Calcutta High Court
M/S. Kusari Enterprises & Ors vs Idfc First Bank Limited (Formerly ... on 14 December, 2021
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
Commercial Division
(Via Video Conference)
BEFORE:
The Hon'ble Mr. Justice Ravi Krishan Kapur
IA No: GA/1/2021
AP/418/2021
M/s. Kusari Enterprises & Ors.
-vs-
IDFC First Bank Limited (Formerly Capital First Limited)
For the petitioners : Mr. Debashis Sinha,
Mr. Arijit Chatterjee,
Mr. Mohit Gupta,
Ms. Sharmistha Dhar,
Mr. R. Banerjee,
Mr. D. Dey,
For the Respondent : Mr. Soumya Roy,
Mr. Ranjit Singh,
Ms. Pooja Sett,
Mr. Amar Singh.
Heard on : 15.11.2021, 17.11.2021, 09.12.2021
Judgment on : 14.12.2021
Ravi Krishan Kapur, J.:
1. This is an application filed for unconditional stay of an award dated
21 June, 2021 ("the award").
2. Briefly, the disputes between the parties arise out of a Business Loan
Agreement dated 31st October, 2018. Under the agreement, the
respondent financial institution provided a business loan of an
amount of Rs.30,60,000/- to the petitioner which was repayable in 36
equal monthly instalments of Rs.109,098/-. The petitioner defaulted
in making repayment of the monthly instalments which resulted in
disputes and differences having arisen between the parties.
Ultimately, the respondent terminated the agreement and issued a
notice dated 12th January, 2021, whereby the petitioner was called
upon to repay the entire outstanding dues aggregating to
approximately Rs.25,59,302.08/-. The agreement contained an
arbitration clause. The award is a culmination of the arbitration
proceedings.
3. This application has been filed under Section 36 of the Arbitration and
Conciliation Act, 1996 ('the Act') wherein the petitioner has prayed for
an order of unconditional stay of operation of the award dated 21st
June, 2021 on the ground that the award has been passed in violation
of the principles of natural justice and without due process of law. It
is pertinent to mention that the application under Section 34 of the
Act being AP No.418 of 2021 is pending before this Court and the
parties have been directed to file their affidavits. Accordingly, the
petitioners submit that, there is no question of securing the award
and the petitioners are entitled to an unconditional order of stay.
4. Section 36 of the Act mandates that, while considering an application
for stay, the Court has to adjudicate upon whether and on what
conditions, stay ought to be granted pending the application under
Section 34 of the Act. The Law Commission of India in its 246th Report
had recommended a change in the section to ensure that the mere
filing of an application under section 34 does not operate as an
automatic stay on the enforcement of an award. The proviso to the
section makes it clear that the Court ought to have "due regard to the
provisions for grant of stay of a money decree under the provisions of
the Code of Civil Procedure". This in my view would mean that the
provisions of the Code of Civil Procedure, 1908 may be taken into
consideration but this is not mandatory.
5. The award is a money award for a sum of Rs.25,59,3002.28/- to be
paid jointly or severely by the petitioners. The only submission made
by the petitioners is that the award is a procured award and has been
passed in violation of all principles of natural justice. Significantly, the
petitioners do not make any submissions whatsoever as to the merits
of the underlying loan transaction whereby the petitioner had
admittedly, indisputably and unequivocally received the principal loan
amount of Rs.30,60,000/- from the respondents. The petitioners
acknowledges receipt of the entire loan amount but submit that they
are not in a position to repay nor will they secure any portion of the
loan far less the entire outstanding amount inclusive of interest.
6. On behalf of the respondents, it is submitted that the award is a
money decree and following the principles of Code of Civil Procedure,
1908 the petitioners are bound to secure the entirety of the award in
any form or mode which this Court may think fit and proper during
the pendency of the application under Section 34 of the Act.
7. The only issue before this Court is, at this stage, whether the award
should be stayed pending the hearing of the Section 34 application
and if so on what terms and conditions. Since the petitioners have
unequivocally submitted that they are not willing nor are in any
position to deposit any sum and will not deposit any amount even on
account of the principal amount or even a portion thereof, I exercise
my discretion in not granting an unconditional stay of the award.
8. Fairness is not a one way street. Nor is there any magic in the phrase
"natural justice". Both the parties belong to the commercial world. In
commercial matters such as the instant case, it is an affront to the
Rule of Law, commercial sense, justice, equity and good conscience
that in a classic money lent and advanced transaction of this nature,
where the petitioners who have indisputably received, utilized and
appropriated the entire amounts advanced, be permitted the luxury of
litigating without securing any portion or the entirety of the principal
claim (far less any portion of the interest) even after a final award has
been passed. I am of the view that in such cases, where the debt or at
least the principal amount is admitted, indisputable and
incontrovertible the petitioners must be made to secure if they choose
to litigate.
9. For the foregoing reasons GA 1 of 2021 is dismissed.
10. Costs are assessed at Rs.10,000/- to be paid to the respondent.
(Ravi Krishan Kapur, J.)
