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Arbitration and Conciliation Act, 1996; Ss. 35-36/Presidency Towns-Insolvency Act, 1909; S. 9 and 9(2): Arbitration award-Nature of-Issuance of an insolvency notice in pursuance of an award-Correctness of-Held: Since 1909 Act is a statute weighed down with grave consequence of civil death for a person adjudged as an insolvent, it has to be construed strictly-Since an arbitration is not an adjudication, an award is not a decree/order for payment-Therefore, it could not be enforced as a decree-Issuance of Notice under the Insolvency Act is fraught with serious consequences-Such a notice, therefore, could be issued in pursuance of decree/order for payment of money passed by a Court/Judicial organ established for dispensation of justice-Notice under 1909 Act is not a mode of enforcing debt-Enforcement could be done in terms of provisions of CPC-No insolvency notice could be issued under Section 9(2) of the 1909 Act on the basis of an Arbitration Award-Hence, notice so issued and order passed by the Division Bench of the High Court in Notice of motion set aside-Code of Civil Procedure, 1908-S. 2(2) and 2(14)-Indian Arbitration Act, 1899-Ss. 4(a), 11 & 15. Words and Phrases: ‘Decree’, ‘order’ and ‘an award’-Distinction between. ‘Courts’, ‘tribunal’ and ‘arbitrator’-Distinction between. Words ‘Litigation’, ‘as if-Meaning of. The questions which arose for determination in this appeal were as to whether an arbitration award is a “decree” for the purpose of section 9 of the Presidency Towns Insolvency Act, 1909 and as to whether an insolvency notice could be issued under section 9(2) of the 1909 Act in pursuance of an arbitration award. Appellants contended that the Presidency Towns Insolvency Act (PTI Act) is a statute fraught with the grave consequence of ‘civil death’ for a person sought to be adjudged an insolvent, therefore, it has to be construed strictly; that it is impermissible to enlarge or restrict the language of the Act having regard to supposed notions of convenience, equity or justice; that the Indian Arbitration Act, 1899 clearly draws the distinction between Courts and Arbitrators; that only for the purpose of enforcement of the award, it is treated as if it were a decree of the Court; that issuance of a notice under the Insolvency or Bankruptcy statutes is not a mode of enforcement of a decree; that it is settled law that where the arbitration is governed by the Arbitration Act, 1899, the Second Schedule will not apply thereto; that PTI Act does not define ‘decree’ or ‘order’ for the simple reason that the meaning of these terms had been well-known since the enactment of Civil Procedure Code; that the words ‘suit or other proceeding in which the decree or order was made’ mean a suit in which a decree is made or a proceeding under the CPC which results in an order by a Civil Court which is not a decree; that the word ‘proceeding’ does not refer to arbitrations because they do not result in an ‘order’ but an ‘award’, much less an order of a Civil Court; that the ‘proceeding’ means a proceeding such as appellate or execution proceedings or applications under the CPC during the pendency of the suit or appeal; that the words ‘or other proceedings’ were added not for covering arbitrations but by way of abundant caution to make it clear that other proceedings in relation to or arising out of suits were to be included; that “Litigation” has been held to mean “a legal action, including all proceedings therein, initiated in a court of law”; that Arbitrators are not tribunals set up by the State to deal with special matters as they are not part of the judiciary exercising the judicial power of the State; that the legislative intendment was that only if a debt found due by the Courts and was not paid in spite of notice, it would amount to an act of insolvency; that the Legislatures never contemplated that a mere award given by persons chosen by parties to resolve their disputes should lead to an act of insolvency; that it is impermissible to substitute the word ‘Court’ with ‘arbitrators’ and the words ‘decree’ or ‘order'; that the Insolency Notice shall be in Form 1-B; that Form 1-B unambiguously points to the fact that the decree or order has been obtained from a Court in a suit or proceeding; that since the Parliament has amended the Act of 1909 in 1978 on the lines of the Bombay Amendment, it has expressly provided that the Notice ‘shall’ be in the prescribed form; and that there is no room left for the argument that variations according to circumstances can bring in arbitrators and awards when the form uses the words Court, decree and order. Respondents submitted that if an Award rendered under the Arbitration and Conciliation Act, 1996 is not challenged within the requisite period, the same becomes final and binding as provided under Section 35 of the Act, thereafter, the same can be enforced as a Decree as it is as binding and conclusive as provided under Section 36 of the Act; that there exists no distinction between an Award and a Decree, in view thereof, there is no impediment in taking out Insolvency Notice as contemplated under Section 9(2) of the Presidency Towns Insolvency Act; that the provisions of Section 9(2) to 9(5) of the PTI Act which are brought in by the amending Act of 1978 in the Presidency Towns Insolvency Act have to be viewed in the light of the statement of objects and reasons; that an Insolvency Notice by itself does not lead to the adjudication of the Debtor as Insolvent but the non-compliance thereof only results in an act of Insolvency, which enable the creditor to file an Insolvency Petition against the Debtor for having him adjudicated Insolvent; that any order, which has become final and enforceable, irrespective of whether passed by any Court, judicial authority, quasi-judicial authority, Tribunal etc. could be the basis of an Insolvency Notice under Section 9(2) of the said Act; that in Section 9(1) clauses (c) and (h), the legislature has used the phraseology “Decree of any Court” in Section 9(2), the legislature has consciously omitted the prefix “of Court” and has added the words “or Order”. Thus the legislative intent being to make it necessary to have a Decree of Court for the purpose of conferring Act of Insolvency under Clause (e) and (h) of Section 9(1) of the said Act, that when two words of different import are used in a statute in two consecutive provisions, it would be difficult to maintain that they are used in the same sequence; that it will be doing injury/offence to the legislative intent if even for the purpose of taking out Insolvency Notice under Section 9(2) of the said Act “a Decree of Court” is made necessary; and that it will be a misconception to borrow the definition of “Decree” or “Order” from the provisions of Civil Procedure Code, while interpreting and giving effect to the provisions of PTI Act, in particular Sections 9(2) to (5) of the Act.

Mumbai.HighCourt.1

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CASE NO.:
Appeal (civil) 4130 of 2006

PETITIONER:
Paramjeet Singh Patheja 

RESPONDENT:
ICDS Ltd. 

DATE OF JUDGMENT: 31/10/2006

BENCH:
Dr. AR. Lakshmanan & Lokeshwar Singh Panta

JUDGMENT:
J U D G M E N T

Dr. AR. Lakshmanan, J.

This appeal was filed against the impugned interlocutory 
judgment and order dated 19.3.2003 passed in Notice of 
Motion No. 72/2002 in Notice No. 180 of 2001 by the High 
Court of Judicature at Bombay whereby the reference made by 
the learned single Judge with regard to the question of law 
was answered against the appellant herein.

