The success of any dispute resolution system depends greatly on the effectiveness

of the enforcement mechanism which it prescribes. Arbitration could emerge as a

successful alternative dispute redressal mechanism in India purely because of the
ease with which an arbitral award can be enforced. An arbitral award could be
enforced by the courts in the same manner as if it were a decree of the court. Since
the enforcement of an award is similar to enforcement of a decree of a court, the
same is broadly governed by the principles laid down by the Code of Civil
Procedure, 1908[1] (CPC), but with some minor differences.
Although an award passed by an arbitral tribunal is treated as a decree of the court,
yet there exists no legal presumption by which an arbitral tribunal is treated as a
court for the purpose of enforcement. This scenario poses various practical
difficulties in enforcement of an arbitral award, which the article endeavours to
highlight.
In order to fully appreciate the whole gamut of controversy, the authors have
briefly dealt with the provisions of CPC that deal with jurisdiction of court at the
stage of institution of suit and at execution of decree, how these provisions were
made applicable to the regime under the Arbitration Act, 1940[2] (the 1940 Act), the
sudden shift brought by India’s adoption to the UNCITRAL Model Law on
International Commercial Arbitration[3] (the UNCITRAL Model Law) by enacting the
Arbitration and Conciliation Act, 1996[4] (the 1996 Act) and subsequent
amendments made to the 1996 Act. The article focuses on provisions of the 1996
Act that deal with jurisdiction of court and the enforcement of an arbitral award
and their interplay especially in view of the amendments made to these provisions
by the Arbitration and Conciliation (Amendment) Act, 2015[5] (the Amending Act,
2015). In the course of discussion, the authors have analysed the judgments of the
Supreme Court which have settled the various controversies surrounding the laws
of arbitration in India and how there still exists ambiguity with respect to certain
aspects of the legislation.
JURISDICTION OF COURTS AS PER THE CODE OF CIVIL PROCEDURE,
1908
Jurisdiction of court under CPC is subject-matter centric. Civil proceedings are
instituted in courts within whose local limits the defendant resides or the subject
property is situated or cause of action has arisen. Sections 15 to 21[6] CPC deal with
jurisdiction of the court in which a suit can be instituted.
Once a decree is passed, it is either enforced by a court which has passed the
decree or is transferred to a court which exercises jurisdiction over the person
against whom the decree is passed or within whose jurisdiction the property is
situated which would be sufficient to satisfy such decree. Sections 36 to
74[7] contained in Part II of the CPC deal with execution of decree and orders.
Provisions relating to transfer of decree are provided in Sections 39 to 45[8]. A court
which has passed the decree may on an application of the decree-holder, send the
decree for execution to another court if the person against whom the decree is
passed, resides or carries on business within the local limits of jurisdiction of that
court, or if such person has no property within the local limits of the jurisdiction of
the court which passed the decree sufficient to satisfy such decree and has
property within the local limits of the jurisdiction of such other court, or if the
decree directs the sale or delivery of immovable property situated outside the local
limits of the jurisdiction or for any other reason which the court may think fit. In
addition to the aforesaid, under Section 46[9], the court which has passed the
decree, upon an application filed by the decree-holder, may issue a percept to any
other court which would be competent to execute such decree to attach any
property belonging to the judgment debtor and specified in the percept.
Order 21 Rules 26[10] and 29[11] are also relevant in the present context as they lay
down the circumstances in which execution of decree may be stayed. A decree may
be stayed for reasonable time inter alia to enable the judgment debtor to file an
appeal. It can also be stayed on such terms as to security, if a suit is pending in any
court against the decree- holder of such court or of a decree which is being
executed by such court. The appellate court can also grant the stay to the execution
proceeding.
The aforesaid provisions, with some modifications were adopted by the legislature
while enacting the Arbitration Act, 1940.
