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2009 Supreme(Bom) 774
BOMBAY HIGH COURT
D.Y. Chandrachud, J.
ESKAY ENGINEERS
v.
BHARAT SANCHAR NIGAM LIMITED.
Chamber Summons No. 510 of 2009 in Chamber Order No. 1620 of 2008 in Execution Application No. 158 of 2006 in Arbitration Award dt. 07.07.2005 with Chamber Summons No. 597 of 2009 in Chamber Order No. 1619 of 2008 in Execution Application No. 158 of 2006 in Arbitration Award dt. 07.07.2005 and Chamber Summons No. 771 of 2009 in Execution Application No. 158 of 2006 in Arbitration Award dt. 07.07.2005, dt. 30.06.2009 and 01.07.2009,
Decided on: July 1, 2009
Devrat Dhankar, S.S. Phadke - Claimant.
Viral D. Shukla, Sumit D. Shukla - Respondent.
The court held that the court which entertained the challenge to the arbitral award under Section 34 would have jurisdiction to entertain subsequent applications arising out of the arbitral proceedings, including execution proceedings. The court also held that unless the arbitral award otherwise directs, a sum directed to be paid by the award shall carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.
Headnote:
Arbitration and Conciliation Act, 1996 - Sections 34, 36, and 42. The court analyzed the provisions of the Act to determine the jurisdiction of the court in executing the arbitral award and the payment of interest on the award. The court held that the court which entertained the challenge to the arbitral award under Section 34 would have jurisdiction to entertain subsequent applications arising out of the arbitral proceedings, including execution proceedings. The court also interpreted the provision in Section 31(7)(b) regarding the payment of interest on the arbitral award.
Fact of the Case:
Disputes and differences between the decree holder and the judgment debtor came to be referred to arbitration under the provisions of the Arbitration and Conciliation Act, 1996. The arbitral award was made on 7th July, 2005 and in the operative part of the award, the sole arbitrator issued directions regarding payment and costs. A petition was filed to challenge the arbitral award under Section 34, which was dismissed by the court. The arbitral award attained finality and is capable of being enforced under Section 36 of the Act. An execution application was filed by the decree holder, and various chamber summons were taken out by both parties to address issues related to the calculations, refund, and jurisdiction of the court. The court held that the arbitral award included a direction for the refund of the security deposit and that the decree holder was entitled to recover interest from the date of the award until payment. The court also clarified that the court which entertained the challenge to the arbitral award under Section 34 would have jurisdiction to entertain subsequent applications arising out of the arbitral proceedings, including execution proceedings. The court dismissed the chamber summons filed by the judgment debtor questioning the jurisdiction of the court as an executing court. The court allowed the decree holder's chamber summons for amendment of the execution application and extension of the warrant of attachment. The court dismissed the judgment debtor's chamber summons challenging the order of amendment and the decree holder's chamber summons for extension of the warrant of attachment.
Finding of the Court:
The court analyzed the provisions of the Arbitration and Conciliation Act, 1996, particularly Sections 34, 36, and 42, to determine the jurisdiction of the court in executing the arbitral award. The court held that the court which entertained the challenge to the arbitral award under Section 34 would have jurisdiction to entertain subsequent applications arising out of the arbitral proceedings, including execution proceedings. The court also interpreted the provision in Section 31(7)(b) regarding the payment of interest on the arbitral award, stating that unless the award otherwise directs, a sum directed to be paid by an arbitral award shall carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.
Ratio Decidendi: The court held that the court which entertained the challenge to the arbitral award under Section 34 would have jurisdiction to entertain subsequent applications arising out of the arbitral proceedings, including execution proceedings. The court also held that unless the arbitral award otherwise directs, a sum directed to be paid by the award shall carry interest at the rate of eighteen per centum per annum from the date of the award to the date of payment.
Result: The court dismissed the chamber summons filed by the judgment debtor questioning the jurisdiction of the court as an executing court. The court allowed the decree holder's chamber summons for amendment of the execution application and extension of the warrant of attachment. The court dismissed the judgment debtor's chamber summons challenging the order of amendment and the decree holder's chamber summons for extension of the warrant of attachment.
DR. D. Y. CHANDRACHUD, J.
This judgment would govern three chamber summons; one taken out by the decree holder and the other two by the judgment debtor. Since all the three chamber summons arise out of an arbitral award under the Arbitration and Conciliation Act, 1996 and the execution proceedings initiated consequent upon the award having attained finality, arguments have been heard together in all the three cases by consent.
Disputes and differences between the decree holder and the judgment debtor came to be referred to arbitration under the provisions of the Arbitration and Conciliation Act, 1996. The arbitral award was made on 7th July, 2005 and in the operative part of the award, the sole arbitrator issued the following directions:
1. The cases where 100% payment has already been made are not to be reopened.
2. The cases where recovery has been resorted to based on surprise checks will be not opened.
3. The cases where 60% payment or no payment has been made, complete payment should be made by September 2005.
4. No cost to the parties.
A petition was instituted by Bharat Sanchar Nigam Limited in order to challenge the arbitral award under Section 34. The petition came to be dismissed by a learned Single Judge of this court on 9th January, 2006. A Division Bench of this court dismissed the appeal on 26th June, 2006. The Supreme Court dismissed the special leave petition on 1st December, 2006. The arbitral award has attained finality and is capable of being enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court. This would be in terms of the provisions of Section 36 of the Arbitration and Conciliation Act, 1996. On 18th March, 2006, an execution application [Execution Application No. 158 of 2006] was filed by the original claimant - decree holder before this court in which a claim was made for the total sum of Rs. 97,58,084 comprising of a principal amount of Rs. 83.34 lakhs and the security deposit of Rs. 14.23 lakhs. A warrant of attachment came to be issued under Order XXI Rule 46 in respect of a current account of the judgment debtor with the State Bank of India, after which a further warrant of attachment came to be levied in respect of the movable and immovable properties. An amount of Rs. 97,58,084 was deposited by the judgment debtor with the Sheriff of Mumbai which came to be withdrawn by the decree holder.
On 4th July, 2006, the judgment debtor moved Chamber Summons No. 818 of 2006 principally contending that the calculations of the decree holder were not correct and that an amount in excess of what was lawfully due had been claimed. The following prayer came to be incorporated in the chamber summons:
"(b)(i) The claimants are entitled to recover an amount of Rs. 76,26,569.00 as per arbitration award dated 07.07.2005 plus Rs. 60.00 being the costs of execution, aggregating to Rs. 76,26,629.00. The claimants may be directed to refund sum of Rs. 21,31,515.00 to the respondents/judgment debtor, being the excess amount claimed and withdrawn by the claimants from the amount deposited by the respondents/judgment debtor with Sheriff of Mumbai in the Execution Application No. 158 of 2006 as per arbitration award dated 07.07.2005."
The contention of the judgment debtor, therefore, was that as against an amount of Rs. 97.58 lakhs, that had been deposited with the Sheriff, the decree holder was entitled to an amount of Rs. 76.26 lakhs, as a result of which the judgment debtor was entitled to a refund of Rs. 21.31 lakhs. The chamber summons was disposed of by a judgment dated 30th September, 2008 of the Hon'ble Mr. Justice S.C. Dharmadhikari. The learned Single Judge negatived the contention of the judgment debtor that the arbitral award did not include a direction in regard to the refund of the security deposit. The learned Single Judge was also of the view that under the arbitral award, the decree holder was entitled to recover interest from the date of the award unt
