SC says Arbitral Award can be Enforced anywhere, No Need to Obtain Transfer Decree

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February 16, 2018

Case name: Sundaram Finance Ltd. v. Abdul Samad

Date of Judgment: February 15, 2018

The instance case was taken up by Two-Judge Bench of the Supreme Court in view of divergence of legal opinion of different High Courts on the question as to whether an award under the Arbitration & Conciliation Act, 1996  is required to be first filed in the court having jurisdiction over the arbitration proceedings for execution and then to obtain transfer of the decree or whether the award can be straightway filed and executed in the Court where the assets are located is required to be settled in the present appeal?

Divergence of opinion– On the aforesaid issue, one of the opinion of High Courts has been that the transfer of decree should first be obtained before filing the execution petition before the Court where the assets are located whereas some High Courts have opined that an award can be filed for execution before the court where the assets of the judgment debtor are located.

Bench’s Verdict

In the case, the Supreme Court has settled the legal proposition by holding that the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.

Other observations made by the Apex Court in the case are as under:

  • That in the case of an award there is no decree passed but the award itself is executed as a decree by fiction. The provisions of the Arbitration & Conciliation Act, 1996 traverse a different path from the Arbitration Act, 1940, which required an award made to be filed in Court and a decree to be passed thereon whereupon it would be executable.
  • While arriving at its decision, the Bench made reference to relevant provisions of the Act under Sections 36, 42 and 32.
  • The Supreme Court finally concluded that the enforcement of an award through its execution can be filed anywhere in the country where such decree can be executed and there is no requirement for obtaining a transfer of the decree from the Court, which would have jurisdiction over the arbitral proceedings.
  • Consequently, the Bench held that the first divergent opinion by the High Courts of Madhya Pradesh and the Himachal Pradesh were not good in law while the views of Delhi High Court, Kerala High Court, Madras High Court, Rajasthan High Court, Allahabad High Court, Punjab & Haryana High Court and Karnataka High Court reflected the correct legal position.

The entire case can be accessed here.