PRO TIP when you face a Business Conflict

Collaborate, Don't Confront: In ADR, success lies in collaboration, not confrontation. Embrace open communication, actively listen, and work together towards a solution that benefits all parties involved.

Private Court Symbol
The International Court of ARBITRATION


Got any

Write to us

Share this page

Landmark Arbitration Award Execution: Nationwide Jurisdiction Triumph

In a recent pivotal judicial pronouncement, the High Court of Allahabad has emphatically reiterated a significant legal principle pertaining to the execution of arbitral awards in India. The court, presided over by Justice Pankaj Bhatia, upheld the stance that a petition for the execution of an arbitral award can be initiated anywhere within the nation, as long as the assets of the award debtor are situated within the territorial boundaries of the court in question. This consequential ruling firmly establishes that Section 42 of the Arbitration and Conciliation Act, which restricts the filing of petitions related to arbitration agreements to the original court where the first petition was submitted, does not exert its influence over petitions seeking the enforcement of arbitration awards. This legally substantial assertion by the court is firmly rooted in legal precedent, specifically citing the decisions rendered by the Supreme Court in the cases of Sundaram Finance and Cheran Properties as persuasive authorities that guided the court in reaching this definitive conclusion.

The backdrop of this case centers on an agreement that transpired on the 2nd of July in 2018. According to the terms of this contractual arrangement, the respondent was entrusted with the responsibility of supplying goods and services to the petitioner. Nevertheless, a dispute erupted between the contracting parties with respect to the payments associated with the supplies outlined within the agreement.

In response to this contractual discord, the respondent chose to initiate a reference proceeding before the MSEF Council. This process ultimately culminated in an arbitral award that favored the respondent's position. Subsequently, the petitioner decided to challenge the award's validity by invoking Section 34 of the Arbitration and Conciliation Act, in conjunction with Section 19 of the Micro, Small, and Medium Enterprises Development Act (MSMED Act), before the Commercial Court in Kanpur. Regrettably, this challenge was met with a dismissal by the court, primarily due to the petitioner's failure to fulfill the requisite condition of depositing 75% of the awarded amount. Following this legal setback, the respondent initiated the process of executing the arbitral award in accordance with the provisions of Section 36 of the Arbitration and Conciliation Act, submitting the execution petition before the Commercial Court in Lucknow.

In response to this execution petition, the petitioner presented their objections, firmly contending that the provisions of Section 42 of the Arbitration and Conciliation Act necessitated that the petition must be filed in the same court as the original Section 34 petition, i.e., the Commercial Court in Kanpur. To the petitioner, the principle of territorial jurisdiction embodied in Section 42 was paramount. This argument was pivotal in their efforts to challenge the enforceability of the execution petition. The executing court, however, rejected the objections raised by the petitioner. Unhappy with this outcome, the petitioner resorted to invoking Article 227 of the Indian Constitution to challenge the executing court's decision.

The primary grounds for the petitioner's challenge rested on two pillars. Firstly, it was their contention that the award in question was delivered in Kanpur and was also the subject of a challenge before the Kanpur court. Consequently, they argued that this invoked the provisions of Section 42 and rendered the execution petition submitted in Lucknow legally unsustainable.

With a judicious and thorough analysis, the court delved into the legal nuances surrounding this matter. Citing as precedent the judgments handed down by the Supreme Court in the cases of Sundaram Finance and Cheran Properties, the court established a definitive legal precedent.

According to these landmark Supreme Court rulings, an award holder possesses the legal right to file an execution petition in any court across the expanse of India where the award is legally enforceable. Importantly, there is no legal requirement to undergo the process of transferring the decree or award from the court vested with jurisdiction over the arbitral proceedings.

Consequently, the court reached a decisive conclusion that the respondent's choice to submit the execution petition before the Commercial Court in Lucknow was well within their rights. The mere fact that the arbitral award was delivered in Kanpur or that the Section 34 petition was filed in the Kanpur court did not render the execution petition non-maintainable. Section 42 of the Arbitration and Conciliation Act, as interpreted by the court, does not encompass execution petitions.

In light of these comprehensive and well-reasoned considerations, the court opted to dismiss the petitioner's challenge. The case was titled "Madhyanchal Vidyut Vitran Nigam Ltd v. Shashi Cable" and was registered as Matters under Article 227 No. 3384 of 2023. This momentous and legally profound decision was rendered on the 13th of October in the year 2023.