Allahabad High Court
M/S Kritika Auto Product Ltd. vs U.P. State Micro And Small Enterprises ... on 21 October, 2019
Author: Siddhartha Varma
Bench: Siddhartha Varma
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Court No. - 49 Case :- WRIT - C No. - 543 of 2017 Petitioner :- M/S Kritika Auto Product Ltd. Respondent :- U.P. State Micro And Small Enterprises And Another Counsel for Petitioner :- Pramod Kumar Singh Paliwa Counsel for Respondent :- Kandarp Srivastava,Kaustubh Srivastava,Ranjit Saxena Hon'ble Siddhartha Varma,J.
Learned counsel for the parties have filed their written arguments.
A dispute arose between the petitioner and the respondent no. 2 regarding payment for some goods supplied by the respondent no. 2 to the petitioner. From the record of the case it appears that the respondent no. 1 that is the U.P. State Micro and Small Enterprises Facilitation Council, U.P. Kanpur entertained the dispute between the petitioner and the respondent no. 2 and ultimately an award was drawn on 11.5.2015 which was signed on 21.6.2015 and as per the award the respondent no. 2, (the petitioner before the U.P. State Micro and Small Enterprises Facilitation Facilitation Council) was entitled to get an amount of Rs. 19,86,951/- alongwith interest. The amount payable to the respondent no. 2 on the date of the award was Rs. 36,04,777/-. It was further provided that interest would be leviable till the entire payment was made. When this amount, it appears, was not being paid by the petitioner, the respondent no. 2 filed an application for executing the award before the District Judge, Faridabad. This application was filed under Section 36 of the Arbitration and Conciliation Act, 1996. The petitioner who was the Judgement Debtor had appeared before the executing court and the execution proceedings had started. This writ petition, thereafter, during the continuation of the execution proceedings, was filed saying that as only the provisions of Sections 65 to 81 of the Arbitration and Conciliation Act 1996 had been made applicable by Section 18 (2) of the Micro Small and Medium Enterprises Development Act, 2006, the provisions of Section 36 were not applicable and the Execution Case was not maintainable. Since the learned counsel for the petitioner readout Section 18 (2) of the Micro Small and Medium Enterprises Development Act, the same is being reproduced here as under:-
"18. Reference to Micro and Small Enterprises Facilitation Council:-(2) On receipt of a reference under sub-section (1), the Council shall either itself conduct conciliation in the matter or seek the assistance of any institution or centre providing alternate dispute resolution services by making a reference to such an institution or centre, for conducting conciliation and the provisions of sections 65 to 81 of the Arbitration and Conciliation Act, 1996, shall apply to such a dispute as if the conciliation was initiated under Part III of that Act "
Further learned counsel for the petitioner stated that even if the Arbitration and Conciliation Act 1996 was applicable then as per Section 42 of that Act the Court which had jurisdiction over the Arbitration proceedings alone would have the jurisdiction to deal with the execution etc. of the award.
Learned counsel for the petitioner still further argued that under no circumstances would the award which was in the shape of a decree be executed by the Court at Faridabad. In this regard, learned counsel for the petitioner relied upon AIR 2006 MP 34 (Computer Sciences Corporation India Pvt. Ltd. v. Harishchandra Lodwal and Anr.) and stated that it would have been proper had the execution been filed at Kanpur and thereafter it would have been transferred to some other Court. But, he stated, it could not have been filed at Faridabad.
Learned counsel for the respondents, in reply, however, submitted that though Section 18 (2) of the Micro Small and Medium Enterprises Development Act, 2006, had applied Sections 65 to 81 for the purposes of conciliation, arbitration had to take place as per the Section 18 (3) of the Micro Small and Medium Enterprises, Development Act. The council under the Act could either itself settle the dispute by arbitration or could refer a given dispute to any institution or centre for arbitration. For arbitration the provisions of the Arbitration and Conciliation Act 1996 had to apply as if the Arbitration was in pursuance of an arbitration agreement referred to under Section 7(1) of the Arbitration and Conciliation Act 1996.
Since learned counsel for the respondents referred to Section 18(3) of the Micro Small and Medium Enterprises Development Act 2006, the same is being reproduced here as under:-
"18. Reference to Micro and Small Enterprises Facilitation Council:- (3) Where the conciliation initiated under sub-section (2) is not successful and stands terminated without any settlement between the parties, the Council shall either itself take up the dispute for arbitration or refer it to any institution or centre providing alternate dispute resolution services for such arbitration and the provisions of the Arbitration and Conciliation Act, 1996, shall then apply to the disputes as if the arbitration was in pursuance of an arbitration agreement referred to in sub-section (1) of Section 7 of that Act."
Learned counsel for the respondent no. 2 submitted that under Section 35 there was a finality attached to the arbitration award if it had not been challenged and then its enforcement was possible under Section 36 of the Arbitration and Conciliation Act. Since the learned counsel for the respondent no. 2 referred to Section 35 and 36 of the Arbitration and Conciliation Act, the same are being reproduced here as under:-
"35. Finality of arbitral awards:- Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively.
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.
(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:
Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908)."
Learned counsel for the respondents further submitted that since an award was not a decree but was only being executed like a decree by a fiction of law created by the Arbitration and and Conciliation Act, the arbitral award could be executed anywhere in the country where such a decree/award could be executed and, therefore, there was no requirement to first file the execution application for executing the award in the Court which had jurisdiction and then get it transferred. In fact, learned counsel for the respondent no.2 submitted that the judgement cited by the learned counsel for the petitioner stood overruled by the judgement reported in AIR 2018 SC 965 (Sundaram Finance Limited vs. Abdul Samad and Ors). Since the learned counsel for the respondent no. 2 referred to paragraphs 22, 23 and 24 of the judgement, the same are being reproduced here as under:-
"22. 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.
23. 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.
24. The appeal is accordingly allowed and the impugned order dated 20.3.2014 is set aside restoring the execution application filed by the appellant before the Morena courts. The parties are left to bear their own costs. "
Having heard the learned counsel for the parties, I am of the view that the award could have been put into execution by the Court where the execution was filed. This is also the view which has been taken by the judgement reported in AIR 2018 SC 965.
The writ petition, therefore, lacks merit and is, accordingly, dismissed.
Order Date :- 21.10.2019 praveen.