TMI Blog2016 (5) TMI 1608X X X X Extracts X X X X X X X X Extracts X X X X ..... ffice of the finance companies might be situate within the jurisdiction of this Court - All that might have been done within the jurisdiction of this Court, could very well be the affixation of the signature of the official of the financier and may be affixation of the seal of the financier. Applications are moved in this Court ex parte for injunction and orders of injunction are obtained. Middle income group borrowers defaulting in payment of instalments seldom appear to contest the proceedings, may be due to financial constraints or inconvenience otherwise of defending proceedings in a distant Court. Moreover, it is often seen that finance companies have their chosen arbitrators, who arbitrate disputes between the financiers and borrowers in bulk. By recourse to fine print terms exorbitant amounts are charged by way of cheque bouncing charges, which are many times the amount charged by banks for the bouncing of cheques, as noted by the leaned single Bench. When a contract appears to be unconscionable, the Court may intervene. It is for the Courts to ensure that no injustice is done to the financially weak. Similarly it is for the Court to exercise restraint before passing u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body's case that this Court lacked jurisdiction to entertain or decide the said application. 2. While the application being AP No. 381 of 2007 was pending in this Court, the disputes which had arisen between the parties were referred to arbitration, and an arbitral award was passed in favour of the appellant on 11th March, 2008. 3. Sections 35 and 36 of the 1996 Act provide as follows: 35. Finality of arbitral awards.--Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively. 36. Enforcement.--Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. 4. Some of the relevant provisions of the Civil Procedure Code relating to execution of decrees are set out hereinbelow: 38. Court by which decree may be executed.--A decree may be executed either by the court which passed it, or by the Court to which it is sent for execution. 39. Transfer of decree.-- (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 16th September, 2009 in EC No. 142 of 2009, the Hon'ble single Bench directed the Receiver appointed in AP 381 of 2007 to take physical possession of the hypothecated assets being the subject-matter of the arbitration. 7. Thereafter the appellant made an application for examination of the judgment debtor, which was heard along with other similar applications, and has in effect and substance been rejected by the Hon'ble single Bench with costs assessed at 6,000 GMs, to be paid by the appellant to the second judgment debtor, being the guarantor. 8. The question which arises for consideration in this appeal is, whether this Court is the appropriate Court of competent jurisdiction, to enforce an arbitral award under the 1996 Act. Related to this issue is, the issue of whether an execution application is required to be transferred to another Court in terms of Section 39 of the Code of Civil Procedure, even if the award holder is seeking examination of the judgment-debtor. A question which follows from the aforesaid issues is, whether the expression 'property' in Section 39 of the Code of Civil Procedure is to be interpreted as immovable property, or whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , finds support from the judgments of the Supreme Court in Consolidated Engineering Enterprises v. Principal Sec. Irrigation Dept. reported in (2008) 7 SCC 169 : (AIR 2009 SC (Supp) 396) and in Union of India v. Popular Construction Co. reported in (2001) 8 SCC 470 : (AIR 2001 SC 4010). 15. The proposition that a special legislation has overriding effect over general legislation has been reaffirmed in Suresh Nanda v. CBI reported in 2008) 3 SCC 674: (AIR 2008 SC 1414) and in Ratan Lal Adukia v. Union of India, reported in (1989) 3 SCC 537 : (AIR 1990 SC 104). Moreover, in Salem Advocates Bar Association v. Union of India, reported in AIR 2005 SC 3353, the Supreme Court observed Section 39 does not authorise the Court to execute the decree outside its jurisdiction, but it does not dilute the other provisions given such as power of compliance of conditions stipulated in those provisions. Thus, the provisions such as Order XXI, Rule 3 or Order XXI, Rule 48 which provide differently, would not be effected by Section 39(4) of the code. 16. Moreover, the substantive provision relating to enforcement of an arbitral award is contained in Section 36 of the 1996 Act. The procedure la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Part I would alone be the Court to exercise jurisdiction over the arbitral proceedings and all sub-sequent applications arising out of the arbitral agreement and the arbitral proceedings. 23. The non obstante clause in Section 42 of the 1996 Act gives the said provision overriding effect, notwithstanding anything to the contrary in any other provision of Part I of the 1996, or in any other law. Section 42 would, therefore, have over riding effect and prevail over Section 36 of the 1996 Act, which is also in Part I of the 1996 Act, read with the provisions of the Code of Civil Procedure, 1908 relating to execution of decrees. 24. In Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, reported in (1986) 4 SCC 447 : (AIR 1987 SC 117, paras 68 69) the Supreme Court observed: 67. A clause beginning with the expression 'notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract' is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined Vode which is repository of the entire law on arbitration and all the rights and remedies of parties are to be adjudicated in accordance with the provisions thereof as held by the Supreme Court in Fuerst day Lawson Ltd. v. Jindal Exports Ltd., reported in (2011) 8 SCC 333 : (AIR 2011 SC 2649) and also by this Court in Coal India Ltd. v. Canadian Commercial Corporation, reported in AIR 2012 Cal 92. 29. In Ratan Lal Adukia v. Union of India reported in (1989) 3 SCC 537 : (AIR 1990 SC 104), cited by Mr. Sen, the Supreme Court held that when a complete self-contained exhaustive code has been enacted by the Legislature constituting a special law for conduct of proceedings thereunder, by necessary implication the operation of provisions of the Code of Civil Procedure would be excluded. 