Canara Bank v. Bank of India & others

Madhya Pradesh High Court (Single Judge)

WRIT PETITION, 5260 of 2021, Judgment Date: Jan 06, 2022

Law laid down - 

1. The sole question which falls for consideration of this Court is whether the jurisdiction of an Arbitrator to pass the award can still be challenged in the execution proceedings of the award in the Civil court under the provisions of Section 47 of the Code, as according to Section 36 of the Arbitration Act, an arbitral award is to be executed by the Civil Court in the same manner as if it were a decree of the Court. (Para 21)

Held: Arbitration Act is a special and self-contained Act confined only to the disputes covered under an arbitration agreement, whereas, CPC is the general law of procedure in cases of civil disputes, thus in case of any conflict between the two enactments, it is the special law that would prevail; Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706, relied upon. (Para 23)

2. The ground of lack of jurisdiction has to be taken by a party at the threshold of the arbitration proceedings only and before no other forum. Thus, it is held that validity of an arbitral award cannot be challenged under s.43 of the Code on the pretext that s.36 of the Arbitration Act provides for the execution of an award in the same manner as if it were a decree of the court. (para 26).

Gas Authority of India Limited v. Keti Construction (I) Limited & others (2007) 5 SCC 38 relied upon.

3. This court is of the considered opinion that s. 7 of Arbitration Act clearly conveys that it is not necessary that the parties must enter into an arbitration agreement at the initial stage itself and it would suffice even at the subsequent stage if the parties decide to resolve to dissolve their dispute through arbitration. (Para 28)

4. The Court is unable to accept the contentions raised by the learned Senior Counsel appearing for the petitioner, that the challenge as to the jurisdiction of the arbitral tribunal can very well be raised by petitioner under Section 47 of the CPC in the execution proceedings. The decisions cited by the learned Senior Counsel appearing for the petitioner are purely in respect of the proceedings of the Civil Court only, and none of the decisions have been rendered in respect of arbitration proceedings involving execution of an arbitration award. If the contention of the petitioner is accepted, it would defeat the whole purpose of the Arbitration Act of expeditious relief to the parties and lead to opening of the Pandora's Box even after an award has attained the finality. (Para 29)

Canara Bank v. Bank of India & others