Allowed

Sundaram Finance Ltd. v. K.M.Naveen

Kerala HC25 Nov 2019OP(C)/2825/2019

Case brief

AI extract

What is this about?

This judgment addresses the jurisdiction for enforcing interim orders under Section 17(2) of the Arbitration and Conciliation Act, distinguishing general supervision jurisdiction from execution jurisdiction.

What did the court decide?

Impugned order returning application to file execution petition only before the court at the seat of arbitration was set aside; matter remanded to Additional District Court to reconsider afresh.

Sundaram Finance Ltd. Vs K.M.Naveen — Arbitration | Kerala HC (2019)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE B.SUDHEENDRA KUMAR

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MONDAY, THE 25TH DAY OF NOVEMBER 2019 / 4TH AGRAHAYANA, 1941

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OP(C).No.2825 OF 2019

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CMA(Arb)308/2019 DATED 13-08-2019 OF ADDITIONAL DISTRICT COURT COURT -IV, THRISSUR

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PETITIONER/S:

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SUNDARAM FINANCE LTD. 21, PATTULLOS ROAD, CHENNAI, REP. BY ITS POWER OF ATTORNEY HOLDER SUNILKUMAR.P.V S/O.P.K.VELAYUDHAN PILLAI, AGED 49 YEARS, SENIOR MANAGER, LEGAL

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BY ADVS. SRI.S.SREEKUMAR (SR.) SRI.P.MARTIN JOSE SRI.P.PRIJITH SRI.THOMAS P.KURUVILLA SRI.AJAY BEN JOSE SRI.MANJUNATH MENON SHRI.HARIKRISHNAN S.

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RESPONDENT/S:

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K.M.NAVEEN AGED 34 YEARS S/O.K.MUKUNDAN, KUNNATHULLY HOUSE, KECHERY, THRISSUR DISTRICT.

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BY ADV. SRI.MAHESH V.MENON

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THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 25.11.2019, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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Case No. OP(C) 2825/19

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JUDGMENT

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In O.P.(C) No.2825 of 2019, the petitioner

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challenges Ext.P3 order passed by the District Court concerned in C.M.A. (Arb.) No.308 of 2019 returning the application filed by the petitioner under Section 17(2) of

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the Arbitration and Conciliation Act, 1996 (for short 'the

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Act') seeking for enforcement of the interim order passed

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by the Arbitrator under Section 17(1) of the Act.

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Heard.

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The learned counsel for the respondent has

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submitted that the application for enforcement of the order

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passed by the Arbitral Tribunal under Section 17(1) of the

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Act shall be filed before the District Court within whose

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jurisdiction the Arbitral Tribunal is situated. The learned

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counsel for the petitioner, on the other hand, has submitted that the seat of the Arbitral Tribunal is not a matter to be considered for deciding the place of execution of the interim order passed by the Arbitral Tribunal.

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The question arises for consideration is as to whether the application under Section 17(2) of the Act for enforcement of the interim order passed by Arbitral Tribunal should be filed only before the District court within whose jurisdiction the seat of Arbitral Tribunal is situated.

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Section 42 of the Act deals with the jurisdiction,

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which is extracted hereunder:-

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“Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this

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Part has been made in a court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of the agreement and the arbitral proceedings shall be made in that Court and in no other court.”

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On going through Section 42 of the Act, it is clear that once the seat of Arbitration is selected by the parties as per the agreement, that Arbitral Tribunal alone is having jurisdiction over the Arbitral proceedings and all subsequent applications arising out of that agreement and the Arbitral proceedings shall be made in that court and in no other court. Thus, it is clear that all proceedings in connection with the Arbitration and all applications filed before the disposal of the Arbitration proceedings shall be dealt with by the Arbitral Tribunal and not by any other

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Tribunal. Section 17(1) of the Act deals with the powers of Arbitral Tribunal to pass interim orders. Section 17(2) of the Act provides the enforcement of the interim orders passed by the Arbitral Tribunal.

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In this context, it is relevant to read sub section

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(2) of Section 17 of the Act, which is extracted hereunder:-

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“Subject to any orders passed in an

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appeal under Section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the court”.

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It is clear from Sub section (2) of Section 17 of the Act that the interim order passed by the Arbitral Tribunal shall be deemed to be an order of the civil court for all purposes and

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the same shall be enforceable under the Code of Civil Procedure in the same manner as if it were an order of the

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court. This would show that an order of the Arbitral Tribunal can be executed only before a civil court as if it

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were an order passed by the Civil Court.

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The learned Single Judge in Pradeep K N v.

