Order Of Executing Court Staying Execution Of Award Under O 21, R 26 CPC Is Within Jurisdiction: Meghalaya High Court

The bench of Justice W. Diengdoh observed that the Executing Court had passed the order to enable the award debtor to approach the concerned court for seeking stay of the execution after its appeal under Section 37 of A&C Act was dismissed. The Executing Court thus found that sufficient cause, as per Order XXI Rule 26 CPC, had been shown.

Upholding the order of the Executing Court, the court remarked that the Executing Court committed no jurisdictional error in passing the said order.

The bench, however, found that the Executing Court’s finding that the award/ judgment debtor, North Eastern Electric Power Corporation Ltd. (NEEPCO), was a “State” within the meaning of Section 82 CPC and was, therefore, entitled to the statutory period of three months within which the decree may not be executed, was incorrect.

The court held that though NEEPCO was a “State” under Article 12 of the Constitution of India, however, it cannot be considered a “State” under Section 82 of CPC since the term “State” under the later provision would only mean a “State Government”.

Section 82 of CPC provides that where, in a suit filed by or against the Government, a decree is passed against the Union of India or a State, such decree shall not be executed unless it remains unsatisfied for a period of three months from the date of such decree.

Also, Order XXI Rule 26 of CPC gives power to the court to which a decree has been sent for execution, to stay such execution for a reasonable time, to enable the judgment debtor to apply for stay from the competent court, upon sufficient cause being shown.

The petitioner, M/s Hindustan Construction Co. Ltd, was issued a Work Order by the respondent, NEEPCO, for a Hydro-electric Project.

After some dispute arose between the parties under the Work Order, the petitioner invoked arbitration. The Arbitral Tribunal passed an award in favour of the petitioner-claimant, which was upheld by the Commercial Court in the Section 34 petition filed by the respondent under the A&C Act. The appeal filed by the respondent under Section 37 of the A&C Act was also dismissed by the Division bench of the Meghalaya High Court vide order dated 26.04.2023.

Subsequently, in the Execution Petition filed by the petitioner for execution of the award, the respondent filed an application under Section 151 of CPC seeking to put the execution on hold.

The respondent in its application sought time to approach the Supreme Court for stay of the execution.

Allowing the application, the Commercial Court functioning as an Execution Court ruled that since NEEPCO was a State under Article 12 of the Constitution, Section 82 of CPC was attracted. The execution of the Award was thus prohibited for a mandatory period of three months, the court held.

The execution of the Award was thus stayed till 25.07.2023, i.e., three months from the High Court’s order dated 26.04.2023.

Against the order of the Executing Court, the petitioner filed a petition under Article 227 of the Constitution of India before the Meghalaya High Court.

The court noted that NEEPCO had approached the Executing Court with an application under Section 151 CPC seeking stay of the execution to enable it to prefer an appropriate application before the Supreme Court for stay of the execution. The Executing Court converted the said application into one under Order XXI Rule 26 CPC, the court observed.

“Justifying the decision to stay the execution of the Award in question, the learned Execution Court has obviously found that sufficient cause has been shown by the judgment debtor/NEEPCO for stay of the said execution, inasmuch as the ground upon which the said application was made is that an appropriate application for stay of the execution have been made before the Hon’ble Supreme Court,” the court remarked.

The Executing Court ruled that since the judgment debtor/NEEPCO was a State within the meaning of Section 82 CPC, it was, therefore, entitled to the statutory period of three months within which the decree may not be executed. The said three months was calculated from the date when the decree was actually effective, that is, w.e.f. 26.04.2023, the date the appeal under Section 37 of the A&C Act was disposed of by the Division Bench.

The petitioner, M/s Hindustan Construction, argued before the High Court that NEEPCO did not fit the description of the term “Government” as found in Section 82 CPC. Thus, the provisions of Section 82 CPC would not be attracted, it claimed.

The respondent, NEEPCO, on the other hand, contended that the term “State” as found in Section 82 CPC would carry the same meaning as found in Article 12 of the Constitution.

Dismissing the contention raised by NEEPCO, the bench held that the term “State” in Section 82 CPC would only mean a “State Government”. The court said that though NEEPCO was a State under Article 12 of the Constitution, however, it cannot be considered a State under Section 82 of CPC since the term “State” under the later provision would only mean a “State Government”.

“The decision of the learned Commercial Court as regard the applicability of Section 82 to the respondent/NEEPCO as far as the proceedings herein are concerned, cannot be sustained. The observation made at para 21 of the impugned order that since NEEPCO is a State within the definition of Article 12 of the Constitution, therefore, the provisions of Section 82 CPC would be attracted is hereby differed with,” the court said.

The respondent, NEEPCO, further submitted before the court that there is no provision under the A&C Act which expressly bars the application of the provisions of CPC. Thus, it pleaded that by resorting to Order XXI Rule 26 of CPC, the Executing Court had acted well within its jurisdiction while passing the said order.

Accepting the plea raised by NEEPCO, the bench concluded, “This aspect of the matter is found acceptable to this Court, inasmuch as since there is no specific provision in the Arbitration Act as regard execution of an arbitral award or the stay of the same, therefore, the learned Commercial Court has committed no jurisdictional error by resorting to the provision of Order XXI Rule 26 CPC to pass the operative portion of the impugned order.”

“In view thereof, as pointed out above, the impugned order is found to have been passed within jurisdiction and the same is upheld, albeit with the modification of the same as regard the applicability of Section 82 CPC to the proceedings,” the court said while dismissing the petition.

Case Title: M/s Hindustan Construction Co. Ltd. vs. North Eastern Electric Power Corporation Ltd. (NEEPCO)

Citation: 2023 LiveLaw (Meg) 26

Dated: 05.07.2023

Counsel for the Petitioner: Mr. T.T. Diengdoh, Sr. Adv. with Mr. J. Shylla, Adv. Mr. C.C.T. Sangma, Adv.

Counsel for the Respondent: Mr. S. Jindal, Adv.

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