Recently the Delhi High Court dealt with an Execution Petition for enforcement of a final arbitral award. The peculiarity involved in this case was that the judgement debtor had preferred objections against the award under Section 47 of the Civil Procedure Code, 1908, as well as under Section 34 of the Arbitration and Conciliation Act, 1996. These proceedings were still pending.
It was contented by the judgement debtor (respondents in the present case) that the arbitrator committed a manifest illegality while rejecting the claim of royalty raised by them. It was further submitted that allowance of a counter claim was another evidence of manifest illegality as it was barred by Section 3 of the Limitation Act, 1963.
Thus, the crux of the respondent’s submission was that since in their view, the award rendered is a nullity and the proceedings in this respect are going on, it cannot be enforced.
The bench presided by Justice Yashwant Varma observed that “While it may be open to the court to draw sustenance and guidance from the principles underlying the provisions contained in Order XXI (of the CPC which deals with the execution of decrees and orders) in the course of enforcement of an arbitral award, it would be wholly incorrect to understand or interpret Section 36 (of A&C Act) as envisaging the adoption of its various provisions. The principles which inform the various provisions of Order XXI can at best only act as a guide for the trial of various questions that may arise in the span of enforcement of an arbitral award.”
The High Court summarized that a challenge to an arbitral award on the ground of nullity or illegality can only be addressed in proceedings under Section 34 of the Arbitration and Conciliation Act and that would be the only remedy available to the judgement debtor. The court highlighted the point that, “The Act neither envisages nor sanctions a dual or independent challenge to an award based on the various facets of nullity as legally recognised being late in enforcement proceedings.”
The High Court relied upon Sections 5, 35, and 36 of the A&C Act to fortify its findings. Accordingly, the HC concluded that a challenge to an award on merits cannot be countenanced in enforcement proceedings. Thus, objection to enforcement of the arbitral award on this ground was negated by the bench.
Therefore, the High Court held that the objections raised by the judgement debtor fall beyond the contours and scope of the present execution proceedings. The Court left it open for the respondent to raise those objections in the appropriate proceedings, as they cannot impede or stall the continuance of the proceedings for the enforcement of the award.
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