The Supreme Court has held that the legislative design of the Arbitration and Conciliation Act, 1996, restricts judicial interference. The Apex Court also observed that Letters Patent Appeals are not maintainable when orders are passed in the course of execution of the arbitral award.

The appeals before the Apex Court challenged the correctness of orders passed by a Division Bench of the Bombay High Court staying two orders passed by the Single Judge pertaining to an Execution Application.

The Division Bench of Justice Sanjay Kumar and Justice Alok Aradhe held, “The Act is a self-contained code and is founded upon principles of party autonomy, expedition and finality. The legislative design of the Act restricts judicial interference. The orders of the learned Single Judge dated 18.12.2014, were passed in course of execution of arbitral award and are, therefore, traceable to the Act and not to CPC. The execution of the arbitral award is sought against the respondents in their capacity as executors of the aforesaid Will. The respondents step into the shoes of judgment debtor of the limited purpose of the execution. The Letters Patent Appeals filed by respondents were therefore not maintainable. The Division Bench of the High Court erred in admitting the appeals subject to maintainability of the same and in admitting the appeals without assigning any reasons.”

Senior Advocate Neeraj Kishan Kaul represented the Appellant, while Senior Advocate Chander Uday Singh.

Factual Background

The appellant is the son of late Kantilal Dalal (father) and nephew of late Girdharilal Dalal (uncle). The first respondent is the nephew of the appellant and the son of the second respondent. The other respondents are the cousins of the second respondent. A fracture in the joint family business dealings, shared ventures, and mutual expectations led to discord about the accounting and distribution of family funds. To resolve the dispute with his father in relation to the family assets, the appellant sought the intervention of a sole arbitrator. An arbitral award was passed in favour of the appellant. The father addressed the communication to the arbitrator, alleging unfair conduct of arbitral proceedings. A caveat was filed by the appellant, but a challenge to the arbitral award under Section 34 of the Arbitration and Conciliation Act did not materialise.

The appellant initiated the execution proceeding for the execution of the arbitral award in Dubai, where the father resided. The father executed a Will in 1994 in favour of the uncle and expired in the year 2013. The appellant required the uncle, who was a substantial beneficiary under the aforesaid Will executed by the father, to disclose the details of the assets of the father. The uncle filed a Civil Suit in the Bombay High Court seeking a declaration that the arbitral award was a nullity. The appellant filed an Execution Application in the High Court seeking execution of the arbitral award and also filed a chamber summons seeking issuance of notice under Order 21 Rule 22 of the Code of Civil Procedure (CPC).

The uncle filed a chamber summons raising various objections to the execution of the arbitral award. The Single Judge held that the arbitral award attained finality. The respondents assailed the validity of the orders passed in chamber summons before the Division Bench of the High Court. The Division Bench stayed the orders of the Single Judge in the chamber summons. In the Civil Appeals before the Apex Court, the validity of such orders was challenged.

Reasoning

The Bench explained that Order 21 Rule 22 mandates that where execution is sought more than two years after the decree or against the legal representative of judgment debtor or against the assignee or receiver in insolvency, where party to the decree has been adjudged to be an insolvent, the executing court would issue notice to the person against whom execution is sought, requiring him to show cause, why the decree should not be executed.

“The mandate of Order 21 Rule 22 (1) stands on two independent and mutually reinforcing foundations (i) the statutory compulsion-the use of word ‘shall’ in the provision leaves no discretion to the executing court in the circumstances enumerated therein, (ii) it incorporates the principles of natural justice as the legal representative of the deceased cannot be proceeded unless he is given an opportunity to contest the execution. Thus, the requirement of notice under Order 21 Rule 22 (1) to the persons enumerated therein is not a mere procedural courtesy but is the very foundation of the jurisdiction when the execution is sought against the estate of the deceased judgment debtor”, it noted.

On a perusal of the cause title of the execution proceeding, the Bench stated, “...it is axiomatic that the uncle was arrayed in execution proceedings as legal representative/executor of the Will dated 16.09.1994 of the father and not in his individual capacity. The respondents, therefore, cannot be treated as third party to the arbitral award.” As per the Bench, the Letters Patent Appeals filed by respondents were not maintainable and the Division Bench of the High Court erred in admitting the appeals. “Thus, it is axiomatic that the notice under Order 21 Rule 22 (1) of the CPC is yet to be issued to the respondents. Once a notice is issued to the respondents, it is open for them to raise an objection to the execution of the arbitral award under Order 21 14 Rule 23(2) of the CPC”, it mentioned.

The Bench found that the Single Judge while deciding the chamber summons made observations/findings which were though not determinative, had the potential to prejudice the respondents in their objections under Order 21 Rule 23 (2) of the CPC, which they were statutorily entitled to raise on receipt of notice. “The respondents, therefore, must be placed in the position, the law intended them to occupy i.e. the legal representatives are entitled to be heard before their estate is saddled with execution”, the Bench held while quashing the impugned orders of the Division Bench of the Bombay High Court.

The Bench thus asked the Single Judge in the Execution Application to issue notice to respondents under Order 21 Rule 22 (1) of the CPC.

Cause Title: Bharat Kantilal Dalal v. Chetan Surendra Dalal (Neutral Citation: 2025 INSC 1334)

Appearance

Appellant: Senior Advocate Neeraj Kishan Kaul, Advocates Mahesh Agarwal, Malcom Singaporia, Rishi Agrawala, Himanshu Saraswat, Vidisha Swarup, Ira Mahajan, Varad Kolhe, Saumitr Kumar, Udit Sidhra, AOR E.C. Agrawala

Respondent: Senior Advocates Chander Uday Singh, Harish M. Jagtiani, AOR Bhargava V. Desai, Advocates Shivam Sharma, Abrar Ahmad, Jahnavi Vora, Yashpal Jain, AOR Sumeer Sodhi, Advocate Harshit Joshi

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Justice Sanjay KumarJustice Alok Aradhe

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.