Jurisdictional Contours and Execution of Arbitral Awards under the Arbitration & Conciliation Act, 1996

By- Sreevibhavan N, Student, B.C.A LLB.(H) at School of Excellence in Law, Chennai.

Abstract:

Territorial Jurisdiction in the enforcement of arbitral awards under the Arbitration and Conciliation Act, 1996, has been a source of judicial conflict. The question was whether the award requires a "transfer of decree" from the supervisory court or can be directly enforced where the debtor's assets are located. Although some High Courts required a "transfer of decree," others permitted direct enforcement. This was settled in the case of Sundaram Finance Ltd. v. Abdul Samad[1], where the Supreme Court held that an arbitral award is not a court decree and is beyond Section 38-39 CPC, permitting direct enforcement where the assets are located.

Keywords:Territorial jurisdiction, enforcement, assets, location and supervisory court.

 1.Introduction

There appears to be a split decision on the issue of the manner of execution of an arbitral award under the Arbitration & Conciliation Act, 1996, between the different High Courts, as to whether an arbitral award has to be filed for execution in the court having jurisdiction over the arbitral proceedings that necessitate a transfer of the decree or whether it can be directly executed in any court where the assets of the judgment debtor are situated. The Supreme Court answered the question in

1.     Factual Background

Sundaram Finance Ltd., provided loan for purchasing a Lorrry to first respondent.. The loan was to be repaid in instalments. The 1st Respondent defaulted from the 20th installment onwards. Arbitration proceedings were initiated as per the loan agreement.Arbitrator was appointed but the respondents were unserved despite notice by publication. Later, ex-parte award was passed with interest and costs.

 2. Litigation History and Jurisdictional Challenge

The execution application was moved in Madhya Pradesh, under Section 36 of the Arbitration Act. The Trial Court rejected it on the ground that a "transfer of decree" from the Tamil Nadu supervisory court was mandatory on the issue of jurisdiction. This was in accordance with the restrictive precedents of the Madhya Pradesh and Karnataka High Courts. However,since there was a conflict with the Delhi and Rajasthan High Courts' more liberal stance on the issue, the appellant avoided the High Court and approached the Supreme Court for a final answer.

3.Key discussions:

1.      Transfer of decree:

The argument that transfer of decree must initially be obtained prior to presenting an execution petition before the court where the assets in question are situated. This position was affirmed by both the Madhya Pradesh and Himachal Pradesh High Courts.

(1)   In Computer Sciences Corporation India Pvt. Ltd. v. HarishchandraLodwal&Anr[2], However, the Madhya Pradesh High Court set a restrictive and pro-transfer precedent for the execution of awards. The High Court held that the arbitral award is to be considered as a decree passed by the court exercising supervisory jurisdiction over the place of arbitration. Therefore, the "transfer of decree" was held to be a mandatory requirement under the CPC before any other court can execute the decree. Moreover, the High Court relied on Section 42 of the Act and held that the court where the first arbitration petition is filed shall have exclusive jurisdiction. Therefore, unless the "decree-passing court" transfers the decree, the court where the assets are located lacks the jurisdiction to enforce the decree.

(2)   In JasvinderKaur  v. Tata Motor Finance Limited[3], High Court of Himachal Pradesh  held that since arbitration proceedings were held in Mumbai and the award was passed in Mumbai, execution could not proceed directly elsewhere. The learned judge extensively referenced the Supreme Court’s reasoning in Swastik Gases, and aligned with the view of the Karnataka High Court in I.C.D.S. Ltd. v. Mangala Builders Pvt. Ltd. &Ors.[4], The Court held that a formal decree transfer is a precursor to execution. As an award is enforced "as if it were a decree," only the court with Section 34 jurisdiction can entertain execution. Petitions before other courts are non-maintainable without prior transfer from the supervising court. The Supreme Court held despite the Rajasthan High Court having jurisdiction based on partial cause of action, the jurisdiction clause in Section 11 clearly expressed the parties' intention to exclusively confer jurisdiction on Kolkata courts.

This law relating to transfer of decree is also recently decided by the Jharkhand Court inM/S Golden Ceramic Works (P) Ltd Throug vs M/S Simplex Casting Limited[5]which observed that there is no requirement of transfer of decree and that execution can be sought from any court anywhere in the country.

