1 exa499-11.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION EXECUTION APPLICATION NO.499 OF 2011 IN CHAMBER SUMMONS NO.1291 OF 2011 AWARD DATED 24/9/2010 Sharad Constructions Pvt.Ltd. .. Applicant Versus Indoco Remedies Ltd. .. Respondents Mr.Sanjay Jain with Ms.Anjali Chandurkar i/b. Purnanand & Co. for the Applicant in chamber summons Mr.Sanjiv Punalekar i/b. PRS Legal for respondents CORAM : S.C.DHARMADHIKARI, J. 5th September 2011. P.C.: 1] Heard both sides. This chamber summons is moved by the respondents for raising attachment on their bank account with Saraswat Bank and IDBI Bank more particularly described in the prayers of this chamber summons. 2 exa499-11.doc 2] It is stated that the claimants have proceeded to attach these bank accounts in pursuance of an Award made by the learned Sole Arbitrator dated 24th September 2010. Aggrieved and dissatisfied with this award, the respondent has filed a petition under section 34 of the Arbitration and Conciliation Act, 1996, which arbitration petition is pending for admission. In the meanwhile and taking advantage of the fact that it was dismissed for non removal or non compliance with certain office objections and requisitions that the subject execution application was filed and the attachment has been levied. Therefore, the attachment be raised and particularly bearing in mind that the award cannot be executed during the pendency of the petition challenging the same. The attachment levied on the Bank Accounts seriously prejudices the respondents and their day to day business is affected. Further, they are awaiting an opportunity to point out to this Court that the Award is illegal and vitiated and a prima facie case is made out for admission of the arbitration petition. Till the petition is heard, the Award does not gain finality and therefore, cannot be enforced. 3 exa499-11.doc 3] On the other hand, the original claimant submits that the respondents have suppressed material facts, inasmuch as, they have not disclosed that their application to challenge the Award is dismissed. Once it was dismissed, the execution application can proceed and, therefore, it has been proceeded with rightly and the attachment does not require any interference leave alone raising it. The application be, therefore, dismissed, is the submission. Reliance is placed on the affidavit in support of the application for execution filed on 16th June 2011. 4] After hearing both sides, in my view, in the light of the settled legal position that during the pendency of a petition challenging the arbitration award in question, the Court cannot enforce and execute the same, that the attachment will have to be raised. The Arbitration Petition is stated to be filed within the period and the limitation provided in Section 34(3) of the Arbitration and Conciliation Act, 1996. The arbitration petition was filed on 21st December 2010. It was rejected under Rule 986 of the Bombay High Court, O.S. Rules on 8th March 2011. Subsequently, that rejection was set aside, the petition was numbered as Arbitration 4 exa499-11.doc Petition No.624 of 2011. It was placed for admission before a learned Single Judge on 5th August 2011 and is adjourned to a further date. The petition was not placed for admission for want of compliance with the objections raised by the Registry of this Court. The petition was dismised for non-removal of these objections but now stands restored to file is the admitted position. Taking advantage of such dismissal, the original claimants – applicants proceeded in execution and attached the Bank accounts. They proceeded knowing fully well that the challenge to the Award has not failed on merits. 5] The arbitration petition is yet to be admitted. If the applicants were aware that it is capable of being restored, then, the steps taken by them to enforce the Award pending restoration of the petition cannot give them any benefit or advantage. More so, when the applicants acted despite being aware of the legal position as noted above. The Award is not final. It is yet to become enforceable. That the challenge to the Award is now admittedly pending. Section 36 of the Act is clear and the Award does not become enforceable until the application under section 34 made 5 exa499-11.doc within time has been refused. If parties like the applicants – claimants are allowed to take advantage of technical lapses and deficiencies of the Advocates of the respondents, then, that would mean that Arbitration Awards attain finality without parties like the respondents getting or being afforded an opportunity to satisfy the Court that the Award deserves to be set aside and grounds in that behalf as enumerated in Section 34(1) of the Act are made out. Invalid and illegal Awards are capable of being challenged under the very enactment which confers legal status to Arbitration and the Awards, which can be enforced as decrees of Civil Court. Public Policy and Public Interest demands that scrutiny of the arbitration awards is undertaken by a competent court and particularly when a aggrieved party has approached it in time by instituting appropriate proceedings. The Awards can also be set aside if the Court finds that the subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force or the arbitral award is in conflict with the public policy of India. [See Section 34(2) read together with Explanation thereto]. During the pendency of such proceedings, beneficiaries of and under an arbitration award may outsmart their opponents but they can never be permitted to 6 exa499-11.doc over-reach the Court. Therefore, the attachment of the Bank Accounts cannot be continued as that may render the challenge to the Award academic and infructuous is the apprehension. This is the only point involved and hence I refused the request of Mr.Jain for adjournment to file an affidavit in reply and to keep this chamber summons pending for that purpose. The admitted position emerging from the record enables me to dispose off these proceedings finally. Further, I have taken into account the contents of the affidavit filed by the applicants in support of their application for execution. 6] The attachment is accordingly raised. What has been pointed out is that the execution application has been filed but the award cannot be executed and no steps can be taken to execute or implement the same during the pendency of the Arbitration petition challenging the said Award. It is precisely for that reason and holding that even if execution application is filed, its filing is permitted in law, the implementation and execution of the Award is postponed until the challenge is pending, that the relief sought vide the chamber summons can be granted and it is accordingly 7 exa499-11.doc granted. Chamber summons is made absolute in terms of prayer clause (a). No costs. 7] The learned Counsel appearing for the respondents states that he will argue the arbitration petition on the date fixed for admission and not seek unnecessary adjournments. Statement accepted. Needless to clarify that the claimants can enforce the Award and take necessary steps or measures in that behalf including levying fresh Attachment on the Movable and Immovable properties of the Respondents, once the Arbitration Petition is dismissed on Merits. Further, needless to clarify that all contentions of parties on Merits of the challenge to the Award are unaffected by this order. However, the Registry of this Court is cautioned and in future before attaching and freezing Bank Accounts etc. it must ensure that the Execution Application can proceed as there is no challenge to the Award or there was one but it has failed on merits. (S.C.DHARMADHIKARI, J)