Allahabad High Court: In a writ petition filed by the State, challenging orders passed by the Trial Court and the Commercial Court related to disputes arising from a contract for construction of a cross drainage under Madhya Ganga Canal Phase-II Project in Bijnor, Shekhar B. Saraf, J., while dismissing the petition as frivolous, vexatious, motivated and being an abuse of the process of Court, imposed a cost of Rs. 5 Lakhs on the State. Further, the Court said the following:
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Jurisdiction of an executing Court under Section 47 of the Code of Civil Procedure, 1908 (‘CPC’), is limited to matters pertaining to execution of the decree. Validity of a decree cannot be looked into by the executing court unless the decree suffers from inherent lack of jurisdiction.
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The Courts should ensure that objections raised under Section 47 of the CPC relate strictly to matters concerning the execution, discharge, or fulfilment of the decree and do not overstep into substantive rights or legal matters beyond the decree’s boundaries
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Plain meaning rule is not an absolute principle and must be used in light of the broader context and purpose of the statute.
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Once objections are dismissed under Section 34 of Arbitration & Conciliation Act, 1996 (‘the Act’), and appeal under Section 37 of the Act also stands adjudicated, an arbitral award attains finality. Any objections regarding the validity of an arbitral award are impermissible under Section 36 of the Act.
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Writ jurisdiction under Article 226 and Article 227 of the Constitution of India cannot be invoked to challenge an arbitral award. Only under exceptional circumstances, a writ court can interfere with an arbitral award or execution proceedings.
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Parties’ failure to raise timely objections under Section 34 and Section 37 of the Act will not entitle them to raise these grounds at a later stage by invoking the writ jurisdiction under Constitution of India
Background
Disputes arose between the State and the respondent in connection with a contract for construction of a cross drainage. Accordingly, in terms with the clauses of the contract, the disputes were referred to arbitration.Against the arbitral award, the State preferred an application under Section 34 of the Act before the District Judge. The said application was rejected by the District Judge.
Thereafter, the State filed a first appeal before this Court against the order of the District Judge. However, this appeal was dismissed by the Court. A Special Leave Petition under Article 136 of the Constitution of India was also preferred by the State before the Supreme Court which was dismissed on the ground of delay. Thereafter, a Review petition was filed by the State against the said order, which was dismissed by the Supreme Court as well.
Thereafter, an execution application was filed by the respondent under Section 36 of the Arbitration Act. Meanwhile, the Trial Court passed an order in the said execution application directing the State Bank of India to cease the bank account of Executive Engineer, and not to permit withdrawal from the said account. Subsequently, the execution application filed by the respondent was transferred to the Commercial Court. The Commercial Court, vide its order directed the State to ensure the payment of the awarded amount along with interest. The petitioners preferred an objection in under Section 47 of CPC, 1908 before the Commercial Court, which was further rejected. Aggrieved by the said order passed by the Trial Court, and the orders passed by the Commercial Court, the State have filed the instant writ petition.
Analysis and Decision:
The Court noted that the purpose of Section 47 of the CPC, 1908 defines the jurisdiction of the court executing a decree, and further, limits the scope of matters subject to determination by the executing court to those related to parties, execution, discharge, or satisfaction of the decree.
The Court has emphasized upon the interpretation of Section 47 of the CPC by the Supreme Court in Dhurandhar Prasad Singh v. Jai Prakash University, (2001) 6 SCC 534 , wherein the Court has observed that the executing Court’s authority is limited to execution matters and that its role is akin to a “microscopic inspection hole” focusing solely on executability. The Court has further remarked that caution should be urged in adjudicating objections under Section 47 due to far-reaching implications and the need to maintain finality of decrees.
The Court said that the Courts must exercise caution and diligence when adjudicating objections under Section 47 of CPC, 1908. The consequences of erroneously allowing or disallowing objections can have far-reaching implications for the parties involved and may undermine the integrity of the execution process.
