Arbitration Award Execution , Can File Anywhere, Bar Under Section 42 Not Applicable: Allahabad High Court Reiterates

The bench of Justice Pankaj Bhatia held that Section 42 of the A&C Act which bars any petition in any Court other than the Court where the first petition in relation to arbitration agreement was filed does not apply to petitions for the enforcement of the arbitration award. It relied on the judgment of the Supreme Court in Sundaram Finance^[1] and Cheran Properties^[2] to arrive at the above conclusion.

Facts

The parties entered into an agreement dated 02.07.2018. In terms of the agreement, the respondent was to made supplies to the petitioner. A dispute arose between the parties in relation to the payments for the supplies made under the agreement.

Accordingly, the respondent filed reference before the MSEF Council and an award in its favour. The petitioner challenged the award under Section 34 of the A&C Act read with Section 19 of the MSMED Act before the Commercial Court, Kanpur, however, the challenge was dismissed by the Court due to its failure to deposit the mandatory 75% of the awarded amount. Thereafter, the respondent filed the execution petition under Section 36 of the A&C Act before the Commercial Court, Lucknow.

The petitioner filed its objection to the execution petition on the ground that since the petition under Section 34 was filed before the Commercial Court, Kanpur, therefore, by virtue of Section 42 of the A&C Act any subsequent petition has to be filed before the same Court only. The executing court rejection the said objection. Aggrieved thereby, the petitioner challenged it under Article 227 of the Indian Constitution.

Ground of Challenge

The petitioner challenged the order of the executing court on the following ground(s):

• The award was delivered at Kanpur and it was also challenged before the Court at Kanpur, therefore, the bar under Section 42 would apply and the execution petition filed before the Court at Lucknow would not be maintainable.

Analysis by the Court

The Court observed that the Supreme Court in Sundaram Finance (supra) and Cheran Properties (supra) has observed that the award holder can file the execution petition before any court in the country where the award is enforceable and there is no requirement to obtain a transfer of the decree/award from the Court which would have the jurisdiction over the arbitral proceedings.

The Court held that the respondent has committed no error in filing for the execution before the Court at Lucknow and merely because the award was delivered in Kanpur or the petition under Section 34 was filed before the Court at Kanpur would not make the petition non-maintainable as the bar under Section 42 of the Act does not apply to execution petitions.

Accordingly, the Court dismissed the petition.

Case Title: Madhyanchal Vidyut Vitran Nigam Ltd v. Shashi Cable, Matters under Article 227 No. 3384 of 2023

Date 13.10.2023

Counsel for the Petitioner: Mr. Manish Jauhari

Counsel for the Respondent: Mr. J.N. Mathur, Senior Advocate with Mr. Amit Kumar Singh and Mr. Utkarsh Srivastava

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