The appellant herein is Paramjeet Singh 
Patheja(guarantor), judgment debtor and the respondent is 
ICDS Ltd, a Company incorporated under the provisions of the 
Companies Act, 1956. 
On 30.10.1998 the said company was registered with the 
Board of Industrial Financial Reconstruction (BIFR) under the 
provisions of the Sick Industrial Companies (Special 
provisions) Act, 1995. The appellant was a party to arbitration 
proceedings initiated by the respondents to recover amounts 
alleged to be due and payable from one Patheja Forgings and 
Auto Parts Manufactures Ltd. (hereinafter referred to as the 
'company'). The appellant was sought to be sued in his 
purported capacity as guarantor of the dues of the said 
company. 
On 09.03.2000, a letter was sent informing the 
Arbitrators that the company has been registered under 
section 15 of the Sick Industrial Companies (Special 
provisions) Act, 1995.
An Award was rendered therein on 26th June 2000 by the 
Arbitrator awarding Rs.3,81,58,821.47. However, according to 
the appellant, no copy of the Award was served on the 
appellant.
On 16.01.2002, Insolvency notice was issued under 
section 9(2) of the Presidency Town Insolvency Act, 1909 
(PTIA) on the basis of the Arbitration Award. Section 9(2) 
provides that a debtor commits an act of insolvency if a 
creditor who has obtained a "decree or order" against him for 
the payment of money issues him a notice in the prescribed 
form to pay the amount and the debtor fails to do so within 
the time specified in the notice. The appellant filed a Notice of 
Motion in the High Court challenging the said notice, inter 
alia, on the ground that an Award is neither a decree nor an 
order for the purpose of the provisions of the Insolvency Act 
and that no notice can be issued under Section 9(2) on the 
basis of an award. This contention has been upheld in the 
case of Srivastava v. K.K. Modi Investments and Financial 
Services, 2002 (4) Mh.L.J.281, by the Bombay High Court 
(J.A. Patil,J.).
Order of BIFR rejecting the reference of Company was 
passed on 05.04.2002. On 14.06.2002, Insolvency notice was 
served on the appellant. 
An appeal filed by the said Company is presently under 
consideration by the Appellate Authority on Industrial and 
Financial Reconstruction ('AAIFR').
The appellant filed a Notice of Motion No.72 of 2002 in 
the High Court challenging the Insolvency Notice dated 16th 
January, 2002. When the above Notice of Motion came up for 
hearing the Learned Single Judge (Dr. Chandrachud,J.) 
hearing the same differed with the view expressed by the High 
Court (J.A. Patil,J.) in the matter of Srivastava v. K.K. Modi 
Investments and Financial Services (Supra) on 14.10.2002 
and referred the question as to whether an insolvency notice 
may be issued under Section 9(2) of the Insolvency Act on the 
basis of an Award for reconsideration by a Division Bench. 
The Division Bench answered the reference in the 
affirmative on 19.03.2003 and held that an award is a "decree" 
for the purpose of section 9 of the Insolvency Act and that an 
insolvency notice may therefore be issued on the basis of an 
award passed by an arbitrator.
Against this order of the High Court this Appeal has been 
filed in this Court. 
The substantial questions of law of paramount 
importance to be decided by this court are:
i. Whether an arbitration award is a "decree" for the 
purpose of section 9 of the Presidency Towns 
Insolvency Act, 1909?
ii. Whether an insolvency notice can be issued 
under section 9(2) of the Presidency Towns 
Insolvency Act, 1909 on the basis of an 
arbitration award?
Counsel for both parties submitted their case at length. 
Mr. V.A. Bobde, learned senior advocate appeared for the 
appellant and Mr. L. Nageshwar Rao, learned senior counsel 
appeared for the respondent.
Mr. V.A. Bobde, learned senior advocate, appearing for 
the appellants submitted that;
a) The Presidency Towns Insolvency Act, 1909 is a 
statute fraught with the grave consequence of 'civil death' for a 
person sought to be adjudged an insolvent. The Act has to be 
construed strictly; it is impermissible to enlarge or restrict the 
language having regard to supposed notions of convenience, 
equity or justice.
b) The insolvency law for Presidency-Towns was enacted 
in 1909 when the Civil Procedure Code, 1908 had recently 
been put on the statute book. At that time, the Arbitration 
Act, 1899 was in force. It was clearly known to the law 
makers what is a 'decree', what is an 'order' and what is an 
'award'. It was equally known that there is a fundamental 
difference between 'Courts' and 'arbitrators'  that Courts 
constitute the judiciary and exercise the judicial power of the 
State whereas arbitrators are persons chosen by parties to a 
contract to resolve their disputes.
c) The Indian Arbitration Act, 1899 clearly draws the 
distinction between Courts and Arbitrators. The preamble of 
the Act shows that it is an Act for dealing with 'arbitration by 
agreement without the intervention of a Court of Justice'. 
Section 4(a) defines 'Court' and various sections deal with the 
powers of the Court. Section 11 provides for the making of an 
'award'. Section 15 provides for its enforcement. It was 
submitted that from a plain reading of the provision it is 
evident that only for the purpose of enforcement of the award, 
it is treated as if it were a decree of the Court. 

On a plain reading of the above provision, it is apparent 
that only for the purpose of enforcement of the award, it is 
treated as if it were a decree of the Court. The only result is 
that for enforcement, i.e. execution, the provisions of the CPC 
may be resorted to. Section 15 does not provide that an award 
shall be deemed to be a decree for all purposes under all laws, 
past or future, passed by any legislature. Learned senior 
counsel referred to various decisions of this court in support of 
this contention.
 d) Mr. Bobde, further submitted that, it was decided 
long ago in 1907 and has never been doubted since then that 
issuance of a notice under the Insolvency or Bankruptcy 
statutes is not a mode of enforcement of a decree in the In re 
A Bankruptcy Notice (1907) 1 KB 478. A judgment obtained 
in pursuance of an order purporting to be made under the 
Arbitration Act, 1889, to enforce an award on a submission by 
entering judgment in accordance therewith, is not a final 
judgment in an action upon which a bankruptcy notice can be 
founded within section 4, sub-section 1(g), of the Bankruptcy 
Act, 1883. Per Vaughan Williams and Fletcher Moulton L.JJ., 
"the Court has no jurisdiction under Section 12 of the 
Arbitration Act, 1889 which provides for the enforcement of an 
award on a submission in the same manner as if it were a 
judgment, to order judgment to be entered in accordance with 
the award."
Per Fletcher Moulton L.J., "an application for a 
bankruptcy notice is not a method of enforcing an award 
within Section 12 of the Arbitration Act, 1889." 
e) Section 325 of the CPC of 1859 provides that 'the 
Court shall proceed to pass judgment according to the 
awardand upon the judgment which shall be so given, 
decree shall follow and shall be carried into execution in the 
same manner as other decrees of the Court. Section 522 of 
the CPC of 1882 is in almost similar terms. Ghulam Khan vs. 
Muhammad (1901) 29 Calcutta Series 167 at 173. It will be 
convenient at the outset to set out the two sections, 
namely,325 of Act VIII of 1859 and 522 of Act XIV of 1882, in 
extense, and in juxtaposition:
"325. If the Court shall not see cause to remit the 
award or any of the matters referred to arbitration for 
reconsideration in manner aforesaid, and if no application 
shall have been made to set aside the award, or if the Court 
shall have refused such application, the Court shall, proceed 
to pass judgment according to the award or according to its 
own opinion on the special case, if the award shall have been 
submitted to it in the form of a special case; and upon the 
judgment which shall be so given decree shall follow and 
shall be carried into execution in the same manner as other 
decrees of the Court. In every case in which judgment shall 
be given according to the award, the judgment shall be 
final."

