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FACTS :   the petitioner, Sundaram Finance Ltd. and the the two respondents, Abdul Samad and anr. had entered into a loan agreement on 18th august, 2005  with the finance company. The second respondent had stood as a guarantor for the first resondent for the repayment of the loan amount and had executed a guarantee letter for the same. As had been decided earlier, the loan was supposed to be repaid by jan 3, 2009 in three installments and as per the claims of the petitioner, the respondent had defaulted in the payments of the loan. Following the default, as per the clauses of the loan agreement the arbitration clause was invoked, the arbitration  proceedings instituted and an ex parte order was passed in favour of the petitioner on 22nd october 2011, since the respondents refused to participate in the arbitration proceedings. The petitioner filed the execution order under sectio 47 read with section 151 order XXI rule 21 of the Code of Civil Procedure with the district court at Morena, Madhya Pradesh where the assets of the respondent was located, as the order was enforceable under section 36 of the Arbitration and Conciliation Act, 1996. However, the execution application was returned by the court on the ground that it didnot have the required jurisdiction to enforce the award. Th petitioner was required to file the case before the court in Tamil Nadu to obtain a decree of transfer and then the execution preoceedings could be filed before the court at Morena. However, the petiotioner directly approached the Hon'ble Supreme Court by obtaining a Special Leave Petition because in earlier cases the Madhya Pradesh and the Karnataka High Courts had given judgements where a transfer decree was required to be obtained by the petitioner.

ISSUES RAISED : The question that was being raised in this case was whether the order could be filed and executed in the same court where the assets of the person was located or whether a transfer order was reqiured from a court of competent jurisdiction to transfer the case ?

JUDGEMENT : The Hon'ble Supreme Court examined the differing judgements of the various High Courts. The Madhya Pradesh and the Himachal Pradesh high courts had in the cases of Computer Sciences India Private Limited vs. Harishchandra Lodwal and Anr and Jasvinder Kaur and Anr. vs Tata Motors Private Limited, respectively, had passed judgements favouring the obtaining of a transfer decree to the court where the assets of the respondent are located.The Hon'ble Supreme Court held that as has been laid down by section 36 of the Arbitration and Conciliation Act,1996 that the "award shall be enforced under the Code of Civil Procedure (5 of 1908) in the same manner as that of a decree of a court" means that the enforcement mechanisms and not the award is similar to the decree of a civil court. The decree is rendered by the tribunal and the tribunal doesnot have the powerS as that of a civil court. It was held that an enforcement award could be filed before any court of the country by the judgement debtor where he resides or carries on business or has his assets located. In any court, the award could be executed and there was no requiremnt of obtaining the transfer order from the court, that would have jurisdiction over the arbitral proceedings.

  • facts of the case
  • issues raised through the case
  • judgement delivered in the case

BY : Mekhla Chakraborty

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