Source: Allahabad High Court

Why in News?

Recently, the Allahabad High Court in the matter of Sanjay Agarwal v. Rahul Agarwal and Ors., has held that the objections under Section 47 of the Civil Procedure Code, 1908 (CPC) are not maintainable in execution proceedings for the enforcement of an arbitration award.

What is the Background of Sanjay Agarwal v. Rahul Agarwal and Ors. Case?

• In this case, Sri Kishori Lal Agarwal and Sanjay Agarwal (revisionist) entered into an agreement on 19^th December 1986 providing that Wing “A” of the property will be exclusively developed by Sri Kishori Lal Agarwal and Wing “B” will be developed exclusively by the revisionist.
• The revisionist’s father Sri Motilal Agarwal died on 31^st December 2007 leaving behind his wife, sons - Sanjay Agarwal (Revisionist) and Rahul Agarwal (opposite party No.1) and a daughter.
• After the death of Sri Motilal Agarwal, there was dispute amongst the family with regard to the distribution of his assets and property.
• It has been submitted that Sri Anirudh Mithal was a friend of revisionist’s father and he intervened to make efforts to amicably resolve the disputes and differences among the family members.
• It is on his intervention that the award/family settlement was passed after several meetings, consultations and after going through various documents.
• Opposite Party No.1 filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (A & C Act) in the Court of District Judge, which was rejected.
• The revisionist filed his objections under Section 47 of CPC inter-alia stating that no arbitration agreement was executed between the parties and the alleged award was not an outcome of arbitration proceedings and therefore could not be executed.
• The First appeal preferred by opposite party No. 1 filed against the rejection of his application under section 9 of the A & C Act before the Allahabad High Court.
• The High Court directed the District Judge to dispose of the application for execution along with the objections within a period of 3 months from the date of communication of the order
• The District Judge has rejected the objections preferred by the revisionist and against the said order the present revision has been filed before the High Court.
• The High Court dismissed the revision petition.

What were the Court’s Observations?

• Justice Alok Mathur observed that the objections under Section 47 of the CPC are not maintainable in execution proceedings for the enforcement of an arbitration award. It held that an arbitration award, not being issued by a "court," falls outside the definition of a decree as outlined in Section 2(2) of CPC.
• It was further held that the District Judge rightly exercised his jurisdiction in rejecting the objections under Section 47 of the CPC, and the revisionist's submissions lacked merit.

What are the Relevant Legal Provisions Involved in it?

Section 47 of CPC

About:

• This Section deals with the questions to be determined by the Court executing decree. It states that-

(1) All questions arising between the parties to the suit in which the decree was passed, or their representatives, and relating to the execution, discharge or satisfaction of the decree, shall be determined by the Court executing the decree and not by a separate suit.

(2) Omitted by the Code of Civil Procedure (Amendment Act, 1976)

(3) Where a question arises as to whether any person is or is not the representative of a party, such a question shall, for the purposes of this section, be determined by the Court.

Explanation I.- For the purposes of this section, a plaintiff whose suit has been dismissed and a defendant against whom a suit has been dismissed are parties to the suit.

Explanation II.- (a) for the purposes of this section, a purchaser of property at a sale in execution of a decree shall be deemed to be a party to the suit in which the decree is passed; and (b) all questions relating to the delivery of possession of such property to such purchaser or his representative shall be deemed to be questions relating to the execution, discharge or satisfaction of the decree within the meaning of this section.

Case Law:

• In the case of Bharat Pumps and Compressors V. Chopra Fabricators (2022), the Supreme Court held that an arbitration award is not included under the definition and meaning of decree in CPC and so no questions can be raised in the execution of such an award.

Section 2(2) of CPC

• Section 2 (2) CPC defines decree to mean formal expression of an adjudication which, so far as regards the Court expressing it, conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit and may be either preliminary or final. It shall be deemed to include the rejection of a plaint and the determination of any question within Section 144, but shall not include -

(a) Any adjudication from which an appeal lies as an appeal from an order, or

(b) Any order of dismissal for default.

• Explanation. - A decree is preliminary when further proceedings have to be taken before the suit can be completely disposed of. It is final when such adjudication completely disposes of the suit. It may be partly preliminary and partly final.

Section 9 of A & C Act

• This Act deals with the interim measures etc. by Court.
• Under the Act, parties can approach the Court under Section 9 of this Act to seek interim reliefs before, or during the arbitral proceedings, or at any time after the passing of the award but before it is enforced.
• Interim reliefs are an essential safeguard provided under the Act to ensure that any claims which a party wishes to raise in the arbitration are protected in the form of security, guarantees or other measures as the Court may deem fit, based on a case-to-case assessment.