Full Judgment Text
2012:BHC-OS:1284-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL JURISDICTION
APPEAL NO. 770 OF 2011
IN
EXECUTION APPLICATION NO.681 OF 2011
IN
ARBITRATION PROCEEDINGS NO.5094 T 00357 10
(International Centre for Dispute Resolution, United States)
Wireless Developers Inc, a company
Incorporated under the laws of
United States and having its registered address
At 2875, Northwind Drive, Suite 200,
East Lansing, MI 48823. ...Appellant
Vs.
Indiagames Ltd, a company
incorporated under the provisions of the
Companies Act, 1956 and having its address
at Vishwaroop IT Park, Vashi International
Info-Tech Park, Above Raghuleela Mall,
th
11 floor, Sector 30A,
CIDCO, Vashi, Navi Mumbai-400 705 ...Respondent
Mr. Venkatesh Dhond, Sr. Advocate with V. Desai and
Prateek Bagaria i/b. Nitish Desai Asso. for Appellant
Mr. Chirag Balsara, with Varun M. i/b. M/s. Rajani Asso. for Respondent
CORAM : MOHIT S. SHAH, C.J. AND
MRS. ROSHAN DALVI, J.
RESERVED FOR ORDER : 09 JANUARY 2012
PRONOUNCEMENT OF ORDER: 30 JANUARY 2012
JUDGMENT (Per Roshan Dalvi, J)
1. The appellant has obtained an award of the Arbitral Tribunal in the
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USA against the respondent which it seeks to enforce and execute. The
appellant took out application under Order 21 Rule 22 of the Code of Civil
Procedure 1908 for obtaining leave of the Court to execute the foreign
award. The parties had appeared before the Arbitrator. After the initial
negotiations the respondent did not participate in the arbitration
proceedings. Instead it sought to invoke arbitration separately. For the
absence of the respondent despite service of notices a final award came to
be passed on 7 December 2010.
2. The respondent sought to challenge aforesaid foreign award in a
petition filed in this Court under Section 34 of the Arbitration and
Conciliation Act 1996 (the Act). The petition filed in this Court was
returned to the respondent for filing in the Court having jurisdiction. The
respondent stated that it had sought leave under clause 12 of the Letters
patent to file the petition in this Court though the cause of action had
accrued at Navi Mumbai in the Thane District where the agreement
between the parties was entered into and where the immovable properties
of the respondent are situate. It was shown to Court that leave as claimed
by the respondent was not obtained. Consequently, the Court could not
exercise jurisdiction upon the respondent’s own claim. The petition under
Section 34 of the Act is now pending hearing before the Court at Navi
Mumbai in Thane District to which it was sent.
3. The appellant has sought to enforce the aforesaid award on the
ground that a movable property of the respondent being a bank account in
ICICI Bank is within the jurisdiction of this Court and the appellant must
file its execution application, as all other applications against decrees of
the Court are filed, in what is known as the Executing Court which would
be the Court, not where the cause of action arose, or the respondent resides
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or carries on business, or where the respondent may have immovable
properties, but where the respondent would have the property which is
sought to be attached in execution of the award. This is because only the
Court within whose jurisdiction the property which is sought to be attached
is situate would be able to execute a decree or an award and hence such
Court would have territorial jurisdiction in an execution application.
4. The learned single Judge under the impugned order held that this
Court does not have territorial jurisdiction. The learned single Judge
considered that it was the appellant’s own case that the respondent cannot
challenge the award in this Court because it lacked territorial jurisdiction
which caused the learned single Judge not to accept the case of the
appellant that this Court would have territorial jurisdiction as an Executing
Court.
5. The territorial jurisdiction of the Court in Arbitration Petitions for
challenge of awards under Section 34 of the Act read with the territorial
jurisdiction of the Executing Court for enforcement of foreign awards
under Section 48 of the Act would have to be considered.
6. It is contended by Mr. Dhond on behalf of the appellant that the
territorial jurisdiction of the Courts in an arbitration and in enforcement of
the award are different and even differently defined in the Act and
considered in the judgment of this Court and the Supreme Court. He drew
our attention to Sections 2(e) and explanation to Section 47 of the Act.
Section 2(e) is in Part- I Chapter I of the Act which defines a Court thus:
“2. Definitions. –
(e) “Court” means the principal civil Court of original
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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; ”
7. The explanation to Section 47 thus:
“Explanation. – In this section and all the following sections of
this Chapter, “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 over
the subject-matter of the award 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. ”
(emphasis supplied by underlining)
8. This concept has been explained by a single Judge of this Court in
the case of Tata International Ltd. Vs. Trisuns Chemical Industry Ltd.
2002(2) B.C.R. 88 . In that case also a foreign award was sought to be
enforced in a Court which the respondent claimed, lacked territorial
jurisdiction. In paragraph 2 of the judgment, the Court considered the
distinction between the aforesaid two provisions relating to the subject
matter of the two aspects: in an arbitration the Court would consider the
subject matter of the arbitration; in the enforcement of the award the Court
would consider the subject matter of the award as the determining factors.
This stands to reason and logic. The subject matter of the arbitration may
be a certain contract, a certain property etc., The territorial jurisdiction of
the Court would be where the contract was entered into or where the some
or all the properties of the respondent would be. Once the arbitration is
concluded and has to be enforced it is the subject matter of the award
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which would have to be seen. That would be whether the award is a
money award (analogous to a money decree in a litigation) or a declaration
or other relief with regard to a contract or a property. The award would
have to be filed for its enforcement in a Court which would be able to
enforce that award. It would be futile to file it where a cause of action may
have arisen, if the respondent would have no properties in that jurisdiction.
Similarly it would be of little use to file it where the respondent resided or
carried on business. It would have to be filed where the respondent would
have properties, movable or immovable, which could be attached and sold
in execution of the award.
