Whether Judgment Debtor Entitled To Move Objections U/S 47 CPC Against Execution Of Award U/S 36 A&C Act: Delhi High Court Explains
The Delhi High Court allowed a Petition filed under Section 36 of the A&C Act seeking enforcement of Award passed by the Arbitral Tribunal by a majority of 2:1 regarding the disputes between the parties.
Justice Jasmeet Singh, Delhi High Court
The Delhi High Court has explained whether the Judgment Debtor is entitled to move objections under Section 47 of the Civil Procedure Code, 1908 (CPC) against the execution of the Award under Section 36 of the Arbitration and Conciliation Act, 1996 (A&C Act).
The Court was dealing with a Petition filed under Section 36 of the A&C Act seeking enforcement of Award passed by the Arbitral Tribunal by a majority of 2:1 regarding the disputes between the parties.
A Single Bench of Justice Jasmeet Singh observed, “If the objections under section 47 of CPC are allowed to be entertained during the enforcement proceedings of an Award, it would effectively open a second round for challenging the Award which the legislature did not intend to do as the same would undermine the provision of section 34 i.e. challenge to Award on limited grounds available as mentioned therein and render the finality granted by section 35, meaningless. Further, if such interpretation is allowed, the same would defeat the purpose of 1996 Act which is to streamline arbitration and reduce the prolonged litigation.”
The Bench added that allowing objections would not only delay the finality of disputes but would also nullify the basic contours of the A&C Act and any particular provision of a statute has to be harmoniously construed so as not to render any other provisions of the statue otiose/inconsistent with the other provisions.
Senior Advocate Jayant K. Mehta appeared on behalf of the Decree Holder while ASG Chetan Sharma and Senior Advocate Sanat Kumar appeared on behalf of the Judgment Debtor.
Brief Facts
In 2007, the Decree Holder and the Judgment Debtor (parties) entered into a Long-Term Agreement (LTA) for the sale and purchase of coking coal from the Decree Holder on FOB (trimmed) basis from DBCT Gladstone in Australia. Under the LTA, the Decree Holder was the seller and the Judgment Debtor was the purchaser of a quantity of a coking coal. The LTA encompassed three delivery periods one year each commencing in July 1, 2004 and ending on June 30, 2007 and the Judgment Debtor was given an option to extend the LTA for two more Delivery Periods which was later exercised by the Judgment Debtor and it was decided that the purchases and deliveries were also to be made in the Fourth Delivery Period and a Fifth Delivery Period. In these two additional Delivery Periods, it was provided that the Judgment Debtors would purchase 466,000 MT of coking coal during each Delivery Period. Till Fourth Delivery Periods, there was no dispute between the parties. The dispute arose out of the Fifth Delivery Period, which was set to expire on June 30, 2009.
However, the Decree Holder’s letter to the Judgment Debtor extended the same till September 30, 2009. The dispute resulted in arbitration and the Decree Holder’s claim before the Arbitral Tribunal was that the Judgment Debtor did not lift the contracted coal other than a small quantity of 11,966 MT during the Fifth Delivery Period. Accordingly, the Judgment Debtor failed in lifting the remaining quantity. The Arbitral Tribunal after evidence led by both the parties and hearing the arguments, passed an Award which was challenged before the High Court. The Judgment Debtor’s Petition was dismissed and this was assailed via another Petition. The Division Bench set aside the Award and this was challenged before the Supreme Court, which restored the Award. During the pendency of the Enforcement Petition, the Judgment Debtor moved objections under Section 47 CPC, urging that the Award was not executable on the ground of ‘fraud’. Hence, the case was before the High Court.
Reasoning
The High Court in view of the above facts, said, “As observed above, I have already held that section 5 of 1996 Act aims limited judicial interference. The legal fiction created by section 36 of 1996 Act, allowing an Award to be enforced “as if it were a decree,” is limited solely to its “enforcement” and does not equate an Award with a decree in substance. Further, the arbitral proceedings are distinct from civil suits/proceedings. The use of CPC provisions is confined to enforcement mechanisms under Order XXI, and does not allow a re-challenge to the Award on merits, which is exclusively governed by section 34 of 1996 Act.”
The Court noted that the Award cannot be termed as a Decree as the same is not passed by a Court and that the Arbitral Tribunal is not a ‘Court’.
“… an Award does not satisfy any conditions of section 2(2) of CPC which defines a „decree‟. For the said reasons and relying on the observations of Shaukat Hussain (supra), it is clear that the Award which is sought to be enforced as a decree and is not a “decree” passed by this Court where the suit is pending. Hence, on this ground, Order XXI Rule 29 of CPC is not applicable”, it further enunciated.
The Court also took note of the fact that enforcement proceedings pending in the High Court arises from the Award and not from a Decree passed by any Civil Court.
“The Award is passed under the 1996 Act which is a special act and a self-contained code. All the challenge procedures and mechanism are exhaustively provided for within the 1996 Act itself and have duly been exhausted by the judgment debtor. If the enforcement of the Award is stayed due to filing of a suit by the judgment debtor against the decree holder, then the very purpose of passing of an Award under 1996 Act would be defeated and no Award passed by the AT would ever be executed. The said interpretation cannot be accepted by this Court”, it added.
The Court was of the view that when the statute itself provides the said relief as prayed in the present Application then the provisions of other statute cannot be taken into consideration.
“In the present case, the judgment debtor has availed all the opportunities to challenge the Award on merits and the Award has been upheld by the Hon’ble Supreme Court. Hence, the Order XXI Rule 29 of CPC cannot be relied upon”, it concluded.
Accordingly, the High Court allowed the Petition, dismissed the objections filed by the Judgment Debtor, and directed the Decree Holder to withdraw the amount along with up-to-date accrued interest after the expiry of two weeks.
Cause Title- Anglo-American Metallurgical Coal Pvt. Ltd. v. MMTC Ltd. (Neutral Citation: 2025:DHC:3495)
Appearance:
Decree Holder: Senior Advocate Jayant K Mehta, Advocates Sumeet Kachwaha, Samar Kachwaha, Ankit K, Akanksha Mohan, and Ananya Saluja.
Judgment Debtor: ASG Chetan Sharma, Senior Advocate Sanat Kumar, Advocates, Akhil Sachar, Sunanda Tulsyan, R.V. Prabhat, Amit Gupta, Kashish Maheshwari, Shweta Pattnaik, Vinay Yadav, Saurabh Tripathi, Vikramaditya Singh, and Shubham Sharma.
