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2014 DIGILAW 351 (KAR)

Chandrashekhar v. Tata Motor Finance Ltd.

2014-03-13

N.KUMAR

body2014
ORDER : N. Kumar, J. 1. This Writ Petition is preferred by the judgment debtor challenging the order passed by the Executing Court rejecting his objections regarding maintainability of the Execution Petition. The undisputed facts are that, the parties to the execution proceedings had agreed for referring the matter to an arbitrator to resolve the dispute. The arbitrator entered appearance and conducted arbitral proceedings at Bombay and also passed the award at Bombay. The said award is sought to be executed before the Principal District and Sessions Judge, Mysore in Execution No. 474/2011. On service of notice of execution proceedings, the judgment debtor entered appearance and filed an application under Section 38 CPC contending that the arbitral award cannot be enforced straightaway by the Court at Mysore; Execution Petition ought to have been filed before the jurisdictional Court at Bombay and it could be transferred to the Court at Mysore on a transfer petition and only then Court at Mysore could enforce the award. 2. The contention of the Judgment Debtor was rejected by the Executing Court on the ground that Section 38 CPC applies to a case where a decree is passed by a Court and such a decree is sought to be enforced in another Court. The said provision is not applicable to a proceeding where execution of an award passed by an Arbitrator is sought as the same is only a deemed decree. The Court also held that the award passed by the arbitrator at Bombay is executable in Mysore where the judgment debtor is residing. Aggrieved by the same, this Writ Petition is filed. 3. Learned Counsel for the petitioner relying on a judgment of this Court in the case of N. Nagaraj v. M/s. Motilal Oswal Securities Limited, W.P. Nos. 38220-221/2010 decided on 27.6.2012 contends that, the Execution Petition ought to have been filed in the Court at Bombay and after obtaining transfer, it could be executed in a Court at Mysore. Since the said procedure is not followed, the Execution Petition is not maintainable. 4. In support of his contention the petitioner also relies on Section 36 of Arbitration and Conciliation Act (hereinafter for short referred to as 'the Act') and Sections 38 to 40 of Civil Procedure Code. Therefore let me examine these provisions before going into merits of the case. 5. 4. In support of his contention the petitioner also relies on Section 36 of Arbitration and Conciliation Act (hereinafter for short referred to as 'the Act') and Sections 38 to 40 of Civil Procedure Code. Therefore let me examine these provisions before going into merits of the case. 5. Section 38 of CPC deals with Courts by which decree may be executed and the same reads as under: "38. Courts 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." 6. Section 39 of CPC deals with transfer of Decree. It reads as under: "39. Transfer of decree.--(1) The Court which passed a decree may, on the application of the decree-holder, send it for execution to another Court of competent jurisdiction, - (a) if the person against whom the decree is passed actually and voluntarily resides or carries on business, or personally for gain, within the local limits of the jurisdiction of such other Court, or (b) if such person has not property within the local limits of the jurisdiction of the Court which passed the decree sufficient to satisfy such decree and has property within the local limits of the jurisdiction of such other Court, or (c) if the decree directs the sale or delivery of immovable property situate outside the local limits of the jurisdiction of the Court which passed it, or (d) if the Court which passed the decree considers for any other reason, which it shall record in writing, that the decree should be executed by such other Court. (2) The Court which passed the decree may of its own motion send it for execution to any subordinate Court of competent jurisdiction. (3) For the purposes of this section, a Court shall be deemed to be a Court of competent jurisdiction if at the time of making the application for the transfer of decree to it, such Court would have jurisdiction to try the suit in which such decree was passed. (4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction." 7. Section 40 of CPC deals with transfer of decree to Court in another State, which reads as under: "40. (4) Nothing in this section shall be deemed to authorise the Court which passed a decree to execute such decree against any person or property outside the local limits of its jurisdiction." 7. Section 40 of CPC deals with transfer of decree to Court in another State, which reads as under: "40. Transfer of decree to Court in another State.--Where a decree is sent for execution in another State, it shall be sent to such Court and executed in such manner as may be prescribed by rules in force in that State." 8. Sections 38, 39, 40 of CPC apply to a case where a decree is not executed by a Court which passed it but sent to another Court for execution. In such an event the decree has to be transferred. In the instant case, the award passed by the arbitrator is deemed to be a decree, but it is not a decree passed by any Court. 9. The award in the instant case is passed at Bombay by the arbitrator. Section 36 of the Arbitration and Conciliation Act, 1996 (for short the Act') deals with enforcement of the awards. It reads as under: "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 f it were a decree of the Court." 