9. This is much like the provisions in the Code of Civil Procedure
(CPC) with regard to execution of decrees and orders. Section 51 thereof
enumerates the powers of the Court to enforce the execution which may be
by delivery of any property, attachment and/or sale of the property, arrest
and detention of the judgment debtor, appointment of a receiver or in any
other manner as required in the case.
Under Order 21 Rule 3 where the immovable properties of the
judgment debtor fall within the local limits of two or more Courts any one
of them may execute the decree by attachment and/or sale. A Court may
even transfer a decree to another Court for execution under Order 21 Rule
5 and 6 of the Code. It would then be executed in the Court to which it is
sent under Order 21 Rule 8 thereof.
10. The CPC does not define an Executing Court. It is, therefore, left to
the judgment creditor to apply in a Court for execution by application in
the Court passing decree, if it could be executed by that Court and by
applying for transfer of the decree, if it could be executed by another
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Court. The choice of the Court is left to the judgment creditor under Order
21 Rule 10 of the CPC which runs thus:
“10. Application for execution. – Where the holder of a decree
desires to execute it, he shall apply to the Court which passed the
decree or to the officer (if any) appointed in this behalf, or if the
decree has been sent under the provisions hereinbefore contained
to another Court, then to such Court or to the proper officer
thereof. ”
The decree holder may make an application for an attachment of a
movable property belonging to the judgment debtor under Order 21 Rule
12 of the CPC and the Executing Court to which such an application is
made would have to follow the procedure under Order 21 Rule 17 of the
CPC upon receiving such application. The proviso to Rule 17 of Order 21
relates to a money decree obtained by the judgment creditor or the decree
holder.
Upon these preliminary measures being undertaken the Executing
Court would issue process for execution under Order 21 Rule 24 of the
CPC.
It may be convenient to set out the relevant parts of the necessary
provisions relating to execution of orders and decrees in the CPC to
understand the concept of the procedure for execution which run thus:
Section 51. Powers of Court to enforce execution. – Subject to
such conditions and limitations as may be prescribed, the Court
may, on the application of the decree-holder, order execution of
the decree –
(a) by delivery of any property specifically decreed;
(b) by attachment and sale or by sale without attachment of
any property;
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(c) by arrest and detention in prison [for such period not
exceeding the period specified in section 58, where arrest and
detention is permissible under that section];
(d) by appointing a receiver; or
(e) in such other manner as the nature of the relief granted
may require:”
Order 21:
“ Courts executing decrees
3. Lands situate in more than one jurisdiction. – Where
immovable property forms one estate or tenure situate within the
local limits of the jurisdiction of two or more Courts, any one of
such Courts may attach and sell the entire estate or tenure.
[ 5. Mode of transfer. – Where a decree is to be sent for
execution to another Court, the Court which passed such decree
shall send the decree directly to such other Court whether or not
such other Court is situated in the same State, but the Court to
which the decree is sent for execution shall, if it has no
jurisdiction to execute the decree, send it to the Court having
such jurisdiction].
6. Procedure where Court desires that its own decree shall be
executed by another Court. – The Court sending a decree for
execution shall send –
(a) a copy of the decree;
(b) a certificate setting forth that satisfaction of the decree
has not been obtained by execution within the jurisdiction of
the Court by which it was passed, or, where the decree has
been executed in part, the extent to which satisfaction has
been obtained and what part of the decree remains
unsatisfied; and
(c) a copy of any order for the execution of the decree, or, if
no such order has been made, a certificate to that effect.
8. Execution of decree or order by Court to which it is sent –
Where such copies are so filed, the decree or order may, if the
Court to which it is sent is the District Court, be executed by
such Court or be transferred for execution to any subordinate
Court of competent jurisdiction.
10. Application for execution. – Where the holder of a decree
desires to execute it, he shall apply to the Court which passed the
decree or to the officer (if any) appointed in this behalf, or if the
decree has been sent under the provisions hereinbefore contained
to another Court, then to such Court or to the proper officer
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thereof.
12. Application for attachment of movable property not in
judgment debtor’s possession – Where an application is made
for the attachment of any movable property belonging to a
judgment-debtor but not in his possession, the decree-holder
shall annex to the application an inventory of the property to be
attached, containing a reasonably accurate description of the
same.
“17. Procedure on receiving application for execution of decree
– (1) On receiving an application for the execution of a decree as
provided by rule 11, sub-rule (2), the Court shall ascertain
whether such of the requirements of rules 11 to 14 as may be
applicable to the case have been complied with; and, if they have
not been complied with, [the Court shall allow] the defect to be
remedied then and there or within a time to be fixed by it.
(1-A) ......
(2) ..........
(3)...........
(4) ..........
Provided that , in the case of a decree for the payment of money,
the value of the property attached shall, as nearly as may be,
correspond with the amount due under the decree. ”
11. A reading of these provisions show that the CPC had not laid down
the jurisdiction of an Executing Court. It cannot be since an Executing
Court would be a Court which would be able to issue a process of
execution within the limits of its territorial jurisdiction only, if the property
or the person which is the subject-matter of the decree is found and
available within such territory. It can attach a property which is within its
territorial jurisdiction. It can detain a judgment debtor who lives within its
territorial jurisdiction. It can appoint receiver of a property also which is
only within its territorial jurisdiction. It would have nothing to do with the
residence or the business of the parties or the place where the cause of
action in the suit in which the decree came to be passed was. Hence if it
has no property that it can attach and sell, it would transfer the decree to
the Court where any property of the judgment debtor is found as the
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“Court having jurisdiction”.
12. The conclusion of the Court in the case of Tata International Ltd.
(supra) in para 4 was in line with this reasoning and runs thus:
“It is therefore, clear that in respect of an Award for money,
subject matter can be said to be money. In other words,
therefore, petition for enforcement of the foreign Award can be
filed in the Court where the party may have money. This is
important consideration considering a party need not be tied
down as in the case of Part I where the subject matter is the
subject matter of the arbitration. In other words, if the party has
a foreign Award in its favour, it can seek to enforce the Award in
any part of the country where it is sought to be enforced as long
as money is available or suit for recovery of money can be filed.
