Jurisdiction issue solved for executing arbitral awards

In a distinct departure from the erstwhile Arbitration Act, 1940, section 36 of the Arbitration and Conciliation Act, 1996, enables execution of an arbitral award “in the same manner as if it were a decree of the court”. Straightforward one would think, but a great deal of confusion has emanated from divergent views taken by high courts across the country.

The high courts of Madhya Pradesh and Himachal Pradesh took the view that for execution, an award had first to be filed in the court having jurisdiction over the arbitral proceedings and then transferred to the court having jurisdiction over the assets against which execution may be levied. In contrast, the high courts of Kerala, Rajasthan, Madras, Allahabad, Karnataka and Punjab and Haryana had held that an execution application may be made straightaway in the court which has jurisdiction over the assets.

This controversy was recently resolved by the Supreme Court in Sundaram Finance Ltd v Abdul Samad, where an award made in Tamil Nadu was sought to be executed in Madhya Pradesh directly, where the respondent was. The Madhya Pradesh court returned the execution application requiring that it be first filed in the competent court in Tamil Nadu and a transfer obtained for the Madhya Pradesh court. Sundaram Finance appealed to the Supreme Court.

Karthik Somasundram is a partner and Shreya Gupta is a senior associate at Bharucha & Partners.