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Gujarat High Court · body

2025 DIGILAW 1279 (GUJ)

Jitendra Dashrathbhai Patel v. Animesh Bansilal Chokshi

2025-11-14

D.N.RAY, SUNITA AGARWAL

body2025
JUDGMENT : Sunita Agarwal, C.J., D.N.Ray, J. 1. The petitioner herein seeks to invoke the extraordinary supervisory jurisdiction of the High Court under Article 227 of the Constitution of India to set aside the order dated 29.09.2025 passed by the Commercial Court, City Civil Court, Ahmedabad in Execution Petition No.84 of 2024. 2. The only ground of challenge to the said order pressed before us, is that the execution case filed on 06.12.2024 was barred by limitation. It was argued that the execution petition preferred by the respondent for enforcement of the arbitral award dated 17.01.2009 is time barred under Article 136 of the Limitation Act’ 1963, which prescribed the period of limitation of 12 years for execution / enforcement of the decree / arbitral award. 3. The contention is that the Executing court has relied upon an overruled judgment of National Aluminium Co. Ltd. v. Pressteel & Fabrications (P) Ltd., [(2004) 1 SCC 540] , and has erroneously applied the principle of “automatic stay of award” to suspend the period of limitation from the date of award, i.e. from 17.01.2009 to the date of amendment of Section 36 of the Arbitration and Conciliation Act’ 1996, i.e. 23.10.2015. 4. The contention is that though prior to the amendment of Section 36 by the amendment of 2015, the legal position, as held in NALCO (supra) was that with the filing of the application under Section 34 of the Arbitration and Conciliation Act’ 1996 (for short, “the Act’ 1996”), there would be an automatic stay of the award affecting its enforceability under Section 36. However, a clarification was brought by insertion of sub-section (2) in Section 36 providing that the filing of application under Section 34 shall not by itself render the award unenforceable, i.e. there would not be automatic stay of the enforcement of the award under Section 36. 5. To substantiate the said contention, Mr. H. S. Tolia, the learned Senior Counsel for the petitioner would vehemently argue that the position of law as to the automatic stay of the arbitral award with the filing of Section 34 application, has further been explained in Hindustan Construction Co. Ltd. v. Union of India , [ (2020) 17 SCC 324 ] , the judgment delivered on 27.11.2019. 6. Placing paragraph Nos. Ltd. v. Union of India , [ (2020) 17 SCC 324 ] , the judgment delivered on 27.11.2019. 6. Placing paragraph Nos. ‘34’ to ‘41’ of the decision in HCCL (supra) , it was contended that a three Judges Bench of the Apex Court has declared therein that the judgments in NALCO (supra) and Fiza Developers & Inter-Trade (P) Ltd. v. Amci (India) (P) Ltd., [ (2009) 17 SCC 796 ] have laid down the law incorrectly, inasmuch as, even the unamended Section 36 did not contemplate for automatic stay. 7. It was held therein by the Apex Court that to read unamended Section 36 to state that an award when challenged under Section 34 becomes unexecutable merely by virtue of such challenge being made because of the language of Section 36, is plainly incorrect. The reading Section 35 with Section 36 (unamended) makes it clear that Section 36 was enacted for different purpose and it merely provided that enforcement of the final award will be under the Code of Civil Procedure, 1905, in the same manner as if it were a decree of the Court. To read Section 36 as inferring something negative, namely, that where the time for making an application under Section 34 has not expired and therefore, on such application being made within time, an automatic stay ensues, is to read something into Section 36 which is not there at all. 8. By reading the aforesaid paragraphs, it is submitted by the learned Senior Counsel that the Apex Court has held in HCCL (supra) that the amended Section 36 is clearly clarificatory in nature as it, merely restates the position that the unamended Section 36 does not stand in the way of the law as to grant of stay of a money decree under the provisions of the CPC. Meaning thereby, the Apex Court has clarified that enforcement of an arbitral award under the unamended Section 36 shall be made by having due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure. 9. Meaning thereby, the Apex Court has clarified that enforcement of an arbitral award under the unamended Section 36 shall be made by having due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure. 9. The submission, thus, is that with the statement of the legal position stated with regard to the unamended Section 36 and the clarification that the amendment in Section 36 by Amendment Act’ 2015 was merely clarificatory in nature, the earlier position of law stated in NALCO (supra) providing that award became unenforceable merely upon the making of an application under Section 34, is held to be bad in law. The result is that the there cannot be any automatic stay of the arbitral award merely by filing application under Section 34 of the Act’ 1996, even under the unamended Section 36. 10. With the above, it was further argued by Mr. H. S. Tolia, the learned Senior Counsel for the petitioner that the subsequent judgment overruling earlier judgment is presumed to apply retrospectively unless there is a clear statement in that regard. The “Doctrine of Prospective Overruling” would apply only in cases, wherein it is clearly held that the law declared by the Court applies to the cases arising in future only and its applicability to the cases which have attained finality is saved. The invocation of the “Doctrine of Prospective Overruling” is left to the discretion of the Court. 