In my opinion, therefore, expression subject matter of the Award
to the explanation under section 47 is different from the
expression subject matter of the arbitration under section 2(e) of
Part I of the Act.
A foreign Award if allowed to be enforced is a deemed decree. It
can be enforced anywhere that the respondent may have money.
In other words it is the nature of forum hunting . The expression
subject matter of the Award and the subject matter of the
arbitration agreement are two different and distinct
expressions. ”
Consequently, in that case when the money award was sought to be
executed in this Court, though it was not even averred that the respondent
had money within the jurisdiction of this Court, it was held that there was
absent of subject matter of the award within the territorial jurisdiction of
this Court and hence this Court had no jurisdiction to hear and decide the
petition for enforcement of the foreign award under Section 47 of the Act.
13. The case of the parties to this litigation is wholly different. The
appellant claims that there is money within the territorial jurisdiction of
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this Court which would satisfy the foreign award obtained by the applicant
in an arbitration proceeding held in the USA. The subject matter of the
award which is a money award, being money is within the territorial
jurisdiction of this Court and consequently, under the explanation to
Section 47 of the Act this Court having jurisdiction over the subject matter
of the award would be the correct Executing Court in enforcement of the
foreign award obtained by the appellant under Section 48 of the Act.
14. In the case of Brace Transport Corporation of Monrovia,
Bermuda Vs. Orient Middle East Lines Ltd., Saudia Arabia & Ors.
AIR 1994 SC 1715 the enforcement of a foreign award under the Foreign
Awards (Recognition and Enforcement) Act (45 of 1961) was considered.
That was a case of a foreign money award. The respondent owned a vessel
which was sold to a partnership firm in Bhavanagar in the State of Gujarat
for being broken in the port of Alang. The vessel was beached at Alang.
The application for enforcement of the award was filed in the Court of the
Civil Judge Senior Division at Bhavanagar. The award holder applied for
attachment of the sale proceeds of the vessel and injunction against its
transfer pending the execution under Order 38 Rule 5 of the CPC (as an
attachment before judgment).
15. Under Section 5(1) of the Foreign Awards Act any person interested
in a foreign award is entitled to apply to the Court having jurisdiction over
the subject matter of the award that the award be filed in Court. This
provision is analogous to the provision contained in the explanation to
Section 47 of the Arbitration Act which also shows a Court for the purpose
of enforcement of an award to be a Court having jurisdiction over the
subject matter of the award.
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16. It is observed in para 13 of the judgment in the case of Brace
Transport (supra) quoting from the Law and Practice of International
Commercial Arbitration by Redfern and Hunter (1986 edition) (at pages
337 and 338) that :
“A party seeking to enforce an award in an international
commercial arbitration may have a choice of country in which to
do so; as it is sometimes expressed, the party may be able to go
forum shopping. This depends upon the location of the assets of
the losing party. Since the purpose of enforcement proceedings
is to try to ensure compliance with an award by the legal
attachment or seizure of the defaulting party’s assets. Legal
proceedings of some kind are necessary to obtain title to the
assets seized or their proceeds of sale. These legal proceedings
must be taken in the State or States in which the property or
other assets of the losing party are located.”
It is this observation which has been followed with approval in the
case of Tata International Ltd. (Supra) .
17. The reasoning for this observation is also set out in para 13 of the
judgment in the case of Brace Transport (supra) : The arbitration
between the parties would be in a neutral forum. They may not have any
assets therein. The award cannot, therefore, be enforced there. That would
be the forum agreed by the parties or where the subject matter of the
arbitration was. Instead the enforcement of the award must be in a country
where the properties of the judgment debtor would be. It is, therefore, held
that foreign awards must, therefore, be recognisable and enforceable
intentationally and the place of such enforcement would not be chosen by
the parties, but would depend upon the circumstances of each particular
case.
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It is, therefore, further observed:
“In order to reach this decision, the party seeking enforcement
needs to locate the State or States in which the losing party has
(or is likely to have) assets available to meet the award.
In that case the respondents had no asset there except the ship which was
sold to the partnership firm and beached at the place where the award was
sought to be enforced.
18. The Court observed the analogy between an award for money in
arbitration and a money decree in a litigation in para 16 of the judgment
thus:
“16. This being an award for money its subject-matter may be
said to be money, just as the subject-matter of a money-decree
may be said to be money ” .
The Court, therefore, directed the Bhavnagar Court to take the award
on file under the provisions of Section 5 of the Foreign Awards Act and
proceed in accordance with the subsequent provisions under the Act for
enforcement of the award.
19. It is clear from a reading of the aforesaid provisions defining the
Court and the aforesaid two judgments and considering the reason and
logic behind the distinction as also the analogous provisions with regard to
enforcement of decrees that since the appellant claims that it can execute
the award within the territorial jurisdiction of this Court that itself bestows
this Court with the territorial jurisdiction, it having within its territorial
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limits the subject matter of the award which is money in the form of the
bank account. Mr. Dhond on behalf of the appellant contended that it is for
the appellant to take its own choise to recover the monies and if the
appellant finds that there are no monies in the said account the appellant
may be constrained to make another application for enforcement of the
award, much like another application for execution of a decree under the
CPC wherever another property of the respondent may be found for
execution and enforcement of the award.
20. This, therefore, settles the territorial jurisdiction aspect under the
application for execution made by the appellant. The notice issued under
Order 21 Rule 22 would, therefore, be entitled to be issued by this Court
having territorial jurisdiction for the enforcement of the award. The
impugned order refusing to exercise jurisdiction on the ground that merely
because the bank account of the respondent was within its territorial
jurisdiction is, therefore, incorrect and must be set aside. This Court
would have to exercise its jurisdiction to enforce the award.
