Telangana High Court: In a revision petition filed by Hyderabad Metropolitan Development Authority (‘HMDA’) against the dismissal of its application under Section 47 of the Code of Civil Procedure, 1908 (‘CPC’) by the Commercial Court, the Division Bench of Moushumi Bhattacharya* and B.R. Madhusudhan Rao, JJ., dismissed the petition with Rs. 5 Lakhs as cost, holding that HMDA did not give any justification for pursuing an alternative route for challenging the legality of the arbitral award, without exhausting their rights in the pending appeal under Section 37 of the Arbitration Act.
Background
In 2007, HMDA and Cyberabad Expressway Limited (‘CEL’) entered into a Concession Agreement (‘the Agreement’) for Design, Construction and Maintenance of an 8-lane access-controlled expressway under Phase II-A Programme as an extension of the Outer Ring Road to Hyderabad City, from Kollur to Patancheru. Eventually, disputes arose, and the arbitration clause contained in Clause 39.2 of the Agreement was invoked.
In 2019, an arbitral award (‘the award’) was passed in favour of CEL. CEL filed a petition to enforce the award before the Commercial Court at Hyderabad under Section 36 of the Arbitration and Conciliation Act, 1996 (‘the Arbitration Act’), whereas HMDA filed an appeal for setting aside the award. HMDA’s petition was dismissed by the Commercial Court. Aggrieved, HMDA filed an appeal under Section 37 of the Arbitration Act and an application seeking a stay of the award. A Co-ordinate Bench of the High Court granted a stay of execution of the award, subject to the HMDA depositing 50% of the amount awarded by the Arbitral Tribunal within 6 weeks from the date of the order, whereas the appeal was still pending before the High Court.
Admittedly, HMDA failed to deposit 50 percent of the awarded amount and filed an application seeking the recall of the conditional stay order. However, the recall application was dismissed by the Co-ordinate Bench, and the appeal filed against such dismissal before the Supreme Court was dismissed as well.
Aggrieved, HMDA filed another application under Section 47 CPC in the enforcement petition filed by CEL. This application was rejected vide the impugned order. Hence, this revision petition.
Analysis and Decision
On the issue of maintainability of the present revision petition under the Commercial Courts Act, 2015 (‘the CC Act’), the Court referred to Section 8 of the CC Act which bars filing of a civil revision application or petition against any interlocutory order of a Commercial Court including an order on the issue of jurisdiction.
Furthermore, after considering the cases cited by the parties, the Court noted that Section 8 of the CC Act cannot impinge upon a party’s right to invoke Article 227 of the Constitution, as a part of the High Court’s supervisory powers over the jurisdictional Courts. There is also a difference between revisional power under Section 115 of the CPC and the High Court’s power of superintendence under Article 227 of the Constitution. However, the power of superintendence under Article 227 should be sparingly exercised only in fit cases, i.e., to keep strict administrative control of the Courts within the territory of the High Court.
In light of this legal background, the Court considered the case on merits and noted that undisputedly, HMDA had exhausted all their legal options except hearing of the appeal from the order of dismissal of the Section 34 petition. The Court also noted that there was no evidence on record to show that HMDA took any steps to expedite the hearing of their appeal seeking the setting aside of the arbitral award. Further, the HMDA failed to deposit 50 percent of the amount awarded by the Arbitral Tribunal for the stay of the award to date.
Thereafter, the Court considered the reasons given by the Commercial Court for dismissal of HMDA’s application under Section 47 of the CPC for stay of the execution of the award, which are as follows:
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HMDA failed in every application challenging the award and for a stay of execution of the award. Multiple applications filed by HMDA were rejected at all levels of the judicial hierarchy, i.e., by the Commercial Court, the High Court, and the Supreme Court.
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The appeal from the dismissal of the application filed under Section 34 of the Arbitration Act was pending before the High Court.
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HMDA failed to deposit 50 percent of the awarded amount within the timeframe fixed by the High Court, as a condition for the stay of the award.
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HMDA filed an application under Section 47 of the CPC on the same facts and grounds as the appeal seeking the setting aside of the award, instead of pursuing the recourse available under the Arbitration Act.
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HMDA filed a petition challenging the legality of the award when it was put into execution under Section 36 of the 1996 Arbitration Act.
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Section 47 of the CPC does not apply to the facts of this case since the award was not a decree as defined under Section 2(2) of the CPC.
