Dismissal Of First Execution Application On Default Ground Does Not Bar Fresh Petition: Calcutta High Court

The High Court held that the provisions of Rules 105 and 106 of Order 21 of the Code of Civil Procedure do not preclude the award-holder/decree-holder from filing a fresh execution case on the same cause of action after a dismissal for default. Unlike Order 9, there is no specific bar in Order 21 regarding execution cases. The bench noted that even Rule 4 of Order 9 allows for a fresh suit on the same cause of action if the previous suit was dismissed for default without the parties' presence.

The High Court also referred to the decision of Supreme Court in Bhagyoday Cooperative Bank Limited Vs. Ravindra Balkrishna Patel deceased through his legal representatives And Others where it was held that mere dismissal of the first execution application on the ground of default does not prevent the award-holder/decree-holder from filing a fresh execution petition.

Brief Facts:

Jaymony Debnath and Ors. (award-debtors) raised an objection concerning the jurisdiction of the Court and the maintainability of the execution case. On the matter of maintainability, it was argued that a previous application for the execution of the same award was dismissed for default. It pointed out that Kotak Mahindra Bank Ltd. (award-holder), in both the Tabular Statement and the execution petition, wrongly attempted to mislead the Court by arguing that the previous execution case was withdrawn. However, the order attached to the application showed that it was dismissed for non-prosecution. The award-holder referred to the affidavit supporting the execution petition which contained a paragraph affirming that the previous execution case was withdrawn based on knowledge derived from the arbitrator. Due to this misleading statement, it argued the application for the execution should be dismissed both for deceiving the Court and due to the bar under Order 21 Rules 105 and 106 of the Code of Civil Procedure.

Further, the award-debtors contended that Section 36 of the Arbitration and Conciliation Act, 1996 states that the procedure for executing a decree also applies to the execution of an arbitral award. Regarding territorial jurisdiction, it submitted that it was undisputed that the award was passed in Mumbai which was also the seat of the arbitral proceedings.

Observations by the High Court:

Addressing the first objection regarding the maintainability of the application due to the dismissal of a prior execution case, the award-debtor argued that the award-holder should have indicated in its Tabular Statement and application that the previous execution petition was dismissed for default not withdrawn with or without liberty to file afresh.

The High Court held that the omission by the award-holder was regrettable but noted that this mistake does not constitute a deliberate attempt to mislead the Court. It noted that the award-holder provided a server copy of the previous dismissal order and relied on it.

Regarding territorial jurisdiction, Clause 24.1 of the agreement contained a forum selection clause requiring certain filings to be made in competent courts at Mumbai. However, when read with Clause 23.1, which subjected disputes to arbitration in Mumbai, the High Court held that these clauses only apply until an award is passed in the arbitral proceeding. It held that once an award is made the matter falls under Section 36 of the Arbitration Act.

Moreover, the High Court referred to Sundaram Finance Limited Vs. Abdul Samad And Another (2018) 3 SCC 622 where it was held that an award under Section 36 of the Arbitration Act is equated to a decree of the Court for the purposes of execution and only for that purpose.

Therefore, the High Court held that:

“while an award passed by the arbitral tribunal is deemed to be a decree under Section 36 of the 1996 Act, there is no deeming fiction anywhere to hold that the Court within whose jurisdiction the arbitral award is passed should be taken to be the Court which passed the decree ….. the 1996 Act actually transcends all territorial barriers.”

The High Court listed the matter on August 8, 2024.

Case Title: Kotak Mahindra Bank Ltd. Vs Jaymony Debnath And Ors.

Case Number: EC/8/2022

Ms. Shrayashee Das, Adv. Mr. Paritosh Sinha, Adv. Mr. Himangshu Bhowsinghka, Adv. Mr. Rohan Kumar Thakur, Adv. ...for the award-holder

Mr. Asif Hussain, Adv. Ms. Sujata Chowdhury, Adv. Ms. Aia Gaffar, Adv. ...for the judgment-debtors

Date of Judgment: 18h July, 2024

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