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Station House Officer, Perumbavoor and another [2016 (2) KHC 714 : AIR 2016 Ker.211] held that the enforcement of an interim order under Section 17(2) of the Act need not follow the same procedure as contemplated in “execution” and it can be implemented in a like manner as the Court exercises its power under Section 27(5) of the Act. The court in Pradeep (supra) further held that the court while considering an application under Section 17(2) of the Act shall resort to Section 94 of CPC to enforce the interim

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order of the Arbitral Tribunal and need not require to follow any procedure as contemplated for execution under the Code of Civil Procedure. The court also held in Pradeep (supra) that the Arbitral Tribunal cannot pass an order to enforce its order by directing the Advocate Commissioner / Receiver to repossess the vehicle from the opposite party.

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This Court in HDB Financial Services Ltd v.

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Kings Baker Pvt. Ltd and others [2019(1) KHC 814 : AIR 2019 NOC 181] held that by virtue of sub-Section (2) of Section 17 of the Act, the interim orders passed by the Arbitral Tribunal are deemed to be orders passed by the Court and are enforceable under the Code of Civil Procedure as orders of the Court. The court further held in HDB Financial Services (supra) that the jurisdiction of the Court under Section 17(2) of the Act is limited to

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enforcement of the order passed under Section 17(1) of the Act.

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The learned counsel for the respondent relied on the decision of the Apex Court in Indus Mobile Distribution Private Limited v. Datawind Innovations Private Limited [2017 KHC 6327] and argued that once the seat of Arbitrator is chosen by the parties, the application under Section 17(2) of the Act has to be filed before the court within whose jurisdiction the Arbitral Tribunal is situated. In Indus Mobile Distribution (supra), the Arbitration proceedings were initiated before the Arbitral Tribunal in Mumbai. However, an application under Section 9 of the Act was filed before the High Court of Delhi in its original jurisdiction seeking for interim reliefs. The High Court granted interim relief. The said order was challenged

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before the Apex Court. The Apex Court held that in Arbitration law, the movement 'the seat' is determined, the court within whose jurisdiction the Arbitral Tribunal is situated, will be having jurisdiction for the purpose of regulating arbitral proceedings arising out of the agreement between the parties. In the said decision, the Apex Court was not dealing with the execution of order/ award passed by the Arbitral Tribunal. Therefore, the above decision is not applicable to the question involved in this case.

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The Apex Court in Sundaram Finance Ltd v. Abdul Samad [2018 KHC 6108] held thus:-

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“We are, thus, unhesitatingly of the view that enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree

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from the Court, which would have jurisdiction over the arbitral proceedings.”

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Section 42 of the Act applies with respect to an

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application being filed in court under part 1. The jurisdiction is over the arbitral proceedings. The

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subsequent application arising from that agreement and the arbitral proceedings are to be made in that court alone.

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The ratio of the Apex court in Sundaram

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(supra) is to the effect that the Arbitral award can be

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executed anywhere in India and it is not necessary that it shall be executed only as provided under Section 38 CPC, after filing the execution petition before the civil court under whose jurisdiction the award was passed. There is nothing in the Act conferring the power on the Arbitral Tribunal to execute the orders and the award. On the

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other hand, Section 17(2) of the Act specifically empowers the civil court to execute any order of the Arbitral Tribunal,

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as if it were the order passed by the court. Section 42 of the Act is not applicable so far as the execution of an interim order passed by the Arbitral Tribunal under Section 17(1) of the Act is concerned, as it is clear from Section 42 of the Act that only the proceedings from the commencement till its culmination before the Arbitral Tribunal are regulated by the provisions of the said Section. The execution of the order is different from

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an application filed before the Arbitral Tribunal. Therefore, the execution of the order can be done at any place in India irrespective of the seat of the Arbitral Tribunal. In view of the above, Ext.P3 order passed by the court concerned returning the

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application in CMA(Arb.) No.308 of 2019 seeking for enforcement of the interim order passed by the arbitral tribunal cannot be sustained and consequently, I set aside

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the same and remit the matter back to the Additional District court concerned to re-consider the issue afresh and pass orders, in accordance with law, in the light of the observations in this judgment.

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In the result, this Original Petition stands disposed of as above.

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B. SUDHEENDRA KUMAR, JUDGE .

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dl/

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APPENDIX

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PETITIONER'S/S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE ORDER DATED 11.05.2019 IN IA NO.1/2019 IN ARB CASE NO.YKR/S F/19 OF 2019 ALONG WITH COVERING LETTER DATED 11.05.2019 EXHIBIT P2 TRUE COPY C.M.A.(ARB) NO.308/2019 EXHIBIT P3 TRUE COPY OF THE COMMON ORDER DATED 13.08.2019 IN C.M.A.(ARB)NO.308/2019

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RESPONDENT'S/S EXHIBITS: NIL

Sundaram Finance Ltd. v. K.M.Naveen

Case brief

What is this about?

What did the court decide?

Sundaram Finance Ltd. v. K.M.Naveen

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

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