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2019 (11) TMI 1062 - HC - Indian LawsAppealable order or not - enforcement of consent arbitral award - foreign award - whether the impugned order is under the Code of Civil Procedure to make it appealable, or it is under the Act of 1996? - HELD THAT - The impugned order is passed in execution of an arbitral award. The execution of the award is governed by Section 36 of the Arbitration Act. According to the Appellants, Section 36 of the Arbitration Act stipulates that the award is to be executed as if it is a decree of the civil court and that being the position, the proceedings for execution of the arbitral award will be governed by the Code of Civil Procedure. It was sought to be contended that a right of Appeal cannot be taken away from those who are not a party to the award or arbitral proceeding. We do not intend to enter into an analysis of hypothetical fact situations. A preliminary objection has been raised before us that the present Appeals are not maintainable. The Appellants are a party to the arbitral proceedings - The Act of 2015 and the Act of 1996 reflect the legislative intent of time-bound resolution of commercial disputes. It cannot be the legislative intent to provide a speedy remedy of arbitration only till the award is passed, with no priority when the award is to be put to execution. The purpose of the arbitral process is not only to expedite the declaration of an award on paper but the actual receipt of the claim. The impugned order dated 24 August 2018 passed by the learned Single Judge of this Court being neither under Order XLIII of the Code of Civil Procedure nor appealable under Section 37 of the Act of 1996, these appeals are not maintainable - Commercial Appeals are dismissed as not maintainable.
Issues Involved:
1. Maintainability of the appeals. 2. Applicability of the Code of Civil Procedure (CPC) versus the Arbitration and Conciliation Act, 1996. 3. Jurisdiction of the court receiver over properties outside the territorial jurisdiction. 4. Execution of the consent arbitral award. 5. Applicability of the Foreign Exchange Management Act (FEMA). Detailed Analysis: 1. Maintainability of the Appeals: The primary issue addressed was whether the appeals against the order appointing a court receiver were maintainable. The respondents contended that the appeals were not maintainable under Section 37 of the Arbitration and Conciliation Act, 1996, as the impugned order was passed in execution of an arbitral award. The appellants argued that the appeals were maintainable under Section 13(1) of the Commercial Courts Act, 2015, read with Clause 15 of the Letters Patent Appeal, as the order was under the CPC. 2. Applicability of the CPC versus the Arbitration and Conciliation Act, 1996: The court examined whether the impugned order was passed under the CPC or the Arbitration Act. Section 36 of the Arbitration Act states that an arbitral award shall be enforced in accordance with the CPC as if it were a decree of the court. The court cited the case of Jet Airways (India) Ltd. v. Subrata Roy Sahara, where it was held that proceedings under Section 36 of the Arbitration Act are not under the CPC but under the Arbitration Act. The court also referred to the Supreme Court’s decision in Sundaram Finance Ltd. v. Abdul Samad, which clarified that Section 36 creates a legal fiction for enforcement but does not make an arbitral award a decree of the civil court. 3. Jurisdiction of the Court Receiver: The appellants argued that the court could not appoint a receiver for properties outside its territorial jurisdiction. The learned Single Judge held that the court could appoint a receiver for properties outside its jurisdiction, considering the appellants' conduct of agreeing to the consent terms and then not honoring them. The court receiver was appointed with all powers, including the power of sale, subject to seeking necessary permission before effecting any sale. 4. Execution of the Consent Arbitral Award: The appellants defaulted on the payment terms agreed upon in the consent award. The respondents sought execution of the award, leading to the appointment of a court receiver. The appellants challenged the consent award on the grounds of violation of FEMA and FDI policy. However, they had previously agreed to withdraw these objections as part of the consent terms. 5. Applicability of FEMA: The appellants repeatedly raised the issue of the consent award violating FEMA. However, they had agreed to withdraw these objections as part of the consent terms. The court noted that the appellants' conduct of agreeing to the consent terms and then not honoring them was a significant factor in the decision to appoint a court receiver. Conclusion: The court concluded that the impugned order dated 24 August 2018, passed by the learned Single Judge, was neither under Order XLIII of the CPC nor appealable under Section 37 of the Arbitration Act, 1996. Therefore, the appeals were not maintainable. The Commercial Appeals were dismissed as not maintainable, and the Notice of Motions were disposed of accordingly.
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