Indo Engineering Works vs Rashtriya Ispat Nigam Ltd
2021 Latest Caselaw 2434 AP

               THE HON'BLE SRI JUSTICE C. PRAVEEN KUMAR
                                  AND
               THE HON'BLE SRI JUSTICE B.KRISHNA MOHAN

         CIVIL REVISION PETITION Nos.489 AND 427 OF 2021


COMMON ORDER : (per Hon'ble Sri Justice B. Krishna Mohan)

CRP No.489 of 20201 :


      This Civil Revision Petition arises against the Order in I.A.No.222

of 2019 in C.A.O.P.No.12 of 2019 on the file of the Special Judge for

Trial and Disposal of Commercial Disputes, Visakhapatnam dated

20.12.2019 allowing the petitioner to with draw 25% of the deposited

amount out of 75% of the awarded amount deposited in the Court

without furnishing any security and the remaining amount to be

withdrawn on furnishing bank guarantee with an undertaking to repay

the said withdrawal amount subject to outcome of the Judgment and

Decree in CAOP No.12 of 2019 pending before the trial Court.


2.    Heard the learned counsel for the petitioner and the learned

counsel for the respondent No.1.

3. The petitioner herein is the petitioner in the interlocutory

application and the 1st respondent in the CAOP No.12 of 2019 before the

trial Court. The respondents herein are the respondents in the

interlocutory application and the 1st respondent herein is the petitioner

in CAOP No.12 of 2019 before the Court below.

4. The 2nd respondent herein is only the proforma party.

                                2                           CPK, J & BKM, J
                                                     CRP No.489 & 427 of 2021

5. It is the case of the petitioner herein that it has filed I.A.No.222

of 2019 in CAOP NO.12 of 2019 on the file of the Special Judge for Trial

and Disposal of Commercial Disputes, Visakhapatnam under Section 19

of Micro, Small and Medium Enterprises Development Act, 2006 R/W

Section 151 of C.P.C., seeking an order of payment of Rs.1,85,33,990.86

ps. (Rupees one Crore eighty five lakhs thirty three thousand nine

hundred ninety and eighty six paise only) to the credit of its current

account No.32282344011 of State Bank of India, Dwarakanagar Branch,

Visakhapatnam pending disposal of the main application of the 1st

respondent herein in CAOP No.12 of 2019 filed under Section 34 of the

Arbitration and Conciliation Act, 1996. The petitioner herein averred

that the 1st respondent herein filed the above said CAOP before the trial

Court to set aside the award passed by the 2nd respondent herein in the

proceedings No.21C/IFC/12926 dated 22.11.2018 and the same is

pending. While so, the trial Court directed the 1st respondent to

deposit 75% of the awarded amount before 30.07.2019 vide its Order in

I.A.No.01 of 2019 in CAOP No.12 of 2019. Accordingly, the

1st respondent herein has deposited initially an amount of

Rs.1,63,16,833.86 ps (Rupees One Crore sixty three lakh sixteen

thousand eight hundred thirty three and eight six paise only) purported

to be an equivalent amount for the 75% of the awarded amount. Since

it is not an equivalent to the 75% of the awarded amount, the petitioner

herein raised the said objection claiming the balance amount of

Rs. 22,70,157/- (Rupees Twenty two lakh seventy thousand one hundred

and fifty seven only) to be deposited by the 1st respondent herein and 3 CPK, J & BKM, J CRP No.489 & 427 of 2021

the same was considered and directed it to be paid a sum of

Rs.22,17,157/- instead of Rs.22,70,157/- by the trial Court in it's order.

Then the 1st respondent herein deposited a further sum of

Rs.22,70,157/-. With that a total sum of Rs.1,85,33,990.86 paise is

lying with the credit of the trial Court, instead of Rs.1,85,86,990.20

paise towards an equivalent amount of 75% of the awarded amount

payable by the 1st respondent herein. The deposit of 75% of the

awarded amount is a condition precedent to maintain an application

under Section 34 of the Arbitration and Conciliation Act. Hence it has

deposited the above said amount in CAOP No.12 of 2019 before the trial

Court. It is further averred that as the petitioner herein is also entitled

for the interest amount as per the award till its realization under the

Micro, Small and Medium Enterprises Development Act, it has prayed

through the above said I.A., before the trial Court seeking to pass an

order of depositing of Rs.1,85,33,990.86 (Rupees One crore eighty five

lakh thirty three thousand nine hundred ninety and eighty six paise

only) to the credit of the petitioner's account pending disposal of the

main CAOP No.12 of 2019 of the trial Court.

6. The 1st respondent herein contested the said application before

the Court below contending that the said petition is not maintainable

either under law or on facts and the 1st respondent has already

deposited 75% of the awarded amount before the trial Court in due

compliance of the Orders of the said Court, the petitioner has already

received the entire amount due to it for the works done as agreed and

the award passed by the 2nd respondent herein/the arbitrator is in 4 CPK, J & BKM, J CRP No.489 & 427 of 2021

correct and the interest awarded by it is without any principal due

there under and without jurisdiction. Hence, the 1st respondent herein

was constrained to file an application under Section 34 of the

Arbitration and Conciliation Act, which is pending in CAOP No.12 of 2019

on the file of the Special Judge for Trial and disposal of Commercial

Disputes, Visakhapatnam. Since the 1st respondent herein has got a very

case to succeed in the main application, the above said I.A., filed by

the petitioner herein cannot be ordered as it becomes difficult to

realise the huge amounts from the petitioner herein, in the event of

allowing the CAOP No.12 of 2019 by the said Court. Hence, sought for

dismissal of the above said I.A.

