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2015 DIGILAW 524 (MP)

Magma Fincorp Ltd. v. Rajbhan Singh

2015-04-30

ALOK ARADHE

body2015
ORDER : ALOK ARADHE, J. 1. In this petition preferred under Article 227 of the Constitution of India the petitioner has assailed the validity of the order dated 18-6-2014 passed by the executing Court by which the application for execution preferred by the petitioner has been dismissed. To appreciate the petitioner's challenge to the impugned order, few facts need mention which are stated infra. The petitioner is a company incorporated under the Companies Act, 1956. The petitioner is engaged in the business of providing financial assistance to the persons purchasing vehicles. The loans are advanced by the company which are secured by high purchase agreements which contain the provisions for recovery of the loan amount and also has the arbitration clause for resolving any dispute arising between the parties. The petitioner entered into hire purchase agreement with the respondent on 29-9-2010 with respect to purchase of a vehicle. Clause 21 of the agreement contains arbitration clause. The dispute between the parties was referred to the sole arbitrator. The arbitrator passed an award on 26-9-2011 by which the claim of the petitioner was decreed for a sum of Rs. 3,39,951/- along with interest. The petitioner after receipt of copy of the award from the arbitrator and after expiry of time prescribed under section 34 of the Arbitration and Conciliation Act, 1996 (in short 'the Act') initiated proceeding for execution before the District Judge, Rewa as the respondent is residing at Rewa. However, the executing Court vide order dated 18-6-2014 returned the application filed by the petitioner for execution of the decree for presenting the same before the competent Court. It was held that in case the execution proceeding received on transfer from the competent Court with certificate as to non-satisfaction of the decree then only the proceeding for execution shall be conducted in accordance with law. Accordingly, the proceeding for execution was closed. In the aforesaid factual background, the petitioner has approached this Court. 2. Learned senior counsel for the petitioner submitted that executing Court grossly erred in relying on the decision rendered by a Bench of this Court in Computer Sciences Corporation India Pvt. Ltd. Vs. Harishchandra Lodwal and Another, AIR 2006 MP 34 : (2005) 4 MPLJ 164 and in holding that the execution proceeding is not maintainable. 2. Learned senior counsel for the petitioner submitted that executing Court grossly erred in relying on the decision rendered by a Bench of this Court in Computer Sciences Corporation India Pvt. Ltd. Vs. Harishchandra Lodwal and Another, AIR 2006 MP 34 : (2005) 4 MPLJ 164 and in holding that the execution proceeding is not maintainable. It is further submitted that there is no provision in the Act requiring the Court to pass a decree in terms of the award and in the absence of any provision in the Act making the arbitral tribunal a Court which passed the decree, it is not open for the executing Court to demand transmission from any other Court or order transmission to any other Court. In support of the aforesaid submission, learned senior counsel has placed reliance on the decisions in Daelim Industrial Co. Ltd. vs. Numaligarh Refinery Ltd., F.A. No. 105/2009 decided on 13-3-2009, Delhi High Court, Indusind Bank Ltd. vs. Sardar Singh and Anr., Writ Petition Civil No. 13971/2011 decided on 18-10-2011, Rajasthan High Court, Jaipur, Kotak Mahindra Bank Ltd. vs. Ram Sharan Gurjar and another, Writ Petition Civil No. 13966/2011 decided on 18-10-2011, Rajasthan High Court, Jaipur and B. Muthu Kumar vs. Sivakama Sundari S. Narayana S.B. Murthy, CRP (NPD) No. 574/2011 decided on 26-8-2011 Madras High Court. 3. I have considered the submissions made by learned senior counsel for the petitioner. Section 38 of the Code of Civil Procedure provides that a decree may be executed either by the Court which passed it, or by the Court to which it is sent for execution. Section 37 of the Code of Civil Procedure defines the "Court which passed a decree" to include the Court of first instance where the decree has been passed in exercise of appellate jurisdiction or the Court which would have jurisdiction to try the suit if the Court of first instance has ceased to exist or to have jurisdiction to execute it. Section 39(1) enables the Court which passed the decree to send it for execution to another Court of competent jurisdiction. 4. However, it is noteworthy that the award passed by the arbitral tribunal under the provisions of the Act is enforceable under section 36 of the Act in the same manner as if it were a decree of Court. Section 39(1) enables the Court which passed the decree to send it for execution to another Court of competent jurisdiction. 4. However, it is noteworthy that the award passed by the arbitral tribunal under the provisions of the Act is enforceable under section 36 of the Act in the same manner as if it were a decree of Court. In other words, the award passed by the arbitral tribunal is equated to a decree of a Court for limited purpose of execution only by creating a legal fiction. The arbitral tribunal is not a Court. It is also, pertinent to mention here that under the Act, an award can be executed directly without seal of approval by the Civil Court. Section 19(1) of the Act provides that arbitral tribunal shall not be bound by the Code of Civil Procedure, 1908 or Indian Evidence Act, 1872. An application for execution cannot be filed before the arbitral tribunal by treating the arbitral tribunal, a Court which passed the decree. There is no deeming fiction contained in any provision of the Act in so far as it pertains to proceeding under Part I of the Act that the Court within whose jurisdiction the arbitration award is passed should be deemed to a Court which passed the decree. However, such a provision has been made by the legislature for enforcement of foreign awards contained in section 49 which provides that award shall be deemed to be decree of that Court. Therefore, the procedure for filing a petition for execution before the Court within whose jurisdiction arbitral award has been passed as if it was a Court which passed the decree cannot, but, be said to be misconceived. The Delhi High Court in the case of Daelim Industrial Co. Ltd. (supra) has held that section 42 of the Act does not apply to the petition for execution as the same is not an arbitral proceeding within the meaning of section 42 of the Act. It has further been held that expression "Court" in section 36 is not meant to be the Court within the meaning of section 2(1)(e) of the Act. I concur with the view taken by the Delhi High Court on this issue for the reasons recorded in paragraph 18 of the aforesaid decision. 5. It has further been held that expression "Court" in section 36 is not meant to be the Court within the meaning of section 2(1)(e) of the Act. I concur with the view taken by the Delhi High Court on this issue for the reasons recorded in paragraph 18 of the aforesaid decision. 5. There appears to be no plausible reason to take a view that in respect of an award, the execution proceeding cannot be initiated where the person or the property of the person is situate against whom the decree is sought to be executed. Such a Court, in my considered opinion, would have inherent jurisdiction to execute the decree in the absence of applicability of mandate contained in section 38 of the Code of Civil Procedure and, therefore, the pedantic insistence on first applying for execution to one Court, merely to obtain transfer, would be also contrary to the intent of the 1996 Act. The decision in Computer Sciences Corporation India Pvt. Ltd. (supra) is clearly distinguishable and does not apply to the fact situation of the case as in the aforesaid case, a Bench of this Court was dealing with the issue of return of application for transfer of a decree. 6. In view of preceding analysis, the impugned order dated 18-6-2014 passed by the executing Court is hereby quashed. The executing Court is directed to proceed with the execution of the award expeditiously in accordance with law. In the result, the writ petition is allowed.