30. As argued by Mr. Sen, a harmonious construction of Section 36 with the definition of Court in Section 2(1)(e) of the 1996 Act would lead to the inescapable conclusion that an arbitral award can effectively be enforced in that principal Civil Court of original jurisdiction in a district, including the High Court in exercise of its ordinary original civil jurisdiction, which would have the jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (3) Arb LR 581 (Delhi) the same Bench decided that execution proceedings were neither an arbitral proceeding nor an application under para 1 of the 1996 Act, which view we respectfully do not endorse, for the reasons discussed above. There can be no doubt that an application before the Chief Justice is not an application to Court. The provisions of Section 42 would not be attracted, in a case where there was just an application under Section 11 of the 1996 Act to the Chief Justice and/or his nominee for appointment of arbitrator as held by the Supreme Court in Ramchandra Mahadev Jagpat and Ors. v. Chief Executive Officer and Ors., reported in (2006) 11 SCC 661 : ( AIR 2007 SC 650) and Rodemadan India Ltd. v. International Trade Expo Centre Ltd. reported in (2006) 11 SCC 651 : ( AIR 2006 SC 3456). 38. In National Highways Authority of India v. SPCL-IVRCL (JV) reported in 2008 (2) Arb. LR 404 (Delhi), the Delhi High Court held that in Section 42 the rule of exclusive jurisdiction had been enacted to provide a 'forum conveniens' to the parties and to avoid conflicting orders of courts at the different stages of an arbitration proceeding arising out of the same agreement b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recept in terms of Section 46 of the Code and there-upon the Court to which the precept was sent would actually attach the property in the manner prescribed. 42. Section 136 of the Code also provides for an order of attachment in respect of property outside the jurisdiction of the Court and sending the order of attachment to the District Court within whose local limits the property sought to be attached is situate. However, Section 136 excludes execution of decrees from within its purview. 43. An execution against immovable property lying outside the jurisdiction of the executing Court is possible in terms of Order 21, Rule 3 of the Code, which governs a case where the particular immovable property forms one estate or tenure within the local limits of the jurisdiction of two or more Courts and where all those Courts is approached for execution of the decree against that property. In a case, where Order 21, Rule 3 has no application, the position is that, if a decree-bolder wants to proceed against a property situate outside the jurisdiction of the Court which passed the decree, he has to get the decree transferred to the appropriate Court for execution, on moving the executin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n application as against the respondent No. 2, being the guarantor. The name of the respondent No. 2 must, therefore, be struck out from the array of respondents in this appeal. 48. In S.K. Engineers v. Bharat Sanchar Nigam Ltd., reported in 2009 (4) Arbitration Law Reporter 369 (Bom) : (2010 (4) AIR Bom R. (NOC) 386) cited by Mr. Mukherjee the Bombay High Court held that the expression Court, cannot for the purpose of Section 36, be read at variance with the meaning of the expression under Section 34. 49. We are in full agreement with the view of Bombay High Court. Where an application under Part I has been made in a Court with respect to an arbitration agreement, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings including execution proceedings. 50. As held by the Bombay High Court the expression all subsequent applications arising out of the arbitral proceedings must be read in a comprehensive manner to include recourse to execution proceedings. 51. In I.C.D.S. Ltd. v. Mangala Builders Pvt. Ltd., reported in AIR 2001 Karnataka 364, a single Bench of the High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction of this Court, through agents and even branch offices, even though the head-office and/or the registered office of the finance companies might be situate within the jurisdiction of this Court. 59. All that might have been done within the jurisdiction of this Court, could very well be the affixation of the signature of the official of the financier and may be affixation of the seal of the financier. Applications are moved in this Court ex parte for injunction and orders of injunction are obtained. Middle income group borrowers defaulting in payment of instalments seldom appear to contest the proceedings, may be due to financial constraints or inconvenience otherwise of defending proceedings in a distant Court. 60. It is only after a Receiver is appointed and the Receiver takes possession that the borrowers come to contest the proceedings. By that time, it becomes difficult to question the jurisdiction, because of the jurisdiction clause which prima facie records that the agreement has been executed within the jurisdiction of this Court and secondly, because of the applicability of Section 42 of the 1996 Act, because an earlier application might already have been enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding installment amounts, overdue charges to the tune of Rs. 8,36,785/-. Finally, the arbitrator had awarded costs of Rs. 10,000/-. 65. Similar observations were made in EC No. 179 of 2009, where the amount claimed in the Tabular Statement was Rs. 12,79,694/- together with interest, costs and mesne profits. We are, however, not concerned with those observations since this appeal arises out of EC 142 of 2010. The award was ex parte. It recorded that none had appeared on behalf of the respondents despite repeated directions and opportunities. In addition to the award on account of the missed installments, the financier had been declared to be entitled to the vehicle and an amount of Rs. 7.5 lakh was assessed in lieu of possession. Mesne profits of Rs. 500 per diem had been awarded from the date following the termination of the agreement till possession was recovered by the financier. Interest had been awarded on the failed installments at 36% per annum and further interest at 24% per annum had been provided on the awarded amount from the date of the award till payment. The learned Judge was perhaps justifiably annoyed, for no Court can be a silent spectator to gross arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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