Application For Attachment Can Be Filed Before Court Even If The Property Is Outside Jurisdiction: Telangana High Court

The Bench, consisting of Chief Justice Satish Chandra Sharma and Justice Abhinand Kumar Shavili, held that even if the properties sought to be attached are outside the territorial jurisdiction of a Commercial Court, a petition under Order 21 Rule 46 of the Code of Civil Procedure, 1908 for attachment of the property can be filed.

An agreement was entered into between the petitioner M/s Rashmi Metaliks Limited and the respondent M/s Techno Unique Infratech Pvt. Ltd. for sale and delivery of steel products. After certain disputes arose between the parties regarding payment of dues, the petitioner invoked the arbitration clause. The Arbitrator passed an award in favour of the petitioner.

After the respondent failed to comply with the arbitral award, the petitioner filed an Execution Petition before the Commercial Court, Hyderabad. The Commercial Court dismissed the Execution Petition on the ground that it had no territorial jurisdiction. Against this, the petitioner filed a Civil Revision Petition before the Telangana High Court.

The petitioner Rashmi Metaliks submitted before the High Court that the Commercial Court passed the order without application of mind and that the Commercial Court had the jurisdiction to entertain the Execution Petition.

The Court observed that since the award passed by the Arbitrator was not challenged by the respondent under Section 34 of the Arbitration and Conciliation Act, 1996 (A&C Act), therefore, the arbitral award became executable under Section 36 of the A&C Act and that it became a decree within the meaning of the Code of Civil Procedure, 1908 (CPC).

The Court noted that as per Section 38 of CPC, a decree may be executed either by the Court which passed it or by the Court to which it is sent for execution.

The Court further observed that the Andhra Pradesh High Court in the case of Ashok Leyland Finance Limited, Hyderabad versus P. Vengal Rao & Anr. (2009) had held that the term 'Court' within the meaning of Section 2 (e) of the A&C Act does not include the court before which an execution petition has been filed. The Court observed that the Andhra Pradesh High Court had differentiated between the court which passed the decree and the court which can execute the same.

The Court ruled that in view of the law laid down by the Supreme Court in the case of Sundaram Finance Limited versus Abdul Samad and Anr. (2018), an Execution Petition can be filed in front of any court at any place in the country, provided the court has the jurisdiction to execute the award by way of attachment of property. The High Court added that the said jurisdiction of the court would depend on the judgment debtor and its location.

The Court held that even if the properties sought to be attached are outside the territorial jurisdiction of the Commercial Court, a petition can be filed under Order 21 Rule 46 of the CPC for attachment of the property. The Court added that the physical presence of a person to operate and attach the same is not necessary.

Therefore, the Court ruled that the Commercial Court in Hyderabad had the jurisdiction to entertain the Execution Petition and that it had erroneously returned the Execution Petition filed by the petitioner. The Court thus set aside the order of the Commercial Court and directed it to entertain the Execution Petition filed by the petitioner.

Case Title: M/s Rashmi Metaliks Limited versus M/s Techno Unique Infratech Pvt. Ltd.

Citation:2022 LiveLaw (Tel) 56

Dated: 06.06.2022 (Telangana High Court)

Counsel for the Petitioner: Mr. Dishit Bhattacharjee

Counsel for the Respondent: Mr. G. Vasantha Rayudu

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