Executing Court Cannot Go Behind Arbitral Award or Treat Stayed Relief as Money Decree, Holds Bombay High Court
Facts
The dispute arose out of the dissolution of M/s. Hotel Windsor, a partnership firm comprising Surinder Kumar Banga and Sucheeta Kedarnath Sethi after the death of another partner. The arbitral tribunal declared that the partnership stood dissolved with effect from 31 January 2012 and determined the parties’ shares in the partnership assets as 40:60.
The tribunal allotted certain bank amounts and flats to each partner and directed that the remaining movable and immovable assets, including the tenancy rights of Hotel Windsor, be realised by sale or otherwise and distributed in the ratio of 40:60. The respondent challenged only part of the award under Section 34 of the Arbitration and Conciliation Act. While the Section 34 petition was dismissed, the Division Bench admitted the appeal under Section 37 and stayed clause (d) of the arbitral award directing distribution of partnership assets. Despite the stay, the decree holder filed execution proceedings seeking recovery of nearly ₹9.84 crore by attaching the respondent’s personal assets.
Issues
- Whether an executing court can recover the monetary value of partnership assets from the respondent’s personal properties when the operative clause directing sale of those assets has been stayed.
- Whether the executing court can interpret the arbitral award as creating a money decree when no such decree exists.
- Whether execution proceedings could continue despite the appellate court’s stay of the operative clause of the award.
Petitioner’s Arguments
The petitioner contended that:
- the arbitral tribunal had already determined the tenancy rights of Hotel Windsor to be partnership assets valued at approximately ₹17.86 crore;
- upon dissolution of a partnership, every partner has a statutory right to realise partnership assets into money and receive his proportionate share;
- the respondent had effectively appropriated the valuable tenancy rights while continuing to run Hotel Windsor, thereby becoming liable to compensate the petitioner;
- after dissolution, the parties stood in the relationship of creditor and debtor, permitting execution against the respondent’s personal assets;
- the executing court could enforce payment by attaching other properties even if the tenancy rights themselves could not presently be sold.
Respondent’s Arguments
The respondent argued that:
- the executing court cannot travel beyond the express terms of the arbitral award;
- clause (d) merely directed distribution of sale proceeds after sale or monetisation of partnership assets and did not create any independent money decree;
- the Division Bench had specifically stayed clause (d), making execution of that portion impermissible;
- the respondent continued to dispute whether the tenancy rights ever formed partnership assets, an issue pending before the appellate court;
- permitting execution against personal assets would effectively defeat the appellate stay and amount to rewriting the award.
Analysis of the Law
The Court examined:
- Order XXI Rule 19 CPC concerning execution where cross-claims exist;
- settled principles governing execution proceedings;
- the powers and limitations of an executing court;
- the effect of an appellate stay on execution of an arbitral award.
The Court reiterated that an executing court is bound by the decree or award exactly as it stands. It cannot create fresh substantive rights, convert non-monetary directions into money decrees or enlarge the scope of the decree while executing it.
Precedent Analysis
The Court relied upon:
- Sanwarlal Agrawal v. Ashok Kumar Kothari – executing court cannot go behind the decree or rewrite its terms.
- State of Punjab v. Krishan Dayal Sharma – executing court cannot grant relief not specifically contained in the decree, including interest.
- Addanki Narayanappa v. Bhaskara Krishnappa and CIT v. Dewas Cine Corporation – recognising partners’ rights upon dissolution, though held distinguishable because execution remained subject to the express terms of the award.
- Other authorities on dissolution of partnership and creditor-debtor relationship were found inapplicable in view of the appellate stay.
Court’s Reasoning
The Court observed that all executable portions of the arbitral award had already been implemented except clause (d) relating to sale or monetisation of partnership assets.
The Division Bench had expressly stayed operation of clause (d). Consequently, the tenancy rights forming the subject matter of that clause could neither be sold nor monetised during the pendency of the appeal.
The Court rejected the petitioner’s attempt to recover the assessed value of the tenancy rights by attaching unrelated personal assets of the respondent. Such a course would effectively circumvent the appellate stay and amount to converting the stayed relief into a money decree, something the arbitral award itself never granted.
The Court further held that no creditor-debtor relationship capable of execution arose merely because the arbitral tribunal had valued the tenancy rights. Since the very finding that the tenancy belonged to the partnership remained under challenge before the appellate court, the executing court could not assume the correctness of that finding and proceed to recover money accordingly.
The Court reiterated the settled principle that an executing court cannot go behind the decree, cannot rewrite its terms and cannot grant relief not expressly awarded.
Conclusion
The Bombay High Court held that an executing court cannot execute a stayed portion of an arbitral award indirectly by converting it into a money decree or by attaching the judgment debtor’s personal assets. Since clause (d) of the arbitral award remained stayed by the appellate court, no execution could proceed in respect of that direction.
The execution application was disposed of, with liberty to the decree holder to institute fresh execution proceedings if the pending appeal is dismissed or if the stay order is vacated.
Case Details
Case: Surinder Kumar Banga v. Sucheeta Kedarnath Sethi
Court: Bombay High Court (Original Side)
Case Number: Commercial Execution Application (L) No. 2701 of 2018
Judge: Justice Sandeep V. Marne
Date: 4 August 2026
Result: Execution application disposed of. The Court held that the stayed portion of the arbitral award could not be executed or converted into a money decree. Liberty was granted to file a fresh execution application after dismissal of the pending appeal or vacation of the stay order.
