THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL REVISION PETITION Nos.486, 487 and 547 of 2009 Dated:02.12.2009 Between: Kankatala Subbarayudu, And others. ….Petitioners And Kankatala Venkateswara Rao, And others. …Respondents THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA CIVIL REVISION PETITION Nos.486, 487 and 547 of 2009 COMMON ORDER: (per Hon’ble Sri Justice V.V.S.Rao) As these three revision petitions under Section 115 of the Code of Civil Procedure, 1908, are against a common order dated 22.12.2008 passed by the Court of the I Additional District Judge, East Godavari at Rajahmundry, they are being disposed of by this common order. The brief fact of the matter is as follows. Kankatala Venkateswara Rao and Kankatala Subbarayudu are brothers. Kankatala Srinivasa Rao is the son of the former and Dhanalakshmi is the wife of the latter, and Naga Surya Durga Srinivasa Rao, Venkata Satya Ramakrishna and Veera Venkata Ramesh are children of Subbarayudu. Both the families owned and enjoyed certain properties jointly. They entered into an arbitration agreement on 24.03.2001 to resolve the disputes regarding possession and enjoyment of immovable properties. In furtherance thereof, by mutual consent, the parties appointed Sri M.Siva Subba Rao, an Advocate, and two others as arbitrators to resolve the dispute. The arbitrators passed an award on 09.09.2002 after deciding the items of immovable properties available for division between the family of Venkateswara Rao on the one hand and Subbarayudu on the other, and after determining the liability of each party, the arbitrators passed the award with reference to item I (Rice Mill), item II comprising of tiled house and thatched hut, and item III a flour mill, in the following manner. (I) (a) Items II(a) and (b) of the schedule below be divided between Sri K.Venkateswararao and Sri K.Subbarayudu. (b) In such division the portion corresponding to the blue marked portion of the plan out of item II(a) and (b) annexed hereto be taken by Sri K.Venkateswararao towards his share, while the property shown and depicted in yellow colour in the said plan be taken by Sri K.Subbarayudu towards his share. (c) Sri K.Venkateswararao and Sri K.Subbarayudu shall execute and register a valid partition deed accordingly in respect of item (II). (II) An undivided ½ share in item I(a) to (d) of the schedule which is depicted in red colour in the plan annexed hereto be sold in auction as between party A and party B only. (a) The upset price and other terms of auction for the same are to be fixed at the time of auction. The highest bidder amongst party A and party B for this property shall pay the bid amount within 3½ months from the date of auction. (b) If the highest bidder fail to pay the offered amount within the time stipulated, he shall pay a sum of Rs.One Lakh as compensation to the opposite party. (c) In the event the highest bidder fail to pay the bid amount the possession of the property be taken over by the arbitrators and they shall deal with the matter afresh according to their best judgment. The compensation payable in terms thereof, shall be recovered by the party entitled to receive the same by executing this award, in the event the same is not paid by the other party and the undivided share of the defaulting party shall remain charged in favour of the other party entitled for recovery of the sum of Rs.One Lakh; in addition to securing a registered sale deed by executing this award through competent Arbitral court. (d) The amount of Rs.One Lakh payable as compensation shall carry interest at 12% p.a. from the date of default till it is paid or realized. (e) It is admitted that a sum of Rs.10,000/- is borrowed by K.Venkateswararao (Party A) offering his share in item (I) as security. Such liability and any other liabilities as may be identified shall be discharged by Venkateswararao only. Similarly any other liability contracted by either of the parties as against their share in the property be discharged by such party only. (III) Undivided half share in item (III) shall also be sold in auction as between the parties A and B only fixing the upset price and other terms at the time of auction. The defaulting bidder shall pay Rs.25,000/- as compensation to the other party. Time for payment for bid amount is three months from date of auction. All other conditions regarding consequences of failure, entitlement to recover by execution of the Award and interest etc. are as applicable to item (I) and stated in II(a) to (e) hereinabove. The arbitrators also