Rajasthan High Court - Jaipur
Ess Kay Fincorp Limited vs Suresh Choudhary S/O Shri Ganga Ram ... on 22 August, 2019
Bench: Mohammad Rafiq, Alok Sharma
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
(1) D. B. Civil Misc. Appeal No. 12/2019
Ess Kay Fincorp Limited, through its Authorised Signatory Shri
Hanuman Singh, having its Registered Office at G-1 G-2, New
Market, Khasa Kothi Circle, Jaipur- 302001.
----Decree Holder-Appellant
Versus
1. Suresh Choudhary S/o Shri Ganga Ram Choudhary, by
caste Jat, R/o Vill. Luhara, Ward No. 7, Pani Ki Tanki, Teh.
Niwai, Distt. Tonk- 304021, Rajasthan.
2. Omprakash Jat S/o Shri Prahlad Jat, by Caste Jat, R/o
Bairwa Mohalla, Deoli, Bhanchi, Pani Ki Tanki, Shivaji
Temple, Teh. Niwai, Distt. Tonk, Rajasthan.
----Judgment Debtor-Respondents
Connected With (2) D. B. Civil Misc. Appeal No. 5890/2018 Equitas Small Finance Bank Ltd., 4Th Floor 672, Temple Tower Anna Salai Nandana Chennai 600035 and Branch Office situated at Plot No. 87 2Nd Floor, Tagore Nagar, near Asopa Hospital, DCM, Ajmer Road, Jaipur through Authorized Signatory Hitesh Kumar Jain son of Shri Kastoor Chand Jain aged about 40 Years, by caste Jain.
----Decree Holder-Appellant Versus
1. Nadir son of Shri Aabid, by caste Muslim resident of Vijay Nagar Colony Distt. Tonk 304001 Rajasthan
2. Najama C/o Shri Ibad, by caste Muslim resident of Vijay Nagar Colony, Distt. Tonk 304001 Rajasthan
3. Amad son of Shri Chamma Khan, by caste Muslim resident of 171 Guljar Bagwali Abadi Distt. Tonk 304001 Rajasthan
----Judgment Debtor-Respondents (3) D. B. Civil Writ Petition No. 4379/2019 Rajasthan State Cooperative Oilseed Growers Federation Ltd, IInd Floor, Nehru Sahkar Bhawan, Bhawani Singh Road, Jaipur (Also Known as Tilam Sangh) through its Authorized Officer
----Petitioner Versus (Downloaded on 06/06/2021 at 06:07:12 PM) (2 of 19) [CMA-12/2019]
1. M/s Solcon Enginners Pvt. Ltd., having its registered office at Plot No. 7, Shivprasad Society, Panmala, Sinhgad Road, Pune-411030, presently at Gat No. 63, A/p Shindewadi, Tal. Bhor, Dist-Pune, 412205 through its Director Achyut B. Gokhale.
2. National Heavy Engineering Cooperative Limited, M.G. Road, Pune.
----Respondents For Appellant(s) : Mr. Himanshu Jain (In Appeal No. 12/2019 and 5890/2018) Mr. Alok Garg (In Writ Petition No. 4379/2019).
For Respondent(s) : None present for respondent In Appeal No. 12/2019 and 5890/2018 despite presumption of service under Rule 99 of High Court Rules.
Mr. Vikas Jain, (for respondent in Writ Petition No. 4379/2019).
HON'BLE MR. JUSTICE MOHAMMAD RAFIQ HON'BLE MR. JUSTICE ALOK SHARMA Judgment REPORTABLE 22/08/2019 (Per Hon'ble Mr. Justice Mohammad Rafiq) These three matters, two appeals and a writ petition, raise a common question of law as to which of the two Courts;- Principal Civil Court, having the original jurisdiction in a district i.e. the Court of District and Sessions Judge, as defined under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act') or the Commercial Court constituted under Section 3(1) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (for short 'the Commercial Courts Act') and as defined in Section 2(b) of that Act, (Downloaded on 06/06/2021 at 06:07:12 PM) (3 of 19) [CMA-12/2019] would be competent to execute an arbitral award, on a "commercial dispute" passed under the Arbitration Act?
Before adverting to the rival submissions, we deem it appropriate to briefly notice the facts of these matters.