"522. If the Court sees no cause to remit the award or 
any of the matters referred to arbitration for reconsideration 
in manner aforesaid, and if no application has been made to 
set aside the award, or if the Court has refused such 
application, the Court shall, after the time for making such 
application has expired, proceed to give judgment according 
to the award, or if the award has been submitted to it in the 
form of a special case, according to its own opinion on such 
case.

Upon the judgment so given a decree shall follow, and 
shall be enforced in manner provided in this Code for the 
execution of decrees. No appeal shall lie from such decree 
except in so far as the decree is in excess of, or not in 
accordance with the award."

 f) Since the Arbitration Act, 1899 made a departure 
from the above position in the case of arbitration by agreement 
without the intervention of Court, Section 89 of the CPC of 
1908 provided as follows:
 "89. Save as otherwise provided by the Arbitration Act, 
1899, or by any other law for the time being in force, all 
references to arbitration, whether by an order in a suit or 
otherwise, and all proceedings shall be governed by the 
provisions contained in Schedule 2." (Dinkarrai vs. 
Yeshwantrai AIR 1930 Bombay 98 at 101.) 

g) The second Schedule provided for three types of 
cases: Arbitration in Suit, from Clauses 1 to 16, Order of 
reference on agreements to refer from Clauses 17 to 19 and 
Arbitration without the intervention of Court, from Clauses 20 
to 23. Clause 16 of the First part and Clause 21 of the Third 
part provide for the Court to 'pronounce judgment according 
to the award..decree shall follow'.
h) It is settled law that where the arbitration is 
governed by the Arbitration Act, 1899, the Second Schedule 
will not apply thereto  Dinkarrai's case(supra). Hence, in 
the case of arbitration on agreement without the intervention 
of the Court, Section 15 of the Arbitration Act of 1899 will 
apply and there is no requirement that a Court must 
pronounce judgment according to the award and that decree 
shall follow. Under Section 15, the award itself is enforceable 
'as if' it were a decree; it does not become a decree.
 i) The Act of 1909 does not define 'decree' or 'order' for 
the simple reason that the meaning of these terms had been 
well-known since the CPC of 1859 and 1882 and had been 
again defined about one year ago in CPC of 1908. Learned 
counsel submitted that there are other indicators to show that 
an award of arbitrators was never intended to be 
comprehended in the meaning of the terms 'decree' or 'order'. 
Thus as understood from 1909, the Insolvency Act dealt only 
with debtors who had suffered decrees by any Court for the 
payment of money.
 j) When the Bombay Amendment came into force on 
19.6.1939 by Bombay Act No. 51 of 1948, clause (i) was added 
to Section 9. That clause again speaks of a 'decree' and 
introduces the word 'order'. After so many years of the CPC 
being in force the Bombay Legislature knew the meaning of 
'decree' and 'order' and used those terms as understood under 
the CPC. The words 'the execution of which is not stayed' 
point clearly to the fact that decree or order mean those 
passed by a Court for it is only under CPC that an appellate 
Court or executing Court can stay the execution of a decree or 
order. These words are inappropriate for and inapplicable to 
awards under the Indian Arbitration Act of 1899 or the 
Arbitration and Conciliation Act, 1996, under which the 
Awards were straightaway enforceable as if they were decrees 
of Court. Moreover, so far the Arbitration Act of 1940 is 
concerned, the award itself acquires force only after the Court 
pronounces judgment and passes a decree under Section 17. 
 k) The words 'suit or other proceeding in which the 
decree or order was made' mean a suit in which a decree is 
made or a proceeding under the CPC which results in an order 
by a Civil Court which is not a decree. The word 'proceeding' 
does not refer to arbitrations because they do not result in an 
'order' but an 'award', much less an order of a Civil Court as 
defined in Section 2(14) of the CPC. 'Proceeding' means a 
proceeding such appellate or execution proceedings or 
applications under the CPC during the pendency of the suit or 
appeal.
l) The words 'or other proceedings' were added not for 
covering arbitrations but by way of abundant caution to make 
it clear that other proceedings in relation to or arising out of 
suits were to be included. This Court has held that: 
 ".the word 'suit' cannot be construed in the 
narrow sense of meaning only the suit and not 
appeal . and the word 'suit' will include such 
appellate proceedings ."

