Execution Petition For Arbitration Award Would Lie Only Before The Designated Commercial Courts: Andhra Pradesh High Court

The bench of Justices D.V.S.S. Somayajulu and Duppala Venkata Ramana held that an execution/enforcement petition for an arbitration award of a specified value would be an application within the meaning of Section 15 of the Commercial Courts Act, 2015 that provides for transfer of an application from the Civil Court to the Commercial Court.

The Court held that once a Commercial Court has been designated for a jurisdiction, the execution petition shall lie only before such Court and any other court would be coram non-judice and the orders passed by such Court would be a nullity in the eyes of law.

The Court also remarked that merely because Section 16 r/w the Schedule to the Commercial Courts Act, 2015 does not explicitly amends Order 21 of CPC, the same cannot mean that the Commercial Courts are not conferred with the power of execution.

Facts

An arbitration award 13.10.2015 was passed in relation to the dispute between the parties. Thereafter, the award was challenged under Section 34 of the Act, the challenge proceedings are pending. Then, an execution petition was filed before the Principal District Judge, Anantapuramu. The same stood transferred to the Family Court, Anantapuramu. In the meantime, the government of Andhra Pradesh had designated two Special Commercial Courts in the cities of Visakhapatnam and Vijaywada for the entire state. In terms of Section 15(2) of the Commercial Courts Act, any petition pending before a Civil Court has to be transferred to the Commercial Court once designated.

However, the Family Court proceeded with the matter itself and passed the impugned order dated 05.05.2022 ordering issuance of sale certificate to the Decree Holder in respect of the subject property.

Aggrieved by the impugned order, the petitioner filed a revision petition before the High Court.

Contention of the Parties

The petitioner challenged the impugned order on the following grounds:

• The value of the Award is above Rs.32 crores and it is far above the commercial value as defined in the Commercial Courts Act.
• During the pendency of the execution petition, the government had designated two Special Commercial Courts, therefore, in view of Section 15(2) of the Commercial Courts Act, it was incumbent upon the District/Civil Court to transfer the petition to the designated commercial court.
• With the designation of the Commercial Court, the Civil Court lacked inherent jurisdiction to decide the petition and became corum non judice and any order passed by it would be a nullity in the eyes of law.
• Section 15 of the Commercial Courts Act r/w the other provisions of the Act makes it abundantly clear that all the petition arising out of the Arbitration and Conciliation Act, 1996 including the execution petition would be decided only by the Commercial Courts and no other Court.

The respondent raised the following counter-arguments:

• The Commercial Courts Act only deals with the hearing and disposal of Commercial disputes including arbitration disputes with a commercial flavor and that the Commercial Act does not deal with execution applications which are still to be filed before a regular Civil Court only.
• That despite the amendments brought to the Commercial Courts Act, Arbitration Act and the CPC etc., no provision has been made conferring the power of “execution” on the Commercial Courts.

Analysis by the Court

The Court analysed the provisions of the Commercial Courts Act, 2015 including Sections 6, 15 and 16 in the light of Section 38 and Order XXI of CPC. The Court referred to the judgment of the division benches of Delhi High Court in Delhi Pharaceuticals v. Himgiri Realtors^[1] and High Court of Gujarat in Vijay Cotton v. Agarwal Cotton Spinning^[2] to hold that once a Commercial Court has been designated under the Commercial Courts Act, only it would have the power to decide all applications, including the execution petition, of a specified commercial value and no other Court would have the power to decide such applications.

The Court held that Section 6 of the Commercial Courts Act provides for the exclusive jurisdiction of the Act, while Section 15(2) provides for transfer of pending commercial suits and applications to commercial courts. It held that the word ‘applications’ under Section 15(2) has to be given a wider interpretation to include execution petitions also as to give effect to the purpose of setting up specialised commercial courts aimed at faster resolution of disputes, otherwise it would lead to an absurd situation where the commercial courts would competent to adjudicate a commercial dispute but powerless to enforce/execute the decree.

The Court held that an execution/enforcement petition for an arbitration award of a specified value would be an application within the meaning of Section 15 of the Commercial Courts Act, 2015 that provides for transfer of an application from the Civil Court to the Commercial Court.

The Court held that once a Commercial Court has been designated for a jurisdiction, the execution petition shall lie only before such Court and any other court would be coram non-judice and the orders passed by such Court would be a nullity in the eyes of law.

The Court also remarked that merely because Section 16 r/w the Schedule to the Commercial Courts Act, 2015 does not explicitly amends Order 21 of CPC, the same cannot mean that the Commercial Courts are not conferred with the power of execution.

Accordingly, the Court held that the District/Family Court lacked inherent jurisdiction to pass the impugned order which makes it a nullity in the eyes of the law. Ergo, the Court directed the pending execution petition to be transferred to the Commercial Court for fresh adjudication on the petition.

Case Title: Obulapuram Mining Company v. R.K. Mining Private Limited, CRP Nos. 2183 of 2022

Date: 12.09.2023

Counsel for the Petitioner: Mr. M.Radhakrishna for Mr.Rajesh Maddy

Counsel for the Respondent: Mr.Challa Kodanda Ram, Senior Counsel and Mr.V. Srikantha Rao

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