Pfs Shipping (India) Limited vs Capt V. K Gupta And Anr
2016 Latest Caselaw 7388 Bom

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           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
               ORDINARY ORIGINAL CIVIL JURISDICTION




                                                                                 
              NOTICE OF MOTION (L) NO.221 OF 2016




                                                         
                              IN
          COMMERCIAL ARBITRATION PETITION NO.54 OF 2016

    M/s.PFS Shipping (India) Limited                )




                                                        
    having its office at 5-A, Mehta Mahal,          )
    13,Mathew Road, Opera House,                    )
    Mumbai - 400 004.                               ) .. Applicant/Petitioner




                                             
           Versus
                                   
    1. Capt.V.K.Gupta                               )
                                  
    residing at 124, Maker Tower-L,                 )
    Cuffe Parade, Mumbai - 400 005.                 )
          


    2. M/s.Nilesh Exim Private Limited              )
       



    Having its office at No.103, Mittal Chambers)
    1st Floor, M.G. Road,                           )
    Secunderabad- 500 003.                          ) .. Respondents





                 ---
    Mr.V.K.Rambhadran, Senior Advocate i/by Mr.Suraj Dessai Almeida for
    the applicant/ petitioner.
    Mr.Rahul Narichania, Senior Advocate a/w Ms.Pooja Kapadia a/w
    Mr.Mohit Prabhu i/by M/s.Mulla & Mulla & Craigie Blunt & Caroe





    for respondent no.2.
                 ---
                               CORAM  : R.D. DHANUKA, J.

DATE : 16th December 2016 Judgment:-

. By this notice of motion, the applicant/petitioner seeks stay of the impugned award dated 30th April 2016 unconditionally.

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2. By a separate order passed by this Court, Commercial

Arbitration Petition No.54 of 2016 filed by the applicant impugning the said award is already admitted.

3. Mr.Rambhadran, learned senior counsel appearing for the applicant invited my attention to some of the portion of the oral evidence

led by his client and more particularly the cross-examination of one of the witness examined by his client by one of the learned arbitrators and

would submit that the arbitral tribunal could not have cross-examined the witness. He submits that even that part of the evidence is not

considered by the arbitral tribunal.

4. It is submitted by the learned senior counsel that though the applicant had supplied the vessel cranes which were subject matter of the agreement between the parties at the request of the respondent no.2

the applicant supplied floating cranes. The arbitral tribunal has awarded

the entire claim as prayed by the respondent merely on the basis of the alleged Indonesian Coal Index Report which was disputed and not

proved. He submits that the entire award is based on no evidence.

5. Mr.Narichania, learned senior counsel for the respondent invited my attention to Section 36(3) read with proviso thereto inserted

by the Arbitration and Conciliation (Amendment) Act, 2015 and also to the Order XLI Rule 5 of the Code of Civil Procedure, 1908 in support of his submission that while considering the application for grant of stay, the Court has to apply the principles of Order XLI Rule 5 of the Code of Civil Procedure, 1908 which has to be considered by an appellate Court

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while granting stay of the money decree under the provisions of the Code

of Civil Procedure, 1908. It is submitted that this Court has no discretionary power to grant unconditional stay or to grant stay on

deposit of part of the awarded sum or on providing security for part of the awarded sum. In support of this submission, learned counsel placed reliance on the judgment of the Supreme Court in the case of

M/s.Mehta Teja Singh and Company Vs. Grindlays Bank Limited, reported in (1982) 2 SCC 199. He submits that if an unconditional stay

is granted in favour of the applicant and if the applicant fails in the arbitration petition filed by the applicant, the respondent who has

succeeded in the arbitral proceedings would not be able to recover any amount from the applicant. He submits that the applicant shall be directed

to deposit the entire amount or to furnish security to the extent of the awarded sum if this Court proposes to grant stay of the impugned award.

6. Learned senior counsel invited my attention to Form 20B

and the annexures thereto annexed to the affidavit-in-reply which form was filed by the applicant and would submit that the applicant has

declared a loss of Rs.1,22,60,40,000/- and is heavily indebted. He submits that the charge is created in respect of all the assets of the applicant as is apparent from the said document i.e. Form 20B annexed at Exhibit-D to the affidavit-in-reply filed by the respondent.