Appeal No. 12/2019 has been filed by the appellant Ess Kay Fincorp Limited assailing order dated 20.10.2018 passed by the Commercial Court, Ajmer (for short 'the Commercial Court'), dismissing Execution Application No. 06/2018 seeking execution of the award dated 12.03.2018 whereby claim of the appellant was allowed and the respondents were directed to jointly and severely pay a sum of Rs. 4,77,387/- together with interest @ 36% per annum from 26.02.2018 till the same is realized, return the possession of the vehicle, as also a sum of Rs. 1,100/- towards arbitration fee and cost to the appellant.
Appeal No. 5890/2018 has been filed by the appellant Equitas Small Finance Bank Limited assailing order dated 20.10.2018 passed by the Commercial Court, Ajmer (for short 'the Commercial Court'), dismissing Execution Application No. 01/2018 filed in CIS No. 145/2018 seeking execution of the award dated 15.02.2018 whereby claim of the appellant was allowed and the respondents were directed to jointly and severely pay a sum of Rs. 5,70,960/- together with interest @ 18% per annum from 01.02.2018 till the same is realized as also a sum of Rs. 2,000/- towards arbitration fee and cost to the appellant.
Writ Petition No. 4379/2019 seeks to challenge order dated 21.12.2018 passed by the Commercial Court No.1, Jaipur (Rajasthan) in CIS/Case No. Ex.42/2018. In this case, Respondent No. 1, M/s. Solcon Engineers Private Limited filed a civil suit against (Downloaded on 06/06/2021 at 06:07:12 PM) (4 of 19) [CMA-12/2019] the petitioner, Rajasthan State Cooperative Oilseed Growers Federation Limited and Respondent No.2, National Heavy Engineering Cooperative Limited in the Court of Civil Judge, Senior Division, Pune (Maharashtra) for recovery of a sum of Rs. 21,95,833/-. The suit was filed on the basis of agreement executed between Respondent No. 1 and Respondent No. 2. On request of Respondent No. 2, the Court referred the matter to the arbitral tribunal for adjudication of the disputes between them. The arbitral tribunal by award dated 24.07.2004 allowed the claim of Respondent No. 1. Respondent No. 2 filed objections against the award before District and Sessions Judge, Pune (Maharashtra) which were dismissed vide judgment dated 23.04.2008. It is thereafter that the application under Section 36 of the Arbitration Act was filed seeking execution of the award before the Court of District and Sessions Judge, Pune. On application of Respondent No.1, the said execution application was transferred to the Court of District and Sessions Judge, Jaipur Metropolitan, Jaipur, who transferred the same to the Commercial Court No.1, Jaipur. Thereafter, the petitioner received show cause notice but the Commercial Court No. 1, Jaipur vide order dated 28.11.2018 transferred the execution application to the Court of District and Sessions Judge, Jaipur Metropolitan, Jaipur directing the parties to appear before that Court. According to the petitioner, Presiding Officer of the Commercial Court No.1, Jaipur sent letter to the District and Sessions Judge, Jaipur Metropolitan and observed that necessary order from that Court be awaited. The matter was adjourned to 14.12.2018 and thereafter, it was again adjourned to 21.12.2018. However, on 21.12.2018, learned Commercial Court resumed the execution proceedings observing that since no (Downloaded on 06/06/2021 at 06:07:12 PM) (5 of 19) [CMA-12/2019] response has been received from the District Court, Jaipur Metropolitan, Jaipur to its letter dated 12.12.2018, the proceedings can not be kept pending indefinitely. The petitioner has filed this writ petition challenging the competence of the Commercial Court No. 1, Jaipur to execute the arbitral award.