21. Such enforcement would be under Section 48 of the Arbitration Act
upon compliance of the three requirements of filing the original award, the
certified copy of the original agreement and the evidence showing that it is
a foreign award under Section 47 thereof. Under Section 48 of the Act the
award can be refused to be enforced inter alia if the enforcement was
contrary to the public policy of India.
22. Mr. Balsara on behalf of the respondent contends that the foreign
awards sought to be executed by the appellant is an ex-parte award in
which the respondent was not heard and, therefore, is liable to be set aside
and refused to be enforced as such awards are held to be against the public
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policy in India. For setting aside the said award the respondent filed an
application under Section 34 of the Act. That application came to be filed
in this Court on the premise that a part of the cause of action arose within
the territorial limits of this Court’s jurisdiction. The respondent claimed to
have taken leave under Clause 12 of the Letters patent. The Petition
having been served upon the applicant herein it was shown that the leave
was not obtained. Consequently, upon the respondent’s own showing in
his petition the Court would not have the territorial jurisdiction. Hence the
respondent’s application has been returned to the competent Court for
filing. That is the Court in which the arbitration agreement is stated to
have been executed and where the immovable properties of the respondent
lie i.e., in Vashi, Navi Mumbai, District: Thane. Consequently, that
petition has been filed and is pending in the Thane Court.
23. It is contended on behalf of the respondent that the award cannot be
enforced until that application is decided. That stands to reason. If the
award is enforced before the application to set it aside is heard that
application would become infructuous without the respondent being heard.
It is contended on behalf of the applicant that the various exceptions for
refusal of the enforcement of the award under Section 48 would
themselves act as a shield against the respondent and the respondent would
be entitled to show this Court as the Executing Court having territorial
jurisdiction why the application for enforcement of the foreign award
should be refused including his plea that the award is against public policy
in India because it was passed in the absence of the respondent and is
accordingly stated to be an ex-parte award.
24. Mr. Balsara on behalf of the respondent has drawn our attention to
the judgment in the case of Venture Global Engineering Vs. Satyam
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Computer Services Ltd. (2008) 4 SCC 190 in which it is held that though
Section 34 is a part of part I of the Act which contains general provisions
otherwise dealing with Indian Awards, it would apply equally to foreign
awards under Part II of the Act there being no analogous provision in Part
II for challenging the foreign arbitral award and for having it set aside. It
is held in that judgment that the provisions of Part I of the Act would apply
to all arbitrations and to all proceedings relating thereto. For arbitrations
held in India Part I would compulsorily apply. For international
commercial arbitrations held out of India Part-I would apply unless the
parties by agreement, express or implead, would exclude all or any of the
provisions of the Part I. In that case the laws or rules chosen by the parties
would prevail and any provision so executed by the parties or which are
contrary to the rules and laws which would prevail would not apply. It is
observed that when a judgment debtor wants to challenge the award as
being against the public policy in India he cannot be deprived of such
rights under Section 34 to set aside the award.
25. In paragraph 33 of the judgment it is observed that the applicability
of Section 34 (which is in Part I of the Act) to foreign international awards
would not be inconsistent with Section 48 of the Act or any other
provisions of Part II. The judgment further observes (as in the case of
Brace Transport (Supra) that the award could be enforced against the
properties of the judgment debtor in India even when the judgment debtor
resides abroad, but not by depriving him of his rights under Section 34 to
invoke the public policy in India to set aside the award.
26. We may mention that Section 48 itself sets out various grounds upon
which enforcement of a foreign award may be refused including that the
enforcement would be contrary to the public policy in India under sub-
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clause 2(b) thereof. Consequently, the rights of the judgment debtor under
Section 34 and Section 48 (2)(b) are similar. He would be heard on merits
of his claim that the foreign award is against public policy of India. There
would, therefore, be substantial justice upon the merits of the claim to hear
the award holder and the judgment debtor in enforcing and having set aside
the award respectively in a single application. In view of the specific
provision under Section 48(2)(b) another application in another Court
under Section 34 of the Act would not be required to be agitated. It can be
fruitfully done by one Court hearing either an application under Section
48(2)(b) of the award holder and under Section 34 of the judgment debtor.
In view of what has been held by the Supreme Court in the case of
Venture Global (supra) we hold that both the applications of the parties
hereto be decided by one Court.
27. This Court is seen to have the territorial jurisdiction as an Executing
Court. It was in this Court that the respondent also initially filed its
application under Section 34 of the Act to set aside the foreign award
obtained by the appellant. The application under Section 34 which was
initially filed here and which was returned to the Court in Thane District
for filing would be required to be re-presented to this Court if the
respondent seeks to agitate it. Even if the respondent does not seek to
agitate, the respondent would be heard on merits by its claim in the
Execution Application No.681 of 2011 by the learned single Judge of this
Court under Section 48(2)(b).
28. In the result the appeal succeeds. The impugned order of the learned
single Judge of this Court dated 20 October 2011 is set aside. It is declared
that this Court has territorial jurisdiction to proceed with the Execution
Application No.681 of 2011 as an Executing Court, it having the subject
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matter of the foreign award which is sought to be enforced, being the bank
account in ICICI Bank within its territorial limits. The application under
Section 34 of the Arbitration and Conciliation Act 1996 at present pending
before the Court in Thane District shall be returned by the competent Court
in Thane District where it is pending for being re-presented to this Court
and shall be disposed off by the learned single Judge of this Court along
with the Execution Application No.681 of 2011.
CHIEF JUSTICE
ROSHAN DALVI, J.
At this stage, after the judgment is pronounced, learned Counsel for
Appellant requests for stay of the operation of this judgment in order to
have further recourse in law. In the fact and circumstances of the case we
are not inclined to accede to the request, as such the request is declined.
CHIEF JUSTICE
ROSHAN DALVI, J.