JURISDICTION OF COURTS UNDER THE ARBITRATION ACT, 1940
The 1940 Act provided for application of the Code of Civil Procedure to all
proceedings before the court and to all appeals under the 1940 Act, subject to the
provisions of the 1940 Act (Section 41[12]). The definition of “court” under the 1940
Act was more or less the same as the court under CPC. As per Section 2(c)[13] court
meant a civil court having jurisdiction to decide the question forming the subject-
matter of reference if the same had been the subject-matter of suit but did not
include a small cause court except for the purposes of arbitration proceedings
under Section 21[14].
One of the key features of the 1940 Act which was done away in the 1996 Act was
that an award under the 1940 Act did not become final and binding on the parties.
Under the 1940 Act, an arbitral award once passed had to be filed in court and the
court had to give notice to the parties. The parties were entitled to file their
objection to the award. The court had power to modify or correct the award and
also to remit the award to the arbitrators for reconsideration, if any issues were left
undetermined, or where the award was so indefinite to be incapable of execution,
or where objection to legality of award is apparent upon the face of it. In case, the
court found no cause to remit the award and the time period for making
application to set aside the award had expired or such application had been
refused, the court would proceed to pronounce the judgment according to the
award and upon the judgment so pronounced a decree shall follow and the award
will become effective.
Section 31 of the 1940 Act[15] dealt with jurisdiction. As per this Section, an award
had to be filed in court having jurisdiction in the matter to which the reference
relates. The concept of jurisdictional seat in the 1940 Act was conspicuous by its
absence. A holistic reading of the 1940 Act would indicate that it was the subject-
matter of dispute that formed the basis of jurisdiction of court just like jurisdiction
under CPC.
The enforcement of arbitral award also had to be done as per the provisions of
CPC. This practice prevailed in India till the enactment of the 1996 Act, which was
based on UNCITRAL Model law.
UNCITRAL MODEL LAW ON INTERNATIONAL COMMERCIAL
ARBITRATION
The need for improvement and harmonisation of domestic laws dealing with
arbitration, especially international commercial arbitration, led to the United
Nations Commission on International Trade law adopting the UNCITRAL Model Law
in the year 1985. This was ratified by India in the form of the 1996 Act. The 1996 Act
overhauled its predecessor and ushered in a new era of dispute resolution through
arbitration.
Article 20 of the UNCITRAL Model Law provides that the parties are free to agree on
the place of arbitration. In case parties fail to do so, the arbitral tribunal, having
regard to the circumstances of the case and the convenience of parties, can
determine the place of arbitration. Article 20(2) is a non obstante clause which
provides that notwithstanding anything contained in Article 20(1), the arbitral
tribunal can hold meeting at any place, unless otherwise agreed by the parties.
Thus, Article 20 contemplates two places – one is the seat, which the parties have
agreed as per the agreement or the Tribunal has determined, the other is the
venue, where the Tribunal can hold any of its meeting irrespective of that place not
being seat as chosen by the parties or determined by the Arbitral Tribunal. The
Model Law mandates the award to contain the date and the place of arbitration
(Article 31). Thus, the “place” where the award was made gained significance under
the UNCITRAL Model Law.
An arbitral award can be set aside by the court only if the grounds mentioned in
Article 34 are satisfied. Article 35 deals with recognition and enforcement of arbitral
award as per which, an arbitral award, irrespective of the country in which it was
made, shall be recognised as binding and upon application in writing to the
competent court, shall be enforced subject to the provisions of Articles 35 and 36.
Article 35 is a significant departure from the practice that was followed by Courts in
India due to the 1940 Act. Unlike the 1940 Act, under the UNCITRAL Model Law, an
arbitral award is binding on parties and capable of enforcement i.e. an award was
treated as a decree capable of enforcement. It does not require approval of the
jurisdictional civil court for its enforcement.
Article 36 deals with the grounds for refusing recognition and enforcement of
arbitral award, irrespective of the country in which it was made. Just like Article 34,
the grounds for refusal to recognise and enforce the arbitral award are limited.