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HMDA failed to demonstrate any subsequent events after dismissal of the petition by the Supreme Court, which would justify maintaining the Section 47 application.
Noting the aforesaid, the Court stated that the aforementioned reasons were fully within the framework of law, i.e., the Arbitration Act and judicial precedents. The Commercial Court considered both the relevant facts as well as the provisions of the Arbitration Act in support of its decision to reject HMDA’s application under Section 47 of the CPC.
The Court further reiterated that the Arbitration Act is a complete code in itself, as it envisages and provides for a comprehensive mechanism for parties to settle their disputes before an Arbitral Tribunal. The mechanism covers the entire gamut of proceedings from the invocation of the arbitration clause to the termination of the arbitration process. It also encompasses the post-award stage, providing for recourse against the award and an appeal from that decision. Further, it provides for a stay of the award pending consideration of an application for setting aside the award. This mechanism aims to protect the rights of an Award-holder through the enforcement of the award, ensuring that the Award-debtor complies with the terms and conditions imposed by the Court for obtaining a stay of the award.
The Court stated that a careful reading of Section 36 of the Arbitration Act made it clear that the CPC had a limited role in the enforcement and stay of the award. The language of Section 36(1) emphasises that the award shall be enforced per the CPC in the same manner as if it were a decree of the Court. The Section itself demarcates the terrain of an award as opposed to the mode of its execution/enforcement. The reference to the CPC is restricted to how the award is to be enforced, it does not spill over to the award itself to equate the award with a decree as defined under Section 2(2) of the CPC.
The Court further stated that the remaining part of Section 36 sheds light on this issue by diverging from the CPC route and establishing a specific mechanism under the Arbitration Act for the stay of enforcement of the award. Section 36(3) provides the only means of pausing the execution of the award by conferring the Court with discretion to decide the issue of stay and impose conditions per the CPC in case of money awards. Therefore, the Court held that the distinction drawn by the Trial Court between an award and the procedure for enforcement thereof fits with the statutory framework of the Arbitration Act.
Accordingly, the Court held that there was no reason to interfere with the findings of the Commercial Court. The Court also concurred with the views expressed by the Commercial Court that HMDA did not give any justification for pursuing an alternative route for challenging the legality of the award, without exhausting their rights in the pending Appeal under Section 37 of the Arbitration Act.
The Court remarked, “We find the conduct of HMDA not only to be in blatant disregard of the law but also evincing desperation to avoid the processes of law by pushing back their obligation to make payment to CEL by filing one vexatious proceeding after another.” It added that selective reliance on the CPC for mounting a challenge to the award under Section 47 of the CPC was contrary to law. In fact, HMDA had no explanation for suddenly switching from the main line to a chord line for reaching the same distinction, i.e., for nullifying the award.
The Court explained that, in essence, the objections/grounds available to a judgment-debtor under Section 47 of the CPC are distinct from those available to an award-debtor under Section 36 of the Arbitration Act. A judgment passed by a Court of law and an award made by an Arbitral Tribunal arise from different sources of conflict, procedures, and the willingness of the parties to adjudicate their dispute in a forum of their choice. The Court further stated that the Arbitration Act draws upon the provisions of the CPC for limited purposes and circumstances. These circumstances are expressly stated in the Arbitration Act and are not to be inferred or invoked based on the convenience of a party, as that would be undermining the finality and binding nature of arbitral awards, as declared under Section 35.
The Court further reiterated that a decision brought before the Court under Article 227 of the Constitution must reflect a patent irregularity or a clear violation of law at first glance. However, the present case was quite the opposite, as the impugned order is well-reasoned with due consideration of the relevant facts and law applicable to the subject matter.
Accordingly, the Court dismissed the petition as not maintainable, with costs of Rs. 5 Lakhs to be paid by HMDA to CEL within two weeks, as CEL was deprived of the fruits of the award and instead taken for a misconceived ride across Courts for more than 6 years.
[Hyderabad Metropolitan Development Authority v. Cyberabad Expressway Limited, Civil Revision Petition No.787 of 2025, decided on 02-05-2025]
*Judgment authored by: Justice Moushumi Bhattacharya
Advocates who appeared in this case:
For the petitioner: Senior Counsel C.V. Mohan Reddy and K. Dhananjaya Naidu
For the respondent: Senior Counsel A. Venkatesh and Ch. Pushyam Kiran