Calcutta High Court
Damodar Valley Corporation vs Reliance Infrastructure Limited on 22 November, 2021
ODC - UNLISTED
ORDER SHEET
APOT/171/2021
GA/1/2020
(OLD No.GA/175/2020)
GA/4/2021
GA/5/2021
AP/40/2020
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
(Commercial Division)
DAMODAR VALLEY CORPORATION
VS
RELIANCE INFRASTRUCTURE LIMITED
BEFORE:
The Hon'ble JUSTICE I. P. MUKERJI
The Hon'ble JUSTICE BIBHAS RANJAN DE
Date : 22nd NOVEMBER, 2021.
Appearance:
Mr. Tushar Mehta, Ld. SGI
Mr. Ratnanko Banerji, Sr. Adv.
Ms. V. Meharia, Adv.
Mr. A. Meharia, Adv.
Mr. S. Chatterjee, Adv.
Ms. U. Chakraborty, Adv.
Ms. T. Singh, Adv.
Ms. P. Banerjee, Adv.
Ms. S. Paul, Adv.
...for the appellant
Mr. Prateek Seksaria, Adv.
Mr. A. Raychaudhuri, Adv.
Mr. P. Majumdar, Adv.
Ms. A. Ray Choudhuri, Adv.
...for the respondent
The Court : Citing grave urgency Mr. Tushar Mehta, learned
Solicitor General appearing for the appellant took leave of this Court in
the morning to move this appeal and the stay application this afternoon
itself. We directed learned counsel to give due notice to the respondent
that the appeal and the stay application would be taken up at 2.00 P. M.
today.
Moving the appeal and the stay application, learned Solicitor
General made his submissions. Mr. Seksaria, learned counsel for the
respondent also made submissions but prayed for time for his senior Mr.
Harish Salve, learned senior counsel to make submissions on 25th
November, 2021.
The urgency, which has arisen, calling for an immediate decision
on our part, at least for a temporary period is this.
By the impugned judgement and order of the learned single judge
dated 18th November, 2021, the following directions have been made :
"For the foregoing reasons, the prayer of the petitioner in this
application for stay on the direction for the return of the bank
guarantee of the respondent is rejected. Needless to mention,
there will be no obligation of the respondent to furnish any
bank guarantees in favour of the petitioner or keep any of the
bank guarantees furnished to the petitioner alive or renewed.
The matter is fixed on 9th December, 2021 for hearing of the
parties on the terms and conditions on which the award ought
to be stayed insofar as securing the monetary portion of the
award is concerned.
Later:
After pronouncement of the order, Ms. Meharia, Advocate
appearing on behalf of the petitioner prays for stay of operation
of the order. The prayer for stay is considered and rejected."
Now, on the basis of this order, the bank has instructed the
appellant to return the bank guarantees for the purpose of their
cancellation. Even if the bank guarantees are not returned, the bank
could on the basis of the impugned order take immediate steps to cancel
the bank guarantees or to discharge themselves from their obligation to
honour them.
The respondent was entrusted by the appellant with the
construction of 2 600 MW Power Plants at Raghunathpur in Purulia
District of West Bengal. The value of the contract, as we are told, was
around Rs.3000 Crores. Arbitral proceedings commenced on the claim of
the respondent for the balance price and damages and also on the
counter-claim of the appellant.
Ultimately, an award was made and published on 21st December,
2019 in favour of the respondent, the counter-claim of the appellant
being dismissed.
Learned Solicitor General submits that the original time to
challenge the award expired on 21st March, 2020. By then, the pandemic
caused by the Covid-19 virus had engulfed the country.
On 23rd March, 2020, the Supreme Court made an order that
with effect from 15th March, 2020 the period of limitation for commencing
legal proceedings would stand extended. The last extension was made on
3rd October, 2021 for three months which according to Mr. Mehta would
expire only on 3rd January, 2022. Therefore, the time to file the Section
34 application to challenge the award would continue till 3rd January,
2022.
In the meantime, the appellant had filed an application under
Section 34 to challenge the award. They also filed an application for stay
of the award, on which the impugned judgment and order was made.
Prima facie three points of great substance have been raised by
the learned Solicitor General.
First, the time to file the application to set aside the award expires
on 3rd January, 2022. Hence, the impugned order which is in the nature
of execution could not have been made by the Court on a consideration
of Section 36(1) of the Arbitration & Conciliation Act, 1996 which is set
out below :
"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."
Secondly, even if it was assumed that the award became
executable, when an application for stay was before the Court and an
application had been made by the appellant for stay of the award, the
question of stay on terms and conditions as stipulated in the proviso to
sub-section 3 of Section 36 ought to have been considered by the Court
before execution but was not considered at all. The award was sought to
be executed by the Court without considering the stay application.
Thirdly, the parties at an earlier stage of the proceedings, had
agreed that the Section 34 application would be considered first which
was recorded in an order of the Court which has become final and that
the respondent could not resile from that position and seek enforcement
of the award.
The above are prima facie observations and would be
reconsidered by us on the returnable date of the application.
List this appeal and the connected application once again on 25th
November, 2021.
On the above prima facie case, noted by us and considering the
balance of convenience, we stay the operation of the impugned
judgement and order dated 18th November, 2021 till 30th November, 2021
or until further order, whichever is earlier.
All points are kept open.
(I. P. MUKERJI, J)
(BIBHAS RANJAN DE, J.)
A Dey
