I.C.D.S Ltd. v. Mangala Builders Pvt. Ltd. And Others

Mohan Kumar, J.:—

An award was made by the Arbitrator appointed under the Arbitration and Reconciliation Act, 1996 (hereinafter referred to as the Act) in terms of the arbitration agreement entered into between the petitioner and the respondents. The award was made on 13-02-1997. The said award is ought to be executed by the decree holder invoking Section 36 of the Act after the period to set aside the award has expired by filing execution petition before the II Additional Civil Judge (Senior Division), Mangalore within whose jurisdiction the properties of the respondents are situate when sale proceedings were in progress the respondents filed I.A-V contending that the Court before which the execution is levied had no jurisdiction to entertain the same. On that objection being upheld, the execution petition was dismissed. The petitioner challenges the said order. Hence the question has come before this Court to consider the correctness of the finding that the Court below had no jurisdiction to entertain the execution proceedings.

2. The question mainly involves the interpretation of the words in Section 36 of the Act. The said Section is as follows:

“Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (V of 1908) in the same manner as if it were a decree of the Court.”

The expression relevant to understand this issue are the words “as if it were a decree of the Court.” The expression Court has been defined in the Act in Section 2(e) in the following manner:

““Court” means the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes”

(underlining for emphasis)

It may be noted that if one juxtaposes the expression “Court” occurring in Section 36 with Section 2(e) of the Act it would mean that the award shall be enforced in the same manner as if it were a decree made by a Court having jurisdiction to decide questions forming the subject-matter of the Arbitration if the same had been the subject matter of the suit. If that be so, the inquiry would be, which is the Court having jurisdiction to decide the question forming the subject matter of the Arbitration, if the same had been the subject matter of a suit. Then that Court which has the jurisdiction to decide the subject matter of the Arbitration would have jurisdiction to levy execution. That takes us to Civil Procedure Code. We may refer to Section 38 of the Civil Procedure Code (CPC for short) which is relevant in this context. That Section is as under:

“38. Court by which decree may be executed: A decree may be executed either by the Court which passed it, or by the Court to which it is sent for execution.”

If so, which is the Court which could have passed the decree? The answer lies in Section 15 to 20 of CPC. In the instant case, it would be Section 20 thereof. It reads thus:

“20. Other suits to be instituted where defendants reside or cuse of action arises:— Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-

(a) the defendants, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, on personally works for again, or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises

Explanation:— A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.”

Therefore, on a combined reading of these provisions it can be seen that the Court which can entertain a suit with respect to the subject matter of arbitration dispute alone can exercise the power under Section 36 of the Act as well Mr. Gopal Hegde, counsel for the petitioner submits that the respondents reside within the jurisdiction of the District Court, Mangalore. In such an event, which is the Court before whom the suits will have to be preferred? The answer to this question is available from Section 14 of the Karnataka Civil Courts Act. This Section reads as follows:

“14. Jurisdiction of District Court: (1) The District Court shall be deemed to be the principal Civil Court of original jurisdiction within the local limits of its jurisdiction.

(2) Subject to the provisions of the Code of Civil Procedure, 1908 (Central Act 5 of 1908), the jurisdiction of a District Court shall extend to all original suits and proceedings of a Civil nature.”

It means the District Court defined in the Act would be the Court of Principal District Judge. In other words, the Principal District Judge exercising jurisdiction over Mangalore alone would have jurisdiction to entertain the execution proceedings. The corollary position would be it is only that Court which could have entertained suit that can enforce the award.

4. This is also implied from the wordings of Section 36 itself. A right to enforce the award arises only after the period for setting aside the arbitral award under Section 34 has expired or such an application having been made is rejected. That is to say, the Court executing the decree has to satisfy itself, before entertaining the application for execution that, the period for setting aside the award has expired or such an application having been made has been refused. If that be so, inferentially, the Court that can exercise the power under Section 34 of the Act can alone entertain the steps to enforce the arbitral award. It means the “Court” as understood in Section 34 has alone the jurisdiction to entertain the enforcement of the arbitral award.

5. In this case, admittedly the subject matter of Arbitration, could have been a suit before the principal District Judge, Mangalore. The execution petition having been levied in a Court other than the principal District Judge is obviously not maintainable. The Counsel for the petitioners Mr. Gopal Hegde, submits that they intend to withdraw the present execution petition and to file the same before the proper Court having jurisdiction under Section 36 of the Act. I permit them to do so. He also seeks that the present interim order granted by this Court may be allowed to continue for a period of one month to enable them to secure appropriate order from the executing Court. Though this request is objected, I feel, it will be only proper to allow the interim order made in the Revision to continue for a period of one month from today to enable the petitioners to move the appropriate Court for orders to safeguard their interest. The Revision Petition is disposed of in the above manner. No costs.