passed award with regard to the total profits realized by Subbarayudu, directing payment of half of the amount to Venkateswara Rao, and with interest at 18% per annum if the amount is not paid within three months. In accordance with the award paragraph 2 to conduct auction for item II of the properties, auction was conducted and Subbarayudu family became highest bidder at Rs.5,05,000/-. As per the award the said amount has to be paid within three and half months from the date of the auction, failing which the defaulter party has to pay Rs.1,00,000/- to the opposite party with interest at 12% per annum. When the amount was not paid, Kankatala Venkateswara Rao and his son filed three execution petitions on the file of the Court of the I Additional District Judge, Rajahmundry. E.P.No.77 of 2005 was filed to recover a sum of Rs.1,38,000/- including interest on Rs.1,00,000/- as awarded in clause 2(d) of the award. The same was sought to be executed by attachment and sale of house bearing door No.3-121 situated at Rajanagaram Mandal, East Godavari District. E.P.No.78 of 2005 was filed seeking a direction to opposite party (petitioners herein) to execute sale deed in terms of the award for rice mill which was item I, and E.P.No.57 of 2006 was filed for eviction of the opposite parties from the floor mill which formed item III of the award. The three E.Ps were opposed raising the following pleas. The judgment debtors are always willing to pay sale consideration and obtained sale deeds. But decree holders are avoiding the execution of sale deeds and have not come forward. Judgment debtors waited for considerable time to have the sale deeds executed, in vain. They filed O.S.No.46 of 2005 for specific performance of agreement of sale, which is pending. When the second decree holder tried to interfere with the possession and enjoyment of the judgment debtors, they filed O.S.No.17 of 2005 on the file of the Court of the I Additional Senior Civil Judge, Rajahmundry, for injunction. The same is pending, and after receiving summons in the said suit, decree holders filed three execution petitions. The trial Court framed appropriate point for consideration. Rejecting the plea that the failure to pay the amount of auction results in sending back the matter to arbitrators as per the award, the learned I Additional District Judge ordered all the execution petitions directing settlement of terms in E.P.No.77 of 2005, directing the judgment debtors to execute necessary transfer deed in terms of the award in E.P.No.78 of 2005, and directing the delivery of schedule property in E.P.No.57 of 2006. Learned Counsel for the petitioners/judgment debtors submits that in the absence of proper stamp duty and registration, the award of the arbitrator is unenforceable. As per clause 2(e), decree holders have not discharged the loan amount of Rs.10,000/-, and therefore the award cannot be enforced. There are suits pending between the parties and therefore the award has become unenforceable. As per clause II(c), in case the amount of auction is not paid, the matter has to be dealt with by the arbitrator and the Court cannot order execution. Lastly, it is submitted that the Court of I Additional District Judge has no jurisdiction to enforce the award under Section 36 read with Section 2(e) of the Arbitration and Conciliation Act, 1996 (the Act, for brevity). Even before these matters are admitted, Kankatala Venkateswara Rao died and the petitioners filed miscellaneous applications to bring the wife and daughter of the deceased as legal representatives. They have been ordered and the deceased first respondent is represented by all his legal representatives. The learned Counsel for respondent No.2 and learned Counsel for respondent Nos.3 and 4 opposed the revision petitions. They contend that the amount of Rs.10,000/- as per clause 2(e) has already been discharged and that the order in E.P.No.57 of 2006 out of which C.R.P.No.486 of 2009 arises has become infructuous as item III and item II(b) have been delivered by the judgment debtors on 23.01.2009. While refuting the contention that I Additional District Judge has no jurisdiction, they contend that at the time of auction conditions were stipulated. As per the auction condition No.5 if the bid amount is not paid, it shall be open to the decree holders to deduct Rs.1,00,000/- towards compensation and obtain sale deed for the balance of the bid amount. Therefore, they would urge that clause II(c) of the award has to be read with condition No.5 of auction conditions. Lastly, they contend