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2024 Supreme(Online)(MAD) 19153
HIGH COURT OF MADRAS
Honourable Mr Justice V. LAKSHMINARAYANAN
M.VIJAY KUMAR – Appellant
Versus
SUNDARAM FINANCE LTD. – Respondent
Objections to arbitration awards must be raised before the arbitrator or via specified provisions; execution courts cannot reassess arbitration awards.
Headnote:
Arbitration - Civil Revision Petition - Arbitration and Conciliation Act - Sections 12(5), 2(1)(e) - The Court found that objections to the award must be raised at the appropriate stages and confirmed the validity of execution against properties related to arbitration decrees.
Fact of the Case:
The petition arose from a loan default where the guarantor's estate was contested in execution proceedings after an arbitration award was made. The judgment debtors, being the heirs of the guarantor, challenged the execution viability citing procedural issues.
Finding of the Court:
The Court determined that the executing court cannot examine objections to the arbitration proceedings and emphasized that any issue concerning the award should have been raised by the judgment debtors at an earlier stage.
Issues: The primary issues revolved around whether the objections based on the arbitrator's disclosures, non-arbitrability, and jurisdiction of the executing court could be raised during execution proceedings.
Ratio Decidendi: The Court held that objections concerning arbitration proceedings must be made before the arbitrator or through a Section 34 application and that the executing court’s role is limited to enforcing the awarded decree.
Final Decision: The Civil Revision Petition is dismissed.
ORDER
This Civil Revision Petition arises at the instance of the Judgment Debtors. The predecessor in title of the Judgment Debtors viz., one Mr.M.Murugan had stood as the guarantor for a loan transaction between the decree holder and one M.Vijaya Kumar. Since there was default in payments, the decree holder left with no other option than to invoke Section 22 (a) of the loan agreement, drew the matter to arbitration. During the course of arbitration, notice was served on the Judgment Debtors/respondents.
2. They did not enter appearance and therefore, the Arbitrator was constrained to proceed in their absence. The Arbitrator finally passed an award on 17.01.2019. Being a decree in terms of the Arbitration and Conciliation Act (hereinafter referred to as 'the Act'), the Decree Holder filed E.P.No.143 of 2022 for attachment and sale of the properties, which belongs to the deceased guarantor. In the said Execution Petition, his legal representatives, viz., wife, son and daughter were arrayed as respondents. On service of notice, the respondents filed a counter pleading that the decree is incapable of execution as the award is contrary to the amended Section 12 (5) of the Act. They would also plead that the Execution Petition had been filed against a dead person and hence the said petition is incapable of execution. The Trial Judge would have none of this, ordered attachment of the properties, against which the present Civil Revision Petition.
3. Heard, Ms.Sandhya for the Civil Revision Petitioners.
4. Ms.Sandhya, would urge multiple points before me. The first point, she would state is that, in terms of Section 12 (5) of the Act, the Arbitrator had not disclosed his lack of interest in the proceedings or as to how many th th proceedings he is handling with the claimants in terms of the 5 and 6 schedule of the Arbitration and Conciliation act. Her second point would be that the issue of non-arbitrability can be gone into at the time of execution as decided by the three Judges Bench of the Supreme Court in Vidya Drolia and Ors. Vs. Durga Trading Corporation ((2021) 2 SCC 1). She would then submit that the property cannot be attached by virtue of the fact, the said property is already under mortgage with M/s Sundaram Finance, a sister concern of the respondent and finally, she would plead that in terms of Section 2 (1) (e) of the Act, the Court for the purpose of the Act, is the principal Court of original jurisdiction or the High Court. She would plead that the Sub Court is not the Principal Court of original jurisdiction and hence, does not have jurisdiction to entertain the execution petition. On these points she would plead that the revision be admitted and an interim order be granted.
5. I have carefully considered the arguments of Ms.Sandhya. In so far as the first point is concerned, the Arbitration and Conciliation Act was amended by Act 33 of 2019, incorporating certain conditions and the manner in which the Arbitrator should act. There are two stages in which the objections can be raised by the respondent. One before the Arbitrator himself by stating that he has not given the affidavit or disclosure as to the necessary terms of Section 12 or by a petition under Section 34 of the Act.
6. It is accepted by Ms.Sandhya, that the objections were not taken by the Judgment Debtor neither before the Arbitrator, nor they filed an application under Section 34 of the Act, before the Principal District Court, Tiruvallur. The executing Court cannot go behind the award, which is a decree. Whether the arbitration proceedings were carried in accordance with the Act or not can be agitated before the appropriate forum at the appropriate time. Having left that opportunity go by it is not open to the Judgment Debtor to raise the plea before the executing court.
7. With respect to the second point reliance has been placed on Vidya Drolia's case (cited supra), the Supreme Court dealt with the issue as regards the non availability of an arbitration cl