Mr. Himanshu Sharma, learned counsel appearing on behalf of the appellants in the aforementioned two appeals argued that an application for execution of the award filed under Section 36 of the Arbitration Act, as per Section 10(3) of the Commercial Courts Act, would ordinarily lie before the Court of original jurisdiction in a district. This, however, is subject to Section 15(2) of the Commercial Courts Act, which inter alia provides that all suits and applications, including applications under the Arbitration Act, relating to a commercial dispute of a specified value pending in any civil court in any district or area in respect of which a Commercial Court has been constituted, shall be transferred to such Commercial Court. A conjoint reading of Section 10(3) and 15(2) of the Commercial Courts Act thus makes it clear that application under Section 36 of the Arbitration Act for execution of the award, subject matter of which is a commercial dispute, would lie only before the Commercial Court and not before the Principal Civil Court, i.e. the Court of District Judge. It is argued that the learned Commercial Court has wrongly relied upon the judgment of the Supreme Court in Sundaram Finance Limited represented by J. Thilak, Senior Manager (Legal) Vs. Abdul Samad and Another, (2018) 3 SCC
622. The Supreme Court therein held that arbitral proceedings stand terminated upon passing of final award and in that context, observed that it is not appreciated how Section 42 of the said Act, (Downloaded on 06/06/2021 at 06:07:12 PM) (6 of 19) [CMA-12/2019] which deals with the jurisdiction issue in respect of the arbitral proceedings, would have any relevance. Learned counsel, in support of his argument, relied upon judgment of the Supreme Court in State of West Bengal & Others Vs. Associated Contractors, (2015) 1 SCC 32. The Supreme Court in that case held that Section 42 applies in all applications made before, during or after the arbitral proceedings are over. Thus, the judgment delivered in Sundaram Finance Limited represented by J. Thilak, Senior Manager (Legal) (Supra) being in direct conflict with latter judgment delivered in State of West Bengal & Others Vs. Associated Contractors (Supra) to the extent of applicability of Section 42 of the Arbitration Act after passing the award, the latter judgment will prevail. It is argued that termination of arbitral proceedings in any case would not make the Arbitration Act inapplicable on applications filed for execution of the arbitral award. Learned Commercial Court wrongly arrived at the conclusion that only if objection against the award is filed before the Commercial Court, the application for execution of award under Section 36 of the Arbitration Act would be considered as an application arising out of that Act as per Section 10(3) of the Commercial Courts Act and not otherwise. The Commercial Court illegally held that since objections under the Arbitration Act were not preferred before the Commercial Court, the application under Section 36 of the Arbitration Act cannot be said to be an application arising out of that Act as per Section 10(3) of the Commercial Courts Act.
Learned counsel for the appellants further argued that the Commercial Court committed grave error in not following the judgment of Gujarat High Court in M/s. OCI Corporation Vs. (Downloaded on 06/06/2021 at 06:07:12 PM) (7 of 19) [CMA-12/2019] Kandla Export Corporation (Misc. Civil Application (For Transfer) No. 2969 of 2016 filed in Misc. Civil Application No. 2977 of 2016 decided on 11.11.2016). In support of his arguments, learned counsel has also relied upon the judgments of Gujarat High Court in M/s. OCI Corporation (supra), which has been upheld by the Supreme Court while dismissing Petition for Special Leave to Appeal (C) No. 6557/2017, Kandla Export Corporation & Others Vs. M/s. OCI Corporation vide order dated 03.03.2017; Vadodara Mahanag Seva Sadan Formaly known as Municipal Corporation Vs. M S Khurana Engineering Ltd. (R/Special Civil Application No. 13736 of 2018 decided on 06.09.2018); judgment of Bombay High Court in Jet Airways (India) Limited Vs. Subrata Roy Sahara, 113 (6) Bom LR 3835; judgment of High Court of Chhattisgarh at Bilaspur in South Eastern Coal Fields Ltd. Vs. M/s. Tirupati Construction District Burhar (TPC No. 4 of 2018 decided on 10.01.2018), 2018 SCC Online Chh 63.
Mr. Vikas Jain, learned counsel for the respondent in Writ Petition No. 4379/2019 argued that the Court of superior most jurisdiction in the District is the Court defined by Section 2(1)(e) of the Arbitration Act as interpreted by the Supreme Court in State of Maharashtra through Executive Engineer, Road Development Division No. 111, Panvel & Another Vs. Atlanta Limited, (2014) 11 SCC 619. While the jurisdiction in respect of arbitration matter is provided in Section 10 of the Commercial Courts Act, Section 15 thereof contemplates transfer of all suits and applications including applications under the Arbitration Act pending in Civil Courts in any District or pending in High Court where Commercial (Downloaded on 06/06/2021 at 06:07:12 PM) (8 of 19) [CMA-12/2019] Division is constituted or area in respect of which the Commercial Courts have been constituted. Therefore, it is clear that in respect of commercial dispute, the Commercial Court would be the only competent Court to execute the award passed under the Arbitration Act and not the ordinary Civil Court. Learned counsel in support of his arguments relied upon judgments of Gujarat High Court in Vijay Cotton and Fiber Company Vs. Agarwal Cotton Spinning Private Limited, R/Appeal No. 216 of 2018 decided on 11.02.2019; M/s. OCI Corporation (supra); Vadodara Mahanag Seva Sadan Formaly known as Municipal Corporation (supra); judgment of Bombay High Court in Sushila Singhania & Others Vs. Bharat Hari Singhania & Others, 2017 (3) ABR 357.