that the I Additional District Judge is not subordinate to the District Judge, and therefore, is competent to enforce the award under Section 36 of the Act. The question whether the Court of I Additional District Judge is barred from entertaining a petition for enforcing award under Section 36 read with Section 2(e) of the Act has been considered by us in an unreported decision in Lakhamraju Sujatha v M/s.Yuvaraj Finance Pvt. Ltd[1]. After considering the relevant case law we have held as follows. Section 2(2) of CPC defines, “decree” means formal expression of adjudication which conclusively determines the rights of the parties with regard to all or any of the matters in controversy in the suit. Section 36 of CPC further clarifies that the provisions relating to execution of decrees shall be deemed to apply to the execution of orders as well. Therefore, arbitral award passed under Section 31 of Arbitration Act is certainly not a “decree”. However, when the same has to be enforced, the law contemplates that for the purpose of enforcement even the award shall be deemed to be “decree” of the Court. This is made clear by Section 36 of Arbitration Act, which lays down that, “an award shall be enforced under CPC in the same manner as if it were a decree of the Court”. Thus we do not have any doubt in our minds to hold that though arbitral award as defined under Section 2(c) of Arbitration Act is not a “decree” within the meaning of Section 2(2) of CPC read with Section 36 of CPC, but for the enforcement, the award shall be treated as a decree of the Court. Such award therefore has to be executed (enforced) under CPC. The question then is what is the procedure for enforcement/execution of the decree of a Court. The provisions in Part-II (Sections 36 to 74) and Rules contained in Order XXI CPC are applicable for execution of decrees. The question whether the award passed by the arbitrator requires to be enforced in an appropriate Court with relevant pecuniary jurisdiction does not fall for consideration in this revision petition. The question however is whether the Additional District Judge is barred from enforcing an arbitral award. It is no doubt true that Section 2(e) of Arbitration Act defines, “Court” means the Principal Civil Court of original jurisdiction in a district not inferior to such Principal Civil Court. Though Sections 9 and 34 of Arbitration Act employ the word “Court” as defined in Section 2(e) of Arbitration Act, the word “Court” in the sense defined in Section 2(e) of Arbitration Act is conspicuous by absence in Section 36 of Arbitration Act, which only speaks of a “decree of a Court” being enforced under CPC. Hence while interpreting Section 2(e) of Arbitration Act with reference to Section 36 of Arbitration Act, the law governing establishment and conferment of jurisdiction on such Courts, cannot be ignored. The Andhra Pradesh Civil Courts Act, 1972 (Civil Courts Act) is an Act relating to Civil Courts subordinate to the High Court in the State of Andhra Pradesh. Sections 3 and 10 of Civil Courts Act empower the Government to establish subordinate Courts in the District of Hyderabad and in other Districts respectively. A reading of Sections 10 and 11 of Civil Courts Act would show that Government shall appoint a District Judge for each District and if in the opinion of the High Court it is so required, the Government may also appoint one or more Additional District Judges to the District Court and such Additional District Judges shall perform all or any functions of District Judge under Civil Courts Act. Section 11(2) of Civil Courts Act makes it clear that all Additional District Judges shall exercise same powers as the District Judge. For ready reference Sections 10 and 11 of Civil Courts Act are extracted hereunder. Section 10. Establishment of District Courts:- (1) The Government may, after consultation with the High Court, by notification, establish such number of District Courts as they may deem necessary and appoint a District Judge for each District Court. (2) The Government may, from time to time, likewise abolish any District Court established under this section. Section 11. Appointment of Additional District Judges:- (1) Where in the opinion of the High Court, the state of business pending in a District Court, so requires, the Government may, after consultation with the High Court, appoint one or more Additional District Judges to the District Court for such period as they may deem necessary. (2) An Additional District Judge so appointed shall perform all or any of the functions