7. Upon raising a query by this Court whether the applicant would be able to deposit 50% of the awarded sum and to secure the balance amount awarded by furnishing security in favour of the Prothonotary and Senior Master of this Court, Mr.Rambhadran, learned senior counsel for the applicant, on instructions from an officer of the

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applicant who is present in Court, states that his client would not be able

to deposit any amount.

8. There is no dispute that the arbitration petition challenging the impugned award is admitted by this Court. Question however that arises for consideration of this Court is whether while considering an

application for stay made under Section 36(1) inserted by the Arbitration and Conciliation (Amendment) Act, 2015, the Court has no discretion to

grant stay unless the entire awarded amount by the learned arbitrator is deposited by the applicant in this Court or not or unless security to

secure the entire awarded claim is provided by the applicant or not.

9. A perusal of Section 36(3) inserted by the Arbitration and Conciliation (Amendment) Act, 2015 clearly indicates that while considering an application for grant of stay in the case of an arbitral

award for payment of money, the Court has been granted discretion to

consider security required to be furnished by the petitioner seeking stay or whether stay has to be granted unconditionally or on furnishing such

security so as to secure part of the claim depending upon the facts and circumstances of each case. Though the Court while considering an application for grant of stay under Section 36(3) inserted by the Arbitration and Conciliation (Amendment) Act, 2015, due regard to the

provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 has to be given, in appropriate cases, the Court can grant stay even on the petitioner furnishing security to secure part of the awarded amount or may grant unconditional stay depending upon the facts and circumstances of each case. If the Court comes to a conclusion that the award is prima facie perverse and is contrary to the

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provisions of law, the Court is not bound to direct the petitioner to

deposit the entire amount of the arbitral award for payment of money. I am thus not inclined to accept the submission of Mr.Narichania, learned

senior counsel for the respondent no.2 that the Court has no discretionary power under Section 36(3) inserted by the Arbitration and Conciliation (Amendment) Act, 2015 while granting stay or considering an application

for stay made under Section 36(1) inserted by the Arbitration and Conciliation (Amendment) Act, 2015 and that the Court is bound to

direct the petitioner to deposit the entire awarded sum in the Court as a condition precedent for grant of stay.

10. A perusal of the document annexed to the affidavit-in-reply

filed by the respondent and more particularly Form 20B which is Annual Returns filed by the petitioner under the provisions of the Companies Act, 1956 clearly indicates that the petitioner is heavily indebted at least in

the sum of Rs.1,22,60,40,000/- and charge is created in respect of all the

assets of the petitioner. Though this financial position of the applicant is brought on record by the respondent by enclosing the documents to the

affidavit-in-reply, the petitioner did not controvert these allegations by filing any rejoinder nor the same is controverted by the learned senior counsel for the applicant/petitioner across the bar at the time of his arguments.

11. In view of precarious financial condition of the petitioner, even otherwise I am not inclined to grant unconditional stay in favour of the applicant/petitioner. Merits and demerits of the arbitral award would be gone into by this Court at the stage of final hearing of this petition. In my view, the interest of justice would be met with if the

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petitioner, in these circumstances, is directed to deposit the entire

awarded amount in this Court within a period of eight weeks from today as a condition for granting stay of the impugned award.

12. I therefore pass the following order :-

(i) The impugned award dated 30th April 2016 is stayed on the

condition that the applicant/petitioner deposits the entire awarded amount in this Court within a period of eight weeks from today.

(ii) It is made clear that if the said amount is not deposited by the

applicant within the time prescribed, the stay granted by this Court

today to stand vacated without further reference to the Court.

(iii) If the said amount is deposited by the applicant, the respondent

would be at liberty to apply for withdrawal of the said amount.

(iv) If any such application is made by the respondent, this Court will consider the same on its own merits.

(v) Notice of motion is disposed of in aforesaid terms.

(vi) No order as to costs.

R.D. DHANUKA, J.