Article 36(2) is of vital importance. As per this provision, in case, an application for
setting aside or suspension of award is made in a court of the country in which, or
under the law of which the award was made, then the court where the recognition
or enforcement of award is sought, may, if it considers proper, adjourn its decision.
It may also, on an application of the party claiming recognition or enforcement of
the award, order the other party to provide appropriate security. Thus, a
discretionary power has been granted to the court where recognition or
enforcement is sought to defer its decision.
Although the UNCITRAL Model Law underwent amendment in 2006, the aforesaid
articles remained intact.
THE ARBITRATION AND CONCILIATION ACT, 1996 AND THE
SUBSEQUENT AMENDMENTS
As mentioned in the foregoing paragraph, the 1996 Act is modelled on the
UNCITRAL Model Law. Part I of the 1996 Act applies where the place of arbitration is
in India, Part II applies where the place of arbitration is outside India.[16] In this
article we are concerned with Part I of the Act.
The 1996 Act defines court in Section 2(1)(e) to mean the principal civil court of
original jurisdiction in a district and includes the High Court in exercise of its
ordinary original civil jurisdiction having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same had been the subject-
matter of a suit but does not include any civil court of a grade inferior to such
principal civil court or any court of small causes.
The definition of court has been subject-matter of various deliberations and
judgments as this definition along with Sections 20, 31(4) and 42 are critical in
determining which court shall have jurisdiction to hear applications arising out of
arbitration agreement and arbitral proceedings.
The language of Sections 20, 21, 31, 32 and 34 of the 1996 Act have been borrowed
from the UNCITRAL Model Law without any material change.
Concept of Juridical Seat
Section 20 of the 1996 Act, just like Article 20 of the UNCITRAL Model law deals with
place of arbitration and contemplates a situation where arbitration proceedings
can be held at a place different from the place decided by the parties to the
arbitration agreement or as determined by the Arbitral Tribunal. It differentiates
between juridical seat and venue.
In the early years of coming into force of the 1996 Act, the concept of “seat” and
“venue” were not very clear. The Indian courts in various judgment held that the
1996 Act is “subject-matter centric”. The concept of parties choosing a neutral place
for arbitration, which was well established in other parts of the world, especially in
International Commercial Arbitrations, was alien to India. It was not before 2012, in
the decision in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO)
[17], that a Constitutional Bench of the Supreme Court drew a distinction between
venue and seat and held that arbitrations are anchored to the seat and that seat is
the centre of gravity. In holding so, the Constitutional Bench clarified that the term
“subject-matter of arbitration” used in the definition of court in Section 2(1)(e)
cannot be confused with the term “subject-matter of the suit”. The subject-matter
of arbitration is arbitration itself and hence, the term court would mean the court
of the seat of arbitration. The court also took note of Section 20 of the Act, a
statutory provision in support of party autonomy and observed that any other
interpretation would leave the provision nugatory. Thus, came the concept of
supervisory court.
It must be pointed out that although in para 96 of the judgment, the Supreme
Court recognises supervisory court, it holds that the legislature has intentionally
given jurisdiction to two courts – (i) the court which would have jurisdiction where
the cause of action is located and (ii) the supervisory court. An isolated reading of
para 96 of the judgment reveals that courts have concurrent jurisdiction and
parties can either choose the court where the cause of action has arisen or the
court exercising supervisory jurisdiction over the arbitral proceedings. Many courts
in India followed this approach. However, a holistic reading of the judgment makes
it clear that the courts at seat alone will have jurisdiction to challenge arbitral
award. This observation of the authors is supported by a recent judgment of the
Supreme Court in BGS SGS Soma JV v. NHPC Ltd.[18] (BGS SGS Soma JV).
