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Application For Enforcement Of Arbitral Award Would Lie Only Before The Court Where Application Under Section 9 And/ Or Section 34 Has Been Filed : Reiterates Telangana High Court

Parina Katyal
18 Jun 2022 3:30 PM GMT
Application For Enforcement Of Arbitral Award Would Lie Only Before The Court Where Application Under Section 9 And/ Or Section 34 Has Been Filed : Reiterates Telangana High Court
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The Telangana High Court has reiterated that in view of Section 42 of the Arbitration and Conciliation Act, 1996 (A&C Act), only the Court where an application under Section 9 and/or Section 34 has been filed would have the jurisdiction to entertain an application for enforcement of the arbitral award.

The Bench, consisting of Justices P. Naveen Rao and Sambasivarao Naidu, held that Section 42 of the A&C Act opens with a non-obstante clause and, therefore, even though an arbitral award is treated as a 'decree in fiction' by a Civil Court, Section 42 of the A&C Act would cover within its ambit all provisions dealing with execution of an award.

The petitioner M/s. India Media Services Private Limited and the respondent M/s. SBPL Infrastructure Limited entered into a nomination agreement. After certain disputes arose between the parties, the petitioner invoked the arbitration clause. The respondent filed an application under Section 9 of the A&C Act for interim measures before the Calcutta High Court. After an arbitral award was passed in favour of the respondent, the petitioner filed an application under Section 34 of the A&C challenging the arbitral award before the Calcutta High Court.

The respondent/award holder filed an Execution Petition before the Civil Court of Hyderabad, which was allowed. Against this, the petitioner filed a Revision Petition before the Telangana High Court.

The petitioner M/s. India Media Services Private Limited submitted before the Telangana High Court that as per the provisions of Section 42 of the A&C Act, only the Principal District Court or the High Court, where applications under Sections 9 and/or Section 34 of the A&C Act have been filed, have the jurisdiction to deal with the applications that are subsequently filed after the conclusion of the arbitral proceedings.

Thus, the petitioner averred that the Civil Court of Hyderabad had no jurisdiction to entertain the Execution Petition since the applications under Section 9 and Section 34 had been filed in the State of West Bengal. Therefore, the petitioner contended that the order passed by the Executing Court in Hyderabad was illegal and void ab initio.

The respondent M/s. SBPL Infrastructure Limited submitted that once an arbitral award is passed by the Arbitrator, the award could be enforced at any place in the country as a decree of the Civil Court, and more particularly in the place where the concerned property was located. The respondent averred that since the concerned property was located in Hyderabad, the Civil Court of Hyderabad had the jurisdiction to entertain the Execution Petition.

Section 42 of the A&C Act provides that notwithstanding any other provision in Part-I of the A&C Act and any other law, where with respect to an arbitration agreement any application has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings, and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.

The Court observed that Section 42 of the A&C Act opens with a non-obstante clause. Therefore, the Court held that even though an award is treated as a 'decree in fiction' by a Civil Court, Section 42 of the A&C Act would cover within its ambit all provisions dealing with the execution of an award.

Thus, the Court held that in view of Section 42 of the A&C Act, only the Court where an application under Section 9 and/or Section 34 was filed would have the jurisdiction to entertain an application for enforcement of the award.

The Court observed that the Supreme Court in the case of State of West Bengal versus Associated Contractors (2014) had held that the expression "with respect to an arbitration agreement", as appearing in Section 42 of the A&C Act, applies to all applications, whether made before or during the arbitral proceedings or after the arbitral award was passed. The Court noted that the Supreme Court had ruled that applications under Section 9 of the A&C Act for interim measures and applications under Section 34 to set aside arbitral award, being applications made to a Court, would fall within the scope of Section 42.

Thus, the High Court held that Section 42 of the A&C Act is also applicable post arbitral award and, therefore, an application for execution of the arbitral award has to be filed in the Court where an application under Section 9 and/or Section 34 was earlier filed.

The Court observed that the respondent, in support of its contention that a petition for enforcement of an arbitral award can be filed anywhere in the country like a decree of the Civil Court, had relied on the decision of the Supreme Court in Cheran Properties Limited versus Kasturi and Sons Limited (2018), wherein the Supreme Court had rejected the application of Section 42 of the A&C Act. The respondent averred that since the decision in Cheran Properties Limited (2018) was rendered by the Supreme Court after the judgment in Associated Contractors (2014), therefore, the decision in Cheran Properties Limited (2018) shall prevail over the decision in Associated Contractors (2014).

The Court noted that the Supreme Court in Cheran Properties Limited (2018) was dealing with an arbitral award which had held that the award holder was entitled to certain share certificates. The Supreme Court had ruled that to effectuate the transfer of share certificates, the award holder was entitled to seek rectification of the register of companies only before the NCLT.

The Supreme Court had held that since the Companies Act was a special enactment, which contained provisions for rectification of the register of a company, the NCLT alone had the jurisdiction to entertain an application seeking rectification of the register of the company. Thus, the Supreme Court had ruled that Section 42 of the A&C Act was not applicable.

The High Court held that there is no conflict in the decision rendered by the Supreme Court in Associated Contractors (2014) and Cheran Properties Limited (2018), since they deal with different contingencies post the passing of the arbitral award.

The High Court ruled that the judgment of the Supreme Court in Cheran Properties Limited (2018) did not overrule the decision of the Supreme Court in Associated Contractors (2014) and that the law as laid down in Associated Contractors (2014) is still applicable.

The High Court observed that the applications under Section 9 and Section 34 of the A&C Act had been filed before the Calcutta High Court. Thus, the High Court held that, in view of the decision in Associated Contractors (2014) and the provisions of Section 42 of the A&C Act, the Calcutta High Court alone had the jurisdiction to entertain an application for enforcement of the award.

Thus, the Court held that the Civil Court in Hyderabad had no jurisdiction to entertain the Execution Petition for enforcement of the arbitral award under Section 36 of the A&C Act. The Court hence allowed the Revision Petition.

Case Title: M/s. India Media Services Private Limited versus M/s. SBPL Infrastructure Limited

Citation : 2022 LiveLaw (Tel) 50

Dated: 09.06.2022 (Telangana High Court)

Counsel for the Petitioner: Mr. M.S. Prasad, learned senior counsel appearing for Ms. A. Satyasri

Counsel for the Respondent: Mr. Venkat Prasad Ukkalam

Click Here To Read/ Download Order

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