Skip to main content

Executing court is to execute decree and not check on facts behind the decree

In Punjab State Civil Supplies Corporation Ltd. & Anr. vs M/s Atwal Rice & General Mills Rep. by its Partners,  The Supreme Court bench of Justices Abhay Manohar Sapre and R.Banumathi, on
July 11, in an arbitration case, indicted both the executing Court and the Punjab and Haryana High Court, for “total non-application of mind” and set aside their orders.

In the instant case, the agreement between the appellant and the respondent, entered into in 1996, was the subject of arbitration, following the dispute between them. In terms of the agreement, the appellant was to give their paddy to the respondents, who were to process the paddy in their rice mill and the rice, produced after processing paddy, were to be delivered to the Food Corporation of India (FCI) for and on behalf of the appellant by the respondents.

The dispute arose because the respondents failed to process and deliver the full quantity of rice in terms of agreement to the FCI much less within the time framed. Therefore, it resulted in money losses to the appellant in addition to sustaining the damages due to non-delivery of the rice. In 2001, the Arbitrator allowed the appellant’s claim in part and passed a money award with interest payable at the rate of 21 per cent with effect from January 1, 1999 till realisation in appellant’s favour.

The respondents first challenged the Award before the ADJ, Jalandhar. The ADJ dismissed the challenged on June 4, 2009, and upheld the award. As the respondents did not pursue their appeal in the High Court, the 2001 award became final.

But the respondents did not pay the awarded amount to the appellants. The appellants, therefore, filed Execution Petition before the ADJ, Jalandhar for enforcement of the award. However, the Executing Court, by its order dated 3.11.2012, upheld the objections raised by the respondents, and dismissed the appellant’s execution application.

The High Court dismissed the revision filed by the appellant and upheld the order of the Executing Court subsequently. In Paragraph 27 of the judgment, the Supreme Court held that the executing court and the High Court neither understood the controversy, nor decided the same in accordance with law. Indicting them for total non-application of mind, the Court further observed that both the courts below neither set out the facts properly, nor dealt with the issues arising in the case and applied the principle of law which governs the controversy.

“Both the orders are, therefore, wholly perverse, illegal and without jurisdiction”, the SC bench concluded and held that an inquiry into facts cannot be held in execution proceedings in relation to award/decree.

“It is a well-settled principle of law that the executing Court has to execute the decree as it is and it cannot go behind the decree. Likewise, the executing Court cannot hold any kind of factual inquiry which may have the effect of nullifying the decree itself but it can undertake limited inquiry regarding jurisdictional issues which goes to the root of the decree and has the effect of rendering the decree nullity”, said the Bench.

The SC bench also awarded costs quantified at Rs.25000 payable by the respondents to the appellant.

Comments

Most viewed this month

Michigan House Approves 'Right-to-Work' Bill

Amid raucous protests, the Republican-led Michigan House approved a contentious right-to-work bill on  Dec 11 limiting unions' strength in the state where the (Union for American Auto Workers)  UAW was born. The chamber passed a measure dealing with public-sector workers 58-51 as protesters shouted "shame on you" from the gallery and huge crowds of union backers massed in the state Capitol halls and on the grounds. Backers said a right-to-work law would bring more jobs to Michigan and give workers freedom. Critics said it would drive down wages and benefits. The right-to-work movement has been growing in the country since Wisconsin fought a similar battle with unions over two years ago. Michigan would become the 24th state to enact right-to-work provisions, and passage of the legislation would deal a stunning blow to the power of organized labor in the United States. Wisconsin Republicans in 2011 passed laws severely restricting the power of public s...

Power to re-assess by AO and disclosure of material facts

In AVTEC Limited v. DCIT, the division of the Delhi High Court held that AO is bound to look at the litigation history of the assessee and cannot expect the assessee to inform him.  In the instant case, the Petitioner, engaged in the business of manufacturing and selling of automobiles, power trains and power shift transmissions along with their components, approached the High Court challenging the re-assessment order passed against them. For the year 2006-07, the Petitioner entered into a Business Transfer Agreement with Hindustan Motors Ltd, as per which, the Petitioner took over the business from HML.  While filing income tax return for the said year, the petitioner claimed the expenses incurred in respect of professional and legal charges for the purpose of taking over of the business from HML as capital expenses and claimed depreciation. Article referred: http://www.taxscan.in/assessing-officer-bound-look-litigation-history-assessee-delhi-hc-read-order/8087/

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...