m) The words 'litigant', 'money decree', judgment-
debtor', 'decretal amount' and 'decree-holder' plainly show that 
Parliament intended to deal with litigants who do not pay 
amounts decreed by Civil Courts. There is no reference at all 
to arbitrations and awards in the Statement of Objects and 
Reasons and in sub-sections (2) to (5) of Section 9, which were 
introduced in 1978 by Parliament.
n) "Litigation" has been held to mean "a legal action, 
including all proceedings therein, initiated in a court of law". 
Obviously therefore Parliament had in mind debts due to 
'litigants' i.e. debts due by reason of decrees of Courts. It is 
well settled that Courts, unlike arbitrators or arbitral 
tribunals, are the third great organ under the Constitution: 
legislative, executive and judicial. Courts are institutions set 
up by the State in the exercise of the judicial power of the 
State will be seen from the cases mentioned hereinbelow:
o) Arbitrators are persons chosen by disputants to be 
their judges. Arbitrators are not tribunals set up by the State 
to deal with special matters. They are not set up by the State 
at all but by the parties to a contract. They do not deal with 
special matters; they deal with any matter referred to them 
under the arbitration clause. They are not part of the 
judiciary exercising the judicial power of the State. In this 
connection, learned senior counsel referred to the following 
observation of Anthony Walton in his Preface to Russell on 
Arbitration, 20th Ed."
"Arbitration has its center the stone that the builders of the 
Courts rejected. You can choose your own judge."
p) It is, therefore, abundantly clear that the legislative 
intendment was that only if a debt found due by the Courts in 
an action contested according to the rules and principles that 
govern Courts, was not paid in spite of notice; it would 
amount to an act of insolvency. The Legislatures never 
contemplated that a mere award given by persons chosen by 
parties to resolve their disputes i.e. persons, who are outside 
the ordinary hierarchy of courts of civil judicature, should lead 
to an act of insolvency.
 q) It is noteworthy that Section 112 of the Bombay 
Insolvency Rules, 1910, empowers the three Presidency-Town 
High Courts to frame Rules. In the exercise of this power 
Rules were framed by the Bombay High Court in 1910. After 
the Bombay Amendment to the act w.e.f. 1939 by introduction 
of clause (i) in Section 9, Rule 52A and Form 1-B were added 
by the Bombay High Court.
 r) Rule 52 A(1) uses the words 'certified copy of the 
decree or order'. It is plain that certified copies are given only 
by Courts or statutory authorities. Arbitrators only submit 
their award and are not empowered under any law to furnish 
certified copies of the award.
Sub-rule (2) mandates that the Insolvency Notice shall be 
in Form No. 1-B with such variations as the circumstances 
may require. The variations are according to circumstances; it 
is impermissible to substitute the word 'Court' with 
'arbitrators and the words 'decree' or 'order'. Form 1-B 
unambiguously points to the fact that the decree or order has 
been obtained from a Court in a suit or proceeding.
s) Now, that Parliament has amended the Act of 1909 
in 1978 on the lines of the Bombay Amendment, it has 
expressly provided by Section 9(3) that the Notice 'shall' be in 
the prescribed form i.e. prescribed by the Rules. There is no 
room left for the argument that variations according to 
circumstances can bring in arbitrators and awards when the 
form uses the words Court, decree and order. 
In reply to the submissions made by the appellants, 
learned senior advocate, Mr. L. Nageshwar Rao, appearing for 
the respondents submitted:
? If an Award rendered under the Arbitration and 
Conciliation Act, 1996 is not challenged within the 
requisite period, the same becomes final and binding as 
provided under Section 35. Thereafter the same can be 
enforced as a Decree as it is as binding and conclusive as 
provided under Section 36. There is no distinction 
between an Award and a Decree. In view thereof, there is 
no impediment in taking out Insolvency Notice as 
contemplated under Section 9(2) of the Presidency Towns 
Insolvency Act.
? Section 9(1)(a) to (h) of the Presidency Towns Insolvency 
Act, 1909 set out the different acts of Insolvency 
committed by a Debtor which acts of Insolvency would 
form the ground or basis for filing an Insolvency Petition 
against the Debtor under Section 12 of the PTIA for 
having him adjudicated Insolvent. The 1978 Central 
Amendment introduced Section 9(2) to (5). The 
statement of objects and reasons of amending Act of 
1978, inter alia, reads as follows :
 "The main defect of the existing law lies in the absence 
of any adequate powers to compel the production of 
assets. The primary object of the Act of 1948 was the 
protection of debtors; the provision it makes for the 
discovery of the property of Insolvents is treated as of 
secondary importance and has long since been found 
insufficient to prevent fraud. The protection of honest 
debtors should be one of the objects of every 
Insolvency Law, although it is of less importance now 
than it was in 1948, when imprisonment for debt was 
more frequent. But it is equally important in the 
interests of commerce that creditors should not be 
defrauded and that dishonest debtors should not be 
able to make use of insolvency proceedings merely to 
free themselves from their liabilities while preserving 
their assets more or less intact."

The objects thus sought to be achieved is to widen the 
scope for adopting Insolvency proceedings. The provisions of 
Section 9(2) to 9(5) which are brought in by the amending Act 
of 1978 have to be viewed in the light of the statement of 
objects and reasons. Therefore, it is evident that what was 
contemplated was to permit Insolvency Notice being issued 
even on the basis of the Arbitral Tribunal provided the same 
has become final, binding and enforceable.
? The amendment added a new act of Insolvency and in 
effect provided that a Debtor commits an act of Insolvency if 
he fails to comply with the requisitions of an Insolvency 
Notice served upon him by a creditor demanding from him 
(the Debtor) the amounts due under the Decree or Order for 
payment of money, which Decree or Order has attained 
finality and the execution whereof has not been stayed. An 
Insolvency Notice by itself does not lead to the adjudication 
of the Debtor as Insolvent but the non-compliance thereof 
only results in an act of Insolvency, which enable the 
creditor to file an Insolvency Petition against the Debtor for 
having him adjudicated Insolvent. An Insolvency Notice is 
thus only a step in aid for filing the Insolvency Petition and 
the Debtor has opportunity to contest the Insolvency 
Petition by taking up all available defenses.
? Section 9(1) (e) and (h) of the PTIA use the phrase "in 
execution of the Decree of any Court for the payment of 
money". Sections 9(1) (e) and (h) have been in the PTIA 
since originally enacted in the year 1909 and enable a 
Creditor to directly file Insolvency Petition against a debtor. 
When the Legislature enacted the Bombay Amendment (in 
1948) and the Central Amendment in 1979, it had before it 
the express wordings of Sections 9(1) (e) and (h), however a 
conscious departure was made while enacting Sections 9(i) 
and 9A (introduced by the Bombay Amendment). The same 
constitute a complete code and provide for complete 
machinery. The phraseology used therein is:
"Decree or Order for the payment of money being a Decree 
or Order which has become final and the execution 
whereof has not been stayed."

Thus by the amendments, the words "or order" have been 
added, so that even an Order can sustain an Insolvency 
Notice. Similarly the words "of any Court" figuring in Section 
9(1) (e) and (h) are omitted. Thereby the qualification that 
Decree should be "of any Court" has been consciously removed 
and/or omitted. The expression "Decree or Order" in Sections 
9(2) to (5) brought in by the 1978 Central Amendment is not 
restricted to a Decree or Order of any Court. Moreover, 
Section 9(5), which provides for setting aside of Insolvency 
Notice, in sub-clause (a) thereof, again uses the phraseology 
"decree or order", without making it conditional that the same 
should be of the Court. Similarly the said sub-clause also 
uses the words "suit or proceeding" in which the Decree or 
Order was passed. Thus any Decree or Order can sustain an 
Insolvency Notice, irrespective of whether they are of Court or 
any other Authority or Tribunal.
 It was further submitted that, "Decree" in clauses (e) 
and (h) has a different connotation from a "Decree or Order" 
in Section 9(2), and,
(i) Even if an Award is held not to be a Decree, it is still 
an Order within the meaning of Section 9(2) of the 
PTIA, which can sustain an Insolvency Notice.
(ii) It is clear from the statement of Objects and Reasons 
behind the PTIA and the Central Amendments thereto 
as also from the decisions reported in AIR 1977 
Bombay 305, 1994(3) B.C.R. 223 that the provisions 
relating to issuance of Insolvency Notice (Sections 9(2) 
to (5) of the PTIA) are an equitable mode of execution 
of a Decree or Order to enable a creditor to recover 
from a Debtor the dues under a Decree or Order and 
upon failure of the Debtor to make payment of the 
amount demanded by the Insolvency Notice within the 
prescribed period, to present an Insolvency Notice 
within the prescribed period, to present an Insolvency 
Petition against the Debtor for having him adjudicated 
Insolvent.

