Enforcement of a Domestic Arbitral Award is governed by Part 1 of the Arbitration and Conciliation Act, 1996 [“the Act”]. Section 2(2) of the Act clarifies that Part 1 will apply to cases in which the place of arbitration is in India. Section 36 of the Act stipulates that an Arbitral Award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908 [“CPC”] after the period of 3 months has expired for challenging the Arbitral Award under Section 34 of the Act. Prior to the Arbitration and Conciliation (Amendment) Act 2015 [“the 2015 Amendment”], mere filing of an application under Section 34 of the Act, challenging the Arbitral Award, would result in an automatic stay of the Enforcement proceedings under Section 36, however, pursuant to the 2015 Amendment, mere filing of an application under Section 34, shall not, by itself, render the award unenforceable, unless the Court grants stay of the operation of the Arbitral Award1Section 36(2). For a detailed discussion on grounds of challenge envisaged under Section 34 of the Act, refer here.
An application for execution of the Arbitral Award must be made in accordance with the procedure prescribed under Order XXI Rule (11) (2) of the CPC which lays down the format and requisite details that the Decree Holder/Award Creditor must fill before applying to the Court for enforcement of the Arbitral Award.
Which Court will have Jurisdiction to entertain Execution Proceedings?
Section 2(1)(e)(i) of the Act defines “Court” for the purpose of Domestic Arbitration as-
- Principal Civil Court of original jurisdiction in a district.
- High Court in exercise of its ordinary original civil jurisdiction.
In India, total five High Courts have been conferred with ordinary original civil jurisdiction viz. Delhi, Bombay, Madras, Calcutta, and Himachal Pradesh. Therefore, as per Section 2(1)(e), the Award Creditor must approach the aforesaid two courts, as the case may be, for enforcement of the Arbitral Award by seeking recourse to the procedure laid down under Order XXI Rule (11)(2) of the CPC.
Earlier there was a misconception that in order to execute the Arbitral Award, the Award Creditor must file an application before the court having jurisdiction over the Arbitral Proceedings and obtain a transfer decree from that court to the court of competent jurisdiction to enforce the Arbitral Award. However, this misconception was repelled and clarified by the Supreme Court in Sundram Finance Limited vs Abdul Samad & Anr.2Civil Appeal No. 1650 of 2018 wherein the Supreme Court, in no uncertain terms, elucidated that an application for enforcement of an Arbitral Award can be filed anywhere in the country where the decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court having jurisdiction over the Arbitral Proceedings.
The Delhi High Court in Continental Engineering Corporation vs Sugesan Transport Pvt. Ltd.3OMP (ENF.) (Comm.) 38 of 2021 also expounded upon the aforesaid position of law by relying upon the ratio laid down in Sundram Finance (supra) and held that it is immaterial where the Arbitral Award was passed, it can be executed by a Court, within whose jurisdiction the judgment debtor-
- Resides
- Carries on business, or
- His property is situated.
This position of law was further affirmed by the Allahabad High Court recently in the matter of National Highway Authority of India and Anr. vs Jagpal Singh42024 AHC 175916.
Will Section 42 of the Act apply to Execution Proceedings?
Section 42 of the Act bars filing of any application “with respect to an arbitration agreement” before any other court, except to that court whose jurisdiction has already been invoked by the parties. If, for example, a party to an arbitration agreement has filed an application before a Principal Civil Court situated in Haryana, then all the subsequent applications pertaining to such arbitration proceedings shall only be entertained by that Principal Civil Court in Haryana and no other court. Section 42, essentially, endeavors to streamline the arbitral proceedings by avoiding the possibility of two different courts exercising jurisdiction over the same arbitration agreement executed between the parties.