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mnm
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL JURISDICTION
APPEAL NO. 770 OF 2011
IN
EXECUTION APPLICATION NO.681 OF 2011
IN
ARBITRATION PROCEEDINGS NO.5094 T 00357 10
(International Centre for Dispute Resolution, United States)
Wireless Developers Inc, a company
Incorporated under the laws of
United States and having its registered address
At 2875, Northwind Drive, Suite 200,
East Lansing, MI 48823. ...Appellant
Vs.
Indiagames Ltd, a company
incorporated under the provisions of the
Companies Act, 1956 and having its address
at Vishwaroop IT Park, Vashi International
Info-Tech Park, Above Raghuleela Mall,
th
11 floor, Sector 30A,
CIDCO, Vashi, Navi Mumbai-400 705 ...Respondent
Mr. Venkatesh Dhond, Sr. Advocate with V. Desai and
Prateek Bagaria i/b. Nitish Desai Asso. for Appellant
Mr. Chirag Balsara, with Varun M. i/b. M/s. Rajani Asso. for Respondent
CORAM : MOHIT S. SHAH, C.J. AND
MRS. ROSHAN DALVI, J.
RESERVED FOR ORDER : 09 JANUARY 2012
PRONOUNCEMENT OF ORDER: 30 JANUARY 2012
JUDGMENT (Per Roshan Dalvi, J)
1. The appellant has obtained an award of the Arbitral Tribunal in the
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USA against the respondent which it seeks to enforce and execute. The
appellant took out application under Order 21 Rule 22 of the Code of Civil
Procedure 1908 for obtaining leave of the Court to execute the foreign
award. The parties had appeared before the Arbitrator. After the initial
negotiations the respondent did not participate in the arbitration
proceedings. Instead it sought to invoke arbitration separately. For the
absence of the respondent despite service of notices a final award came to
be passed on 7 December 2010.
2. The respondent sought to challenge aforesaid foreign award in a
petition filed in this Court under Section 34 of the Arbitration and
Conciliation Act 1996 (the Act). The petition filed in this Court was
returned to the respondent for filing in the Court having jurisdiction. The
respondent stated that it had sought leave under clause 12 of the Letters
patent to file the petition in this Court though the cause of action had
accrued at Navi Mumbai in the Thane District where the agreement
between the parties was entered into and where the immovable properties
of the respondent are situate. It was shown to Court that leave as claimed
by the respondent was not obtained. Consequently, the Court could not
exercise jurisdiction upon the respondent’s own claim. The petition under
Section 34 of the Act is now pending hearing before the Court at Navi
Mumbai in Thane District to which it was sent.
3. The appellant has sought to enforce the aforesaid award on the
ground that a movable property of the respondent being a bank account in
ICICI Bank is within the jurisdiction of this Court and the appellant must
file its execution application, as all other applications against decrees of
the Court are filed, in what is known as the Executing Court which would
be the Court, not where the cause of action arose, or the respondent resides
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or carries on business, or where the respondent may have immovable
properties, but where the respondent would have the property which is
sought to be attached in execution of the award. This is because only the
Court within whose jurisdiction the property which is sought to be attached
is situate would be able to execute a decree or an award and hence such
Court would have territorial jurisdiction in an execution application.
4. The learned single Judge under the impugned order held that this
Court does not have territorial jurisdiction. The learned single Judge
considered that it was the appellant’s own case that the respondent cannot
challenge the award in this Court because it lacked territorial jurisdiction
which caused the learned single Judge not to accept the case of the
appellant that this Court would have territorial jurisdiction as an Executing
Court.
5. The territorial jurisdiction of the Court in Arbitration Petitions for
challenge of awards under Section 34 of the Act read with the territorial
jurisdiction of the Executing Court for enforcement of foreign awards
under Section 48 of the Act would have to be considered.
6. It is contended by Mr. Dhond on behalf of the appellant that the
territorial jurisdiction of the Courts in an arbitration and in enforcement of
the award are different and even differently defined in the Act and
considered in the judgment of this Court and the Supreme Court. He drew
our attention to Sections 2(e) and explanation to Section 47 of the Act.
Section 2(e) is in Part- I Chapter I of the Act which defines a Court thus:
“2. Definitions. –
(e) “Court” means the principal civil Court of original
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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; ”
7. The explanation to Section 47 thus:
“Explanation. – In this section and all the following sections of
this Chapter, “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 over
the subject-matter of the award 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. ”
(emphasis supplied by underlining)
8. This concept has been explained by a single Judge of this Court in
the case of Tata International Ltd. Vs. Trisuns Chemical Industry Ltd.
2002(2) B.C.R. 88 . In that case also a foreign award was sought to be
enforced in a Court which the respondent claimed, lacked territorial
jurisdiction. In paragraph 2 of the judgment, the Court considered the
distinction between the aforesaid two provisions relating to the subject
matter of the two aspects: in an arbitration the Court would consider the
subject matter of the arbitration; in the enforcement of the award the Court
would consider the subject matter of the award as the determining factors.
This stands to reason and logic. The subject matter of the arbitration may
be a certain contract, a certain property etc., The territorial jurisdiction of
the Court would be where the contract was entered into or where the some
or all the properties of the respondent would be. Once the arbitration is
concluded and has to be enforced it is the subject matter of the award
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which would have to be seen. That would be whether the award is a
money award (analogous to a money decree in a litigation) or a declaration
or other relief with regard to a contract or a property. The award would
have to be filed for its enforcement in a Court which would be able to
enforce that award. It would be futile to file it where a cause of action may
have arisen, if the respondent would have no properties in that jurisdiction.
Similarly it would be of little use to file it where the respondent resided or
carried on business. It would have to be filed where the respondent would
have properties, movable or immovable, which could be attached and sold
in execution of the award.
