2018 (2) TMI 1131 - SC - Indian Laws

Arbitration awards can be directly filed and executed where assets are located, not where arbitration occurred.

The Supreme Court held that an arbitration award can be directly filed and executed in the court where the assets are located, without the need to first ... Court by which decree may be executed - Transfer of decree - Arbitration award - Procedure where court desires that its own decree shall be executed by another court - whether an award under the Arbitration & Conciliation Act, 1996 is required to be first filed in the court having jurisdiction over the arbitration proceedings for execution and then to obtain transfer of the decree or whether the award can be straightway filed and executed in the Court where the assets are located is required to be settled in the present appeal - Held that:- The 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 from the Court, which would have jurisdiction over the arbitral proceedings. The appeal is accordingly allowed and the impugned order dated 20.3.2014 is set aside restoring the execution application filed by the appellant before the Morena courts. Issues Involved:1. Whether an arbitration award under the Arbitration & Conciliation Act, 1996, must be first filed in the court having jurisdiction over the arbitration proceedings for execution and then obtain a transfer of the decree, or if the award can be directly filed and executed in the court where the assets are located.Issue-wise Detailed Analysis:1. Divergence of Legal Opinion:The Supreme Court addressed the conflicting views of various High Courts regarding the execution of arbitration awards. The core issue was whether an award needs to be filed in the court with jurisdiction over the arbitration proceedings before obtaining a transfer of the decree or if it can be directly executed in the court where the assets are located.2. Facts:The appellant granted a loan to the first respondent for purchasing a vehicle, with the second respondent standing as guarantor. Due to default in payment, arbitration proceedings were initiated, resulting in an ex parte award in favor of the appellant. The appellant sought to execute the award in Morena, Madhya Pradesh, but the trial court returned the execution application due to lack of jurisdiction, requiring the appellant to first file in Tamil Nadu and obtain a transfer.3. Conflicting Views:A. Transfer of Decree First:- Madhya Pradesh and Himachal Pradesh High Courts: These courts held that the award must be filed in the court with jurisdiction over the arbitration proceedings first and then transferred for execution. This view was based on the interpretation of Section 42 of the Arbitration Act and Sections 37 and 39 of the Code of Civil Procedure (CPC), which deal with the court's jurisdiction and transfer of decrees.B. Direct Execution Where Assets Located:- Delhi, Kerala, Madras, Rajasthan, Allahabad, Punjab & Haryana, and Karnataka High Courts: These courts opined that an award could be directly executed in the court where the assets are located. They emphasized that the award is not a decree of a particular court but is enforceable as a decree under Section 36 of the Arbitration Act.4. Supreme Court's Analysis:The Supreme Court analyzed the relevant provisions of the CPC and the Arbitration Act. It noted that:- Section 36 of the Arbitration Act: It states that an award is enforceable as if it were a decree of the court, implying the enforcement mechanism is akin to a decree but does not require a decree to be passed by a civil court.- Section 42 of the Arbitration Act: This section pertains to jurisdiction over arbitral proceedings and subsequent applications but does not extend to execution proceedings once the arbitral award is made.- Section 32 of the Arbitration Act: It terminates arbitral proceedings upon the final award, indicating that Section 42 does not apply to execution proceedings.5. Conclusion:The Supreme Court concluded that the enforcement of an award through execution could be filed anywhere in the country where such a decree can be executed. There is no requirement to obtain a transfer of the decree from the court with jurisdiction over the arbitral proceedings. The views of the Delhi, Kerala, Madras, Rajasthan, Allahabad, Punjab & Haryana, and Karnataka High Courts were upheld as reflecting the correct legal position, while the views of the Madhya Pradesh and Himachal Pradesh High Courts were deemed incorrect.Judgment:The appeal was allowed, and the impugned order dated 20.3.2014 was set aside, restoring the execution application filed by the appellant before the Morena courts. The parties were left to bear their own costs.