State Of West Bengal & Anr vs Dilip Kumar Saha
2021 Latest Caselaw 1494 Cal/2

                IN THE HIGH COURT AT CALCUTTA
             (ORDINARY ORIGINAL CIVIL JURISDICTION)
                COMMERCIAL APPELLATE DIVISION
                         ORIGINAL SIDE


  Present:

  THE HON'BLE JUSTICE T. S. SIVAGNANAM

                     &

  THE HON'BLE JUSTICE HARISH TANDON

                          APO NO.95 OF 2021
                              Arising out of
                          IA GA NO.2 OF 2021
                           AP NO.89 OF 2015

                     STATE OF WEST BENGAL & ANR.
                                 Vs.
                         DILIP KUMAR SAHA


                                  Mr. S.N. Mookherjee, Ld. Adv.Gen
                                           Mr. Anirban Ray, Ld. G.P
                                       Mr. Paritosh Sinha, Ld. AOR
                                         Mr. Arindam Mondal, Adv.
                                                 For the Appellants

                                              Mr. Utpal Bose, Adv.
                                                 Mr. S. Mitra, Adv.
                                         Ms. H. Charkraborty, Adv.
                                              For the Respondents

Heard On: 09.11.2021 Judgment On: 29.11.2021

Harish Tandon, J.:

The instant mandamus appeal arises from the order dated 20th

July, 2021 passed by the Single Bench in I.N. No. GA/2/2021 in AP 89

of 2015 allowing an application filed by the respondent seeking

withdrawal of the amount deposited in terms of the order dated 15th

January, 2021 upon furnishing a bank guarantee for Rs. 1.50 crores.

Shown of unnecessary details, the undisputed facts are

adumbrated herein below in order to have a clarity on facts in pursuit of

deciding the points canvassed by the respective counsels in this appeal.

A notice inviting tender no 8 of 2010-11 was published by the

Superintendent Engineer, Public Works Department and Public Works

Road, North Bengal construction, Circle-I, Jalpaiguri for construction of

RCC Bridge over river Sanaijan at Kangratoli on Imigration Road at

Mekhliganj, District Jalpaiguri under Coochbehar division PWD. The

respondent herein participated in the tender process and was adudged

as the lowest bidder and a contract was awarded in his favour with clear

stipulation that the work could be completed within 12 months. Later on,

a formal contract was executed between the parties on September 29,

2010 followed by the work order dated November 11, 2010. Clause 25 of

the said contract contained the arbitration clause in the event any

dispute cropped up in relation thereto. In fact, the dispute cropped up

and since the appellant failed to perform their obligation under the said

arbitration clause by appointing an arbitrator, the application was moved

by the respondent before this court under Section 11(4) of the Arbitration

and Conciliation Act, 1996 which was eventually allowed on 3rd April,

2013 by appointing Mr. Santanu Basu Roychawdhury, a former

secretary of PWD roads of the State. The sole arbitrator made and

published an award dated October 29, 2014 directing a sum of Rs.

1,66,52,949/- to be paid to the respondent within 90 days from the date

failing which an interest at the rate of 18 per cent would accrue till the

recovery thereof.

The appellant challenged the said award under Section 34 of the

said Act before this court in AP no. 89 of 2015 which was formally

admitted on February 25, 2015. Subsequently, an application for stay of

the award was taken out by the appellant in the said proceeding and an

unconditional stay of the operation of the arbitral award was passed on

December 18, 2018. The said order was challenged before the Supreme

Court by way of special leave petition which was set aside and the matter

was remitted back to the High Court for reconsideration. The application

for stay was again listed before the Single Bench and by an order dated

15th January, 2021, the stay application was disposed of directing the

appellant to deposit the sum of Rs. 1.50 crores with the Registrar,

Original Side of this Court as condition precedent to such stay.

The respondent took out an application being GA no. 2 of 2021

seeking an order upon the Registrar, Original Side, High Court to accept

the bank guarantee for Rs. 1.50 crore with a consequential order of

permitting the respondent to withdraw the said sum of Rs. 1.50 crores

deposited by the appellant in terms of the order dated 15th January,

2021. By the impugned order the application was allowed directing the

Registrar, Original Side to accept the bank guarantee of Rs. 1.50 crores

to be furnished by the HDFC Bank Ltd with the condition that the bank

guarantee shall be kept alive till the disposal of an application under

Section 34 of the said Act(AP no 89 of 2015). Simultaneously, the

respondent was also permitted to withdraw the said amount upon the

furnishing such bank guarantee.

The present appeal is at the behest of the appellant assailing the

said order primarily on the ground that the moment the order of stay

passed by the court directing the deposit of the amount with the

Registrar, Original Side of this court, such order cannot be recalled,

varied, modified unless there is a change in circumstances warranting

the same.

The learned Advocate General submits that Section 36 of the said

act does not envisage such course to be adopted by the court the

moment an application for stay was disposed of directing the deposit of

the amount with this court. It is further submitted that the proviso

appended to sub-Section (3) of Section 36 of the Act though contemplates

the applicability of the provisions of Code of Civil Procedure, 1908 but

the same is restricted at the stage of granting stay and not otherwise. It

is thus submitted that in absence of any express provision under the

said Act, the court cannot usurp the jurisdiction in modifying or

reviewing the earlier order. He placed reliance upon the judgment of the

Supreme Court rendered in case of Pam Developments Private Ltd vs.

