Telangana High Court To Decide Whether Execution Petition Of Arbitral Award Can Be Filed Before Any Court

Telangana High Court to decide whether execution petition of an arbitration award can be filed before any Court? Or whether only the court where the application under section 34 was already filed has jurisdiction to deal with subsequent applications including application for enforcement of an award?

The question arose in a Civil Revision Petition filed by Pipeline Infrastructure Limited, challenging the dismissal order of the Special Court for the Trial and Disposal of Commercial Disputes at Hyderabad herein referred to as the 'Commercial Court.' The Commercial Court had dismissed the execution petition filed by the review petitioners, relying on the judgment passed by a Division Bench of the Telangana High Court in India Media Services Pvt Ltd vs. SBPL, holding that all applications relating to arbitration proceedings, including an execution petition can only be filed before the Court where an application under section 9 or 34 of the Arbitration and Conciliation Act,1996 had been filed.

Brief Facts:

In January 2023 an arbitration award was passed against Nagarjuna Fertilizers and Chemical Limited and in favor of the Review Petitioner herein. The arbitration proceedings were held in Bombay and presided over by Justice R. Y Ganoo, a former Judge of the Bombay High Court.

In the same year, the review petitioners filed an execution petition before the City Civil Court at Hyderabad and the vacation court in May passed an order directing attachment of immovable property owned by Nagarjuna Fertilizers. The petition was renumbered and placed before the Commercial Court for further adjudication.

Nagarjuna Fertilizers relying upon the judgment passed in India Media challenged the jurisdiction of the Commercial Court at Hyderabad in entertaining the execution petition. The Commercial Court conceding to the view taken in India Media dismissed the execution proceedings for lack of jurisdiction.

The review petitioners have approached the High Court challenging the dismissal order passed by the Commercial Court.

The India Media Judgement, in light of section 42 of the Arbitration and Conciliation Act, which stipulates that only the Court that entertained an application in relation to an arbitration agreement, has jurisdiction over the arbitration proceedings and all subsequent applications affirmed that an execution proceeding of an arbitral award could only be initiated before the Court that entertained such application.

As per the arguments of the review Petitioners, the Court in the above-mentioned case failed to consider section 32 of the 1996 Act, which states that once a final award has been passed by the Arbitrator/s, the arbitration proceedings shall be terminated. Thus, when an award is already made, of which execution is sought, the arbitration proceedings already stand terminated on the making of the final award and section 42 will have no applicability.

It was argued before the Commercial Court that in view of the aforesaid, since Section 32 of the Arbitration Act, 1996 was not considered in India Media Judgment, the CEP No. 13 of 2023 is distinguishable. However, Hon'ble Commercial Court did not consider the decision of the Hon'ble Supreme Court in Sundaram Finance and Cheran Properties which are directly on the point of Execution Petitions vis-à-vis Section 42 of the Act and wherein Section 32 (termination of arbitral proceedings) was categorically discussed and considered.” The petitioners contended and relied upon Cheran Properties Limited v. Kasturi and Sons Limited and Ors and Sundaram Finance Limited Vs. Abdul Samad and Ors in furtherance of their claim.

The Nagarjuna Fertilizers on the other hand contended that a plain reading of section 42 makes it evident that the provision applies to all arbitral proceedings even if the proceedings have attained finality. It was further argued that the Division Bench after factoring all aspects has passed the order in the India Media Services judgment.

Further, that the three-judge bench of the Supreme Court in State of West Bengal vs Associate Contractors that Section 42 will apply to applications after the arbitral proceedings have come to an end provided they are made under Part-1 of the Act. This ratio was followed by the division bench of the Telangana High Court in India Media Services vs SBPL and it was held by virtue of Section 42 the execution application would have to be filed in the court where Section 9 or Section 34 was earlier filed by the parties. 

The writ has been listed the Chief Bench for final disposal in this week.

Pipeline Infrastructure Limited vs. Nagarjuna Fertilizers and Chemicals Ltd.