The Supreme Court in Indus Mobile Distribution (P) Ltd v. Datawind Innovations (P) Ltd.,
[19] while analysing in detail the effect of Section 20 of the 1996 Act on the
jurisdiction of court held that the place chosen by the parties in the arbitration
agreement to hold arbitral proceedings, may not in the classical sense have
jurisdiction, i.e. no part of the cause of action may have arisen at such a place,
however, in arbitration law, the moment such a place is chosen, it becomes the
juridical seat, which is akin to exclusive jurisdiction clause. Thus, jurisdiction of
court under the arbitration law is seat-centric.
Section 21 deals with commencement of arbitral proceedings from the date on
which request for dispute to be referred to arbitration is received by the
respondent and as per Section 32, it terminates when the Tribunal has made the
final award. Just like the UNCITRAL Model Law, Section 31(4) of the 1996 Act also
mandates the award to mention the date and the place of arbitration. These
provisions were not subjected to any amendments.
Challenge to Arbitral Award
An arbitral award can only be challenged before the court within whose jurisdiction
an award is made. Section 34 deals with application for setting aside the arbitral
award. The grounds for setting aside an award are confined to those provided in
the Section. As per Section 34(3), the time period to challenge the arbitral award is
three months. Section 34 underwent some change in 2015 and the grounds for
challenge were further limited. In order to make the dispute resolution process
effective, sub-clause (6) was introduced which mandated the courts to dispose of
Section 34 application within a period of one year from the date of service of
notice.
Finality of Award and its Enforcement
Section 35 deals with finality of arbitral awards. An award is final and binding on the
parties and persons claiming under them. Section 36 deals with enforcement of
arbitral award. As per this section, where the time for making an application to set
aside the arbitral award has expired, or such application having been made, it has
been refused, the award shall be enforced under the CPC in the same as it were a
decree of the court. This is significantly different from the position contemplated in
the 1940 Act where the arbitral award by itself was not final, binding and
enforceable and required approval from the court by way of judgment and decree
to make it enforceable.
Position under the 1996 Act distinct from that under the UNCITRAL Model Law
A bare reading of Articles 36 of the UNCITRAL Model Law and Section 36 of the
1996 Act would suggest that contrary to Article 36 of the UNCITRAL Model Law,
where a discretion has been granted to the executing court to stay or not to stay
the execution of arbitral award till the pendency of proceedings challenging the
arbitral award, no such discretion vests with the Courts under Section 36 of the
1996 Act.
Judgments of the Court and the position of law prior to the Amending Act of 2015
The aforesaid position has been subject-matter of various judgments in the past.
The Supreme Court in National Buildings Construction Corpn. Ltd. v. Lloyds Insulation
(India) Ltd.[20] and Fiza Developers and Inter-trade (P) Ltd. v. AMCI (India) (P) Ltd. .
[21] held that the very filing and pendency of application under 34 operates as a
stay of enforcement of the award. Similar stand was taken in National Aluminium Co.
Ltd. v. Pressteel & Fabrications (P) Ltd.[22] , however, the Court was quick to add that
automatic suspension of the execution of arbitral award defeats the very purpose
of arbitration. This suggestion of the Supreme Court was accepted by the 246th
Law Commission[23], which in its report recommended insertion of the following:
Section 36(1) will be subject to Section 36(2);
36(2) where an application to set aside the arbitral award has been filed in the
Court under Section 34, the filing of such an application shall not by itself render
the award unenforceable, unless upon a separate application made for that
purpose, the court grants stay of the operation of the award in accordance with the
provisions of sub-section (3) hereof;
36(3) upon filing of the separate application under sub-section (2) for stay of the
operation of the award, the court may, subject to such conditions as it may deem
fit, grant stay of the operation of the award for reasons to be recorded in writing:
Provided that the Court shall while considering the grant of stay, in the case of an
award for money shall have due regard to the provisions for grant of stay of money
decrees under the Code of Civil Procedure, 1908.