Mr. Alok Garg, learned counsel appearing on behalf of the petitioner in Writ Petition No. 4379/2019 argued that Section 2 of the Commercial Courts Act nowhere prescribes that the execution application shall be entertained by the Commercial Court. Reading of Section 15(2) of the Commercial Courts Act would make it clear that the word "Application" referred to therein is the original application like application filed under Sections 9 and 34 of the Arbitration Act. The object of the creation of Commercial Court is speedy disposal of commercial matters involving trade and commerce to ease the business transactions. As such, execution application is not maintainable before the Commercial Court and has to be transferred to the Court of District and Sessions Judge. In fact, the Commercial Court No. 1, Jaipur vide order dated 14.12.2018 required the parties to give appearance before the Court of District and Sessions Judge, Jaipur Metropolitan and further (Downloaded on 06/06/2021 at 06:07:12 PM) (9 of 19) [CMA-12/2019] directed to reduce the file from pendency list for the purpose of statistics. The Commercial Court thereafter could not resume the proceedings of execution petition. Learned counsel in support of his arguments relied upon the judgment of High Court of Chhattisgarh at Bilaspur in South Easters Coalfields Limited (SECL) Through The Chief General Manager, SECL, Sohagpur Area, District Shahdol, Madhya Pradesh Vs. Padam Kumar Singhaniya (TPC No. 59 of 2017 decided on 22.01.2018) and submitted that aforesaid judgment has been upheld by the Supreme Court while dismissing Petition for Special Leave to Appeal (C) No. 14884/2018 South Eastern Coal Fields Ltd. (SECL) Vs. Padam Kumar Singhaniya decided on 05.07.2018.
We have given our anxious consideration to rival submissions, carefully perused the material on record and studied the cited precedents.
The Commercial Court, Ajmer has relied upon the judgment of the Supreme Court in Sundaram Finance Limited represented by J. Thilak, Senior Manager (Legal) (Supra) in holding that an application under Section 36 of the Arbitration Act for execution of award cannot be treated as an original or independent application de hors the main arbitration proceedings in which final award has already been rendered, thus resulting into termination of arbitration proceedings. In the aforesaid case, respondent Abdul Samad defaulted in payment of a loan taken for vehicle from the appellant financial institution. An ex-parte award was passed against the respondents. Case of the appellant before the Supreme Court was that the award being enforceable as a decree under Section 36 of the Arbitration Act, execution (Downloaded on 06/06/2021 at 06:07:12 PM) (10 of 19) [CMA-12/2019] proceedings were filed in the jurisdiction of the Courts at Morena, Madhya Pradesh under Section 47 read with Section 151 and Order 21 Rule 27 CPC. Plea of the respondent was that the vehicle concerned was stolen. The Trial Court returned the execution application on the ground of jurisdiction. Due to conflicting views of various High Courts, the appellant therein directly approached the Supreme Court against the order of the trial court. In those facts, the Supreme Court held that some High Courts are of the incorrect view that transfer of decree should first be obtained before filing the execution petition before the Court where the assets are located, while other High Courts are of the correct view that an award is to be enforced in accordance with the provisions of the CPC in the same manner as if it were a decree of the Court as per Section 36 of the Arbitration Act, which does not imply that the award is a decree of a particular Court, and it is only a fiction. Thus, the award can be filed for execution before the Court where the assets of the judgment debtor are located. Section 36 of the Arbitration Act would show that an award is to be enforced in accordance with the provisions of the CPC in the same manner as if it were a decree. It was in that context that the Supreme Court held that line of reasoning supporting the award to be filed in a so-called Court of competent jurisdiction and then to obtain a transfer of the decree is primarily based on the jurisdiction clause found in Section 42 of the Arbitration Act, which applies with respect to an application being filed in Court under Part I. The jurisdiction is over the arbitral proceedings. The subsequent application arising from that agreement and the arbitral proceedings are to be made in that Court alone. However, the Supreme Court further observed that what has (Downloaded on 06/06/2021 at 06:07:12 PM) (11 of 19) [CMA-12/2019] been lost sight of is Section 32 of the Arbitration Act, which provides for arbitral proceedings to be terminated by the final arbitral award. 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, Section 42 of the Arbitration Act, which deals with the jurisdiction issue in respect of arbitral proceedings, does not have any relevance. The Supreme Court, therefore, held that the decree of 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 Arbitration Act is equated to a decree of the Court for the purposes of execution and only for that purpose, an award passed by the Arbitral Tribunal is deemed to be a decree under Section 36 of the Arbitration Act. There is no deeming fiction anywhere to hold that the Court within whose jurisdiction the arbitral award is passed should be taken to be the Court, which passed the decree. The Arbitration Act actually transcends all territorial barriers. Thus, 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. Clearly, the Supreme Court in the aforementioned case of Sundaram Finance Limited represented by J. Thilak, Senior Manager (Legal) (Supra) did not have the occasion to deal with inter play of Section 36 of the Arbitration Act with Sections 10(3) and 15(2) of the Commercial Courts Act.
