IN

THE

HIGH

COURT

OF

DELHI

AT

NEW

DELHI

SUBJECT : Code of Civil Procedure

Judgment Reserved on : 03rd May, 2007

Date of Decision

: 03rd July, 2007

EFA (OS) No. 18/2006

M/S DECOR INDIA P LTD.
Through:

..... Petitioner
Mr. Jayant Bhushan, Sr.Adv.
with Ms. Bimla Sharma, Adv.

versus
NATIONAL BUILDING CONST.
CORPN L.
Through:

*
*

..... Respondent
Mr. Jayant Nath, Sr. Adv.
with Mr. Subhash Mishra,
Adv.

CORAM:
HON'BLE MR. JUSTICE VIKRAMAJIT SEN
HON'BLE MR. JUSTICE J.P. SINGH

J.P. Singh, J. :
1.
This Appeal under Order XLIII Rule 1 and Section 105 of the Code of
Civil Procedure is directed against the order dated 28.7.2006 passed by the
learned Single Judge in the Execution Petition. The Single Bench has dismissed
the Execution Petition on the ground that mere pendency of the Appeal
under
Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to
as the Act) stays the execution.
2.
We have heard Mr. Jayant Bhushan, Sr. Advocate learned counsel for
the Appellant and Mr. Jayant Nath, Sr. Advocate learned counsel for the
Respondent.
3.
Briefly the facts are that the Appellant herein had done some
interior work (renovations) in the office of the Respondent. The disputes were
referred to the Arbitrator who delivered an Award on 22.10.1999. The Respondent
herein filed an Application (Objections) under Section 34 of the Act before the
learned Single Judge for setting aside the Award. The learned Single Judge
modified the Award vide order dated 6.4.2004, in respect of claim No.7; set
aside the Award in respect of claim No.3 and upheld rest of the Award.
So
practically the decree stood passed in favour of the Appellant though not
exactly as claimed by it. Both the parties filed appeals under Section 37 of the
Act against the judgment dated 6.4.2004 passed by the learned Single Judge. The
said appeals are pending before the Division Bench of this Court.
Stay of
execution however has not been granted.
4.
question
Petition

In the Execution Petition filed by the Appellant herein, the

before the learned Single Judge was as to whether the execution
was maintainable in view of the pendency of the appeals.
After

discussing the facts and the law the learned Single Judge held that during
pendency of the appeals Execution Petition could not be entertained and
dismissed the same. Hence the Execution First Appeal by the claimant.
5.
Learned counsel for the appellant has vehemently argued that
by
treating the pending appeals as automatic stay the very basic purpose of the
Arbitration & Conciliation Act, 1996 stands defeated.
6.
The learned counsel for the Respondent has vehemently argued that an
appeal is continuation of original proceedings and the Award is not yet final
because the same could be set aside in the Appeal and then the judgment of the
Single Bench will merge in the judgment of the Appellate Court (DB), therefore
there was no point in continuing with the execution by the learned Single Judge.
This, in fact, is the gist of judgments referred to in para 10 of the impugned
Judgment on the point of merger. There is no quarrel about the legal position,
but can it help the Respondent?
7.
Learned counsel for the Appellant has cited the Judgment titled
Vipul Aggarwal Vs. M/s Atul Kanodia & Co., reported in AIR 2004 Allahabad 205.
Briefly the facts in the said case were that an Award was passed by the Arbitral
Tribunal under the Arbitration & Conciliation Act, 1996 against the Petitioner.
The Petitioner filed an application under Section 34 of the said Act for setting
aside the Award but the application was dismissed. An appeal against the said
order was also dismissed. The Petitioner filed special leave to appeal in the
Hon'ble Supreme Court of India, which is pending. Meanwhile an application for
executing the Award was filed. The Petitioner objected that the Appeal was
pending before the Hon'ble Supreme Court against the order rejecting his
application under Section 34 of the Act, therefore the Award was not final
because the Appeal before the Hon'ble Supreme Court was the continuation of the
proceedings. The said application was rejected by the District Judge. The High
Court after discussing the facts and the law opined that since stay was not
granted by the Hon'ble Supreme Court, the execution should proceed because the
main purpose of legislating the Arbitration & Conciliation Act, 1996 was to give
a speedy remedy. The case before us is also similar except that the Appeal in
this case is pending in the High Court (D.B.).
8.
In the above cited case the learned Single Judge has minutely
examined the provisions of law for distinguishing a decree passed in a civil
suit and an Award passed in arbitration proceedings and has extensively referred
to the provisions of the Code of Civil Procedure for execution of the decrees
and has then interpreted Section 35 & 36 of the Act to hold that there is no
automatic stay due to pendency of the appeal.
9.
At this stage we may reproduce Sections 35 & 36 of the Arbitration &
Conciliation Act, 1996 which are as under :35. Finality of arbitral awards. - Subject to this Part an arbitral award
shall be final and binding on the parties and persons claiming under them
respectively.
36.
Enforcement.- Where the time for making an application to set aside the
arbitral award under Section 34 has expired, or such application having been
made, it has been refused, the award shall be enforced under the Code of Civil
Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the
Court
10.
The learned counsel for the Respondent has given prominence to the
words this part mentioned in Section 35 of the Act and wants it to be read as
part-I of the entire Act, which also contains Section 37 of Chapter IX (Appeals)
of the Act under which the Appeal was filed and is pending. In all there are 4

parts in the Act.

