Court, therefore, is the Court for entertaining and/or accepting the challenge to the consent award. However, there was no such challenge raised to the award. The award has attained finality.
Therefore, considering the scheme of Arbitration Act, including the definition of the "Court" and the provision of enforceability as 10/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 11 chsl1322.12gp.sxw contemplated under Section 35, 36 and as already observed in Rajashree Shrinivas Joshi & Ors. (Supra), which is confirmed by the Division Bench in The Akola Janata Commercial Co-Operative Bank Ltd., A Multi State Co-Operative Scheduled Bank, through its Branch Manager, Pradeep Ramchandra Goenka (Supra), I have no doubt that this "Court" is the "executing Court" for the purpose of execution of the consent award, which is nothing but an executable decree/ award as contemplated under the Arbitration Act.
15 The CPC provides various steps and stages to follow for execution of any decree and/or such award. The transfer of decree for execution is permissible mode even under the CPC. The transfer executing Court has same power as if decree passed by the same Court as contemplated under Section 42 of the CPC. The decree holder/ plaintiff-Claimant is therefore, entitled to file Execution Application for steps as contemplated in appropriate Court.
Therefore, the Execution Application as filed in this Court, in the background so referred above, I am inclined to hold that it is maintainable.
11/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 12chsl1322.12gp.sxw 16 It is also relevant to note that the Plaintiff is master of initiation of executing proceedings, based upon the placement of movable, as well as, immovable properties of the judgment-debtor and/or the Respondent. The basic Court is a Court where decree is deemed to have been passed therefore, this Court has jurisdiction.
Therefore, the rest of the proceedings so initiated by transfer and/or to transmit the decree in no way can be stated to be without jurisdiction. This Court under the Bombay High Court (Original Side) Rules 319 and 323, also permits to take such steps. Rules 319 and 323 read thus:-
"R.319. Application for transmission of decree or order for execution.- Applications under section 39 of the Code of Civil Procedure to transmit a decree or order to another Court for execution shall be made on affidavit clearly stating the particulars mentioned in clause (a) or (b) of that section and shall be accompanied by a certified copy of the decree or order, and the Prothonotary and Senior Master shall thereupon transmit such certified copy together with the other documents mentioned in Order XXI, Rule 6 of the Code of Civil Procedure to the said Court by registered post."
"R.323. Transmission of decree on two or more districts simultaneously.- When a person against whom execution is sought has property in two or more districts, the Prothonotary and Senior Master may, on being satisfied of the necessity, cause a copy of the decree or order obtained against such person to be transmitted for execution of some or all of such 12/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 13 chsl1322.12gp.sxw districts contemporaneously. In the certificate of non- satisfaction to be sent therewith to the Court of each of such district it shall be stated to what other Courts a copy of the decree or order has been sent for execution.
At the same time a letter shall be sent to the Judge of one of such Courts requesting him to attach and sell the property in his district (hereinafter mentioned as district "A"), or a sufficient portion thereof, and certify the result to this Court, and with such letter shall be sent a copy of the letter sent to the judge of each of the other Courts. A letter shall also be sent to the Judge of each of the other Courts, requesting him to attach the property in his district, but not to sell the same until furnished by this Court with information as to the result of the sale of the property in district "A"."
17 This Court has in fact, after considering the material placed on record on 29 August 2012, passed order, as some of the properties, though not fully, are available for attachment in this Court's jurisdiction. There is no bar for remaining execution or for attachment of movable and/or immovable property outside the territorial jurisdiction of this Court.
18 In view of Amendment Act 22 of 2002 with effect from 1- 7-2002, it is now clear that the execution against immovable property lying outside the jurisdiction of the Executing Court, it is necessary to get the decree transfer to the appropriate Court for execution on 13/14 ::: Downloaded on - 09/06/2013 13:27:15 ::: ssm 14 chsl1322.12gp.sxw moving the executing Court in that behalf, unless the case falls within the ambit of Order-21 Rule 3 of the CPC. It is therefore, necessary for the Executing Court to transfer the decree to the Court having jurisdiction over the property those sought to be proceeded against by the decree-holder. The order of attachment of a property, even outside its jurisdiction is different than the execution of the decree as contemplated under the CPC. We are concerned with the maintainability of Execution Petition and not concerned with the transmission and/or transfer of Execution Application for enforcement of consent award outside the executing Court, as there is no objection to the transmission/ transfer but only to the maintainability of this execution in this Court. (Mohit Bhargava Vs. Bharat Bhushan Bhargava & Ors. 3 ). In view of above, I am inclined to observe that the Execution Petition so filed by the Plaintiff in this Court based upon the consent award, is maintainable.
19 Both the matters be listed for hearing on other points.
Stand over to 26 June 2013.
(ANOOP V. MOHTA, J.) 3 (2007) 4 SCC 795 14/14 ::: Downloaded on - 09/06/2013 13:27:15 :::