Andhra Pradesh High Court - Amravati
M/S.Bharat Heavy Electricals Ltd., vs M/S.Ruksan Engineers Pvt. Ltd., on 13 August, 2024
HIGH COURT OF ANDHRA PRADESH:: AMARAVATI
MAIN CASE NO.: CRP.No.1786 of 2024
PROCEEDING SHEET
Sl. Date ORDER OFFICE
No.
NOTE
4. 13.08.2024 RNT, J & VN, J
1. Heard Sri P.Rajasekhar, learned counsel
appearing for the petitioner.
2. The petitioner is the judgment debtor and
the respondent is the decree holder.
3. There is an Arbitral Award dated 25.08.2011
passed by the sole Arbitrator in favour of the
respondent/decree holder in A.O.P.No.1451 of
2011, which commenced on 01.06.2009. For
setting aside the same, the proceedings under
Section 34 of the Arbitration and Conciliation Act
were initiated by the petitioner. But, said
objections were rejected on 29.08.2019. The
Award attained finality. For execution of the
Award, C.E.P.No.12 of 2020 was filed in
AOP.No.1451 of 2011. The petitioner filed
objections, which were rejected by the order dated
07.12.2023 by the Special Judge for Trial and
Disposal of Commercial Disputes, Visakhapatnam.
Challenging the said order, dated 07.12.2023 the
present Civil Revision Petition under Article 227 of
the Constitution of India has been filed.
4. Learned counsel for the petitioner submits
that the Arbitral Award cannot be executed in the
present execution proceedings. He submits that
Bharat Heavy Electrical Limited (Heavy Plates and
Vessels Plant) (BHPV), Visakhapatnam was
declared as Sick Industrial Company by the
proceedings dated 06.10.2005, by the Board for
Industrial and Financial Reconstruction (BIFR)
under the Sick Industrial Companies Act, 1985.
The Draft Resolution Scheme (DRS) for revival of
the BHPV was published under the proceedings
dated 23.07.2010. The petitioner BHEL Limited is
the transferee company from BHPV Limited
pursuant to merger under Modified Sanctioned
Scheme approved by BIFR under Section 18 of
the SICA Act, 1985. He submits that in arbitration
proceedings, the aforesaid proceedings under
SICA were not informed. Even in the proceedings
under SICA, there was no adjudication of the claim
of the present respondent. However, he submits
that the objection was taken before the execution
court that the directions for the BIFR would also
apply to the present decree holder-respondent, i.e
the decree holder is entitled if at all only to the
principal amount, but the said objection was
rejected. He submits that on the repeal of SICA in
2016, the resolution plan would continue to govern
under Indian Bankruptcy Code (IBC).
5. He further submits based on the Judgment
in Ghan Shyam Mishra and Sons Private Limited
through the Authorized Signatory vs. Edelweiss
Asset Reconstruction Company Limited through
the Director and Others [(2021) 9 Supreme Court
Cases 657], that once a resolution plan is duly
approved by the adjudicating authority under sub-
section (1) of Section 31 of the IBC, frozen and
will be binding on the corporate debtor and its
employees, members, creditors, including the
Central Government, State Government or any
local authority, guarantors and other stakeholders,
and further that on the date of approval of
resolution plan by the adjudicating authority, all
such claims, which are not a part of resolution
plan, shall stand extinguished and no person will
be entitled to initiate or continue any proceedings
in respect to claim which is not part of the
resolution plan. Consequently, the proceedings
cannot be initiated for execution of the Arbitral
Award independent of Modified Sanctioned
Scheme.
6. Learned counsel for the petitioner, on
specific query by us, submits that in the
proceedings under Section 34 of the Arbitration
Act, the objections of this nature were not taken.
The objections which were taken were rejected.
So, the Arbitration Award attained finality under
the Arbitration Act.
7. Learned counsel, however, further submits
that after the order in the execution case, some
negotiations have taken place between the parties
and as per such negotiation vide letter in
Ref.HR/Legal/REPL/2024, dated 26.06.2024, the
petitioner has agreed to pay an amount of
Rs.1,10,00,000/-. He submits that the liability to
the extent of principal amount is admitted.
8. From perusal of the impugned order of
execution Court, it appears that there is Modified
Sanctioned Scheme (MSS) dated 29.08.2013.
Para 11.6 of MSS of which provided as under:-
"11.6. Details of court case:
If any suit, writ petition, appeal, revision or other
proceedings of whatsoever nature by or against the
Transferor Company be pending, the same shall not
abate, be discontinued or be in any way prejudicially
be affected by reason of the amalgamation of the
Transferor Company or of anything contained in the
scheme, but the proceedings may be continued,
prosecuted and enforced by or against the
Transferee Company in the same manner and to
the same extent as it would be or might have
been continued, prosecuted or enforced by or
against the Transferor Company as if the scheme
had not been made. On and from the effective
date, the Transferee Company shall and may
initiate any legal proceedings for and on behalf
of the Transferor Company."
9. Prima facie, in our view, under the MSS, the
proceedings of whatsoever nature, which would
therefore prima facie include Arbitration
proceedings, were permitted to be continued and
also to be enforced by or against the transferee
company in the same manner and to the same
extent as it would be or might have been
continued, proceeded or enforced, as if the
scheme (MSS) had not been made.
10. However, the matter requires consideration,
after affording opportunity of hearing to the
respondent; inter alia, on the following points:-
i) Whether the Award of the Arbitrator in the proceedings
under the Arbitration Act can be executed by the executing
Court considering the law as laid down Ghan Shyam
Mishra and sons Private Limited (supra) and the MSS,
dated 29.08.2013, as referred to in the order of the
execution Court?
ii) What would be the effect, if an objection (as of the
present nature) was not taken in the proceedings under
Section 34 of the Arbitration and Conciliation Act for setting
aside the Award; i.e if such an objection is still open to be
taken at the time of execution under Section 36 of the
Arbitration and Conciliation Act.
11. Issue notice to the respondent.
12. Let the Counter Affidavit if any be filed
within three (3) weeks.
13. In addition to the normal mode, the learned
counsel for the petitioner is permitted to take out
personal notice to the respondent by R.P.A.D and
file proof of service.
14. As an interim measure, it is provided that
the execution proceedings shall remain stayed
subject to the petitioner depositing the amount of
Rs.1,10,00,000/- (Rupees one crore ten lakhs
only) before the Execution Court, within three (3)
weeks.
15. We make it clear that we have not observed
anything on the submission with respect to the
negotiations, as the respondent is at present not
before us.
16. Post this matter on 03.09.2024.
______
RNT, J
_____
VN, J
IS