We may mention here that the part-I of the Act has 10
Chapters. Chapter No.VIII deals with Finality and Enforcement of Arbitral Award,
while Chapter IX of Part-I deals with appeals; part-II of the Act deals with
Enforcement of Certain Foreign Award;
part -III relates to Conciliation and
Part IV has Supplementary Provisions.
11.
Needless to say that as per established principles of interpretation
an Act is to be interpreted keeping in view the harmonious construction so as
to advance the object of the legislation. The object of the Act is to provide
speedy remedy for the commercial and other related transactions and to avoid the
procedural delays in the routine suits in the courts of law. When viewed in this
background we are of the opinion that the term this Part used in section 35 of
the Act refers to the Chapter No. VIII only and neither to the Chapter IX
(Appeals) nor to the entire Part-I of the Act.
This interpretation, in our
view, is in consonance with the language of Section 36 of the Act, because
inbuilt limitations qua enforcement/execution are legislated in Section 36
(supra) of the Act, regarding enforcement of the Decree.
12.
In the case before us the application under Section 34 of the Act
for setting aside the Award has been refused (dismissed) and therefore the award
becomes executable under Section 36 of the Act as a decree under the Code of
Civil Procedure. The provisions of Order XLI Rule 5 of the Code of Civil
Procedure are as under :
5. Stay by Appellate Court.- (1) An appeal shall not operate as a stay of
proceedings under a decree or order appealed from except so far as the Appellate
Court may order, nor shall execution of a decree be stayed by reason only of an
appeal having been preferred from the decree; but the Appellate Court may for
sufficient cause order stay of execution of such decree.
(2) Stay by Court which passed the decree.- Where an application is made for
execution of an appealable decree before the expiration of the time allowed for
appealing therefrom, the Court which passed the decree may on sufficient cause
being shown order execution to be stayed.
(3) No order for stay of execution shall be made under sub-rule (1) or sub-rule
(2) unless the Court making it is satisfied (a) that substantial loss may result to the party applying for stay of execution
unless the order is made;
(b) that the application has been made without unreasonable delay; and
(c) that security has been given by the applicant for the due performance of
such decree or order as may ultimately be binding upon him.
(4) [Subject to the provisions of sub-rule(3)], the Court may make an ex parte
order for stay of execution pending the hearing of the application.
[(5) Notwithstanding anything contained in the foregoing sub-rules, where the
appellant fails to make the deposit or furnish the security specified in subrule (3) of rule 1, the Court shall not make an order staying the execution of
the decree.
13.
At this stage we may refer to the Introduction, Statement of Objects
and Reasons and Preamble to the Arbitration & Conciliation Act, 1996. The sum
and substance of these sub-headings in the Arbitration & Conciliation Act, 1996
is that the outdated Arbitration Act, 1940 was replaced by the Arbitration &
Conciliation Act, 1996 to make it more responsive to contemporary requirement;
to make provisions for an Arbitral procedure which is fair, efficient and
capable of meeting the needs of specific arbitration; to minimize the
supervisory role of the courts in the arbitral process amd to provide that every
final Arbitral Award is enforced in the same manner as if it were a decree of
the Court.

14.
If we read the provisions of Section 35, 36 & 37 of the Act and
Order XLI Rule 5 of the Code of Civil Procedure in the light of the laudable
objects of the Arbitration & Conciliation Act, 1996, we find that there is no
manner of doubt that the very purpose of Arbitration & Conciliation Act, 1996 is
to curb the procedural delays as are inherent in the routine civil disputes in
the courts.
In fact a summary proceedure has been envisaged in the Act in
contradistinction to the Arbitration Act of 1940.
15.
Now if the execution of the Decree followed by Award is to be
delayed as suggested by learned counsel for the Respondent by treating the
pendency of Appeal as automatic stay then the new legislation i.e., the
Arbitration & Conciliation Act, 1996 instead of being an efficient and speedy
remedy would be reduced to a remedy worst than what we already had, that is the
civil suits and the deep routed procedural delays till passing of the decree and
even thereafter but we may hasten to add that even in civil suits' decrees there
is no automatic stay on pendency of the Appeal and stay even if granted in
execution of civil suits' decrees is more often than not a conditional stay and
preferably subject to deposit of the decretal amount.
Had the legislature
intended to give the provision of stay of execution on filing of an Appeal under
Section 37 of the Act, it would have given the provision in the Act itself, in
pari materia with Order XLI Rule 5 of the Code of Civil Procedure. Since it has
not been done by the legislature, in our view, it will not be possible to
provide unconditional automatic stay under the principle of merger. So from
whatever angle we examine this proposition, the interpretation, in our view,
falls in favour of non-automatic stay.
16.
Considering all the facts and circumstances we agree with the
reasoning given in the judgment titled Vipul Aggarwal Vs. M/s Atul Kanodia & Co.
(Supra) and set aside the impugned order. The Appeal is accordingly accepted.
17.
Consequently, the Execution Petition No.141/2001 titled M/s dcor
India (P) Ltd v. National Building Construction Co. Ltd. is restored.
The
Respondent is directed to deposit the entire amount with up to date interest
with the Registrar General of this Court, within two weeks.
The amount be
released to the Appellant, subject to the outcome of the pending Appeal, on
furnishing security to the satisfaction of the concerned Registrar General.
However, in case of non compliance of this order, the same shall be enforced by
the Execution Court using coercive means, in accordance with law.
There is,
however, no order as to costs.

Sd/J.P. SINGH
( JUDGE )

Sd/VIKRAMAJIT SEN
( JUDGE )