In the recent case of Sundaram Finance Limited v/s Abdul Samad and Anr decided on 15th February, 2018, the Supreme Court has ruled that the enforcement of an award can be sought before any court in India where the decree can be executed and that there is no requirement of obtaining a transfer decree from the Court which had jurisdiction over the arbitral proceedings. The Supreme Court has hence given its final say to the conflicting views that had long opposed various High Courts on the subject.
In the instant case, Sundaram Finance Ltd. was directed to file the execution of the award before the competent court of Tamil Nadu and obtain a transfer decree to enable the proceedings to be filed before the trial court of Morena, Madhya Pradesh where they sought to execute the award.
In the instant case, the Supreme Court had to decide whether an arbitral award made under the Arbitration and Conciliation Act, 1996 is required to be first filed in the court having jurisdiction over the arbitral proceedings for execution and then to obtain a transfer of decree, or where the award can be directly executed in the court where the award debtor’s assets are located.
While doing so, the Supreme Court addressed the divergence in legal opinion of various High Courts. While, the Madhya Pradesh and Himachal Pradesh had ruled in several case laws that a transfer of decree should first be obtained before an execution petition can be filed before the court where the assets are located, on the ground that section 42 of the Act grants jurisdiction only to the Court that has supervisory jurisdiction over the arbitral proceedings, the Delhi, Madras and certain other High Courts are on the contrary repeatedly ruled that execution could directly be sought before the court where the award debtor’s assets are located. The Supreme Court opined in favour of the latter interpretation and clarified that whereas an award is enforceable as a decree of a civil court and hence in accordance with the provisions of the Code Civil Procedure, it is only the enforcement mechanism that is akin to the enforcement of a decree but the arbitral award itself is not a decree of a civil court. The Supreme Court further ruled that section 42 of the Arbitration Act does not apply to enforcement proceedings under section 36 of the Act so far as, pursuant to a clear reading of section 32, the arbitral proceedings end with the making of the arbitral award.
In the Sundaram Finance Limited v/s Abdul Samad and Anr has hence put an end to the controversy over jurisdiction of courts under section 36 of the Arbitration Act, by clarifying that no transfer of decree is required before an award can be directly filed for execution before the courts where assets are located.
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Judgment Link: https://goo.gl/dF7sL9