11. Placing the decision of the Apex Court in Sarwan Kumar v. Madan Lal Aggarwal , [ (2003) 4 SCC 147 ] and Directorate of Revenue Intelligence v. Raj Kumar Arora , [2025 SCC OnLine SC 819], it was vehemently argued that when the Apex Court interprets an existing law while overruling an interpretation therein to it earlier, it cannot be said that a new law is laid down. The declaration of law relates back to the law itself and it would be deemed that the law was never otherwise. 12. The declaration of law relates back to the law itself and it would be deemed that the law was never otherwise. 12. It was further submitted that the Apex Court, while deciding HCCL (supra) did not hold that the law declared by it would be prospective in operation rather stated that the interpretation of the unamended Section 36 in NALCO (supra) was incorrectly made in ignorance of the legislative intent and other provisions of Sections 9, 35 as also the second part of Section 36 of the unamended Arbitration Act’ 1996. 13. The argument, thus, is that with the said statement of the correct position of law in HCCL (supra) of the interpretation of unamended Section 36 and further statement that amendment of Section 36 by Amendment Act of 2015 is clarificatory in nature, the judgment in NALCO (supra) becomes nullity. The legal position stated in NALCO (supra) of automatic stay of enforcement of the award eclipsed with the correct statement of law in HCCL (supra) decided on 27.11.2019. 14. The Execution Court has, thus, committed an error of law in applying the judgment in NALCO (supra) to compute the period of limitation for execution / enforcement under Section 136 of the Limitation Act with effect from 23.10.2015 and concluding that the execution petition filed in 2024 is well within limitation. 15. Dealing with the above submissions of the learned Senior Counsel for the petitioner, suffice it to note that there is no dispute about the fact that the award, in the instant case, was passed on 17.01.2009 and the application under Section 34 of the Act’ 1996 was filed on 16.04.2009, itself. As per the statement of law in NALCO (supra) rendered on 18.12.2003, of the interpretation of Section 34, the position of law stated in paragraph No. ‘11’ therein was that there would be an automatic stay on filing of Section 34 application and the award becomes unenforceable under Section 36. “ 11. However, we do notice that this automatic suspension of the execution of the award, the moment an application challenging the said award is filed under Section 34 of the Act leaving no discretion in the court to put the parties on terms, in our opinion, defeats the very objective of the alternate dispute resolution system to which arbitration belongs. However, we do notice that this automatic suspension of the execution of the award, the moment an application challenging the said award is filed under Section 34 of the Act leaving no discretion in the court to put the parties on terms, in our opinion, defeats the very objective of the alternate dispute resolution system to which arbitration belongs. We do find that there is a recommendation made by the Ministry concerned to Parliament to amend Section 34 with a proposal to empower the civil court to pass suitable interim orders in such cases. In view of the urgency of such amendment, we sincerely hope that necessary steps would be taken by the authorities concerned at the earliest to bring about the required change in law.” 16. The judgment in NALCO (supra) came to be overruled in HCCL (supra) decided on 27.11.2016. The application under Section 34, in the instant case, came to be rejected on 27.11.2024 whereafter, the appeal under Section 37 of the Act’ 1996 has been filed before the High Court, which was also dismissed on 11.03.2025. The execution application has been filed after dismissal of the application under Section 34 vide order dated 27.11.2024. 17. Further dealing with the contentions of the learned Senior Counsel about the position of law, as stated in NALCO (supra) clarified by the Apex Court in HCCL (supra) on 27.11.2019 while dealing with the Amendment Act’ 2015 came into force on 23.10.2015, suffice it to note that by way of the Amendment Act’ 2015, with the insertion of sub-section (2) in Section 36, the position of law has been clarified that mere filing of application under Section 34 would not make the award unenforceable. Meaning thereby that after the enforcement of the Amendment Act’ 2015 with effect from 23.10.2015, the legislature clarified that there shall not be automatic stay and the award can be enforced under Section 36. Meaning thereby that after the enforcement of the Amendment Act’ 2015 with effect from 23.10.2015, the legislature clarified that there shall not be automatic stay and the award can be enforced under Section 36. The fact that the Apex Court has clarified in HCCL (supra) that the amendment of Section 36 by the Amendment Act’ 2015 is merely clarificatory as it has merely restated the law as provided in the unamended Section 36, at the best, would mean that since after 23.10.2015, there would not be an automatic stay even in the pending applications under Section 34 and the award would be enforceable even in such cases where during the pendency of the Section 34 application, there is no stay. 18. The result is that while computing the limitation under Article 136 of the Limitation Act, which is 12 years from the date of decree, atleast, the period from 16.04.2009 from the date of filing of the application under Section 34 by the petitioner, in the instant case, till the date of the enforcement of the Amendment Act’ 2015, i.e. 23.10.2015, is to be excluded even considering the submission of the learned Senior Counsel for the petitioner. 