of the District Judge under this Act or any other law for the time being in force which the District Judge may assign to him, and in the performance of those functions, he shall exercise the same powers as the District Judge. By reading Section 2(e) of Arbitration Act and Sections 10 and 11 of Civil Courts Act harmoniously, we are convinced that Additional District Judge though not strictly be considered as a Principal Civil Court, is not barred from entertaining applications/petitions for enforcing arbitral awards. The submission of the learned Counsel regarding the jurisdiction of the Court below is misconceived, and is liable to be dismissed. Insofar as the alleged non payment of Rs.10,000/- and the pendency of the suits are concerned, in our opinion, these have no bearing on the right of the party to enforce the award if the opposite party fails to perform his obligations under the award. The submission regarding stamp duty and registration is also misconceived. There is no dispute that the stamp duty of Rs.200/- was paid on the award. Being a document not falling under Section 17(1) of the Registration Act, 1908, the same does not require any registration. Indeed in M.Anasuya Devi v M.Manik Reddy[2] the Supreme Court held that the question of stamp duty would arise only at the stage of enforcement of the award under Section 36 of the Act. In this case though such question has been raised before the execution Court the same does not bar the Court below from executing the award as appropriate stamp duty is paid as per item 12 of Schedule I-A of Indian Stamp Act, 1899. Clause II(c) of the award is to the effect that in the event of failure on the part of the successful bidder to pay the amount the possession of the property shall be taken over by the arbitrators and they shall deal with the matter afresh according to their best judgment. In the face of such binding clause in the award, the Court below could not have allowed E.P.No.78 of 2005 (out of which C.R.P.No.547 of 2009 arises) and could not have directed to execute necessary transfer deed in terms of the award. Learned Counsel for the respondents, however, argued that when the auction was conducted a term was stipulated that the failure on the part of the highest bidder to deposit the money entails the decree holders to pay the balance of amount after deducting Rs.1,00,000/- and obtain sale deed. According to them the said auction condition forms part of the award. The submission cannot be accepted. Auction condition No.8 makes it very clear that if there is a failure in following auction conditions or dispute arises in relation to auction, the same has to be decided by the arbitrators again and their decision will be binding. Auction condition No.8 belies the contention made by the respondents. As noticed, condition No.II(c) is as much binding on the parties as the other terms of the award. We cannot sustain the order of the Court below impugned in C.R.P.No.547 of 2009. It is needless to mention that under Section 36 of the Act arbitral award shall be enforced under the Code of Civil Procedure, 1908 (CPC), treating it as a decree of the Court when such award becomes final. An award shall become final and binding after the period stipulated under Section 34 of the Act has expired. Therefore, the award which is “final and binding” on the parties has to be enforced and it is not within the purview of the civil Court to modify the award at the time of enforcement/execution. As held by the Supreme Court in Paramjeet Singh Patheja v ICDS Limited[3], an award of the Arbitral Tribunal is not decree within the meaning of Section 2(2) of CPC and therefore, in the absence of any provision like Section 47 of CPC, the enforcing Court cannot go beyond the arbitral award. We are therefore not able to sustain and uphold the order of the Court below insofar as E.P.No.78 of 2005 is concerned. We also record the submission that pursuant to the order in E.P.No.57 of 2006 the petitioners have already delivered the possession of item III and II(b) to respondents, and therefore, it has become infructuous. Accordingly, C.R.P.No.486 of 2009 arising out of E.P.No.57 of 2006 and C.R.P.No.487 of 2009 arising out of E.P.No.77 of 2005 are dismissed and C.R.P.No.547 of 2009 arising out of E.P.No.78 of 2005 is allowed. We direct the parties to bear their own costs. _______________ (V.V.S.RAO, J) ________________ (B.N.RAO NALLA, J) 02.12.2009 vs [1] CRP No.4618 of 2009, dated 11.11.2009 [2] (2003) 8 SCC 565 = JT 2003 (8) SC 276 [3] AIR 2007 SC 168 = (2006) 13 SCC 322