Source: Allahabad High Court

Why in News?

Recently, the Allahabad High Court in the matter of India Oil Corporation Ltd. & Anr v. The Commercial Court & Anr., held that objection cannot be raised under Section 47 of the Civil Procedure Code, 1908 (CPC) in proceedings for the execution of arbitral award.

Background

• A suit was filed in the year 1989 for the appointment Arbitrator under the Arbitration Act, 1940 in which arbitrator was appointed in 1991.
• Arbitration could only commence in the year 2001 due to pending litigation proceedings.
• In 2002, the arbitrator passed an order to continue the proceedings as per the provisions of the Arbitration and Conciliation Act, 1996 (A&C Act).
• In 2005, the award was passed partly in favor of the petitioner and respondents.
• Respondent had moved an application under Section 33 of the A&C Act for the modification of the award.
• After several rounds of litigation, the award attained finality.
• Respondents had filed an Execution Application in which the petitioner had filed objection under Section 47 of CPC and the same was rejected vide order dated 8th August 2022.
• A petition was filed before the Allahabad HC challenging the order dated 8th August 2022.
• The petition was dismissed by the Court.

Court’s Observations

• A bench comprising of Justice Neeraj Tiwari dismissed a petition against the rejection of objection under Section 47 of CPC at the stage of execution of arbitral award.
• The Court reiterated that arbitral award is not a decree under Section 2(2) of CPC, therefore, an objection filed under Section 47 of CPC in execution proceedings is not maintainable.
• Further, the Court reiterated the principle laid down by the Supreme Court in Padmajeet Singh Patheja v. ICDS LTD (2006).
  • In this case, the SC held that an arbitral award can be executed invoking Section 36 of the A&C Act, 1996 along with the provisions of CPC in the same manner as if it is decree of the Court.
  • Section 36 states 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 CPC in the same manner as if it were a decree of the Court.

Legal Provisions

Section 47, CPC

• This Section deals with the questions which are 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.

Sub-section (2) was omitted by the Amendment Act of 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.

(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.

• In the case of Bharat Pumps and Compressors V. Chopra Fabricators (2022), the SC 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.

Arbitration and Conciliation Act, 1996

• This Act improved the previous laws regarding arbitration in India, namely the Arbitration Act, 1940, the Arbitration Act, 1937, and the Foreign Awards Act, 1961.
• This act also derives authority from the UNCITRAL (United Nations Commission on International Trade Law) Model Law on international commercial arbitration and the UNCITRAL rules on conciliation.
• It unites and manages the laws associated with domestic arbitration, international business arbitration, and the enforcement of foreign arbitral awards.
• It also defines the law related to conciliation.
• It controls domestic arbitration in India and was amended in 2015, 2019 and 2021.
• Section 33 of this Act deals with the correction and interpretation of the award. It states that -

(1) Within thirty days from the receipt of the arbitral award, unless another period of time has been agreed upon by the parties—

(a) a party, with notice to the other party, may request the arbitral tribunal to correct any computation errors, any clerical or typographical errors or any other errors of a similar nature occurring in the award;

(b) if so, agreed by the parties, a party, with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award.

(2) If the arbitral tribunal considers the request made under sub-section (1) to be justified, it shall make the correction or give the interpretation within thirty days from the receipt of the request and the interpretation shall form part of the arbitral award.

(3) The arbitral tribunal may correct any error of the type referred to in clause (a) of sub-section (1), on its own initiative, within thirty days from the date of the arbitral award.

(4) Unless otherwise agreed by the parties, a party with notice to the other party, may request, within thirty days from the receipt of the arbitral award, the arbitral tribunal to make an additional arbitral award as to claims presented in the arbitral proceedings but omitted from the arbitral award.

(5) If the arbitral tribunal considers the request made under sub-section (4) to be justified, it shall make the additional arbitral award within sixty days from the receipt of such request.

(6) The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, give an interpretation or make an additional arbitral award under sub-section (2) or sub-section (5).

(7) Section 31 shall apply to a correction or interpretation of the arbitral award or to an additional arbitral award made under this section.