9. This is much like the provisions in the Code of Civil Procedure
(CPC) with regard to execution of decrees and orders. Section 51 thereof
enumerates the powers of the Court to enforce the execution which may be
by delivery of any property, attachment and/or sale of the property, arrest
and detention of the judgment debtor, appointment of a receiver or in any
other manner as required in the case.
Under Order 21 Rule 3 where the immovable properties of the
judgment debtor fall within the local limits of two or more Courts any one
of them may execute the decree by attachment and/or sale. A Court may
even transfer a decree to another Court for execution under Order 21 Rule
5 and 6 of the Code. It would then be executed in the Court to which it is
sent under Order 21 Rule 8 thereof.
10. The CPC does not define an Executing Court. It is, therefore, left to
the judgment creditor to apply in a Court for execution by application in
the Court passing decree, if it could be executed by that Court and by
applying for transfer of the decree, if it could be executed by another
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Court. The choice of the Court is left to the judgment creditor under Order
21 Rule 10 of the CPC which runs thus:
“10. Application for execution. – Where the holder of a decree
desires to execute it, he shall apply to the Court which passed the
decree or to the officer (if any) appointed in this behalf, or if the
decree has been sent under the provisions hereinbefore contained
to another Court, then to such Court or to the proper officer
thereof. ”
The decree holder may make an application for an attachment of a
movable property belonging to the judgment debtor under Order 21 Rule
12 of the CPC and the Executing Court to which such an application is
made would have to follow the procedure under Order 21 Rule 17 of the
CPC upon receiving such application. The proviso to Rule 17 of Order 21
relates to a money decree obtained by the judgment creditor or the decree
holder.
Upon these preliminary measures being undertaken the Executing
Court would issue process for execution under Order 21 Rule 24 of the
CPC.
It may be convenient to set out the relevant parts of the necessary
provisions relating to execution of orders and decrees in the CPC to
understand the concept of the procedure for execution which run thus:
Section 51. Powers of Court to enforce execution. – Subject to
such conditions and limitations as may be prescribed, the Court
may, on the application of the decree-holder, order execution of
the decree –
(a) by delivery of any property specifically decreed;
(b) by attachment and sale or by sale without attachment of
any property;
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(c) by arrest and detention in prison [for such period not
exceeding the period specified in section 58, where arrest and
detention is permissible under that section];
(d) by appointing a receiver; or
(e) in such other manner as the nature of the relief granted
may require:”
Order 21:
“ Courts executing decrees
3. Lands situate in more than one jurisdiction. – Where
immovable property forms one estate or tenure situate within the
local limits of the jurisdiction of two or more Courts, any one of
such Courts may attach and sell the entire estate or tenure.
[ 5. Mode of transfer. – Where a decree is to be sent for
execution to another Court, the Court which passed such decree
shall send the decree directly to such other Court whether or not
such other Court is situated in the same State, but the Court to
which the decree is sent for execution shall, if it has no
jurisdiction to execute the decree, send it to the Court having
such jurisdiction].
6. Procedure where Court desires that its own decree shall be
executed by another Court. – The Court sending a decree for
execution shall send –
(a) a copy of the decree;
(b) a certificate setting forth that satisfaction of the decree
has not been obtained by execution within the jurisdiction of
the Court by which it was passed, or, where the decree has
been executed in part, the extent to which satisfaction has
been obtained and what part of the decree remains
unsatisfied; and
(c) a copy of any order for the execution of the decree, or, if
no such order has been made, a certificate to that effect.
8. Execution of decree or order by Court to which it is sent –
Where such copies are so filed, the decree or order may, if the
Court to which it is sent is the District Court, be executed by
such Court or be transferred for execution to any subordinate
Court of competent jurisdiction.
10. Application for execution. – Where the holder of a decree
desires to execute it, he shall apply to the Court which passed the
decree or to the officer (if any) appointed in this behalf, or if the
decree has been sent under the provisions hereinbefore contained
to another Court, then to such Court or to the proper officer
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thereof.
12. Application for attachment of movable property not in
judgment debtor’s possession – Where an application is made
for the attachment of any movable property belonging to a
judgment-debtor but not in his possession, the decree-holder
shall annex to the application an inventory of the property to be
attached, containing a reasonably accurate description of the
same.
“17. Procedure on receiving application for execution of decree
– (1) On receiving an application for the execution of a decree as
provided by rule 11, sub-rule (2), the Court shall ascertain
whether such of the requirements of rules 11 to 14 as may be
applicable to the case have been complied with; and, if they have
not been complied with, [the Court shall allow] the defect to be
remedied then and there or within a time to be fixed by it.
(1-A) ......
(2) ..........
(3)...........
(4) ..........
Provided that , in the case of a decree for the payment of money,
the value of the property attached shall, as nearly as may be,
correspond with the amount due under the decree. ”
11. A reading of these provisions show that the CPC had not laid down
the jurisdiction of an Executing Court. It cannot be since an Executing
Court would be a Court which would be able to issue a process of
execution within the limits of its territorial jurisdiction only, if the property
or the person which is the subject-matter of the decree is found and
available within such territory. It can attach a property which is within its
territorial jurisdiction. It can detain a judgment debtor who lives within its
territorial jurisdiction. It can appoint receiver of a property also which is
only within its territorial jurisdiction. It would have nothing to do with the
residence or the business of the parties or the place where the cause of
action in the suit in which the decree came to be passed was. Hence if it
has no property that it can attach and sell, it would transfer the decree to
the Court where any property of the judgment debtor is found as the
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“Court having jurisdiction”.
12. The conclusion of the Court in the case of Tata International Ltd.
(supra) in para 4 was in line with this reasoning and runs thus:
“It is therefore, clear that in respect of an Award for money,
subject matter can be said to be money. In other words,
therefore, petition for enforcement of the foreign Award can be
filed in the Court where the party may have money. This is
important consideration considering a party need not be tied
down as in the case of Part I where the subject matter is the
subject matter of the arbitration. In other words, if the party has
a foreign Award in its favour, it can seek to enforce the Award in
any part of the country where it is sought to be enforced as long
as money is available or suit for recovery of money can be filed.