2.      Execution of award in the jurisdiction where the assets of the judgment debtor are located:

The enforcement of the arbitral award under Section 36 is considered a deemed decree under the CPC, but not that of any particular court. Execution can thus be presented to any court within whose jurisdiction the assets of the judgment debtor are situated.

(i) In Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd[6]. 2009 SCC OnLine Del 511,the court held that Section 42 cannot be applied to the proceedings of execution, as arbitral awards are not decrees of any particular court, and therefore Sections 38 and 39 CPC cannot be applied to the case. Execution can be filed directly in any court where the judgment debtor resides or has any property. The Supreme Court in the Amazon.com NV Investment Holdings v. Future Retail Ltd[7]. case distinguished the holding in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltdwith respect to enforcement proceedings as follows:

Respondents relied on Daelim Industrial to submit that the enforcement of Section 36 is in accordance with CPC under Sections 38 and 39, with Section 42 being irrelevant. In Daelim, the Delhi High Court held that courts under Sections 38 and 39 CPC have the jurisdiction to enforce arbitral awards.The Supreme Court, drew a distinction between Daelim and the present case, observing that Daelim did not deal with Section 17 of the Arbitration Act regarding interim orders of Arbitral Tribunals. The case explained that although arbitral awards are enforced as decrees under CPC, they are not the same as civil court decrees.

The Court clarified that the Section 17(2) interim orders are enforceable as court orders by a limited legal fiction, but not for appeals against enforcement orders. The rationale for Daelim's enforcement jurisdiction is not relevant to Section 17(2), as the Section 36 and Section 17(2) enforcement have different legal provisions.

(ii) In Maharashtra Apex Corporation Limited v. V. Balaji G. &Anr[8], however, the court held that an execution court cannot insist on the formal presentation of a decree as a prerequisite to entertain an execution petition. Rather, the execution court is obliged to accept an execution petition, irrespective of where the award was made.

(iii) In Kotak Mahindra Bank Ltd. v. SivakamaSundari&Ors.[9],the Court examined the relationship between the 1996 Act and the Code, referring to Sections 39, 41, and 46. The Court held that although civil court decrees are enforced through the passing court, the statutory fiction under Section 36 of the Code does not render the arbitral proceedings as court in the notional passing court. Neither the Code nor the 1996 Act requires prior execution as to where the award was made, with Section 21's party autonomy further confirming the transcendence of territorial restrictions under the 1996 Act.

(iv) Kotak Mahindra Bank Ltd. v. Ram Sharan Gurjar&Anr[10]2011 SCC OnLine Raj 2748.the Court held that although Section 42 gives exclusive jurisdiction to the arbitration court, Section 36 enforcement is regulated by the CPC. Execution can be started before any court in which the judgment debtor or property is situated, without transfer of decree. Territorial restrictions in Section 39 CPC do not apply to enforcement in the location of debtor assets.

(v) In GE Money Financial Services Ltd. v. Mohd. Azaz&Anr.[11]2013 SCC OnLine All 13365It was specifically noted that the arbitrator cannot be likened to a court, although the arbitral award is enforceable as if it were the decree of a court. Therefore, Sections 38 and 39 of the Code are irrelevant, and the arbitral award can be enforced wherever the judgment debtor resides, carries on business, or has assets within the court's jurisdiction.

(vi) The Punjab and Haryana High Court in Indusind Bank Ltd. v. Bhullar Transport Company[12]the Court reiterated that under Section 36,territorial jurisdiction for the execution of an arbitral award is with the court within which the judgment debtor resides or holds property, irrespective of the court where the award was passed. There is no statutory provision that makes award a decree of the award-passing court, therefore, the transmission of the decree is not required,and Section 42 applies only to arbitration proceedings.

(vii) Sri Chandrashekhar v. Tata Motor Finance Ltd. &Ors.[13] 2014 SCC OnLineKar 12146 the Court held that execution of arbitral award need not be filed before the jurisdiction where the award was passed, but may be instituted directly before the court that has jurisdiction over the residence of the judgment debtor.