The aforesaid recommendation was duly incorporated in the 1996 Act by the
Amending Act of 2015. Thus, post the Amending Act of 2015, mere filing of Section
34 application will not in itself render the arbitral award non-executable.
Position post the Amending Act of 2015: Judgment in Board of Control for Cricket in India
v. Kochhi Cricket (P) Ltd.
After the amendment, there were conflicting decisions passed by the various High
Courts regarding whether the amendment made to the 1996 Act by the Amending
Act of 2015 shall apply to pending court proceedings or not. The position was finally
settled by the Supreme Court in Board of Control for Cricket in India v. Kochhi Cricket (P)
Ltd. [24]. The issue before the Court was whether the amended Section 36, would
apply in relation to proceedings initiated prior to coming into force of the
amendment. The question required interpretation of Section 26 of the Amending
Act of 2015 as per which the amendment was to apply in relation to arbitral
proceedings commenced on or after the date of commencement of this Act and
would apply to the arbitral proceedings which commenced before the
commencement of this Act only if the parties agreed to its application.
The Court held that the era of automatic stay was over. Section 36 being procedural
in nature, the amendment would be applicable to pending court proceedings as
well. Consequently, in order to stay enforcement of arbitral award, application to
that effect under Section 36(2) will have to be filed before the competent court and
that mere challenge to arbitral award will not make the arbitral award non-
executable. However, the issue that whether Section 36 proceedings are
independent of Section 34 proceedings was not decided despite being raised by the
parties.
It will not be out of place to mention that a press note dated 7 March 2018 was
brought to the notice of court as per which a new Section 87 was proposed to be
inserted to clarify that unless parties agree otherwise the 2015 Amendment shall not
apply to –
 Arbitral proceedings which have commenced before the commencement of
the 2015 Amendment Act; and
 Court proceedings arising out of or in relation to such arbitral proceedings
irrespective of whether such court proceedings are commenced prior to or after
the commencement of the 2015 Amendment Act.
Shall apply only to
 Arbitral proceedings commenced on or after the commencement of the 2015
Amendment Act; and
 To court proceedings arising out of or in relation to such arbitral proceedings.
The Supreme Court took note of the press note and advised the Central
Government to keep in the mind the very object of the enactment of the 2015
Amendment Act as the proposed Section 87 would defeat the very purpose for
which the amendment was made to the 1996 Act.
Parliament ignored the advice of the Supreme Court and went ahead and
introduced Section 87 to the 1996 Act by way of Section 13 of the Arbitration and
Conciliation (Amendment) Act, 2019[25].
Section 87 of the 1996 Act was challenged in a batch of petition before the Supreme
Court in Hindustan Construction Co. Ltd. v. Union of India.[26] The Supreme Court struck
down the insertion of Section 87 by the Amending Act, 2019 as well as deletion of
Section 26 of the Amending Act, 2015. This judgment, although a landmark, suffers
from some errors; only time will tell whether the errors are glaring enough to take
away the precedential value of this judgment.
Jurisdiction of Court: Section 42 of the 1996 Act
Another crucial provision of the 1996 Act which has been a subject-matter of
various controversies is Section 42 which deals with jurisdiction. A bare perusal of
Section 42 would suggest that Section 42 has an overriding effect over all other
provisions of the Act.
As per Section 42, the court where the first application emanating from the
arbitration agreement or arbitral proceedings is made, shall have jurisdiction over
the arbitral proceedings and will have exclusive jurisdiction over all other future
court proceedings. Reading Section 42 in isolation would suggest that in a case
where the cause of action arose in city A, and the arbitration was seated in city B, if
a party files an application before courts in city A, the courts in city A alone will
exercise jurisdiction over future court proceedings emanating from the arbitration
agreement. These readings of the section run counter to the concept of seat and
supervisory jurisdiction which is etched deeply in the UNCITRAL Model Law based
on which the 1996 Arbitration Act is modelled. Therefore, in order to understand
the true import of Section 42, the same has to be read together with Section 2(1)(e)
and Section 20. The aforesaid position, with a similar example was discussed in BGS
SGS Soma JV[27], where the Court observed that the moment a seat is chosen by the
parties, the Court of the seat is conferred with exclusive jurisdiction to decide the
proceedings emanating from the arbitration agreement.
