Sunday 23 January 2022

Whether a party can challenge jurisdiction of arbitrator during execution of arbitration award?

The contention raised was as follows:

1. As per Section 36 of the Arbitration & Conciliation Act, 1996, an arbitral award is to be executed by the civil court in the same manner as if it were a decree of the Court.

2. Since the award has to be executed as a decree, the executing court would be able to decide certain questions as provided under Section 47 of the Code of Civil Procedure, 1908.

3. Amongst the various questions which an executing court has power to determine it also has power to determine jurisdiction of the Court which passed the Decree (There is legal principle that the executing court shall not go behind the decree, but there are two exceptions to this rule, & the executing courts may deny to execute the decree if (a) decree is passed under fraud (b) the court which passed the decree lacks inherent jurisdiction.

4. As a consequence, the executing Court under Section 47 of the CPC, should have power to decide whether the Arbitrator lacked jurisdiction to pass the award.

The Court, while rejecting the contention, held as follows:

1. The Arbitration & Conciliation Act, 1996 is a special and self contained code in itself, whereas CPC is a general law of procedure, thus in case of conflict, it is the special law which will prevail (Reliance placed on Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706)

2. The ground of lack of jurisdiction has to be taken by a party at the threshold of the proceedings. It cannot be challenged under Section 47 of the CPC (Reliance placed on Gas Authority of India Limited v. Keti Construction (I) Limited & others (2007) 5 SCC 38).

3. If the contention of the Petitioner is accepted, it would defeat the whole purpose of Arbitration of expeditious relief, and lead to opening of pandora’s box even after an award has attained finality.
Madhya Pradesh High Court
Canara Bank vs Bank Of India on 6 January, 2022
Author: Subodh Abhyankar
Read full Judgment here: Click here
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