The Supreme Court in State of West Bengal & Others Vs. Associated Contractors (supra) was dealing with a case (Downloaded on 06/06/2021 at 06:07:12 PM) (12 of 19) [CMA-12/2019] where an Item Rate Tender was executed and signed between Associated Contractors and the concerned Superintending Engineer for execution of the work of excavation and lining of Teesta-Jaldhaka Main Canal from Chainage 3 Kms. to 3.625 Kms. in Police Station Mal, District Jalpaiguri, West Bengal. Para 25 of the said contract contained an arbitration clause. The respondent therein filed an application under Section 9 of the Arbitration Act for interim orders in the High Court of Calcutta. A learned Single Judge of the High Court after granting leave under Clause 12 of the Letters Patents, passed an ad-interim ex-parte injunction order, which was confirmed on 10.12.1998. Meanwhile, a retired Hon'ble Judge was appointed as Arbitrator under Section 11 of the Arbitration Act to adjudicate upon the disputes between the parties. Recall application filed by the State was dismissed on 20.01.2000. An appeal was filed against order dated 10.12.1998, confirming injunction order, before Division Bench in which operation of the same was stayed. Learned Arbitrator, however, passed the award on 30.06.2004. The State of West Bengal filed an application under Section 34 of the Arbitration Act to set aside the arbitral award before the Principal Civil Court of the learned District Judge at Jalpaiguri, West Bengal, which issued notice to the respondent. The respondent filed an application under Article 227 of the Constitution challenging the jurisdiction of the Court of learned District Judge at Jalpaiguri. Learned Single Judge of the High Court of Calcutta allowed the petition vide judgment dated 11.04.2005. The Supreme Court on examining definition of "Court" given in Section 2(1)(e) and provision of Section 42 of the Arbitration Act, which are corresponding to provisions of Section 2(c) and 31(4) of the Arbitration Act, 1940, observed thus: (Downloaded on 06/06/2021 at 06:07:12 PM)
(13 of 19) [CMA-12/2019] "11. It will be noticed that Section 42 is in almost the same terms as its predecessor section except that the words "in any reference" are substituted with the wider expression "with respect to an arbitration agreement". It will also be noticed that the expression "has been made in a court competent to entertain it", is no longer there in Section 42. These two changes are of some significance as will be pointed out later. Section 42 starts with a non- obstante clause which does away with anything which may be inconsistent with the section either in Part I of the Arbitration Act, 1996 or in any other law for the time being in force. The expression "with respect to an arbitration agreement" widens the scope of Section 42 to include all matters which directly or indirectly pertain to an arbitration agreement. Applications made to courts which are before, during or after arbitral proceedings made under Part I of the Act are all covered by Section 42. But an essential ingredient of the section is that an application under Part I must be made in a court.
21. One other question that may arise is as to whether Section 42 applies after the arbitral proceedings come to an end. It has already been held by us that the expression "with respect to an arbitration agreement" are words of wide import and would take in all applications made before during or after the arbitral proceedings are over. In an earlier judgment, Kumbha Mawji v. Dominion of India, AIR 1953 SC 313, the question which arose before the Supreme Court was whether the expression used in Section 31(4) of the 1940 Act "in any reference"
would include matters that are after the arbitral proceedings are over and have culminated in an award. It was held that the words "in any reference"
cannot be taken to mean "in the course of a reference", but mean "in the matter of a reference"
and that such phrase is wide enough and comprehensive enough to cover an application made after the arbitration is completed and the final award is made (See AIR pp. 317-18, paras 13-16). As has been noticed above, the expression used in Section 42 is wider being "with respect to an arbitration agreement" and would certainly include such applications.