In para 62 of the judgment, the Court held that the decision of High Court of Delhi
in Antrix Corpn. Ltd. v. Devas Multimedia (P) Ltd.[28] (Antrix Corpn.) is incorrect. The High
Court of Delhi in Antrix Corpn.[29] by relying on para 96 of BALCO[30] had concluded
that the two courts can have concurrent jurisdiction and that merely choosing a
seat cannot amount to exercising such a right of exclusive forum selection. The
High Court of Delhi in Antrix Corpn.[31] was of the opinion that holding otherwise
would in effect render Section 42 of the 1996 Act ineffective. The Supreme Court
concluded that Section 42 of the 1996 Act is meant to avoid conflicts in jurisdiction
of courts by placing the supervisory jurisdiction over all arbitral proceedings in
connection with the arbitration in one court exclusively. The Court further observed
that in cases where it is found on facts that no seat is designated by the agreement
or the so-called seat is only a convenient venue and that several courts may have
jurisdiction as part of the cause of action have arisen within their jurisdiction, then
the court where the earliest application is filed, will be the court that shall exercise
exclusive jurisdiction under Section 42.
Interplay between Sections 36 and 42 of the 1996 Act
We have in the initial paragraphs of this article discussed in detail how a decree is
executed under CPC. As per Section 38 CPC, a decree may be executed either by
the court which has passed the decree or the court to which the decree may be
sent for execution. An arbitral award, unlike a judgment and order, is passed by an
Arbitral Tribunal which does not have power of execution of decree and thus, the
first part of Section 38 that deals with execution of decree by the court which has
passed it does not apply in the case of arbitral award. The second part of Section 38
that deals with execution by court to which decree is sent also does not get
attracted in the case of execution as there exists no deeming fiction to hold that the
court within whose jurisdiction the arbitral award was passed should be taken to be
the court which passed the decree. It is for the same reason, why Section 39 CPC
can also not be fully applied to execution of an arbitral award as there exists no
court from where a decree has been transferred for execution. However, Section 39
comes to the rescue in determining which court will have jurisdiction to execute an
award as it marks out certain indicators needed to determine the appropriate court
where an execution petition may be filed.
Thus, an arbitral award may be executed at any place having a close nexus with a
judgment debtor or his assets or properties or both. As such, a person in whose
favour the award is passed is not required to file an execution petition before the
District Court within whose jurisdiction the award was passed and then seeks its
transfer to the court where inter alia the assets or properties of a judgment debtor
lie.[32]
Position of law clarified by the judgment in Sundaram Finance Ltd. v. Abdul Samad
The Supreme Court in Sundaram Finance Ltd. v. Abdul Samad (Sundaram Finance)
[33] clarified the position of law on this point by holding that the enforcement of an
award through its execution can be filed anywhere in the country where such a
decree can be executed and there is no requirement for obtaining a transfer of
decree from the court, which would have jurisdiction over the arbitral award.
The Supreme Court in Sundaram Finance[34] while holding so also took note of the
relevance of Section 42 of the 1996 Act in determining jurisdiction of executing
court and concluded that Section 42 will not get attracted in case of execution
proceedings. The Court observed that when final award is made, of which
execution is sought, the arbitral proceedings already stand terminated (Section 32)
and thus, Section 42 of the Act, which deals with jurisdiction issue in respect of
arbitral proceedings, will have no relevance.