Mr. L.N. Rao invited our attention to the provisions of P.T.I. 
Act, Rules, C.P.C., Arbitration Act of 1899 and 1996 and also 
relied on the following judgments reported in AIR 1956 SC 35 
[The Member, Board of Revenue vs. Arthur Paul Benthall] 
followed in T.B. Guddalli vs. Registrar or Co-op. Societies, 
AIR 1994 Kar. 66 (FB), Oriental Insurance Co. Ltd. vs. 
Hansrajbhai V. Kodala, AIR 2001 SC 1832, Commissioner 
of Income-tax, New Delhi vs. M/s East West Import & 
Export (P) Ltd., Jaipur, AIR 1989 SC 836, M/s B.R. 
Enterprises vs. State of U.P. and Ors., AIR 1999 SC 1867.

The above decisions were cited for the proposition that 
the use of different words in the two provisions is for a 
purpose and if the field of two provisions are to be the same 
the same words would have been used and when two 
provisions use different words the different words used could 
only be to convey different meaning. Arguing further Mr. L.N. 
Rao submitted that the Presidency Towns Insolvency Act does 
not define the term "Decree" or "Order". Therefore, any order, 
which has become final and enforceable, irrespective of 
whether passed by any Court, judicial authority, quasi-judicial 
authority, Tribunal etc. could be the basis of an Insolvency 
Notice under Section 9(2) of the said Act. Since the said Act 
does not define the word "Decree" or "Order", it will be 
offending the legislative intent to borrow the definition of 
"Decree" or "Order" from any other Act or Code. In Section 9(1) 
clauses (c) and (h), the legislature has used the phraseology 
"Decree of any Court" in Section 9(2), the legislature has 
consciously omitted the prefix "of Court" and has added the 
words "or Order". Thus the legislative intent being to make it 
necessary to have a Decree of Court for the purpose of 
conferring Act of Insolvency under Clause (e) and (h) of 
Sections 9(1) of the said Act, whereas Section 9(2) brought in 
by the Amendment Act does not mandate that the Decree 
should be of any Court.
When two words of different import are used in a statute 
in two consecutive provisions, it would be difficult to maintain 
that they are used in the same sequence.
If the intention of the legislature was to provide the same 
provision, nothing would have been easier than to say so. 
When two words of different import are used in a statute in 
two consecutive provisions, it would be difficult to maintain 
that they are used in the same sense, and the conclusion 
must follow that the two different expressions have different 
connotations.
If the legislative intention was not to distinguish, there 
would have been no necessity of expressing the position 
differently. When the situation has been differently expressed 
the legislature must be taken to have intended to express a 
different intention.
The use of different words in the two provisions is for a 
purpose. If the field of two provisions are to be the same, the 
same words would have been used. When the two provisions 
use different words, the different words used could only be to 
convey different meaning. 
Mr. L.N. Rao further submitted that in view of the same, 
the conclusion must follow that the expression "decree or 
order for payment of money" found in Section 9(1)(i) (Bombay 
Amendment of 1948) and also in Section 9(2) (1978 Central 
Amendment) of the said Act is not restricted to a Decree or 
Order "of any Court" as found in Section 9(1)(e). Ordinarily, 
the rule of construction is that the same expression where it 
appears more than once in the same statute, more so in the 
same provisions, must receive the same meaning. It lays 
down that when two words of different import are used in a 
statute in two consecutive provisions, it would be difficult to 
maintain that they are used in the same sequence and the 
conclusion must follow that the expression "decree or order for 
payment of money" found in Section 9(1)(i) and also in Section 
9(2) of the said Act, is not restricted to a decree or order "of 
any Court" as found in Section 9(1)(e).
In view thereof, it will be doing injury/offence to the 
legislative intent if even for the purpose of taking out 
Insolvency Notice under Section 9(2) of the said Act "a Decree 
of Court" is made necessary.
It will be a misconception to borrow the definition of 
"Decree" or "Order" from the provisions of Civil Procedure 
Code, while interpreting and giving effect to the provisions of 
the said Act, in particular Section 9(2) to (5) which constitute a 
self contained code and has been specifically brought in by 
Amending Act of 1978. 
We heard both the senior counsel appearing for the 
appellants and respondents, in extenso. We have carefully 
perused through in detail all the material placed before us.
We are of the view that The Presidency Towns Insolvency 
Act, 1909 is a statute weighed down with the grave 
consequence of 'civil death' for a person sought to be adjudged 
an insolvent and therefore the Act has to be construed strictly. 
The Arbitration Act was in force when the PTIA came into 
operation. Therefore there can be seen that the law makers 
were conscious of what a 'decree', 'order' and an 'award' are. 
Also the fundamental difference between 'Courts' and 
'arbitrators' were also clear as back as in 1909.
Further, The Indian Arbitration Act, 1899 clearly draws 
the distinction between Courts and Arbitrators. The preamble 
of the Act shows that it is an Act for dealing with 'arbitration 
by agreement without the intervention of a Court of Justice'. 
Section 4(a) defines 'Court' and various sections deal with the 
powers of the Court. Section 11 provides for the making of an 
'award'. Section 15 provides for its enforcement. It can 
therefore be observed that it is only for the purpose of 
enforcement of the award, the arbitration award is treated as if 
it were a decree of the Court.
Section 15 reads as under:
"15. Award when filed to be enforceable as a decree (1) An 
award on a submission, on being filed in the Court in 
accordance with the foregoing provisions, shall (unless the 
Court remits it to for reconsideration to the arbitrators or 
umpire, or sets it aside) be enforceable as if it were a decree 
of the Court.
(2) An award may be conditional or in the alternative."

Sections 2(2) and 2(14) of the CPC define what 'decree' and 
'order' mean. For seeing whether a decision or determination 
is a decree or order, it must necessarily fall in the language of 
the definition. Section 2(2) of the CPC defines 'decree' to mean 
"the formal expression of an adjudication which, so far 
as regards the Court expressing it, conclusively 
determines the rights of the parties with regard to any 
of the matters in controversy in the suit and may be 
either preliminary or final. It shall be deemed to 
include the rejection of a plaint and the determination 
of any question within Section 144, but shall not 
include-

(a) any adjudication from which an appeal lies as an 
appeal from an order, or

(b) any order of dismissal for default.

Explanation : A decree is preliminary when further 
proceedings have to be taken before the suit can be 
completely disposed of. It is final when such adjudication 
completely disposes of the suit. It may be partly preliminary 
and partly final."

