Home Jurisdiction Request for enforcement of arbitral award would only be filed in court if a request under Article 9 and/or Article 34 has been filed: Telangana High Court reiterates

Request for enforcement of arbitral award would only be filed in court if a request under Article 9 and/or Article 34 has been filed: Telangana High Court reiterates

0

The Telangana High Court reiterated that in view of section 42 of the Arbitration and Conciliation Act 1996 (A&C Act), only the court in which a claim under section 9 and/or section 34 was filed would have jurisdiction to entertain a request for enforcement of the arbitral award.

The bench, consisting of Justices P. Naveen Rao and Sambasivarao Naidu, held that Section 42 of the A&C Act opens with a non-obstinate clause and, therefore, even if an arbitral award is treated as a “fictitious decree by a Civil Court, Section 42 of the A&C Act would cover within its scope all provisions relating to the enforcement of an award.

The petitioner M/s. India Media Services Private Limited and the respondent M/s. SBPL Infrastructure Limited has entered into a nomination agreement. Following certain disputes between the parties, the applicant invoked the arbitration clause. The defendant filed an application under Section 9 of the A&C Act for interim relief in the High Court of Calcutta. After an arbitral award was made in favor of the respondent, the claimant filed a petition under Section 34 of the A&C challenging the arbitral award in the High Court of Calcutta.

The Respondent/Scholarship Holder filed a petition for enforcement in the Civil Court of Hyderabad which was granted leave. Against this, the petitioner filed a petition for review in the Telangana High Court.

The petitioner M/s. India Media Services Private Limited argued in the Telangana High Court that, in accordance with the provisions of Section 42 of the A&C Act, only the Principal District Court or the High Court, where claims under Sections 9 and/ or section 34 of the A&C Act have been filed, have jurisdiction to hear claims filed subsequently after the conclusion of the arbitration proceedings.

Thus, the petitioner asserted that the Civil Court of Hyderabad had no jurisdiction to hear the petition for enforcement since the claims under Section 9 and Section 34 were filed in the State of Bengal. western. Therefore, the petitioner argued that the order issued by the Hyderabad Enforcement Court was unlawful and void ab initio.

The respondent M/s. SBPL Infrastructure Limited argued that once an arbitral award is made by the arbitrator, the award can be enforced anywhere in the country as a civil court order, and specifically where the property concerned is located. The respondent argued that since the property in question was located in Hyderabad, the Civil Court of Hyderabad had jurisdiction to hear the petition for enforcement.

Section 42 of the A&C Act provides that notwithstanding any other provision of Part I of the A&C Act and any other statute, where with respect to an arbitration agreement a claim has been filed in a court, that court has sole jurisdiction to hear the arbitration. proceedings, and all subsequent claims arising out of this agreement and the arbitral proceedings shall be made in this court and in no other court.

The Court observed that Section 42 of the A&C Act opens with a non-obstinate clause. Therefore, the Court held that even if an award is treated as a “fictitious decree” by a civil court, Section 42 of the A&C Act would cover within its scope all provisions relating to the enforcement of ‘a sentence.

Thus, the Court held that in view of section 42 of the A&C Act, only the court in which a claim under section 9 and/or section 34 was filed would have jurisdiction to hear the dispute. a request for execution of the award.

The Court observed that the Supreme Court, in the case of State of West Bengal v Associated Contractors (2014) held that the phrase “with respect to an arbitration agreement”, as it appears in Section 42 of the A&C Act, applies to all claims, whether made before or during the arbitral proceedings or after the arbitral award has been rendered. The Court noted that the Supreme Court had ruled that requests under Section 9 of the A&C Act for interim relief and requests under Section 34 to set aside an arbitral award, being requests made to a court, would fall within the scope of Article 42.

Thus, the High Court held that Section 42 of the A&C Act is also applicable after the arbitral award and, therefore, an application for enforcement of the arbitral award must be filed in the court where a claim under the Section 9 and/or Section 34 was previously filed.

The Court observed that the defendant, in support of its thesis that a request for the execution of an arbitral award can be filed anywhere in the country as a judgment of the civil court, had relied on the decision of the Court supreme in Cheran Properties Limited v Kasturi and Sons Limited (2018), in which the Supreme Court rejected the application of section 42 of the A&C Act. The respondent asserted that since the decision in Cheran Properties Limited (2018) was rendered by the Supreme Court after the judgment of Associate contractors (2014)therefore, the decision in Cheran Properties Limited (2018) will prevail over the decision taken Associate contractors (2014).

The Court noted that the Supreme Court of Cheran Properties Limited (2018) dealt with an arbitration award which held that the holder of the award was entitled to certain share certificates. The Supreme Court had ruled that in order to effect the transfer of share certificates, the allotment holder had the right to seek rectification of the company register only before the NCLT.

The Supreme Court held that since the Companies Act is a special law containing provisions relating to the rectification of a company’s register, only the NCLT has jurisdiction to hear an application for rectification of the company’s register. Thus, the Supreme Court had ruled that section 42 of the A&C Act was not applicable.

The High Court held that there was no conflict in the Supreme Court’s decision in Associate contractors (2014) and Cheran Properties Limited (2018), since they deal with different contingencies after the arbitral award has been rendered.

The High Court held that the Supreme Court’s judgment in Cheran Properties Limited (2018) did not overturn the Supreme Court’s decision in Associate contractors (2014) and that the law as set forth in Associate contractors (2014) still applies.

The High Court observed that the claims under Sections 9 and 34 of the A&C Act were filed in the High Court in Calcutta. Thus, the High Court held that, in view of the decision in Associate contractors (2014) and the provisions of Section 42 of the A&C Act, the High Court of Calcutta had exclusive jurisdiction to hear an application for enforcement of the award.

Thus, the Court held that the Civil Court of Hyderabad lacked jurisdiction to entertain the enforcement motion for the enforcement of the arbitral award under Section 36 of the A&C Act. The Court therefore granted the motion for review.

Case title: M/s. India Media Services Private Limited v M/s. SBPL Infrastructure Limited

Date: 09.06.2022 (Telangana High Court)

Counsel for the Applicant: Mr. MS Prasad, Senior Scholar Appearing for Mrs. A. Satyasri

Counsel for the Respondent: Mr Venkat Prasad Ukkalam

Click here to read/download the order