Sanchayita Lahkar

The High Court of Andhra Pradesh at Amaravati has dismissed a civil revision petition challenging the rejection of execution proceedings initiated to enforce an arbitral award issued under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The Single Bench of Justice Ravi Nath Tilhari recorded that “once an award has been held inexecutable and such finding has attained finality, a second execution petition for the same award is not maintainable.”

The impugned order dated 17.09.2024, passed by the Special Judge for Commercial Disputes, Visakhapatnam, was upheld in its entirety. The High Court concluded that “no illegality has been committed in rejecting the present CEP GR as not maintainable” and held that “the execution petition is not maintainable in view of the earlier final adjudication.”

Also Read: PIL Filed in Supreme Court Urges FIR Against Justice Varma; Challenges Authority of Three-Judge In-House Committee

The civil revision petition was filed under Article 227 of the Constitution of India by M/s. Real Fab India Private Limited, represented by its Managing Director Koneru Karunakara Rao. The petitioner sought to challenge the rejection of its execution petition in CEP GR Nos.1694 and 1772 of 2024 by the Special Court for Commercial Disputes. The execution was sought to enforce an arbitral award dated 25.10.2018 issued by the Andhra Pradesh Micro and Small Enterprises Facilitation Council at Vijayawada.

The original award was made in Claim No.21C/IFC/2013/19266, where the Facilitation Council had directed M/s. Rashtriya Ispat Nigam Limited (RINL) to pay ₹11,79,38,792 as principal, along with interest from 01.11.2010 to 21.09.2017 and further interest on the principal from 22.09.2017 onwards, in accordance with the MSMED Act.

Subsequently, RINL filed CAOP No.16 of 2019 under Section 34 of the Arbitration and Conciliation Act, 1996, seeking to set aside the award. In its order dated 27.12.2023, the Special Court held that although valid grounds existed to set aside the award, including lack of jurisdiction, classification of the contract as a works contract, and absence of reasoning in the award, the petition could not be entertained because the award submitted was unsigned by the Council members and Chairman. The Court recorded that “when there is no complete and valid award, the question of setting aside the award does not arise.”

During the pendency of the Section 34 petition, execution petition CEP No.6 of 2019 was stayed by the Court. Following the disposal of CAOP No.16 of 2019, the petitioner filed E.A. No.11 of 2024 seeking restoration of the earlier execution petition. The Special Court dismissed the application on 05.08.2024, holding that there was “no award, much less an executable one” and that relisting the execution would serve no purpose since the prior decision had found the award inexecutable.

The petitioner then filed a fresh execution petition in CEP GR Nos.1694 and 1772 of 2024, contending that the signed copy of the award had now been filed and that the prior bar to execution had been removed. However, the Special Judge rejected the fresh execution petition, citing finality of the earlier determination.

In response, the petitioner approached the High Court with the present revision petition, arguing that the Special Judge erred in not registering and proceeding with the execution in light of the now-compliant award.

Justice Ravi Nath Tilhari considered the arguments advanced and framed the legal issue as “whether the judgment and order dated 17.09.2024 rejecting the execution petition in CEP GR Nos.1694 and 1772 of 2024 as not maintainable is legally justified.”

The Court reviewed the proceedings in CAOP No.16 of 2019 and recorded that the award had been held “liable to be set aside” for three independent reasons: lack of jurisdiction due to the petitioner’s failure to file the statutory memorandum, the nature of the contract being a works contract, and the award being unreasoned. However, the petition under Section 34 was dismissed solely because the award was unsigned and hence invalid.

Justice Tilhari stated: “The dismissal of the petition under Section 34 was not on the ground that the case for setting aside the award was not made out. On the contrary, specifically it was held that the grounds for setting aside the award were made out.”

Referring to the prior decision of 05.08.2024 in E.A. No.11 of 2024, the Court observed: “The order attained finality and could not be challenged. Once the execution petition was not restored, clearly observing that the award was inexecutable, the rejection of the petitioner’s petition in CEP GR of 2024 as not maintainable cannot be faulted.”

The Bench rejected the petitioner’s contention that the availability of a signed copy now made the award executable. The Court stated: “The rejection of E.A. No.11 of 2024 was not only on the ground that the award was not signed, but also because the award was held liable to be set aside for fundamental reasons.”

Addressing the petitioner’s reliance on V.D. Modi v. R. Abdul Rehman, where the Supreme Court held that execution courts cannot go behind the decree, the Court distinguished the facts, stating: “The proposition applies only where there is a valid decree. Here, the award was held without jurisdiction, and therefore the Executing Court could not have ignored that the award was not capable of execution.”

The Court further recorded: “In view of the findings in CAOP No.16 of 2019, it was on the face of the award that it was held without jurisdiction.” It held that the execution petition was “not maintainable in light of the settled findings and final order passed in the earlier execution proceedings.”

Also Read: “Principal Issue in This Case Is the Workman’s Dismissal”: Calcutta High Court Directs Tribunal to Frame Specific Issue on Legality of Termination

In rejecting the argument that an objection to maintainability must be raised by the opposite party, the Court held: “The Court can of its own consider the maintainability of the execution petition and need not wait for an objection.”

The High Court dismissed the civil revision petition, upholding the order dated 17.09.2024 passed by the Special Judge. The Court recorded: “I do not find any illegality in the impugned order. The civil revision petition deserves to be dismissed and is accordingly, dismissed.” All pending miscellaneous petitions stood closed in consequence.

Advocates Representing the Parties

For the Petitioners: Sri Gopal S. Hegde, Senior Counsel, assisted by Sri Koneru Prabhakara Rao, representing Sri Y.N. Anjaneyacharyulu, Advocate

Case Title: M/s. Real Fab India Pvt. Ltd. v. M/s. Rashtriya Ispat Nigam Limited
Case Number: Civil Revision Petition No. 2936 of 2024
Bench: Justice Ravi Nath Tilhari

[Read/Download order]