Therefore, an issue arose that Execution Proceedings for enforcement of the Arbitral Award could only be filed before the Court whose jurisdiction had already been invoked by the parties as per Section 42 of the Act. However, the Supreme Court, in Sundram Finance (supra) answered in the negative. The Supreme Court emphasized upon the phrase “with respect to an arbitration agreement” falling in Section 42 of the Act read with Section 32 of the Act which inter alia stipulates that the Arbitral Proceedings shall be terminated with passing of the Final Arbitral Award and observed that at the time of making an application for execution of the Award, the arbitral proceedings already stand terminated, therefore, Section 42 will have no application for the purpose of execution of the Arbitral Award.
What if Principal Civil Court and High Court, both have concurrent jurisdiction over the dispute?
Section 2(1)(e) of the Act defines “Court” as Principal Civil Court of original jurisdiction and High Court exercising ordinary original civil jurisdiction, therefore, giving rise to a situation wherein a Principal Civil Court as well as High Court, in exercise of its ordinary original civil jurisdiction, could have jurisdiction to entertain an arbitration dispute, in a particular area, as per Section 2(1)(e) of the Act. In State of Maharashtra through Executive Engineer vs Atlanta Ltd5(2014) 11 SCC 619. one of the parties moved an application under Section 34 of the Act, before the Principal Civil Court, Thane, Mumbai and on the same day, the opposite party also moved an application under Section 34 of the Act challenging the Arbitral Award, before the Bombay High Court, exercising ordinary original civil jurisdiction in that area. The Supreme clarified that if a choice arises between the above two courts, then the parties must exercise the choice in favour of the High Court, being the superior court as per Section 2(1)(e) as follows-
“24.2…Undoubtedly, a “principal Civil Court of original jurisdiction in a district”, is the superior most court exercising original civil jurisdiction in the district over which its jurisdiction extends. It is clear, that Section 2(1)(e) of the Arbitration Act having vested jurisdiction in the “principal Civil Court of original jurisdiction in a district”, did not rest the choice of jurisdiction on courts subordinate to that of the District Judge. Likewise, “the High Court in exercise of its ordinary original jurisdiction”, is the superior most court exercising original civil jurisdiction, within the ambit of its original civil jurisdiction. On the same analogy and for the same reasons, the choice of jurisdiction, will clearly fall in the realm of the High Court, wherever a High Court exercises “ordinary original civil jurisdiction”.
33… Under the scheme of the provisions of the Arbitration Act therefore, if the choice is between the High Court (in exercise of its “ordinary original civil jurisdiction”) on the one hand, and the “principal civil court of original jurisdiction” in the District i.e. the District Judge on the other; Section 2(1)(e) of the Arbitration Act has made the choice in favour of the High Court. This in fact impliedly discloses a legislative intent. To our mind therefore, it makes no difference, if the “principal civil court of original jurisdiction”, is in the same district over which the High Court exercises original jurisdiction, or some other district. In case an option is to be exercised between a High Court (under its “ordinary original civil jurisdiction”) on the one hand, and a District Court (as “principal Civil Court of original jurisdiction”) on the other, the choice under the Arbitration Act has to be exercised in favour of the High Court.” (emphasis supplied)
Therefore, if a situation arises wherein a Principal Civil Court and High Court both have jurisdiction as per Section 2(1)(e) of the Act, the parties must approach the High Court, exercising its ordinary original civil jurisdiction.
Conclusion
The Arbitral Award can be executed anywhere in the country depending upon the residence, assets and place of business of the Award Debtor. Now, a party need not file an application before the Court having jurisdiction over the Arbitral Proceedings, seeking transfer of Decree. As per the ratio laid down in Sundram Finance (supra) the Award Creditor can now directly approach the Court of competent jurisdiction for execution of the award. The 2015 amendment also has streamlined the execution process by doing away with the automatic stay of execution proceedings upon filing of Section 34 Application. However, history is witness to the fact that in India, the real battle for the litigant only starts when the Decree has been obtained. Execution of a Decree is a separate and independent proceeding, fraught with procedural delays which, more often than not, results in protraction of proceedings, disentitling the litigant from reaping the fruits of litigation.