The words 'Court', 'adjudication' and 'suit' conclusively 
show that only a Court can pass a decree and that too only in 
suit commenced by a plaint and after adjudication of a dispute 
by a judgment pronounced by the Court. It is obvious that an 
arbitrator is not a Court, an arbitration is not an adjudication 
and, therefore, an award is not a decree.
Section 2(14) defines 'order' to mean 
"the formal expression of any decision of a civil 
court which is not a decree;" 

The words 'decision' and 'Civil Court' unambiguously rule 
out an award by arbitrators.
The above view has been consistently taken in decisions 
on Section 15 of the Indian Arbitration Act, 1899 viz. 
Tribhuvandas Kalidas vs. Jiwan Chand 1911(35) Bombay 
196, Manilal vs. The Bharat Spinning & Weaving (35) Bom. 
L.R. 941, Ramshai v. Joylall, AIR 1928 Calcutta 840, 
Ghulam Hussein vs. Shahban AIR 1938 Sindh 220. 
In Ramshai v. Joylall(supra), the Calcutta High Court 
held as follows:
"(a) Presidency Town Insolvency Act, S.9 (e)  Attachment in 
execution of award is not one in executive of a decree.

 Attachment in execution of an award is not 
attachment in the execution of a decree within the meaning 
of S.9(e) for the purpose of creating an act of insolvency: Re. 
Bankruptcy Notice, (1907) 1 K.B. 478, Ref.

(b) Arbitration Act, S.15  Award,

An award is a decree for the purpose of enforcing that 
award only."

In Ghulam Hussein vs. Shahban AIR 1938 Sindh 220, 
the Court observed as follows: 

"Section 9(e) must be strictly construed in favour of 
the debtor to whom the matter of adjudication as an 
insolvent under the Insolvency law is one of vital importance. 
Any inconvenience arising out of such a construction is for 
the Legislature to consider and remedy if they think proper 
by amendment; it is not for the Court to enlarge the meaning 
of the words used by the Legislature. An attachment in 
execution of an award is not an attachment in execution of 
the decree of a Court within the meaning of S.9(e) for the 
purpose of creating an act of Insolvency: AIR 1928 Cal.840 
approved and followed; 35 Bom. 196 relied on."

 ".The words: "In execution of the decree of any 
Court for the payment of money" cannot be extended by 
analogy. They must be extended, if at all, by the Legislature 
and we cannot hold that there has been an act of Insolvency 
when the definition given by the Legislature has not been 
complied with.

These are strong words and strong language, and as I 
have said above the judgment of Rankin C.J. must be treated 
with the greatest respect. The case of Ramsahai vs. Joylall is 
referred to by Sir D. Mulla in his Commentary on the Law of 
Insolvency at P. 94. In para 123 Sir D. Mulla states:

"An award for the payment of money filed in Court 
under S.11 of I.A.A. 1890 is not a 'decree' within the 
meaning of the present clause although it is enforceable 
under that Act as if it were a decree. No Insolvency petition 
can therefore be founded on an attachment or sale in 
execution of an award."

In support of this proposition Sir D. Mulla cites the 
case of Ramasahai v. Joylall (supra). The commentator 
proceeds:

It is therefore for consideration whether Cl.(e) should 
not be amended by adding the words 'or in execution of an 
award for the payment of money.'

Now, it cannot be disputed that Sir D. Mulla as a 
commentator on the Law of Insolvency is universally 
regarded as an authority, and in the course of his 
Commentary on the Law of Insolvency Sir D. Mulla has not 
hesitated in several places to record his respectful dissent 
when he has considered that the judgment of any High Court 
in India is doubtful or incorrect. It is significant that in 
referring to the case in AIR 1928 Cal. 840, the learned 
commentator has not recorded any dissent, but on the 
contrary states that it is for consideration whether Cl.(e) 
should not be amended by adding the words 'or in execution 
of an award for the payment of money.' In this part of his 
commentary Sir D. Mulla has also referred to the case in 35 
Bom 196, where it was held by a Bench of the Bombay High 
Court that an award filed in Court under S.11, Arbitration 
Act, was nothing more than an award although it was 
enforceable as if it were a decree. In that case an application 
had been made under O.21, R.29, for stay of execution of a 
decree. The application was dismissed on the following 
grounds set out in the judgment of Sir Basil Scott C.J.:

Now, such an order can only be made by the Court, if 
there is a suit pending on the part of a person against whom 
a decree has been passed, against the holder of a decree of 
the Court. It appears to me that the petitioner is not a 
holder of a decree of the Courtfor the award, to which 
the applicants seek to give the force of a decree, is nothing 
more than an award, although it is enforceable as if it were a 
decree."

The same view was taken on Section 36 of the 1996 Act 
in Sidharth Srivastava v. K.K. Modi Investment & 
Financial Service P.Ltd. 2002(4) Mah. L.J. 281. It was held 
thus:
"Where the Award in favour of the petitioning creditor came 
to be passed on the basis of the consent terms and not on 
the basis of an adjudication, the Award which has the force 
of decree does not fulfil the essential conditions of decree as 
contemplated by Section 2(2) of the Civil Procedure Code. 
Even though the Award dated 5.9.1997 is enforceable as if it 
were a decree still it is not a decree within the meaning of 
the term as defined in section 2(2) of the Civil Procedure 
Code and, therefore, obtaining of such as Award does not 
fulfil the requisite conditions contemplated by clause (i) of 
section 9(1) of the Presidency Towns Insolvency Act. 
Consequently, on that basis the respondent cannot be said 
to have committed act of insolvency, either under clause (i) of 
sub-section 9(1) or sub-section (2) of section 9 of the Act. AIR 
1928 Cal.840, AIR 1938 Sind 220, AIR 1975 Cal 169 and 
AIR 1976 SC 1503, Ref." 

 It is settled by decisions of this Court that the words 'as 
if' in fact show the distinction between two things and such 
words are used for a limited purpose. They further show that 
a legal fiction must be limited to the purpose for which it was 
created. 
 Section 36 of the Arbitration & Conciliation Act, 1996 
which is in pari materia with Section 15 of the 1899 Act, is 
set out hereinbelow:
"36. Enforcement  Where the time for making an application 
to set aside the arbitral award under Section 34 has expired, 
or such application having been made, it has been refused, 
the award shall be enforced under the Code of Civil Procedure, 
1908 in the same manner as if it were a decree of the Court."

