Execution Of Arbitral Award Is To Be Filed In The Seat Court And Not At The Place Of Land Acquired: Punjab And Haryana High Court

The bench of Justice Raj Mohan Singh held that once the seat of arbitral proceeding is fixed then only the court within whose jurisdiction the seat is situated would have the jurisdiction to decide all the applications arising out of the arbitration.

The Court held that Section 42 of the A&C Act has no applicability once the arbitral award is passed, therefore, any application filed after the award has been passed would not be guided by Section 42.

The Court further held that NHAI Rules that deal with the disbursement of compensation amount cannot be interpreted to provide for an automatic stay on arbitral award as the same would be in clear violation of Section 36(3) of the A&C Act.

Facts

NHAI (petitioner) acquired the lands of the respondents. Unsatisfied with the amount of compensation, the respondents filed arbitration reference under 3G(5) of NHAI Act. Accordingly, the arbitrator passed an award with enhanced compensation in favour of the respondents.

Aggrieved by the award, the petitioner challenged the award under Section 34 of the A&C Act before the District Court at Bhatinda. Thereafter, the respondents filed for the execution of the arbitral award before the Court at Faridkot. In the execution application, the petitioner filed an application under Section 42 of the A&C Act r/w Section 151 CPC objecting to the jurisdiction of the Court to entertain the petition and for transfer of execution petition to the Court at Bhatinda.

The petitioner contended that it has already challenged the arbitral award before the Court at Bhatinda and in view of Section 42 of the Act only that Court will have the jurisdiction to decide all application concerning the arbitration between the parties. Moreover, the acquired land is situated within the jurisdiction of the Court at Bhatinda.

The petitioner had further filed an application under Order XXI Rule XXIX CPC for stay on the execution. The District Court at Faridkot dismissed the applications filed by petitioner. Aggrieved thereby, the petitioner filed the revision petition.

Grounds

The petitioner challenged the impugned order on the following grounds:

• The Court at Faridkot has no jurisdiction to entertain the execution petition for the reason that the petitioner had, before the filing of execution petition, challenged the arbitral award under Section 34 of the Act before the District Court at Bhatinda, therefore, as provided under Section 42 only the Court at Bhatinda would have the jurisdiction to decide all the applications.
• The Court at Faridkot does not have the jurisdiction for another reason as the acquired land is situated outside its jurisdiction and within the jurisdiction of Court at Bhatinda.
• The Concept of Seat has no applicability in a statutory arbitration and the Court would be determined as provided under Section 2(1)(e) of the Act and only the Court at Bhatinda has the jurisdiction to decide the subject matter of arbitration as the acquired land is within its jurisdiction.
• Moreover, Faridkot was only the venue of arbitration as there was no specific designation of Seat either by the parties or by the Tribunal and in arbitration under NHAI Act, the seat would always be the place where the land is situated.
• Rule 3 of the National Highways (Manner of depositing the amount by the Central Government; making requisite funds available to the competent authority for acquisition of land) Rules, 2019 provides that the amount of enhanced compensation cannot be released when the award has been challenged by either of the parties. Therefore, therefore, there can be no execution unless the challenge petition is decided.

The respondent countered the submissions of the petitioner by making the following submissions:

• The seat of the Arbitrator was fixed at Faridkot vide letter dated 16.07.2015 as per Section 3G(5) of the National Highways Act, 1956.
• The respondent has also filed an application for transferring application pending before the Court at Bhatinda as it has no jurisdiction.
• It is only at the fag end of the proceedings under the execution application of the respondent that the petitioner filed the application under Section 42 of the Act and that too when the Court had asked it to deposit the amount of award.
• The court was also justified in rejecting the application under Order XXI Rule XXIX CPC as there is no concept of automatic stay after the amendment in the Arbitration Act and the award has to be treated as a money decree and the same cannot be stayed.

Analysis by the Court

The Court held that the parties had Section 42 of the A&C Act would have no jurisdiction as the parties had already fixed the seat of arbitration. Further, it held that Section 42 would have no application once the arbitral proceedings terminates and an arbitral award is passed.

The Court relied on the judgment of the Hon'ble Supreme Court in Sundaram Finance to hold that the award holder can file the execution petition anywhere in the country where it can be enforced and there is no requirement of seeking a transfer of decree from the Court, which would have jurisdiction over the arbitral proceedings. The Court reaffirmed that arbitration act transcends all territorial barriers.

The Court held that the parties have designated Faridkot as the 'Seat' of arbitration, therefore, only the Court at Faridkot would have the jurisdiction to decide all applications arising out of the arbitration between the parties.

The Court rejected the argument of the petitioner regarding automatic stay in view of Rule 3 of NHAI Rules 2019. The Court held that the said rules do not create any automatic stay as the Rule is only in respect of manner in which the disbursement has to be made and also the manner of making requisite funds available to the competent authority. Moreover, once an arbitral award is passed then it has to be enforced as provided under the A&C Act and no provision of NHAI shall govern the proceedings after the passing of the award.

Accordingly, the Court rejected the revision petition.

Case Title: NHAI v. Yashpreet Singh, CR NO. 259 of 2022 (O&M)

Citation: 2022 LiveLaw (PH) 271

Date: 30.09.2022

Counsel for the Petitioner: Mr. Satya Pal Jain, Sr. Advocate with Mr. R.S. Madan, Advocate and Mr. Mahender Joshi, Advocate

Counsel for the Respondents: Mr. Puneet Bali, Sr. Advocate with Mr. Ranjit Saini, Advocate and Mr. Vikram Rathore, Advocate

Counsel for State: Mr. R.S. Pandher, Sr. DAG, Punjab.

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