Calcutta High Court
Fair Deal Supplies Limited vs R. Piyarelall Iron And Steel ... on 7 December, 2021
OD-9 & 10
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AP/156/2020
IA NO. GA/1/2020 (Old No.GA/741/2020)
FAIR DEAL SUPPLIES LIMITED
Versus
R. PIYARELALL IRON AND STEEL PRIVATE LIMITED
Wt10
EC/176/2021
R. PIYARELALL IRON AND STEEL PVT. LTD.
Versus
RAM PRASAD AGARWALA AND ORS.
BEFORE:
The Hon'ble JUSTICE SHEKHAR B. SARAF
Date : 7th December, 2021
(Via Video Conference)
Appearance:
Mr. Jayanta Kr. Mitra, Sr. Adv.
Mr. Joy Saha, Sr. Adv.
Mr. Biswajib Ghosh, Adv.
Ms. Nilanjana Adhya, Adv.
Mr. Debdut Mukherjee, Adv.
Mr. Ratnanko Banerji, Sr. Adv.
Mr. D.N. Sharma, Adv.
Mr. Ratnesh Kumar Rai, Adv.
Mr. Ankan Rai, Adv.
Ms. V. Garg, Adv.
The Court:
1. GA No. 741 of 2020 is an application under Section 36 of the Indian
Arbitration and Conciliation Act,1996 (hereinafter referred to as 'the Act')
2
challenging the award dated 16th December, 2019. The Arbitration
tribunal has passed a decree for an aggregate sum of Rs. 36,54,82,007/-
along with interest on the above sum at the rate of 12% per annum from
14th March 2014 until 11th December 2019 and further interest at the rate
of 12 per cent per annum until payment. The respondent has also been
directed to pay costs of Rs 4 lacks to the claimant /award holder.
2. The award has now been challenged under section 34 of the Act and
application under section 36 has been filed for staying the arbitral award
under section 36(2) of the Act.
3. I have heard Mr. Jayanta Mitra, Senior Advocate and Mr. Jay Saha,
Senior Advocate appearing on behalf of the petitioners. I have also heard
Mr. Ratnanko Banerjee, Senior Advocate appearing along with Mr.
Anirban Roy for the award holders/respondent.
4. It is to be noted that the award was passed in the year 2019 and an
execution had been filed by the award holders. Several orders were
passed in the said execution application and due to technical reasons a
new execution application has again been filed being E.C. No. 176 of
2021.
5. Arguments have been canvassed by both sides in relation to the previous
execution application. The award holders have argued that several
attempts were made to scuttle the execution proceedings on earlier
instances. In my view, much water has flowed under the bridge in
relation to the above issue and the same would have no impact in the
applications before me today. We are primarily concerned with the issue
of the stay of the award in terms of Section 36 Clause 2 and Clause 3 of
the Arbitration and Conciliation Act, 1996.
6. One may peruse Section 36 to understand the exact purport of the
same:-
36. Enforcement--(1) Where the time for making an application to
set aside the arbitral award under section 34 has expired, then,
subject to the provisions of sub-section (2), such award shall be
enforced in accordance with the provisions of the Code of Civil
Procedure, 1908 (5 of 1908), in the same manner as if it were a
decree of the court.
(2) Where an application to set aside the arbitral award has been
filed in the Court under section 34, the filing of such an
application shall not by itself render that award unenforceable,
unless the Court grants an order of stay of the operation of the
said arbitral award in accordance with the provisions of sub-
section (3), on a separate application made for that purpose.
(3) Upon filing of an application under sub-section (2) for stay of
the operation of the arbitral award, the Court may, subject to such
conditions as it may deem fit, grant stay of the operation of such
award for reasons to be recorded in writing:
Provided that the Court shall, while considering the application for
grant of stay in the case of an arbitral award for payment of
money, have due regard to the provisions for grant of stay of a
money decree under the provisions of the Code of Civil Procedure,
1908 (5 of 1908).]
[Provided further that where the Court is satisfied that a Prima
facie case is made out that,--
(a) the arbitration agreement or contract which is the basis of the
award; or
(b) the making of the award,
was induced or effected by fraud or corruption, it shall stay the
award unconditionally pending disposal of the challenge under
section 34 to the award.
Explanation.--For the removal of doubts, it is hereby clarified that
the above proviso shall apply to all court cases arising out of or in
relation to arbitral proceedings, irrespective of whether the arbitral
or court proceedings were commenced prior to or after the
commencement of the Arbitration and Conciliation (Amendment)
Act, 2015 (3 of 2016)
7. In my view, this court is required to take due regard to the provisions
relating to grant of stay of a money decree under the Code of Civil
Procedure, 1908 (hereinafter referred as "CPC") when hearing an
application under Section 36 of the Arbitration and Conciliation Act. The
proviso to section 36 makes it abundantly clear that compliance under
Order 41 Rule 5(5) of the CPC is to be fully and mandatorily followed.
The only discretion that the court could have would be with regard to the
manner and mode of security to be provided by the award debtor.
However, in exceptional circumstances the court may considering undue
hardship grant stay with a reduced amount of security. However, such
exercise of power would be in the rarest of cases.
8. In the present case, the award has been passed two years back and
the award holder has not been able to enjoy the fruits of the said award.
One must keep in mind that the amendment in the Arbitration Act in
2015 was to remove the previous mischief wherein the admission of
section 34 application would amount to an automatic stay from recovery
and award holders would have to wait for umpteen years to get there just
dues.
9. The Supreme Court has consistently held that an Arbitration Award is to
be treated as a money decree and accordingly there should be 100%
deposit either in cash or by way of any other equivalent security. In fact,
the Supreme Court has in appropriate cases further held that the award
holder shall be entitled to withdraw the entire amount after furnishing
security to the satisfaction of the court. Reference may be made to Srei
Infrustructure Finance Limited -Vs-Candor Gurgaon Two
Developers and Projects PVT. Ltd. (arising out of impugned final
judgment and order dated 19-07-2018 in GANo. 1399/2018 GA No.
1400/2018 and in GA No. 1401/2018 passed by the High Court at
Calcutta) and Manish -Vs-Godawari Marathawada Irrigation
Development Corporation (arising out of impugned final judgment and
order dated 19.03.2018 in CA No. 14464/2017 19-03-2018 in CA
No.3538/2016 passed by the High Court of Judicature at Bombay at
Aurangabad).
10. I have considered the arguments placed by both sides and see no
reason in the present case to reduce the security to be provided by the
award debtor. Accordingly, the award debtor is directed to deposit a sum
of Rs. 31,70,26,583/- [Rs 36,54,82,007/- (Principal Sum) minus Rs.
4,84,55,424/- (sum lying in fixed deposit with Punjab and Sind Bank,
Kolkata Branch in favour of the Award Holder)] by way of cash deposit
before the Registrar, Original Side.
11. The balance amount with regard to the interest at the rate of 12%
per annum from 14th March 2014 till 10th September 2021 should be
deposited by way of a Bank Guarantee from a nationalised Bank before
the Registrar, Original Side. The above deposits of the cash security and
the Bank Guarantee should be made by the Award debtors within 4
weeks from date. In the event the said security is provided, the execution
application being EC 176 of 2021 shall also remain stayed. In default,
the award debtor shall be at liberty to proceed with the execution
application in accordance with law.
12. In light of the above observations, GA No. 741 of 2020 is disposed
of. As the AP No. 156 of 2020 has been assigned to me, parties shall be
at liberty to mention the same for early listing upon completion of
affidavits.
(SHEKHAR B. SARAF, J.)
R.Bhar
