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2016 Supreme(Cal) 876

IN THE HIGH COURT OF CALCUTTA
Samapti Chatterjee, J.
Fingertips Solutions Pvt. Ltd. - Petitioner
Vs.
Dhanashree Electronics Limited - Respondent
C.O. 3955 of 2015
Decided On : 27-04-2016

Advocates Appeared:
For the Petitioner: Mr. Biswajit Bhattacharya, Mr. Probal Mukherjee, Mr. Malay Dhar, Mr. Biswajit Sarkar
For the Respondent: Mr. Jishnu Saha, Mr. Siddhartha Lahiri, Ms Sonal Shah, Mr. Shruti Agarwal

The Executing Court does not have the jurisdiction to entertain an application under Section 47 of the Code of Civil Procedure, 1908, raising objections as to the execution, discharge, and satisfaction of an award in the nature of a decree.

Headnote:

ARBITRATION - EXECUTION OF AWARD - CHALLENGE TO LEGALITY AND VALIDITY - SECTION 47 OF THE CODE OF CIVIL PROCEDURE, 1908 - APPLICABILITY - RES JUDICATA - AWARD HOLDER - EXECUTION COURT - JURISDICTION:

Fact of the Case:

An arbitration award was passed in favor of the petitioner, and the award holder filed an execution application. The award debtor filed an application under Section 47 of the Code of Civil Procedure, 1908, challenging the legality and validity of the award. The Executing Court rejected the application. The award debtor filed a second application under Section 47, which was allowed by the Executing Court. The award holder filed a revisional application challenging the order of the Executing Court.

Finding of the Court:

1. The Executing Court does not have the jurisdiction to entertain an application under Section 47 of the Code of Civil Procedure, 1908, raising objections as to the execution, discharge, and satisfaction of an award in the nature of a decree. 2. A decree passed on the basis of an arbitration award is non-est or a nullity, and the Executing Court has the power to make a declaration to that effect.

Issues: 1. Whether the Executing Court can entertain an application under Section 47 of the Code of Civil Procedure, 1908, raising objections as to the execution, discharge, and satisfaction of an award in the nature of a decree? 2. Whether such a decree is non-est or a nullity and whether the Executing Court is empowered to make a declaration to that effect?

Ratio Decidendi: 1. Section 47 of the Code of Civil Procedure, 1908, cannot override the procedures provided under Sections 5, 16, 34 of the Arbitration and Conciliation Act, 1996, and thereby entertain a challenge to the award at the execution stage. 2. When an award is passed by the Arbitrator, any party aggrieved by the award has to challenge the award in accordance with the procedures provided under the Arbitration & Conciliation Act, 1996, including the issue relating to the jurisdiction of the Arbitrator, which such issue, however, should be raised before the Arbitrator under Section 16 of the Act, 1996. 3. A party, aggrieved by the award, not having taken any of the measures provided in the Act, 1996, is debarred in law to challenge the validity or legality of the award at the execution stage when such award is put into execution under Section 36 of the Act, 1996. 4. The principle of res judicata applies even when a case does not fall under Section 11 of the Code of Civil Procedure. 5. The Executing Court cannot go behind the decree but can consider the pleadings and the proceedings to find out the true effect of the decree.

Final Decision: The revisional application was allowed, the impugned order was set aside, and the Executing Court was directed to proceed with the execution application expeditiously.

JUDGMENT :

Samapti Chatterjee, J.

1. The petitioner/claimant/award holder filed the present revisional application assailing order no.28 dated 29th September, 2015 passed by the Learned Civil Judge (Senior Division) 2nd Court at Barasat in Miscellaneous Case No.81 of 2015 arising out of Arbitration Execution Case No.63 of 2013.

2. The key issue involved in this revisional application is whether the Executing Court can entertain an application under Section 47 of the Code of Civil Procedure raising objection as to the execution, discharge and satisfaction of an award in the nature of a decree?

Further issue involved in the present revisional application is whether such a decree is non-est or in other words is a nullity and whether the Executing Court is empowered to make a declaration to that effect ?

FACT OF THE CASE

3. The brief case of the claimant/award holder/petitioner is that the petitioner being a Private Limited Company entered into an agreement with the opposite party on 26th September, 2003 whereby the petitioner was provided with a commercial space with super built-up area of 2900 sq.ft along with two car parking spaces and all other facilities at Block-EP and GP, Salt Lake, Sector-V, Kolkata-91. In the said agreement there was an arbitration clause. Since some disputes and differences arose between the parties the petitioner as per the arbitration clause contained in Clause 16 of the said agreement on 26th September, 2003 sent a letter under registered post to the opposite party on 18th September, 2007 thereby invoking the arbitration clause by nominating the Arbitrator and requiring him to enter upon the reference.

The sole arbitrator issued notices to both the petitioner and the opposite party requesting them to be present on 18th December, 2007 at the venue mentioned therein for taking steps for arbitral proceeding. The petitioner entered appearance and made their submission before the Learned Arbitrator but none appeared on behalf of the opposite party despite receipt of the notice issued by the Arbitrator. The petitioner filed their statement of claim and served copy of the statement of claim upon the opposite party but opposite party neither filed statement of defence nor attended the arbitration proceeding.

Since the opposite party failed and neglected to enter appearance in the reference despite notice and contested the claim the Learned Arbitrator proceeded with the arbitration proceedings.

Ultimately Learned Arbitrator after considering all aspects of matter and materials on record on 21st March, 2013 passed an award directing the opposite party to pay a total sum of Rs. 4,91,09,700/- to the claimant/petitioner within a period of 30 days from the date of receipt of the copy of the award and in default the opposite party was to pay interest at the rate of 18 per cent per annum till recovery by holding that the claimant/petitioner suffered loss and damages to the extent of Rs. 4crores and is entitled to an interest of Rs. 85,00000/-.

It was also held by the Learned Arbitrator that the claimant/petitioner is further entitled to legal expenses and the cost of arbitration proceedings for 38 sittings assessed at Rs. 3,09,700/- and Rs. 3,00000/- for incidental expenses.

The said award was duly communicated to the opposite party on th April, 2013 but the opposite party failed to comply with the award passed by the Learned Arbitrator. Therefore, due to non-payment of the awarded amount the petitioner filed an application on 12th September, 2013 for execution of the arbitration award under Section 36 of the Arbitration & Conciliation Act, 1996 following the procedure prescribed in Order 21 Rule 11 of the Code of Civil Procedure, 1908 before the Learned Civil Judge (Senior Division) 2nd Court, Barasat which was registered as Arbitration Execution Case No.63 of 2013.

The petitioner also moved an application under Article 227 of the Constitution of India praying for expeditious disposal of the said Arbitration Execution Case and














































































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