19. With this view, we find that the Executing court cannot be said to have committed any error of law or jurisdiction, much less a manifest error of jurisdiction in rejecting the objection of the petitioner of the execution petition being time barred. The submission of the learned Senior Counsel for the petitioner that the Trial Court has committed a manifest error of law and jurisdiction in relying upon the overruled judgment of the Apex Court in NALCO (supra) is wholly misconceived. 20. The submissions of the learned Senior Counsel for the petitioner that the limitation would start from 2009 itself, i.e. from the date of making of the award or the limitation would commence from the date when award became executable upon expiry of period of three months as per Section 34(3), are liable to be rejected as wholly misconceived. 21. The submissions made on the doctrine of prospective overruling of the judgment and retrospective application of the statement of law in HCCL (supra), are of no help to the petitioner, inasmuch as, on the date when the law was stated by the Apex Court in HCCL (supra) , i.e. 27.11.2019, the application under Section 34 was pending. 22. 21. The submissions made on the doctrine of prospective overruling of the judgment and retrospective application of the statement of law in HCCL (supra), are of no help to the petitioner, inasmuch as, on the date when the law was stated by the Apex Court in HCCL (supra) , i.e. 27.11.2019, the application under Section 34 was pending. 22. The period of limitation, in the present case, at the most, can be considered to have commenced with effect from 23.10.2015 when the clarificatory amendment has been brought in Section 36 by insertion of sub-section (2) providing that there shall be no automatic stay of the award by mere filing of an application under Section 34, inasmuch as, on the said date was well, the application under Section 34 filed by the petitioner was pending where there was no stay. 23. At the cost of repetition, it may be noted that, in the instant case, the application under Section 34 was filed by the petitioner within a period of three months (90 days) from the date of making of the award as per sub-section (3) of Section 34, inasmuch as, the date of award is 17.01.2009 and the date of filing of the application under Section 34 is 16.04.2009. 24. With the filing of the application under Section 34 within the limitation period provided in sub-section (3) thereof, the position of law stated in NALCO (supra) applied resulting into automatic stay of the arbitral award, making it unenforceable. In view of the same, there was no occasion of the award holder to seek enforcement under Section 36. The stay continued till the amendment was brought in Section 36 by insertion of sub-section (2) on 23.10.2015. 25. If this period is not excluded from the period of limitation, it would amount to a double whammy for the award holder as, on the one hand, he was precluded from seeking enforcement of award because of an incorrect statement of law by the Apex Court in NALCO (supra) and, on the other, he would further be denied his right to enforcement of the award after the correct law laid in HCCL (supra) in the year 2016. The plea of the learned Senior Counsel for the petitioner that by the retrospective application by law stated in HCCL (supra), it shall be presumed that there was no stay and the award was enforceable even in 2009 during the pendency of the application under Section 34, is absolutely misleading and requires no further deliberation. 26. No error, as such, can be found in the opinion drawn by the Executing Court that the period uptil 23.10.2015 is to be excluded in computing the period of limitation in filing petition seeking enforcement of the award under Section 36 of the Act’ 1996, in the facts and circumstances of the present case. 27. With regard to the other arguments made about the interest awarded by the Executing Court on the amount of Rs.18,85,826/- paid by the legal heirs of one of the award debtors, suffice it to say that the award of 18% interest on the aforesaid amount from the date of filing of Civil Suit No.3473 of 1998 till the payment of the awarded amount, is as per the condition of the award, where the learned Arbitrator has provided for post-award interest on the awarded amount. The submission made by the learned Senior Counsel for the petitioner that the Executing Court has gone beyond the award in granting interest is, thus, liable to be rejected outrightly. 28. With the above, no interference is called for. The present petition filed under Article 227 of the Constitution of India is liable to be dismissed being devoid of merits and is dismissed, as such. No order as to costs. 29. However, before parting with this judgment and order, we may clarify that in view of the facts and circumstances of the present case, we have not entered into the question of applicability of the limitation period provided in Article 136 of the Limitation Act, in the matter of enforceability of the award under Section 36 of the Arbitration and Conciliation Act’ 1996.