Deposit Of Awarded Amount In Court Registry Sufficient To Extinguish Liability Arising Under Award: Himachal Pradesh High Court
The Himachal Pradesh High Court bench of Mr. Justice Bipin Chander Negi has held that the deposit of awarded amount in pursuance of an order of the court into the court registry would be equivalent to payment under section 31 of the Arbitration Act. This will extinguish the liability arising under the award for which execution petition would then not be maintainable. Brief...
The Himachal Pradesh High Court bench of Mr. Justice Bipin Chander Negi has held that the deposit of awarded amount in pursuance of an order of the court into the court registry would be equivalent to payment under section 31 of the Arbitration Act. This will extinguish the liability arising under the award for which execution petition would then not be maintainable.
Brief Facts
The present petition has been filed laying challenge to the impugned judgment dated 23.08.2019, whereby objections filed by the present petitioner/judgment debtor against the execution filed by the present respondent/decree holder have been dismissed.
In an arbitration proceeding inter-se the parties, an award was passed by learned Arbitrator against the present petitioner on 05.09.2002. The aforesaid award was challenged by way of an application under Section 34 of the Arbitration and Conciliation Act 1996 (herein after for the purpose of brevity referred to as the 'Act') by the present petitioner.
The aforesaid application filed under Section 34 of the Act came up for consideration before a Co-ordinate Bench of this Court on 19.12.2002. On the said date, the execution of the award dated 05.09.2002 was stayed subject to the deposit of the entire amount in terms of the award.Therafter,the awarded amount was deposited in the Registry of this Court.
In the reply, so filed, a specific objection qua pecuniary jurisdiction of the Hon'ble Court was taken.Subsequent thereto, on 27.06.2003, when the matter was listed before the Court, the application filed for grant of interim order (OMP No. 500 of 2002) was held to be mis-conceived in view of the provisions of Section 36 of the Act which provides that an award can only be enforced after objections filed under Section 34 of the Act are disposed of.
Thereafter, on 27.08.2003, learned Counsel for the petitioner on account of non-maintainability (lack of pecuniary jurisdiction) of the application under Section 34 of the Act before the Hon'ble High Court sought return of the same for filing the application under section 34 of the Act before the appropriate forum.
The section 34 application was thereafter heard and dismissed by the court of competent jurisdiction. Subsequent thereto, an execution petition was filed by the present respondent. In the said execution objections were filed by the present petitioner.
A specific objection was taken therein qua the execution being not maintainable as the entire awarded amount had been deposited in the Registry of the Court in pursuance to order dated 19.12.2002 passed in OMP No. 500 of 2002 while the application under section 34 of the Act was pending adjudication before this court.
Learned Trial Court after hearing both the parties and after going through the record by placing reliance on provision of Order 21 dismissed the objections filed by the present petitioner.
Contentions
The petitioner submitted that deposit of the award amount into the court in the case at hand is nothing but a payment to the credit of the decree holder. Reliance was placed on H.P. Housing & Urban Development Authority v. Ranjit Singh Rana, (2012).
That the Arbitration Act is a self-contained Act. Mere reference to Civil Procedure Code in the said Section 36 cannot be construed in such a manner that it takes away the power conferred in the main statute
Court's Analysis
In H.P. Housing & Urban Development Authority (supra) the Supreme has held that the word “payment” may have different meaning in different context but in the context of Section 31(7)(b); it means extinguishment of the liability arising under the award. It signifies satisfaction of the award. The deposit of the award amount into the court is nothing but a payment to the credit of the decree-holder, the court noted.
The court while applying the above ration to the facts of the present case observed that the deposit made in terms of the order of the Court did not place the same out of the reach of the respondent as while passing the order the Court did not qualify in the order that the money deposited could only be withdrawn on furnishing a security.
The next contention whether provisions of the CPC would be applicable while hearing stay application filed under section 36(3) of the Arbitration Act.
The court further noted that section 36(1) of the Arbitration Act which deals with enforcement of an award provides that an award shall be enforced “in accordance with” the provisions of the Code of Civil Procedure, 1908. Whereas Section 36(3) of the Arbitration Act which deals with staying of the operation of an arbitral award uses the expression “have regard to the provisions”.
In Pam Developments (P) Ltd. v. State of W.B., (2019) the Supreme Court has held that the use of the expression “having regard to the provisions of CPC” in Section 36 and in the form as mentioned in Section 36(3) of the Arbitration Act, the applicability of CPC would only be directory, whereas the provisions of the Arbitration Act are essentially to be first applied, the court observed.
The court in the above case continued to observe that the Arbitration Act is a self-contained Act. The provisions of CPC will apply only insofar as the same are not inconsistent with the spirit and provisions of the Arbitration Act. Whereas in terms of section 36(1) of the Arbitration Act wherein the expression used is “in accordance with” the provisions of CPC, the applicability of the CPC has been held to be mandatory, the court noted.
The court further observed that Order 21 Rule 1 sub-rule 2 CPC cannot be invoked in the case at hand as the payment in the case at hand was not deposited in the executing Court after the award had attained finality in terms of section 36 of the Act. Award amount in the case at hand was deposited while the Section 34 application made for setting aside the award was pending adjudication
Based on the above, the court while justifying the exercise of revisional power observed that the trial Court had the jurisdiction but in exercising jurisdiction the Court has Acted illegally, (a) in breach of Section 31(7)(b) of the Arbitration Act and (b) in referring to provisions of Order 21 CPC it has taken into account provisions which were not applicable to the facts of the case at hand.
Deposit in the case at hand had been made in terms of the order of the Court dated 19.12.2002. Even when OMP No. 500 of 2002 was dismissed on 27.06.2003, being mis-conceived in view of the provisions of Section 36 of the Act which provides that an award can only be enforced after objections filed under Section 34 of the Act are disposed of, no order for return of amount deposited in pursuance thereof was passed, the court noted.
The court further noted that the proceedings in which the deposit had been made was at best irregular on account of lack of pecuniary jurisdiction and not void on account of lack of inherent jurisdiction. The conduct of the respondent in the facts and attending circumstances of the case at hand precludes the respondent from objecting to the deposit made by the petitioner in pursuance to the order dated 19.12.2002 passed.
Accordingly, the impugned order was set aside and the respondent was allowed to withdraw the deposited amount.
Case Title: Oriental Insurance Company Versus Kuldip Dogra
Citation: 2024 LiveLaw (HP) 76
Case Reference: Civil Revision No. 149 of 2019
Judgment Date: 13/11/2024