3.      Execution under the Code of Civil Procedure, 1908

Section 37 CPC gives the definition of the court that passed the decree, while Section 38 allows execution by the said court or by a court to which the case is transferred. Section 39 allows transfer if the judgment debtor resides, carries on business, or owns property outside the original court's jurisdiction, within territorial limits. Section 46 allows the decree-passing court to issue precepts to other competent courts for attachment and execution of the judgment debtor's property.

1)      The nature of arbitral awards

In contrast to court decrees, arbitral awards are made by arbitral tribunals, not courts. Section 36(1) establishes a statutory fiction that awards are "as if" decrees only for the purpose of execution, without specifying which court. After the conclusion of arbitration proceedings under Section 32, the exclusive jurisdiction clauses in Section 42 no longer apply to petitions for execution, as Section 42 applies only to arbitration proceedings, not execution proceedings.

2)      Application and Implications

Order XXI Rules 6 and 11 CPC provide the procedures for decree transmission and execution application on the basis of parameters of court decree, which are not applicable to the arbitral awards that do not have the status of a decree.

3)      Judicial Interpretations

The Court held in Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd[14],that the procedural rules of CPC apply to applications for execution under the 1996 Act, and not to arbitration. The jurisdiction bar under Section 42 applies only to arbitration and not to execution petitions. As the arbitral award is not a court decree, there is no statutory provision requiring execution of the award before the arbitration court or transfer. In Kotak Mahindra Bank Ltd. v. SivakamaSundari S Narayana S B Murthy[15], the court held that making an arbitral award a decree under Section 36 does not make the arbitral proceedings a "court which passed the decree" for the purpose of execution of the CPC. The CPC and the Arbitration Act do not require execution petitions to be filed in the arbitration court; the award can be directly enforced in the place where the judgment debtor or its assets are found. The High Courts of Rajasthan, Allahabad, Punjab & Haryana, and Karnataka have supported this flexibility in enforcement.

  4. Conclusion:

The Court’s opinion clarifies that execution of an arbitral award must adhere to the procedural framework prescribed by the Code of Civil Procedure, subject to the statutory fiction that the award is equivalent to a decree solely for enforcement purposes. This dispels the misconception that execution petitions must first be filed in the Court having jurisdiction over the arbitral proceedings and subsequently transferred. Instead, execution may be commenced directly in any competent Court where execution is feasible.

This position harmonizes the provisions of the Arbitration and Conciliation Act with the territorial execution rules under the Code, ensuring effective enforcement rights while respecting the terminated status of arbitral proceedings post-award.

[1]Sundaram Finance Ltd. v. Abdul Samad, (2018) 3 SCC 622.

[2]Computer Sciences Corporation India Pvt.Ltd. v. HarishchandraLodwal&Anr., 2005 SCC OnLine MP 338.

[3]Jasvinder Kaur v. Tata Motor Finance Limited, 2013 SCC OnLine HP 3904.

[4]I.C.D.S. Ltd. v. Mangala Builders Pvt.Ltd. &Ors., 2001 SCC OnLineKar 153.

[5]M/S Golden Ceramic Works (P) Ltd. v. M/S Simplex Casting Limited, 2025:JHHC:19786.

[6]Daelim Industrial Co. Ltd. v. Numaligarh Refinery Ltd., 2009 SCC OnLine Del 511.

[7]Amazon.com NV Investment Holdings v. Future Retail Ltd., (2022) 1 SCC 209.

[8]Maharashtra Apex Corporation Limited v. V. Balaji G. &Anr., 2011 SCC OnLine Ker 4039.

[9]Kotak Mahindra Bank Ltd. v. SivakamaSundari&Ors., 2011 SCC OnLine Mad 1290.

[10]Kotak Mahindra Bank Ltd. v. Ram Sharan Gurjar&Anr., 2011 SCC OnLine Raj 2748.

[11]GE Money Financial Services Ltd. v. Mohd. Azaz&Anr., 2013 SCC OnLine All 13365.

[12]Indusind Bank Ltd. v. Bhullar Transport Company, 2012 SCC OnLine P&H 21674.

[13]Sri Chandrashekhar v. Tata Motor Finance Ltd. &Ors., 2014 SCC OnLineKar 12146.

[14]Supra 6.

[15]Supra 9.

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