25. Our conclusions therefore on Section 2(1)(e) and Section 42 of the Arbitration Act, 1996 are as follows:
(a) xxxxxxxx
(b) xxxxxxx
(c) xxxxxxx (Downloaded on 06/06/2021 at 06:07:12 PM) (14 of 19) [CMA-12/2019]
(d) xxxxxxx
(e) xxxxxxx
(f) Section 42 will apply to applications made after the arbitral proceedings have come to an end provided they are under Part I.
(g) xxxxxxxx."
It may be noted that the judgment of the Supreme Court in Sundaram Finance Limited represented by J. Thilak, Senior Manager (Legal) (Supra) was delivered by two Judges Bench and judgment of the Supreme Court in State of West Bengal & Others Vs. Associated Contractors (supra), which specifically dealt with provisions of Section 10 and 15 of the Commercial Courts Act, was delivered by three Judges Bench. Therefore, in view of categorical finding recorded in State of West Bengal & Others Vs. Associated Contractors (supra), it has to be accepted that Section 42 of the Arbitration Act would govern the field not only in respect of the applications made to the Court, before and during arbitral proceedings but also qua those filed after the arbitral proceedings are over provided that such applications are made in Part I of the Arbitration Act. The expression "with respect to an arbitration agreement" as used in Section 42 of the Arbitration Act, as held by the Supreme Court, are words of wider import and would take in its sweep all applications filed before, during or after, the arbitral proceedings are over provided such applications are made under Part I, which, obviously would also include an application under Section 36 of the Arbitration Act as it is very much covered by Part I of the said Act.
Gujarat High Court in M/s. OCI Corporation (supra) was dealing with a case where M/s. OCI Corporation filed application (Downloaded on 06/06/2021 at 06:07:12 PM) (15 of 19) [CMA-12/2019] under Section 15(5) of the Commercial Courts Act read with Section 2(1)(e)(ii) and Section 47 of the Arbitration Act seeking clarification and appropriate direction for transfer of execution petition pending before the District Court, Gandhidham-Kutch either to the High Court of Gujarat or to appropriate Commercial Court/Commercial Division. Gujarat High Court on analysis of provisions of Sections 2(e), 47 of the Arbitration Act and Section 2(1)(i), Section 6, 10, 15 of the Commercial Courts Act in para 11 of the Report held as under:
"11.00. The sum and substance of the above discussion would be, (1) Where the subject matter of an arbitration is a commercial dispute of a specified value and if such arbitration is international commercial arbitration, all the applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 shall be heard, decided and disposed of by the Commercial Division where such commercial Division has been constituted in the High Court i.e. in the present case High Court of Gujarat.
(2) Where the subject matter of an arbitration is a commercial dispute but not of a specified value and if such arbitration is international commercial arbitration, considering the provisions of Arbitration and Conciliation (Amendment) Act, 2015 the same shall be heard, decided and disposed of by the concerned High Court.
(3) Where the subject matter of an arbitration is a commercial dispute of a specified value and if such arbitration is other than international arbitration, all the applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 shall be filed in and heard, decided and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such commercial court has been constituted.
Considering section 15 of the Commercial Courts Act, all the applications/appeals in question under the Arbitration and Conciliation Act, 1996, therefore, are required to be transferred to the concerned Commercial Division of the High Court of Gujarat or (Downloaded on 06/06/2021 at 06:07:12 PM) (16 of 19) [CMA-12/2019] before the Gujarat High Court or before the concerned commercial court and as observed hereinabove and as the case may be."
The aforesaid judgment was subjected to challenge before the Supreme Court by Kandla Export Corporation & Others by filing Petition for Special Leave to Appeal (C) No. 6557/2017, which was dismissed vide order dated 03.03.2017. Similar dispute again cropped up before Gujarat High Court at Ahmedabad in Vadodara Mahanag Seva Sadan Formaly known as Municipal Corporation (supra) wherein Division Bench of Gujarat High Court, relying upon its earlier judgment in M/s. OCI Corporation (supra), reiterated the same view. The question as to which Court would be competent to exercise jurisdiction for execution of award passed under the Arbitration Act was also answered by the Gujarat High Court in Vijay Cotton and Fiber Company (supra) holding that the Commercial Court of competent jurisdiction would be the Court to execute the decree and not the ordinary Civil Court constituted under Gujarat Civil Courts Act.