7. By considering the rival contentions of both the sides, the trial

Court passed a detailed order in I.A.No.222 of 2019 in CAOP No.12 of

2019 dated 20.12.2019 and the operative portion of the same is as

follows :

"In the result, the petition filed by the petitioner is allowed. The petitioner is permitted to withdraw 25% of the deposited amount out of 75% lying in the Court without furnishing any security and the remaining amount on furnishing bank guarantee. The petitioner is liable to repay the said withdrawal amount to the respondent if the respondent has succeeded in the main application filed under Section 34 of Arbitration and Conciliation Act i.e., CAOP 12 of 2019 which is pending on the file of this Court. There shall be no order as to costs."

                                   5                           CPK, J & BKM, J
                                                        CRP No.489 & 427 of 2021

8. Aggrieved by the same, the petitioner herein filed the above said

Civil Revision Petition.

9. The learned counsel for the petitioner contends that imposing

a condition to withdraw the total 75% of the deposited amount by

furnishing a bank guarantee as per the orders of the trial Court is

onerous and the petitioner herein cannot comply with the said condition

as it is a small scale unit. The trial Court ought to have seen the

"undertaking" given by the petitioner herein and as such it should have

allowed the petitioner to withdraw the total deposited amount without

furnishing any security.

10. On the other hand, the learned counsel appearing for the 1st

respondent contended that the 1st respondent has got a good case in the

pending CAOP No.12 of 2019 before the trial Court and it has got all fair

chances of success. In the event of succeeding the same it would be

difficult for the first respondent herein to recover the amounts from the

petitioner herein if no security is furnished by them. However, agreed

for withdrawal of the deposited amount with furnishing third party

security and in terms of the undertaking given by the petitioner herein

before the trial Court.

11. On perusal of the Order of the trial Court and the material

available on record, it is to be seen that the 2nd respondent herein

passed an award in the proceedings No.21C/IFC/12926 dated

22.11/2018 directing the 1st respondent herein to pay an amount of

Rs.2,17,55,778.48 ps (Rupees Two crores seventeen lakh fifty five 6 CPK, J & BKM, J CRP No.489 & 427 of 2021

thousand seven hundred seventy eight and forty eight paise only) under

the provisions of Micro, Small Medium Enterprises Development Act,

2006. As stated supra, questioning the same, the 1st respondent herein

filed CAOP No.12 of 2019 on the file of the Special Judge for Trial and

Disposal of Commercial Disputes, Visakhapatnam under Section 34 of

Arbitration and Conciliation Act, 1996 and as per the orders of the trial

Court, the 1st respondent herein deposited an amount of

Rs.1,85,33,990.86 paise, as against the claim of Rs.1,85,86,990.20 paise

towards 75% of the awarded amount to the credit of the CAOP No.12 of

2019 before the Court below for entertaining the said O.P.

12. Now the issue left over for consideration is whether to allow the

petitioner to withdraw the above said deposited amount by furnishing

security or without any security? The same is resolved as hereunder.

13. In the result, the order of the trial Court dated 20.12.2019 is

modified as follows :

"The petitioner herein is permitted to withdraw the 75% of the awarded amount deposited by the 1st respondent herein in the Court below through its current account No.32282344011 of the State Bank of India, Dwarakanagar Branch, Visakhapatnam subject to certain conditions:

1) Out of the amount so deposited 25% of the amount, if not already withdrawn, be permitted to be withdrawn without furnishing any security.

2) The remaining 50% of the amount so deposited may be permitted to be withdrawn on furnishing third party security.

                                7                          CPK, J & BKM, J
                                                    CRP No.489 & 427 of 2021

3) The withdrawals so made shall be subject to the outcome of CAOP No.12 of 2019 on the file of the Special Judge for Trial and Disposal of Commercial Disputes, Visakhapatnam.

4) Further, the withdrawal of Rs.1,85,33,990.86 ps (Rupees One crore eighty five lakh thirty three thousand nine hundred ninety and eighty six paise only) shall be with an understanding that the petitioner would repay the said amount subject to the final orders in CAOP No.12 of 2019.

5) The third party security shall be furnished to the satisfaction of the trial court.

6) The properties so furnished as security shall be accompanied with a valuation certificate issued by the concerned officer of the Sub- Registrar's Office and the genuinity of the documents so furnished shall be accompanied with the certificate issued by the MRO."

14. Accordingly, this Civil Revision Petition is disposed of. There shall

be no order as to costs.

As a sequel, miscellaneous petitions, if any pending in this case,

shall stand closed.

CRP No.427 of 20201 :

15. In view of the orders passed in Civil Revision Petition No.489 of

2021 no further orders are necessary in the connected Civil Revision

Petition No.427 of 2021.

                                  8                         CPK, J & BKM, J
                                                     CRP No.489 & 427 of 2021

Accordingly, this Civil Revision Petition is dismissed, with no

costs.

As a sequel, miscellaneous petitions, if any pending in this case,

shall stand closed.

________________________ JUSTICE C. PRAVEEN KUMAR

________________________ JUSTICE B. KRISHNA MOHAN

July 16th, 2021 Yvk