In fact, Section 36 goes further than Section 15 of the 
1899 Act and makes it clear beyond doubt that enforceability 
is only to be under the CPC. It rules out any argument that 
enforceability as a decree can be sought under any other law 
or that initiating insolvency proceeding is a manner of 
enforcing a decree under the CPC.
Therefore the contention of the respondents that, an 
Award rendered under the Arbitration and Conciliation Act, 
1996 if not challenged within the requisite period, the same 
becomes final and binding as provided under Section 35 and 
the same can be enforced as a Decree as it is as binding and 
conclusive as provided under Section 36 and that there is no 
distinction between an Award and a Decree does not hold 
water.
 The PTIA, 1909 does not define 'decree' or 'order' for the 
simple reason that the meaning these terms has been well 
settled since the CPC of 1859 and 1882 and had been again 
defined in CPC of 1908. The other indicators that an award of 
arbitrators is not intended to be a 'decree' or 'order' are:
i) Section 2(a) and (b) define 'creditor' to include a 
decree-holder and a 'debt' to include a judgment-debt 
and 'debtor' to include a judgment-debtor. Secondly
ii) It is quite clear from Section 33 of the CPC that a 
decree, being the formal expression of adjudication by 
a Court, follows only upon pronouncement of 
judgment by the Court. It is equally clear that Courts 
and Judges render judgments; arbitrators only make 
awards. 
iii) Sections 9(e) and (h) put the matter beyond 
controversy by expressly mentioning 'decree of any 
Court for the payment of money'. Thus as enacted in 
1909, the Insolvency Act dealt only with debtors who 
had suffered decrees by any Court for the payment of 
money.
 When the Bombay Amendment came into force on 
19.6.1939 by Bombay Act No. 51 of 1948, clause (i) was added 
to Section 9. Section 9 speaks of a 'decree' and introduces the 
word 'order'. After so many years of the CPC being in force the 
Bombay Legislature knew that meaning of 'decree' and 'order' 
and used those terms as understood under the CPC. 
 The fact that the Bombay Amendment and later the 
Central Amendment intended to refer only to decrees and 
orders as defined in the CPC is clear from the Statement of 
Objects and Reasons of the Central Amendment Act No.28 of 
1978 which introduced subsections (2) to (5) in Section 9. The 
SOR gazetted on 18-03-1978 reads, inter-alia, as under:
 "The difficulties experienced by a litigant in 
India in executing even a simple money decree have 
been commented upon by the Privy Council as well 
as the Law Commission and the Expert Committee on 
Legal Aid. The law Commission in its Third Report 
on the Limitation Act, 1908, has recommended that 
the most effective way of instilling a healthy fear in 
the minds of dishonest judgment-debtor would be to 
enable the Court to adjudicate him an insolvent if he 
does not pay the decretal amount after notice by the 
decree-holder, by specifying a period within which it 
should be paid, on the lines of the amendment made 
to the Presidency-Towns Insolvency Act, 1909 in 
Bombay. This recommendation was reiterated by the 
Law Commission in its Twenty Sixth Report on 
Insolvency Laws.
2. The Expert Committee on Legal Aid was also of 
the view that the above recommendation of the Law 
Commission should be implemented immediately 
without waiting for the enactment of a comprehensive 
law of insolvency.
3. It is, therefore, proposed to amend the 
Presidency  Towns Insolvency Act, 1909, and the 
Provincial Insolvency Act, 1920 to add a new act of 
insolvency, namely, that a debtor has not complied 
with the insolvency notice served on him by a 
creditor, who has obtained a decree or order against 
him for the payment of money, within the period 
specified in the notice. If the amount shown in the 
insolvency notice is not correct, it would be 
invalidated if the debtor gives notice to the creditor, 
disputing the amount. The debtor can, however, 
apply to the Court to have the insolvency notice set 
aside on the ground, among others, that he is entitled 
to have the decree re-opened under any law relating 
to relief of debtedness or that the decree is not 
executable under any such law." 
 The words 'litigant', 'money decree' , judgment-debtor', 
'decretal amount' and 'decree-holder' plainly show that 
Parliament intended to deal with litigants who do not pay 
amounts decreed by Civil Courts. There is no reference at all 
to arbitrations and awards in the Statement of Objects and 
Reasons and in sub-sections (2) to (5) of Section 9, which were 
introduced in 1978 by Parliament.
As already noticed, "Litigation" has been held to mean "a 
legal action, including all proceedings therein, initiated in a 
court of law". Obviously therefore Parliament had in mind 
debts due to 'litigants' i.e. debts due by reason of decrees of 
Courts. It is well settled that Courts, unlike arbitrators or 
arbitral tribunals, are the third great organ under the 
Constitution: legislative, executive and judicial. Courts are 
institutions set up by the State in the exercise of the judicial 
power of the State will be seen from the cases mentioned 
hereinbelow:
 "The expression 'Court' in the context (of Art.136) denotes 
a tribunal constituted by the State as a part of the ordinary 
hierarchy of Courts which are invested with the State's 
inherent judicial powers. A sovereign State discharges 
legislative, executive and judicial function and can legitimately 
claim corresponding powers which are legislative, executive 
and judicial. Under our Constitution, the judicial functions 
and powers of the State are primarily conferred on the 
ordinary courts which have been constituted under its 
relevant provisions. The Constitution recognized a hierarchy 
of Court and to their adjudication are normally entrusted all 
disputes between citizens as well as between citizens and the 
State. These courts can be described as ordinary courts of 
civil judicature. They are governed by their prescribed rules of 
procedure and they deal with questions of fact and law raised 
before them by adopting a process which is described as 
judicial process. The powers which these Courts are judicial 
powers, the functions they discharge are judicial functions 
and the decisions they reach are and pronounce are judicial 
decisions.
In every State there are administrative bodies . But the 
authority to reach decisions conferred on such administrative 
bodies is clearly distinct and separate from the judicial power 
conferred on Courts, and the decisions pronounced by 
administrative bodies are similarly distinct and separate in 
character from judicial decisions pronounced by Courts.
Tribunals occupy a special position of their own under 
the scheme of our Constitution. Special matters are entrusted 
to them and in that sense they share with the Courts one 
common characteristic; both the Courts and the tribunals are 
'constituted by the State and are invested with judicial as 
distinguished from purely administrative or executive 
functions'. The basic and fundamental feature which is 
common to both the Courts and tribunals is that they 
discharge judicial functions and exercise judicial powers 
which inherently vest in a sovereign State."
 "By 'courts' is meant courts of civil judicature and by 
'tribunals' those bodies of men who are appointed to decide 
controversies arising under certain special laws. Among the 
power of the State is the power to decide such controversies. 
This is undoubtedly one of the attributes of the State, and is 
aptly called the judicial power of the State."
"All tribunals are not courts, though all courts are 
tribunals. The word 'courts' is used to designate those 
tribunals which are set up in an organized State for the 
administration of justice"
"It is common knowledge that a 'court' is an agency 
created by the sovereign for the purpose of administering 
justice. It is a place where justice is judicially administered. 
It is a legal entity"
That litigation is therefore very different from arbitration 
is clear. The former is a legal action in a Court of law where 
judges are appointed by the State; the latter is the resolution 
of a dispute between two contracting parties by persons 
chosen by them to be arbitrators. These persons need not 
even necessarily be qualified trained judges or lawyers. This 
distinction is very old and was picturesquely expressed by 
Edmund Davies, J. in these words:
 "Many years age, a top-hatted gentleman used to parade 
outside these law Courts carrying a placard which bore a 
stirring injunction 'Arbitrate  don't Litigate"

