09 November 2021 | Matrix Partners India Investment Holdings, LLC v. Shailendra Bhadauria | OMP (ENF) (Comm) 11/2021 and EX. Appl. (OS) 998/2021 | C Hari Shankar J | Delhi High Court | 2021 SCC OnLine Del 4917

An application to execute a consent award against some properties located in Delhi was filed in Delhi. The respondent questioned the territorial jurisdiction.

The court rejected the objections applying Sundaram Finance Ltd. v. Abdul Samad (2018) 3 SCC 622 in which the Supreme Court has ruled that execution of an arbitral award could be sought before any Court within whose territorial jurisdiction the assets of the judgement debtor are located.

Among the arguments rejected was that the consent terms vested jurisdiction in Bombay courts. Such an argument had been accepted in a High Court case that Sundaram had overruled.

Another argument was based on Section 100 of the Transfer of Property Act, 1882. It was argued that that the case was sui generis because, first, before action against any other property was taken, some property located in Bombay had to be sold in terms of the consent award. Those terms had created a charge on the Bombay property within the meaning of Section 100. Thus, they could be executed only by a court in Bombay (having the territorial jurisdiction).

Hari Shankar J said it completely befuddled him as to how Section 100 TPA could be pressed into service. He examined the consent terms in detail concluded, for several reasons, that there was no intention, whatsoever, to secure the amounts payable to the petitioners Bombay property. The concept of “security”, he added, in commercio-legal terms, as an enforceable asset, predicates an independent right of the creditor to proceed against the security. No such independent right was discernible.

Hari Shankar J gave an additional reason. He said that even if the consent terms were to be interpreted as creating a charge on the Bombay properties, that cannot be a factor which is relevant for the executing court, which is essentially seized with the task of executing a money award and not executing a charge.

Lastly, the argument that having approached the Bombay High Court for execution of the ad interim order of the arbitrator, the petitioner's right to approach the Delhi court for execution of the final award was foreclosed, was also rejected. The court noted that as stated in Sundaram Finance, Section 42 ACA, the foundation of the submission, does not apply to execution.

Read the judgment here.