2018 (9) TMI 2128 - HC - Indian Laws

Arbitration for resolution of disputes - Corporation has now raised a contention that the application for setting aside the arbitral award may be competent before the Commercial Court however the Execution Petition of the Contractor would not be since the claim of the contractor in such Execution Petition is below Rs. 1 Crore - HELD THAT - As is well known once an award is passed by the Arbitral Tribunal the same can be challenged in terms of Section 34 of the Arbitration Act. Subsection 1 thereof provides for recourse to a Court against an arbitral award that may be made only by an application for setting aside such award in accordance with subsection 2 and subsection 3 . If such an application for setting aside arbitral award is not filed or if filed and the same is not entertained the award could be enforced in terms of Section 36 of the Arbitration Act. Since in the present case jurisdiction of the subject matter which was part of the arbitration proceedings ordinarily lies with the Commercial Court and it was because of this reason that the application for setting aside the arbitral award was transferred to the Commercial Court it was the Commercial Court which was competent to enforce the arbitral award; as if it were a decree of that Court - there are no force in the contentions of the Corporation - Division Bench of this Court in case of M/s. OCI Corporation vs. Kandla Export Corporation Ors. 2018 (2) TMI 412 - SUPREME COURT in which the question as to which Court would be competent to entertain execution petition to enforce award from an international commercial arbitration came up for consideration before the Court. Petition dismissed.

Summary

Issues Involved:

1. Jurisdiction of Commercial Court in execution of arbitral awards with claims below Rs. 1 Crore.
2. Applicability of Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) to execution petitions.
3. Interpretation of "Specified Value" under the Commercial Courts Act, 2015.
4. Definition and jurisdiction of "Court" under the Arbitration and Conciliation Act, 1996 (Arbitration Act).
5. Enforcement of arbitral awards as decrees of the court.

Detailed Analysis:

1. Jurisdiction of Commercial Court in execution of arbitral awards with claims below Rs. 1 Crore:
The petitioner challenged the jurisdiction of the Commercial Court, Vadodara, to execute an arbitral award where the claim was below Rs. 1 Crore. The court noted that the combined value of the claim and counterclaim before the Arbitrator exceeded Rs. 1 Crore, making the Commercial Court the correct forum for the application for setting aside the arbitral award. The court emphasized that once the application for setting aside the arbitral award was transferred to the Commercial Court, the same court had jurisdiction to enforce the award.

2. Applicability of Order VII Rule 11(d) of the Code of Civil Procedure, 1908 (CPC) to execution petitions:
The petitioner argued that the execution petition should be dismissed under Order VII Rule 11(d) of the CPC. The court, however, was doubtful whether this provision applied to execution petitions. Ultimately, the court rejected the application on merits, finding no force in the petitioner's contention.

3. Interpretation of "Specified Value" under the Commercial Courts Act, 2015:
The court examined the definitions of "commercial dispute" and "specified value" under Sections 2(c) and 2(i) of the Act of 2015. It was clarified that the specified value is determined by the aggregate value of the claim and counterclaim in arbitration. Since the total value exceeded Rs. 1 Crore, the Commercial Court had jurisdiction. The court referred to Section 12 of the Act of 2015, which mandates considering both the claim and counterclaim for determining the specified value.

4. Definition and jurisdiction of "Court" under the Arbitration and Conciliation Act, 1996 (Arbitration Act):
The court referred to Section 2(e) of the Arbitration Act, which defines "Court" as the principal Civil Court of original jurisdiction in a district, excluding any civil court of a grade inferior to such principal Civil Court. The court concluded that for the purposes of Sections 34 and 36 of the Arbitration Act, the definition of "Court" includes the Commercial Court, which has jurisdiction over the subject matter of the arbitration.

5. Enforcement of arbitral awards as decrees of the court:
The court highlighted that under Section 36 of the Arbitration Act, an arbitral award is enforced in the same manner as if it were a decree of the court. This means the court with jurisdiction over the subject matter of the arbitration is competent to execute the award. The court referenced Section 38 of the CPC, which states that a decree may be executed by the court which passed it or by the court to which it is sent for execution.

Supporting Judgments:
The court referred to the Division Bench judgment in M/s. OCI Corporation vs. Kandla Export Corporation & Ors., which clarified that all applications or appeals arising out of arbitration involving commercial disputes of specified value are to be heard by the Commercial Court. The Supreme Court's decision in Kandla Export Corporation vs. M/s. OCI Corporation was also cited to reinforce the jurisdiction of Commercial Courts in such matters.

Conclusion:
The court dismissed the petition, upholding the jurisdiction of the Commercial Court, Vadodara, to execute the arbitral award. The court found no merit in the petitioner's arguments and confirmed that the Commercial Court was the appropriate forum for enforcement of the arbitral award, given the specified value of the combined claims.