In my opinion, therefore, expression subject matter of the Award
to the explanation under section 47 is different from the
expression subject matter of the arbitration under section 2(e) of
Part I of the Act.
A foreign Award if allowed to be enforced is a deemed decree. It
can be enforced anywhere that the respondent may have money.
In other words it is the nature of forum hunting . The expression
subject matter of the Award and the subject matter of the
arbitration agreement are two different and distinct
expressions. ”
Consequently, in that case when the money award was sought to be
executed in this Court, though it was not even averred that the respondent
had money within the jurisdiction of this Court, it was held that there was
absent of subject matter of the award within the territorial jurisdiction of
this Court and hence this Court had no jurisdiction to hear and decide the
petition for enforcement of the foreign award under Section 47 of the Act.
13. The case of the parties to this litigation is wholly different. The
appellant claims that there is money within the territorial jurisdiction of
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this Court which would satisfy the foreign award obtained by the applicant
in an arbitration proceeding held in the USA. The subject matter of the
award which is a money award, being money is within the territorial
jurisdiction of this Court and consequently, under the explanation to
Section 47 of the Act this Court having jurisdiction over the subject matter
of the award would be the correct Executing Court in enforcement of the
foreign award obtained by the appellant under Section 48 of the Act.
14. In the case of Brace Transport Corporation of Monrovia,
Bermuda Vs. Orient Middle East Lines Ltd., Saudia Arabia & Ors.
AIR 1994 SC 1715 the enforcement of a foreign award under the Foreign
Awards (Recognition and Enforcement) Act (45 of 1961) was considered.
That was a case of a foreign money award. The respondent owned a vessel
which was sold to a partnership firm in Bhavanagar in the State of Gujarat
for being broken in the port of Alang. The vessel was beached at Alang.
The application for enforcement of the award was filed in the Court of the
Civil Judge Senior Division at Bhavanagar. The award holder applied for
attachment of the sale proceeds of the vessel and injunction against its
transfer pending the execution under Order 38 Rule 5 of the CPC (as an
attachment before judgment).
15. Under Section 5(1) of the Foreign Awards Act any person interested
in a foreign award is entitled to apply to the Court having jurisdiction over
the subject matter of the award that the award be filed in Court. This
provision is analogous to the provision contained in the explanation to
Section 47 of the Arbitration Act which also shows a Court for the purpose
of enforcement of an award to be a Court having jurisdiction over the
subject matter of the award.
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16. It is observed in para 13 of the judgment in the case of Brace
Transport (supra) quoting from the Law and Practice of International
Commercial Arbitration by Redfern and Hunter (1986 edition) (at pages
337 and 338) that :
“A party seeking to enforce an award in an international
commercial arbitration may have a choice of country in which to
do so; as it is sometimes expressed, the party may be able to go
forum shopping. This depends upon the location of the assets of
the losing party. Since the purpose of enforcement proceedings
is to try to ensure compliance with an award by the legal
attachment or seizure of the defaulting party’s assets. Legal
proceedings of some kind are necessary to obtain title to the
assets seized or their proceeds of sale. These legal proceedings
must be taken in the State or States in which the property or
other assets of the losing party are located.”
It is this observation which has been followed with approval in the
case of Tata International Ltd. (Supra) .
17. The reasoning for this observation is also set out in para 13 of the
judgment in the case of Brace Transport (supra) : The arbitration
between the parties would be in a neutral forum. They may not have any
assets therein. The award cannot, therefore, be enforced there. That would
be the forum agreed by the parties or where the subject matter of the
arbitration was. Instead the enforcement of the award must be in a country
where the properties of the judgment debtor would be. It is, therefore, held
that foreign awards must, therefore, be recognisable and enforceable
intentationally and the place of such enforcement would not be chosen by
the parties, but would depend upon the circumstances of each particular
case.
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It is, therefore, further observed:
“In order to reach this decision, the party seeking enforcement
needs to locate the State or States in which the losing party has
(or is likely to have) assets available to meet the award.
In that case the respondents had no asset there except the ship which was
sold to the partnership firm and beached at the place where the award was
sought to be enforced.
18. The Court observed the analogy between an award for money in
arbitration and a money decree in a litigation in para 16 of the judgment
thus:
“16. This being an award for money its subject-matter may be
said to be money, just as the subject-matter of a money-decree
may be said to be money ” .
The Court, therefore, directed the Bhavnagar Court to take the award
on file under the provisions of Section 5 of the Foreign Awards Act and
proceed in accordance with the subsequent provisions under the Act for
enforcement of the award.
19. It is clear from a reading of the aforesaid provisions defining the
Court and the aforesaid two judgments and considering the reason and
logic behind the distinction as also the analogous provisions with regard to
enforcement of decrees that since the appellant claims that it can execute
the award within the territorial jurisdiction of this Court that itself bestows
this Court with the territorial jurisdiction, it having within its territorial
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limits the subject matter of the award which is money in the form of the
bank account. Mr. Dhond on behalf of the appellant contended that it is for
the appellant to take its own choise to recover the monies and if the
appellant finds that there are no monies in the said account the appellant
may be constrained to make another application for enforcement of the
award, much like another application for execution of a decree under the
CPC wherever another property of the respondent may be found for
execution and enforcement of the award.
20. This, therefore, settles the territorial jurisdiction aspect under the
application for execution made by the appellant. The notice issued under
Order 21 Rule 22 would, therefore, be entitled to be issued by this Court
having territorial jurisdiction for the enforcement of the award. The
impugned order refusing to exercise jurisdiction on the ground that merely
because the bank account of the respondent was within its territorial
jurisdiction is, therefore, incorrect and must be set aside. This Court
would have to exercise its jurisdiction to enforce the award.
