Second Execution Petition Cannot Be Entertained When First Petition Seeking Execution Of Arbitral Award Was Dismissed On Merits: Andhra Pradesh HC

It also held that if valid grounds existed for setting aside the award, its execution cannot be allowed merely due to the submission of a signed copy thereafter.

Brief Facts:

An Award dated 25.10.2018 was passed in favour of M/s.Real Fab India Private Limited (petitioner) by Andhra Pradesh Micro and Small Enterprises Facilitation Council at Vijayawada (in short 'Council') established under Section 20 of the Micro, Small and Medium Enterprises Development Act, 2006 (in short 'MSMED Act').

The claimant made a claim of Rs.22,74,31,117/- against the respondent herein, M/s. Rashtriya Ispath Nigam Limited, Visakhapatnam Steel Plant, Visakhapatnam (Respondent/'RINL').

The respondent-RINL, filed petition-CAOP.No.16 of 2019 under Section 34 of the Arbitration Act to set aside the award dated 25.10.2018.

The Special Judge held that though the petition could have been allowed and the award could have been set aside on the grounds, but the petition was dismissed for the reason that the award as filed in the Court was not signed by the Members and the Chairman of the Facilitation Council and was not a valid and complete award, and therefore, the question of setting aside such an award as filed in the Court did not arise.

The petitioner-claimant had filed execution petition C.E.P.No.6 of 2019, under Order 21 Rules 11, 30 & 52 of the Code of Civil Procedure (in short 'CPC')

The respondent/Rashtriya Ispat Nigam Limited, in CAOP No.16 of 2019 filed I.A.No.73 of 2019, which was allowed granting stay of the execution of the Award dated 25.10.2018, till disposal of the main CAOP.No.16 of 2019.

The C.E.P.No.6 of 2019 was closed due to a stay order. After disposal of CAOP No.16 of 2019, the petitioner, filed E.A.No.11 of 2024 to restore/list CEP No.6 of 2019. E.A.No.11 of 2024 was dismissed by a detailed Order dated 05.08.2024.

The petitioner M/s. Real Fab India Private Limited, then filed petition, CEP GR Nos.1694 and 1772 of 2024, in same Claim No.21C/IFC/2013/19266. The petition has been rejected as not maintainable by the learned Special Judge, vide Order dated 17.09.2024.

In the present civil revision petition, under challenge is the Order dated 17.09.2024. By the said Order, the learned Special Judge while rejecting the petition as not maintainable, observed that in spite of clear finding that there was no executable award, the Real Fab, the present petitioner filed the execution petition mainly on the ground that the copy of the award, which fulfilled the requirements of Section 31 of the Arbitration Act, was available and hence the award was executable.

Contentions:

The Petitioner submitted that the Executing Court was obligated to enforce the award/decree unless an objection to its maintainability was raised. The original arbitral award which was passed on 25 October, 2024 and delivered on 29 May, 2024 in compliance with section 31 of the Arbitration Act had attained finality under section 35 of the Arbitration Act as the signed copy was not challenged under section 34 of the Arbitration Act and the previous challenge had been rejected.

It was also argued that as such the award was executable under Section 36 of the Arbitration Act for which the Execution Case should have been registered and proceeded in accordance with law and the same could not have been rejected as not maintainable.

It was further argued that in V. D. Modi v. R. Abdul Rehman and Ors (1970), it was held that executing a decree cannot go behind the decree, and until the award dated 25.10.2018 was set aside by an appropriate proceeding, even if it be erroneous was still binding between the parties and executable.

Observations:

The court noted that the Special Judge rejected the petitioner's E.A. No. 11 of 2024 to restore CEP No. 6 of 2019 by order dated 5 August, 2024 which was not challenged and attained finality. CEP No. 6 of 2019 which was filed for executing the award dated 25 October, 2018 was closed due to a stay in COAP No. 16 of 2019.

It further noted that the petition to restore CEP No. 6 of 2019 was rejected on the ground that the award was inexecutable. Since the order dated 5 August 2024 was on merits, the rejection of the petition in CEP GR of 2024 for executing the same award was justified and not illegal.

The court observed that the rejection of E.A. No. 11 of 2019 was not solely due to the absence of a signed award. Even when a signed copy of the award was filed, the Execution Court could not ignore the Special Judge'S findings in CAOP No. 16 of 2019 with respect to the illegalities in the award which could warrant its setting aside under section 34 of the Arbitration Act. Therefore, the arguments of the petitioner that execution should proceed simply because a signed copy is now available cannot be accepted.

The Supreme Court in V.D. Modi (supra) held that when the decree was made by a Court which had no inherent jurisdiction to make, objection as to its validity may be raised in an execution proceeding if the objection appeared on the face of the record.

The court further noted that in CAOP No. 16 of 2019, the Special Court held that the council lacked jurisdiction to adjudicate the disputes and that the contract was a works contract therefore the benefits under the MSMED Act were not applicable. Consequently, the award was deemed without jurisdiction. The Executing Court in the present proceedings could not ignore that the award passed was without jurisdiction therefore could not be executed.

In Parikshitraj Kulkarni v. The Assistant Director, Women and Child Development Department (2013), the first execution petition was dismissed as not maintainable and the order attained finality. The Petitioner later filed a second petition for the execution of the same decree stating that it was within the 12 years limitation period. The executing court dismissed the petition on the ground that the similar petition had been rejected previously.

The Karnataka High Court in the above case held that the earlier order was binding on both the petitioner and the court, making the second execution petition barred by res judicata.

Accordingly, the present petition was dismissed.

Case Title: M/s. Real Fab India Pvt.Ltd. Versus M/s. Rashtriya Ispath Nigam Limited

Case Title: CIVIL REVISION PETITION No.2936 of 2024

Judgment Date: 21/03/2025

Counsel for the Petitioner: Sri Gopal S. Hegde, Senior Counsel, Assisted by Sri Koneru Prabhakara Rao Representing Sri Y.N.Anjaneyacharyulu

Counsel for respondent : ---

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