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2023 Supreme(All) 2140

IN THE HIGH COURT OF ALLAHABAD
ROHIT RANJAN AGARWAL, J.
M/s. Imagine Fashion Apparels Pvt. Ltd. – Petitioner
Versus
Presiding Officer Commercial Court and Another – Respondents
Matters Under Article 227 No. 6736 of 2021
Decided On : 18-05-2023

Advocates:
Advocate Appeared:
For the Petitioner: Puneet Arun.
For the Respondents: Tarun Agrawal, Rishabh Agarwal.

Headnote:(A) Micro, Small and Medium Enterprises Development Act, 2006 - Section 18; Arbitration and Conciliation Act, 1996 - Section 36; Code of Civil Procedure, 1908 - Order VII, Rule 10 and 11 - Execution of arbitral award - Writ petition allowed for the erroneous dismissal of execution application by Commercial Court due to lack of jurisdiction - Execution proceedings initiated at the place of the defendant's residence are valid under Section 36 - Orders dated 12.08.2021 and 21.08.2021 set aside. (Paras 8, 10, 14)

Facts of the case:
The petitioner, a registered company, availed services under the MSMED Act and received an award for payment against respondent No. 2. Despite no objections, the execution was wrongfully returned to an inappropriate court, leading to dismissal of the petitioner's execution application.

Findings of Court:
The execution application was maintainable in Jhansi; subsequent orders were found illegal and set aside.

Issues: Whether the execution could be maintained in the Commercial Court at Jhansi and the validity of the related orders under the Code of Civil Procedure.

Ratio Decidendi: Execution proceedings can commence at the defendant's location as mandated by law, and the error in the earlier orders was against settled legal principles established by the Supreme Court.

Result: Writ petition allowed.

Table of Content
1. petition details and background of the case. (Para 1 , 2 , 3)
2. arguments regarding execution jurisdiction and validity. (Para 4 , 5 , 6)
3. court's rationale for setting aside earlier orders. (Para 7 , 8 , 9 , 10 , 11 , 12 , 13)
4. final ruling and directive to lower court. (Para 14 , 15)

JUDGMENT :

ROHIT RANJAN AGARWAL, J.

1. This writ petition under Article 227 of the Constitution of India has been filed assailing the order dated 12.08.2021 passed by Commercial Court, Jhansi under Order VII, Rule 10 CPC directing the petitioner to take back application for execution of the award dated 22.09.2020 within seven days to be presented before the Court having jurisdiction. A prayer has also been made for setting aside the order dated 21.08.2021 passed by Commercial Court, Jhansi dismissing the Misc. Case No. 78 of 2021 for execution under the provisions of Order 7 Rule 11(d) and (f) CPC.

2. The petitioner before this Court is a private limited company registered under the provisions of Companies Act, 1956. It is duly registered as a MSME unit under the MICRO, SMALL AND MEDIUM ENTERPRISES ACT , 2006 (hereinafter called as “MSMED Act 2006”). It is engaged in the business of readymade garments having its principal place of business at Jhansi. The relationship between the petitioner and respondent No. 2 is that the petitioner is a supplier and respondent No. 2 is buyer. When the dispute arose between the parties, a reference/claim petition was filed by the petitioner before Facilitation Council under Section 18 of the MSMED Act, 2006 claiming principal amount along with interest being Claim Petition No. 239 of 2019 dated 15.10.2019. An award was made by the Facilitation Council on 29.09.2020, allowing claim of the petitioner and directing respondent No. 2 to pay principal amount along with interest amounting to Rs.11,01,616/-. Against the award, no objections or application under Section 34 of the Act, 1996 was preferred either by petitioner or respondent No. 2 and the award became final.

3. An execution application was moved by the petitioner under Section 36 of the Act of 1996 before Commercial Court, Jhansi, which was registered as Misc. Case No. 78 of 2021. An objection was raised by the Munsarim of Commercial Court, Jhansi as to the maintainability of execution proceedings and an objection was invited on 30.07.2021 to which a reply/objection was filed by the petitioner. The Commercial Court, after hearing the parties on application 3C(2) on 12.08.2021 found that the Court at Jhansi did not have territorial jurisdiction to decide the matter and returned the case under Order VII Rule 10 CPC to be presented before appropriate Court within seven days. Thereafter, the Commercial Court on 21.08.2021 found that the time for withdrawing the execution application to be filed before appropriate Court was till 19.08.2021 which the petitioner had failed to do so hence dismissed the execution case under the provision of Order VII Rule 11(d) and (f) CPC, hence this writ petition.

4. Sri Puneet Arun, learned counsel appearing for petitioner submitted that the award made by Facilitation Council under MSMED Act was put to execution under Section 36 of the Act of 1996 before the Court at Jhansi. According to him, the Court was not correct to pass the orders impugned dated 12.08.2021 and 21.08.2021. According to him, Section 36 mandates that execution proceedings under Section 36 of the Act of 1996 can be made at any place where a decree can be executed. He has relied upon judgment of Apex Court rendered in case of Sundaram Finance Limited vs. Abdul Samad and Another , 2018 (3) SCC 622 .

5. According to him, the arbitral proceedings stood terminated by the final award made by the Facilitation Council and no objection having been filed by the respondent No. 2, the award was put to execution under Section 36 , which provides that the award shall be enforced under the Code of Civil Procedure 1908 in the same manner as if it were a decree

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