Moreover, the position that arbitrators are not Courts is 
quite obvious and this Court noted the position as under in 
two decisions:
 "But the fact that the arbitrator under Section 10A is 
not exactly in the same position as a private arbitrator does 
not mean he is a tribunal under Article 136. Even if some of 
the trappings of the Court are present in his case, he lacks 
the basic, essential and fundamental requisite in that behalf 
because he is not invested with the State's judicial 
power..he is not a Tribunal because the State has not 
invested him with its inherent judicial power and the power 
of adjudication which he exercises is derived by him from the 
agreement between parties.(Engineering Mazdoor Sabha & 
Anr. Vs. Hind Cycles Ltd., AIR 1963 SC 874.) "

"There was no dispute that the arbitrator appointed under 
Section 19(1)(b) [of the Defence of India Act, 1939] was not a 
court.(Collector, Varanasi vs. Gauri Shankar Misra & Ors., 
AIR 1968 SC 384) "

Thus the thrust of submissions made by both the learned 
senior counsel can be summarized as under:
Courts are institutions invested with the judicial power of 
the State to finally adjudicate upon disputes between litigants 
and to make formal and binding orders and decrees. Civil 
Courts pass decrees and orders for payment of money and the 
terms 'decree and order' are defined in the CPC. Arbitrators 
are persons chosen by parties to adjudge their disputes. They 
are not Courts and they do not pass orders or decrees for the 
payment of money; they make awards.
The Insolvency Act of 1909 was passed, and amended by 
the Bombay Amendment of 1939 and also by Parliament in 
1978 when two laws were on the statute book: the Arbitration 
Act, 1899 and the Civil Procedure Code, 1908. Parliament and 
the Bombay Legislature were well aware of the difference 
between awards on the one hand and decrees and orders on 
the other and they chose to eschew the use of the word 'award' 
for the purposes of the Insolvency Act.
Section 15 of the Arbitration Act, 1899 provides for 
'enforcing' the award as if it were a decree. Thus a final 
award, without actually being followed by a decree (as was 
later provided by Section 17 of the Arbitration Act of 1940), 
could be enforced, i.e. executed in the same manner as a 
decree. For this limited purpose of enforcement, the 
provisions of CPC were made available for realizing the money 
awarded. However, the award remained an award and did not 
become a decree either as defined in the CPC and much less 
so far the purposes of an entirely different statute such as the 
Insolvency Act.
Section 36 of the Arbitration and Conciliation Act of 1996 
brings back the same situation as it existed from 1899 to 
1940. Only under the Arbitration Act, 1940, the award was 
required to be made a rule of Court i.e. required a judgment 
followed by a decree of Court.
Issuance of a notice under the Insolvency Act is fraught 
with serious consequences: it is intended to bring about a 
drastic change in the status of the person against whom a 
notice is issued viz. to declare him an insolvent with all the 
attendant disabilities. Therefore, firstly, such a notice was 
intended to be issued only after a regularly constituted court, 
a component of judicial organ established for the dispensation 
of justice, has passed a decree or order for the payment of 
money. Secondly, a notice under the Insolvency Act is not a 
mode of enforcing a debt; enforcement is done by taking steps 
for execution available under the CPC for realizing moneys.
The words "as if" demonstrate that award and decree or 
order are two different things. The legal fiction created is for 
the limited purpose of enforcement as a decree. The fiction is 
not intended to make it a decree for all purposes under all 
statutes, whether State or Central.
For the foregoing discussions we hold :
i) that no insolvency notice can be issued under 
Section 9(2) of the Presidency Towns Insolvency 
Act, 1909 on the basis of an Arbitration Award;
ii) that execution proceedings in respect of the 
award cannot be proceeded with in view of the 
statutory stay under Section 22 of the SICA Act. 
As such, no insolvency notice is liable to be 
issued against the appellant.
iii) Insolvency Notice cannot be issued on an 
Arbitration Award.
iv) An arbitration award is neither a decree nor an 
Order for payment within the meaning of Section 
9(2). The expression "decree" in the Court Fees 
Act, 1870 is liable to be construed with reference 
to its definition in the CPC and held that there 
are essential conditions for a "decree".
(a) that the adjudication must be given in a suit.
(b) That the suit must start with a plaint and 
culminate in a decree, and
(c) That the adjudication must be formal and final 
and must be given by a civil or revenue court.
An award does not satisfy any of the requirements of a 
decree. It is not rendered in a suit nor is an arbitral 
proceeding commenced by the institution of a plaint.
(v) A legal fiction ought not to be extended beyond its 
legitimate field. As such, an award rendered under the 
provisions of the Arbitration Act, 1996 cannot be 
construed to be a "decree" for the purpose of Section 
9(2) of the Insolvency Act.
(vi) An insolvency notice should be in strict 
compliance with the requirements in Section 
9(3) and the Rules made thereunder.
(vii) It is a well established rule that a provision 
must be construed in a manner which would 
give effect to its purpose and to cure the 
mischief in the light of which it was enacted. 
The object of Section 22, in protecting 
guarantors from legal proceedings pending a 
reference to BIFR of the principal debtor, is to 
ensure that a scheme for rehabilitation would 
not be defeated by isolated proceedings adopted 
against the guarantors of a sick company. To 
achieve that purpose, it is imperative that the 
expression "suit" in Section 22 be given its plain 
meaning, namely any proceedings adopted for 
realization of a right vested in a party by law. 
This would clearly include arbitration 
proceedings. 
(viii) In any event, award which is incapable of 
execution and cannot form the basis of an 
insolvency notice.
In the light of the above discussion, we further hold that 
the Insolvency Notice issued under section 9(2) of the P.T.I. 
Act 1909 cannot be sustained on the basis of arbitral award 
which has been passed under the Arbitration & Conciliation 
Act, 1996. We answer the two questions in favour of the 
appellant.
In view of the above, the following two questions viz., 
(a) Whether the award dated 26.6.2000 was ever 
served upon the appellant; and
(b) Whether the Arbitration proceedings and 
resulting award are null and void in view of the 
Sick Industrial Companies (Special Provisions) 
Act, 1995
may not have to be decided by the High Court in view of the 
order passed in civil appeal by this Court.
 The Civil Appeal stands allowed. The order dated 
19.3.2003 passed by the Division Bench of the High Court of 
Bombay in Notice of Motion No.72/2002, Notice No. 
N/180/2001 is set aside. No costs.
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