Section 10(3) and 15(2) of the Commercial Courts Act both are relevant for deciding the controversy involved in the present matters and they are reproduced as under:
"10. Jurisdiction in respect of arbitration matters.-Where the subject-matter of an arbitration is a commercial dispute of a Specified Value and-
(1) xxxxxxxxxxxxxx (2) xxxxxxxxxxxxxx (3) If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any principal civil court of original jurisdiction in a district (not (Downloaded on 06/06/2021 at 06:07:12 PM) (17 of 19) [CMA-12/2019] being a High Court) shall be filed in, and heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted."
"15. Transfer of pending cases.-(1) xxxxxxxxxxx (2) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a commercial dispute of a Specified Value pending in any civil court in any district or area in respect of which a Commercial Court has been constituted, shall be transferred to such Commercial Court:
Provided that no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court shall be transferred either under sub-section (1) or sub-section (2). (3) xxxxxxxxxxx (4) xxxxxxxxxxx (5) xxxxxxxxxx"
A conjoint reading of Section 10(3) and 15(2) of the Commercial Courts Act makes it clear that an application under Section 36 of the Arbitration Act, seeking execution of award, satisfies the requirement of "being application arising out of such arbitration under the provisions of the Act of 1996". If such application is pending before any Principal Civil Court of original jurisdiction in a district, the same shall be transferred to Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted. In view of Section 10(3) of the Commercial Courts Act, since the awards in the present set of cases have been rendered in arbitral proceedings, their execution applications filed under Section 36 of the Arbitration Act having regard to provisions of Section 15(3) of the Commercial Courts Act, which contemplates transfer of all such pending applications to Commercial Court, as a legal corollary thereto, would also be liable to be filed and maintained before the Commercial (Downloaded on 06/06/2021 at 06:07:12 PM) (18 of 19) [CMA-12/2019] Court and not the ordinary Civil Court/Principal Court of District Judge.
In so far as judgment of Chattisgarh High Court in South Eastern Coalfields Limited Vs. Padam Kumar Singhaniya (supra) relied by Mr. Alok Garg, learned counsel for the petitioner is concerned, we are, with great respect, not inclined to concur with the view taken by that Court that word, "application" mentioned in sub-section (2) of Section 15 of the Commercial Courts Act would only mean an original application and not an application for execution, which is preferred after the award has been delivered. In our considered opinion, there is no warrant for taking such narrow interpretation of Section 15(2) of the Commercial Courts Act. Analogy which the learned Judges of Chhattisgarh High Court have taken from proviso to Section 15(2) of the Commercial Courts Act is that since no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court, shall be transferred either under sub-section (1) or sub-section (2) of Section 15 of the Commercial Courts Act, therefore, application subsequently filed for execution of the award could also not be entertained by the Commercial Court. However, in our view, that is not the correct interpretation of proviso to Section 15(2) of the Commercial Courts Act, which has been engrafted therein only with a limited purpose of ensuring that cases in which arguments have been heard and judgments reserved, are given finality and not required to be reopened so as not to repeat those proceedings all over again.
In view of above, we answer the question of law formulated in the beginning of this judgment in the terms that the (Downloaded on 06/06/2021 at 06:07:12 PM) (19 of 19) [CMA-12/2019] Commercial Court constituted under Section 3(i) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015, as defined in Section 2(b) of that Act, would be the only competent Court to execute an arbitral award on a "commercial dispute" passed under the Arbitration and Conciliation Act, 1996 and not the Principal Civil Court having the original jurisdiction in the District i.e. the Court of District and Sessions Judge as defined under Section 2(1)(e) of the Arbitration and Conciliation Act, 1996.
In view of our opinion recorded above, Appeals No. 12/2019 and 5890/2018 deserve to succeed and are accordingly allowed. The orders impugned therein are set aside. Writ petition No. 4379/2019 is however dismissed.
All the pending stay applications as also other interim applications, if any, stand disposed of.
Office is directed to place a copy of this judgment on record of each connected matter.
(ALOK SHARMA),J (MOHAMMAD RAFIQ),J
MANOJ NARWANI /6 to 8
(Downloaded on 06/06/2021 at 06:07:12 PM)
Powered by TCPDF (www.tcpdf.org)