Remarking on the limited scope of the executing Court’s jurisdiction under Section 47 of the CPC, 1908, the Court said that it requires a precise delineation of the issues that fall within its purview.
The Court also suggested that the Courts must also be mindful of the principle of finality of decrees when adjudicating objections under Section 47 of the CPC, 1908. Decrees represent the final determination of the rights and liabilities of the parties, and objections seeking to reopen issues already decided may undermine the principle of finality.
The Court also said that the Courts need to balance the need for expeditious resolution of execution proceedings with the principles of fairness and due process. Further, it remarked that while efficiency is essential in the administration of justice, Courts must afford parties a reasonable opportunity to present their case and be heard on matters relevant to the execution process. The Court also added that rushing through objections without adequate consideration of the parties’ submissions may result in miscarriage of justice and undermine the credibility of the judicial process.
However, as per the Court there is also a need to guard against the misuse of objections under Section 47 of the CPC, 1908 to delay or obstruct the execution process. The Court remarked that the parties may resort to frivolous or dilatory objections to prolong proceedings or gain tactical advantage. Further, it suggested that the Courts must exercise vigilance in identifying and dismissing such objections to ensure expeditious and effective enforcement of decrees.
While dealing with the applicability of Section 47 of the CPC, 1908 to execution of arbitral awards under Section 36 of the Act, the Court said that while Section 36 of the Arbitration Act treats arbitral awards as if they were Court decrees for enforcement purposes, it is essential to recognize the legal fiction established by this provision. The phrase “as if it were” signifies a hypothetical condition, implying that something is being treated in a manner akin to a particular situation, even if it’s not factual. Despite this treatment, arbitral awards retain their distinct nature and origin as decisions arising from private contractual agreements between parties and issued by private arbitrators. While they may have the same legal effect as Court decrees once enforced, they are fundamentally different.
The Court further added that the Arbitral awards are distinct from Court judgments in that they arise from private contractual agreements between the parties and are issued by private arbitrators rather than state-appointed judges. Allowing objections under Section 47 of the CPC, 1908 to be raised against arbitral awards would undermine the finality and binding nature of arbitration awards. It would subject arbitral awards to same procedural complexities and delays associated with court proceedings, defeating the purpose of choosing arbitration as an alternative dispute resolution mechanism.
Therefore, objections under Section 47 of the CPC, 1908, applicable specifically to execution of decrees, are not maintainable against arbitral awards. This understanding upholds the self-contained nature of Arbitration Act and preserves the finality and binding nature of arbitration awards.
Therefore, the Court held that the objections which were sought to be raised by the State under Section 47 of the CPC, 1908 before the Commercial Court were not maintainable and the rejection of the State’s objections filed under Section 47 of the CPC, 1908 by the Commercial Court, on grounds of maintainability warrants no interference by this Court.
Concerning the question that whether writ jurisdiction can be invoked to challenge arbitral award, the Court emphasized that Parties must exhaust all statutory remedies before seeking collateral challenges through writ petitions under Article 226 or 227 of the Constitution.
The Court remarked that parties’ failure to raise timely objections under Section 34 and Section 37 of the Arbitration Act will not entitle them to raise these grounds at a later stage by invoking the writ jurisdiction under the Constitution. Writ jurisdiction is extremely limited and cannot be treated as a second chance at the cherry.
Therefore, the Court while dismissing the instant writ petition termed it as frivolous, and imposed a cost of Rs. 5,00,000/- upon the State. Further, it directed the State to file an affidavit of compliance after making the payment in aforesaid terms within five weeks from date of this Judgment.
[State of UP v. Raj Veer Singh, 2024 SCC OnLine All 1094, decided on 16-04-2024]
Advocates who appeared in this case:
Advocates for the Petitioners: Manish Goyal, AAG, Ashok Kumar Goyal, ACSC
Advocates for the Respondents: Anurag Khanna, Sr. Adv., Punit Kumar Gupta,
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