The judgment in Sundaram Finance[35] although seems to have settled the position
of law relating to execution of arbitral awards, however, certain parts of the
judgment could have been more elaborative to avoid any ambiguity in future. The
Court by holding that Section 42 will not get attracted in case of execution of award
under Section 36 has taken into account only those cases where a final award has
been passed by the Tribunal and not an interim award. Similarly, while referring to
Section 46 CPC, which deals with issuance of percept, the Court has failed to hold
which court will be competent to issue precepts – does it mean that an execution
petition may be filed, as a matter of principle, in a court where Section 34
application is pending and necessary direction may be issued by that court to the
court which otherwise under CPC would be the competent court to execute the
decree? One problem that may emerge from the ambiguity is that litigants may rely
on para 10 of Sundaram Finance judgment[36] to maintain their petition before a
court which otherwise lacks territorial jurisdiction to enforce the arbitral award.
The lack of clarity in the aforesaid issue is problematic as even the obiter of the
Supreme Court is binding on lower courts. An ambiguous obiter may pose a
different level of problems as we have seen in the past.[37]
CONCLUSION
From the foregoing discussion, one thing is clear that although the legislature and
the judiciary have come a long way in streamlining the dispute settlement process
through arbitration, yet there continues to exist an ambiguity with respect to
certain aspects of the Arbitration and Conciliation Act, 1996. The amendments
brought by the Amending Act of 2015 have definitely aided in changing the outlook
of the international community towards India as an arbitration friendly nation,
however, the lack of clarity that has crept in because of the divergent judicial
pronouncements subsequent to these amendment poses a greater challenge which
needs to be overcome soon.
One of the areas which need clarity is the interplay between Sections 34 and 36 of
the 1996 Act. The Amending Act, 2015 has intertwined these Sections. As per the
amended Act, in order to obtain a stay on the execution of an arbitral award, an
application challenging the arbitral award under Section 34 of the Act has to be
accompanied by a separate application seeking stay of the arbitral award under
Section 36(2). Only when the competent court passes an order of stay of the
award, on the application made under Section 36(2), the arbitral award becomes
unenforceable. The court while hearing the application for stay of the arbitral
award may impose certain conditions on the judgment debtor. One of these
conditions may include payment of money as well in case of a money decree. In
such a situation, a question arises as to whether such an action of the supervisory
court, i.e. imposition of condition involving payment of money amounts to deemed
execution of award or not. The courts are yet to examine this issue. One of the
standpoint from which the court will have to examine this issue is that unlike
jurisdiction under CPC, the jurisdiction of courts under the 1996 Act is not subject-
matter centric. A court, under the 1996 Act, exercises supervisory jurisdiction over
arbitration purely because of the fact that the arbitration was conducted within its
local limits. There can be a situation where the supervisory court has absolutely no
nexus with the subject-matter of dispute. In such a situation, whether by conferring
the power to stay the execution of an award by imposing conditions involving
payment of money, has the legislature not transgressed the settled principles of
law relating to jurisdiction of court at the time of execution of a decree.
The aforesaid issue gives rise to another practical problem. Assuming the court
stays the award and directs the judgment debtor to deposit a certain portion of
arbitral amount and at the same time, allows the decree-holder to withdraw that
amount upon an application being made by him, then whether such an order
would amount to deemed enforcement of award. Also, which court would be
responsible to see whether the proper stamp duty has been paid or not on an
arbitral award as per the judgment laid down in M. Anasuya Devi. v M. Manik
Reddy[38], since the issue of stamp duty has to be seen at the stage of enforcement.
Another issue that will require examination is whether the court under Section 34
while staying the arbitral award are deemed to be the court “which has passed the
decree” as per Section 37 of the CPC, 1908 so as to make certain sections of the CPC
while enforcing the decree workable like precepts. This issue, although was
discussed in Sundaram Finance[39], has not been tested.
In order to make the dispute resolution through arbitration reach its full potential,
the courts will have to address the aforementioned issues and ensure that the
judgments in future provide a solution keeping in mind the practical realities of
dispute resolution in India.