10. The aforesaid provision makes it clear that for the purpose of enforcement, the award is treated as a decree of the Court. It shall be enforced under the Code of Civil Procedure. The award under the Act is passed by the Arbitral Tribunal. It is that award, which can be enforced as if, it were a decree of the Court. After the passing of the award, when it is sought to be enforced under the provisions of the CPC, then in view of Section 38 of the Code of the Civil Procedure, it has to be executed either by the Court, which passes it or by the Court to which it is sent for execution. As the arbitral award is not passed by any Court, the Court, which has to enforce the award is the Court as defined under Section 2(e) of the Act. As the arbitral award is not passed by any Court, the Court, which has to enforce the award is the Court as defined under Section 2(e) of the Act. It is because, if an arbitration award is to be challenged under Section 34 of the Act, it is before a Court as defined under Section 2(e) of the Act. Therefore, in order to find out, which is that Court, which has the jurisdiction to enforce the award, the place where the award is passed is not of importance. We have to find out the Court, in which the said award could have been challenged under Section 34 of the Act. Therefore, either for the purpose of challenging the award under Section 34 of the Act or for the purpose of enforcement of the award, we have to find out the Court as defined under Section 2(e). Section 2(e) of the Act reads as under: "(e) "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." 11. The primary Court competent to execute a decree is the one which passed the decree. No Court can execute a decree, in which the subject matter of the suit or of the application for execution is, property situated entirely outside the local limits of its jurisdiction. Territorial jurisdiction, in other words, is a condition precedent to a Court executing the decree. Section 39 of the Code of Civil Procedure enables the Court, which passes the decree on an application of the decree holder, to transfer the decree to another Court of competent jurisdiction for its execution, if the Court, which passed the decree had no jurisdiction over the property in respect of which, execution is sought. In the case of the award passed by an Arbitrator, by a legal fiction it is deemed to be a 'decree'. It is not passed by any Court. For transfer of a decree the condition precedent is there should be two Courts. In the case of the award passed by an Arbitrator, by a legal fiction it is deemed to be a 'decree'. It is not passed by any Court. For transfer of a decree the condition precedent is there should be two Courts. One Court which passed the decree which has no territorial jurisdiction to execute the decree, second Court, which has not passed the decree but which has the territorial jurisdiction, i.e., either the judgment debtor is residing or carrying on business within its jurisdiction or any immovable property which he owns is situate within the jurisdiction. However, in the case of an arbitration award it is the Court which has the jurisdiction to decide the questions forming the subject matter of the arbitration, as if the same had been the subject matter of the suit. As is clear from the definition under Section2(e) of the Act, it is the Principal Civil Court of original jurisdiction in a District, which has the jurisdiction to entertain the execution petition. Therefore, one has to see what are the questions forming the subject matter of the arbitration. Then find out if the same were to be the subject matter of the suit, which Principal Civil Court, will have jurisdiction to decide the said question. It is that "Court" which will have jurisdiction to execute the award. 12. In Nagaraj's case on which reliance is placed by the petitioner is concerned, the arbitration award was passed by a sole arbitrator at Chennai. The said award was challenged before the Court at Chennai under Section 34 of the Act. Once the award is challenged under Section 34 of the Act, the question of executing the award would not arise till the application under Section 34 of the Act is decided. Even otherwise, the Court which has entertained the application under Section 34 of the Act would be the Court which would be executing the award. Therefore, the judgment rendered in the aforesaid case has no application to the facts of this case. From the material on record, it is clear that the decree holder is carrying on its business at Bombay. The judgment debtors are all residents of Mysore. If the decree holder instead of opting for arbitration, had filed a suit for recovery of the money, he could have done so in any Civil Court of original jurisdiction in Mysore. From the material on record, it is clear that the decree holder is carrying on its business at Bombay. The judgment debtors are all residents of Mysore. If the decree holder instead of opting for arbitration, had filed a suit for recovery of the money, he could have done so in any Civil Court of original jurisdiction in Mysore. The said Court had jurisdiction to pass a decree. Therefore, the test is, if there is a dispute between the parties, whether the Court as defined under Section 2(1)(e) of the Act has the jurisdiction to decide the questions, forming the subject matter of arbitration, as if the same had been the subject matter of the suit. If the Court at Mysore had the jurisdiction to decide the same, the Court at Mysore has the jurisdiction to execute the decree passed in respect of the subject matter of the award. As the award is not a decree passed by a Court, the question of filing an execution petition before the Court which passed the decree and then seeking for transfer of the decree to a Court, which has jurisdiction over the judgment debtor or their properties, would not arise. Therefore, rightly, the decree holder has initiated the execution proceedings in the Court at Mysore, which has the jurisdiction to execute the decree by way of an award of the arbitrator by virtue of Section 36 of the Act. Therefore, there is no merit in this writ petition. Accordingly writ petition is dismissed.