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Madhya Pradesh High Court · body

2006 DIGILAW 136 (MP)

Jaideep Tiwari v. Ashok Leyland Finance

2006-01-24

P.K.JAISWAL

body2006
ORDER 1. This revision is filed by the applicant against the order dated 19.1.2004 passed by the VI Additional District Judge, Gwalior, in Execution Case No. 5/2003, whereby the learned Executing Court rejected the objection filed by the applicant under section 47 and Order 21 Rule 5, CPC. 2. Brief facts of the case are that the respondent No.2 approached the respondent No.1 for purchase of Ashok Leyland vehicle on lease rental basis. The said request of respondent No.2 was accepted and lease agreement dated 21.3.1996 was executed between the respondent No. 1 and 2. The petitioner signed the agreement as guarantor. According to the said lease agreement, the respondent No.2 and the petitioner have agreed to repay the contractual amount, which comes to Rs.4,46,488/- in 36 monthly lease rental installments regularly during the period of lease. The respondent No.2 failed to repay the rental instalment within the stipulated time. As per clause 33 of the agreement, the petitioner and respondent No.2 agreed that the Courts in Madras shall alone have exclusive jurisdiction in respect of any matter, claim or dispute arising out of or in any way relating to this agreement. The matter was referred to the arbitrator as per clause 27 of the agreement dated 21.3.1996. The respondent No. 1 appointed Shri K.S. Gowthaman, Advocate, as arbitrator. An award was made by the arbitrator appointed under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Act") in terms of the arbitration agreement entered into between the petitioner and the respondents. The award was made on 23.8.2002. The said award is sought to be executed by the respondent No. 1 - decree holder invoking section 36 of the Act after the period to set aside the award has expired by filing execution application before the VI Additional District Judge, Gwalior, within whose jurisdiction the properties of the petitioner and respondent No.2 are situate. The petitioner filed an application on 3.9.2003 and 15.1.2004 contending that the Court before which the execution is levied had no jurisdiction to entertain the same and award is inexecutable at Gwalior. The said objections were rejected by the executing Court. 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 jurisdiction to entertain the execution proceedings. The said objections were rejected by the executing Court. 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 jurisdiction to entertain the execution proceedings. The respondent No.2 and the petitioner are liable to pay Rs.7,17,707/- alongwith the additional finance charges @12% per annum from 29.8.2001, till the same is realized in full. 3. Under the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "Act"), when the Arbitral Tribunal terminates the proceedings on merits, the party aggrieved has remedy in filing the petition under section 34 of the Act. It is not disputed by the petitioner that he has not filed any application for setting aside the award under section 34 of the Act. Section 35 declares that the award of Arbitral Tribunal shall be final and binding upon the parties and award is deemed to be a decree civil Court and can be executed as a civil Court decree. Under section 35 of the Act, the award dated 23.8.2002 is final and binding upon the respondent No. 1 and petitioner as nobody applied for its setting aside or if any such application is dismissed, then the award is entitled to the status of decree and deemed to be a judgment and decree of a Court of law and all claims made, which are subject-matter of the reference, merged with the award. The execution of the award under Order 21 of the Code of Civil Procedure is permissible as the award, though not a civil Court decree, is deemed to be a decree for the purpose of its enforcement. So, any party in order to obtain the fruits of the award can realise such fruits by executing it as if it were a civil Court decree. 4. The respondent No. 1 after the period fixed for setting aside the award was expired, filed the execution before the trial Court for execution of the decree before the Court of VI Additional District Judge, Gwalior, within whose jurisdiction property of the petitioner and respondent No.2 is situated. The objection of the petitioner, that the Gwalior Court had no jurisdiction to entertain the execution petition, has been rejected by the trial Court. The objection of the petitioner, that the Gwalior Court had no jurisdiction to entertain the execution petition, has been rejected by the trial Court. The objection that award has not been made the decree of the Court is untenable by reasons of section 36 of the Act, the award has to be enforced under the Civil Procedure Code and in the same manner as if it were the decree of the Court. 5. The question mainly involves the interpretation of the words in section 36 of the Act. The said section is as followed: "36. Enforcement. -- 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 (5 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" is 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." 6. It may be noted that if one juxtaposes the expression "Court" occurring in section 36 with 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 question forming the subject-matter of the Arbitration if the same had been the subject-matter of the suit. It 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. 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 Code of Civil Procedure ("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 sections 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 cause 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 defendant 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, or personally works for gain; 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. "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. Narwariya, counsel for the respondent No.1, submits that the petitioner is resident with the jurisdiction of the District Court, Gwalior. In such an event, which is the Court before whom suits will have to be preferred? The answer to this question is available from section 7 of the M.P. Civil Courts Act, 1958. This section reads as follows: "7. Principal civil Court of original jurisdiction -- (1) The Court of the District Judge shall be the principal civil Court of original jurisdiction in the civil district. The answer to this question is available from section 7 of the M.P. Civil Courts Act, 1958. This section reads as follows: "7. Principal civil Court of original jurisdiction -- (1) The Court of the District Judge shall be the principal civil Court of original jurisdiction in the civil district. (2) An Additional District Judge shall discharge any of the functions of a District Judge, including the functions of Principal civil Court of original jurisdiction which the District Judge may, by general or special order, assign to him and in the discharge or such functions he shall exercise the same powers as the District Judge." It means the District Court could be the Court of principal civil Court of original jurisdiction in the civil district. In other words, the Principal District Judge/Additional District Judge exercising jurisdiction over Madras 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. 7. Learned counsel for the petitioner contended that the learned executing Court committed error in entertaining the execution application and execution is to be levied in the Court of Principal civil Court at Madras and Gwalior Court had no jurisdiction to entertain the execution petition. 8. 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. It 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. 9. In this case, admittedly the subject-matter of arbitration could have been a suit before the principal civil Court at Madras. The execution petition having been levied in a Court other than the Principal civil Court is obviously not maintainable. 9. In this case, admittedly the subject-matter of arbitration could have been a suit before the principal civil Court at Madras. The execution petition having been levied in a Court other than the Principal civil Court is obviously not maintainable. The respondent No.1 is at liberty to withdraw the present execution proceedings and to file the same before the appropriate Court having jurisdiction under section 36 of the Act. 10. For the reason stated above, the impugned order dated 19.1.2004 of the trial Court cannot be sustained. The same is accordingly set aside. In result the revision filed by the petitioner is allowed. In the facts and circumstances of the case, there shall be no order as to costs.