EXECUTION OF ARBITRAL AWARD.

[Mr. M. GOVINDARAJAN]

                        Arbitration is the submission of determination of disputed matter to a private non official persons selected in manner provided by law or agreement.   It is the substitution of their award or decision for judgment of a court.  In a wide sense, ‘arbitration’ may embrace the whole method of thus settling controversies, and include all the various steps.   But in a more strict use, the term denotes only the submission and hearing, the decision being separately spoken of, and called an ‘award’.   An award is a judgment or decision of arbitrators or referees on a matter submitted to them.   It is also the writing containing such judgment. 

                        The award should be in writing and to be signed by the arbitrator(s).   The erstwhile Arbitration Act, 1940 requires the arbitrator award to be made as a decree for implementing the award.   According to the above act once the arbitrator passes an award the same is to be got decreed by filing a petition before the Civil Court having jurisdiction which would consume some time.   After getting the decree only the award will be enforced by the Executing Court.  The said procedure is modified in the Arbitration and Conciliation Act, 1996. 

                        Rule 35 of the Arbitration and Conciliation Act, 1996 provides that an award shall be final and binding on the parties and persons claiming them respectively unless appeal is filed challenging the award and  the same is set aside by the Court. 

                        Rule 36 of the Arbitration and Conciliation Act, 1996 provides that where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree.

                        Section 38 of the Code of Civil Procedure said that a decree might be executed either by the court which passed it or by the court to which it was sent for execution.   The Arbitrator is not having power under the Arbitration and Conciliation Act, 1996 to execute the award he has passed.   The Court is only to execute the same.   The beneficiary may file the decree with the Execution Court and made the award be executed.   The question of jurisdiction of execution court is raised in many cases.  According to the Karnataka High Court an arbitral award was a decree and that the orders of transmission were necessary for execution.                     

                        While hearing a civil revision petition from Kotak Mahindra Bank Limited, Mumbai, Justice V. Ramasubramanian of Madras High Court (report in ‘Business Line’ dated 21.09.2011) set aside an order of an executing court, which held that the orders of transmission were necessary.   The High Court further observed that there had been a great deal of confusion about transmission of such arbitral awards.   Hundreds of execution petitions were pending in various courts in Tamil Nadu with prayer for transferring them to other courts for execution. 

                        In the above said case the petitioner bank had issued a credit card to the respondent Sivakama Sundari S. Narayana SB Murthy, Chennai.  The petitioner raised a dispute, on the ground that the amounts were due from the respondent.   The dispute was referred to arbitration at Mumbai.   An award was passed on 29.01.2010 by the arbitrator.   The High Court observed that the practice of filing execution petitions in courts had caught on with lawyers and there was a misconception that the court within whose jurisdiction arbitral award proceedings took place was the court which passed the decree.   There was no basis in law for such presumption.

                        According to the Arbitration and Conciliation Act awards of arbitral tribunal were liable to be enforced under Section 36  as if it was a decree of court in terms of the code.   The High Court ruled that no court to which an application for execution was presented could insist on filing of execution to another court to transmit the copy of the decree.

                        The High Court further held that it was no proper to import provisions of Order XXI, Rule 5 & 6 and demand order for transmission.   This principle shall apply not only to the case on hand where the Assistant Judge, City Civil Court, Chennai, had made such a demand, but would also apply to every other court.

                        The High Court allowed the petition and set aside the impugned order and directed the petition to re-present the execution petition to the City Civil Court, Chennai.

Discussions to this article

[ricky kundra]

Please kindly provide me that under what provision arbitration award can be executed ,award passed under arbitration act 1940

[MARIAPPAN GOVINDARAJAN]

The award passed under Arbitration Act, 1940 is converted into a DECREE by filing the award in a competent civil court and then it is to be executed through the execution court.