21. Such enforcement would be under Section 48 of the Arbitration Act
upon compliance of the three requirements of filing the original award, the
certified copy of the original agreement and the evidence showing that it is
a foreign award under Section 47 thereof. Under Section 48 of the Act the
award can be refused to be enforced inter alia if the enforcement was
contrary to the public policy of India.
22. Mr. Balsara on behalf of the respondent contends that the foreign
awards sought to be executed by the appellant is an ex-parte award in
which the respondent was not heard and, therefore, is liable to be set aside
and refused to be enforced as such awards are held to be against the public
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policy in India. For setting aside the said award the respondent filed an
application under Section 34 of the Act. That application came to be filed
in this Court on the premise that a part of the cause of action arose within
the territorial limits of this Court’s jurisdiction. The respondent claimed to
have taken leave under Clause 12 of the Letters patent. The Petition
having been served upon the applicant herein it was shown that the leave
was not obtained. Consequently, upon the respondent’s own showing in
his petition the Court would not have the territorial jurisdiction. Hence the
respondent’s application has been returned to the competent Court for
filing. That is the Court in which the arbitration agreement is stated to
have been executed and where the immovable properties of the respondent
lie i.e., in Vashi, Navi Mumbai, District: Thane. Consequently, that
petition has been filed and is pending in the Thane Court.
23. It is contended on behalf of the respondent that the award cannot be
enforced until that application is decided. That stands to reason. If the
award is enforced before the application to set it aside is heard that
application would become infructuous without the respondent being heard.
It is contended on behalf of the applicant that the various exceptions for
refusal of the enforcement of the award under Section 48 would
themselves act as a shield against the respondent and the respondent would
be entitled to show this Court as the Executing Court having territorial
jurisdiction why the application for enforcement of the foreign award
should be refused including his plea that the award is against public policy
in India because it was passed in the absence of the respondent and is
accordingly stated to be an ex-parte award.
24. Mr. Balsara on behalf of the respondent has drawn our attention to
the judgment in the case of Venture Global Engineering Vs. Satyam
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Computer Services Ltd. (2008) 4 SCC 190 in which it is held that though
Section 34 is a part of part I of the Act which contains general provisions
otherwise dealing with Indian Awards, it would apply equally to foreign
awards under Part II of the Act there being no analogous provision in Part
II for challenging the foreign arbitral award and for having it set aside. It
is held in that judgment that the provisions of Part I of the Act would apply
to all arbitrations and to all proceedings relating thereto. For arbitrations
held in India Part I would compulsorily apply. For international
commercial arbitrations held out of India Part-I would apply unless the
parties by agreement, express or implead, would exclude all or any of the
provisions of the Part I. In that case the laws or rules chosen by the parties
would prevail and any provision so executed by the parties or which are
contrary to the rules and laws which would prevail would not apply. It is
observed that when a judgment debtor wants to challenge the award as
being against the public policy in India he cannot be deprived of such
rights under Section 34 to set aside the award.
25. In paragraph 33 of the judgment it is observed that the applicability
of Section 34 (which is in Part I of the Act) to foreign international awards
would not be inconsistent with Section 48 of the Act or any other
provisions of Part II. The judgment further observes (as in the case of
Brace Transport (Supra) that the award could be enforced against the
properties of the judgment debtor in India even when the judgment debtor
resides abroad, but not by depriving him of his rights under Section 34 to
invoke the public policy in India to set aside the award.
26. We may mention that Section 48 itself sets out various grounds upon
which enforcement of a foreign award may be refused including that the
enforcement would be contrary to the public policy in India under sub-
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clause 2(b) thereof. Consequently, the rights of the judgment debtor under
Section 34 and Section 48 (2)(b) are similar. He would be heard on merits
of his claim that the foreign award is against public policy of India. There
would, therefore, be substantial justice upon the merits of the claim to hear
the award holder and the judgment debtor in enforcing and having set aside
the award respectively in a single application. In view of the specific
provision under Section 48(2)(b) another application in another Court
under Section 34 of the Act would not be required to be agitated. It can be
fruitfully done by one Court hearing either an application under Section
48(2)(b) of the award holder and under Section 34 of the judgment debtor.
In view of what has been held by the Supreme Court in the case of
Venture Global (supra) we hold that both the applications of the parties
hereto be decided by one Court.
27. This Court is seen to have the territorial jurisdiction as an Executing
Court. It was in this Court that the respondent also initially filed its
application under Section 34 of the Act to set aside the foreign award
obtained by the appellant. The application under Section 34 which was
initially filed here and which was returned to the Court in Thane District
for filing would be required to be re-presented to this Court if the
respondent seeks to agitate it. Even if the respondent does not seek to
agitate, the respondent would be heard on merits by its claim in the
Execution Application No.681 of 2011 by the learned single Judge of this
Court under Section 48(2)(b).
28. In the result the appeal succeeds. The impugned order of the learned
single Judge of this Court dated 20 October 2011 is set aside. It is declared
that this Court has territorial jurisdiction to proceed with the Execution
Application No.681 of 2011 as an Executing Court, it having the subject
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matter of the foreign award which is sought to be enforced, being the bank
account in ICICI Bank within its territorial limits. The application under
Section 34 of the Arbitration and Conciliation Act 1996 at present pending
before the Court in Thane District shall be returned by the competent Court
in Thane District where it is pending for being re-presented to this Court
and shall be disposed off by the learned single Judge of this Court along
with the Execution Application No.681 of 2011.
CHIEF JUSTICE
ROSHAN DALVI, J.
At this stage, after the judgment is pronounced, learned Counsel for
Appellant requests for stay of the operation of this judgment in order to
have further recourse in law. In the fact and circumstances of the case we
are not inclined to accede to the request, as such the request is declined.
CHIEF JUSTICE
ROSHAN DALVI, J.
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