State of West Bengal reported in 2019, 8 SCC 112 wherein it is held

that the phrase "having regard to the provision of CPC" is directory in

nature and can be used as a guiding factor but the provisions of

Arbitration Act are essentially to be applied first as it is a self contained

Act. It is thus submitted that though the provisions of Code of Civil

Procedure may be used as a guidance but has to be applied in

juxtaposition with Section 36(3) of the Act which by no stretch of

imagination be construed to supersede or whittle down the express

provision of the Act. Learned Advocate General further placed reliance

upon the unreported Co-ordinate Bench decision rendered in case of M/s.

Satyen Construction vs. State of West Bengal (APO 77 of 2020)

passed on 6th October, 2020 wherein it is held that the variation or

modification of an order granting stay should not be varied or modified

unless the ground narrated in the said application are found to be

worthy, that too, based upon the subsequent events constituting change

in circumstances. It is lastly submitted that the application filed by the

respondent was bereft of any subsequent or change in circumstances

and the impugned order does not reflect any finding returned thereupon

and, therefore, the same is liable to be set aside.

Mr. Utpal Bose, the learned Senior Advocate appearing for the

respondent submits that there is no fetter on the part of the court in

permitting the furnishing of the bank guarantee upon withdrawal of the

amount deposited by the appellant and in fact such order has been

passed on several occasions. To buttress the aforesaid submission, the

reliance is placed upon the order of the Supreme Court in case of

Aviation Travels private Ltd Vs. Bhavesa Suresh Goradia & Ors

(SLP no. 5374-5375 of 2019). It is arduously submitted that the

withdrawal of an amount deposited by the judgment debtor at the time of

securing the stay of the award on furnishing a security is a well settled

practice as held by the Division Bench of the Gujarat High Court in

Manibhai & Brothers vs. Birla Cellulosic (Civil Appeal no 11793 of

2015). According to Mr. Bose there is no impediment on the court in

permitting the withdrawal of the amount so deposited discernible from

the judgment of the Supreme Court in case of Aviation Travels Private

Ltd vs. Bhavesha Suresh Goradia & Ors (in Civil Appeal no 1890-

1891 of 2020). As per Mr. Bose, even if there is no express provision

contemplating such situation, the court is not powerless in passing an

appropriate order in exercise of the inherent powers conferred in Section

151 of the Code. Invariably, the court passes such order balancing the

rights of the parties in securing the said amount. He is very much vocal

in his submission that the paramount consideration is securing an

amount in whatever form as contemplated under Order 41 Rule 5 of the

Code of Civil Procedure. We thus submits that the withdrawal of an

amount upon replacement with the bank guarantee, in fact, invites the

same situation i.e the protection of money as well as the interest of the

appellant in the event the main proceeding is allowed and, therefore, no

prejudice would be caused to an appellant if the impugned order is

allowed to stand.

On the conspectus of the aforesaid facts and the submission

advanced by the respective Counsels, the point which emerged for

consideration is whether after passing an order granting stay of the

award on condition to deposit an amount with the Registrar, Original

Side of this Court, the court can vary or modify the order subsequently.

If the aforesaid question is answered in affirmative whether such

modification has to be preceded with the change in circumstances or

reasonable grounds warranting such modification or variation.

At the time of promulgation of the Arbitration and Conciliation Act,

1996 the unamended provision of Section 36 thereof leaves no ambiguity

that the moment the challenge is made to an award under Section 34 of

the Act, it, ipso facto, brings stay of the executability of the award

without seeking any blessings from the court. The aforesaid section

undergone a see change with the Arbitration and Conciliation

(Amendment) Act, 2015 and the said amended provision is quoted 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 enforce 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)."

The radical change one would perceive from the bare reading of the

amended provision that the automatic stay of the enforcement of the

award is no longer available but the party has to apply for a stay of the

operation of the arbitral award. Sub-section (3) of Section 36 of the Act

bestowed power upon the court to grant a stay of the operation of the

award on such conditions as it may deem fit upon recording the reasons

in writing. The proviso appended thereto exemplifies the exercise of

power on due regard to the provisions for grant of stay of money decree

under the provisions of the Code of Civil Procedure. By virtue of such

reference by way of incorporation in the another statute due regard to

the provisions of the court relating to the grant of stay of money decree is

made applicable.

In Pam Developments Private Ltd (Supra) though the question

involved therein relates to the applicability of the provisions contained in

Order 27 Rule 8A of the Code in conjunction with Order 41 Rule 5 and

Section 36 of the Act but the phrase "having due regard to" incidentally

came up for consideration and it is held that the same cannot be said to

be mandatory and should be used as a guiding factor without

superseding or suppressing the substantive provision of the Act which is

essential to be applied first. It is further held that the Arbitration and

Conciliation Act is a self contained Act and the provision of the CPC can

be borrowed by such reference to the extent that the same is not

inconsistent with the spirit and provision of the said Act in these words:

"18. In our view, in the present context, the phrase used is

'having regard to' the provisions of CPC and not 'in accordance

with' the provisions of CPC. In the latter case, it would have been

mandatory, but in the form as mentioned in Rule 36(3) of the

Arbitration Act, it would only be directory or as a guiding factor.

Mere reference to CPC in the said Section 36 cannot be construed in

such a manner that it takes away the power conferred in the main

statute (i.e. Arbitration Act) itself. It is to be taken as a general

guideline, which will not make the main provision of the

Arbitration Act inapplicable. The provisions of CPC are to be

followed as a guidance, whereas the provisions of the Arbitration

Act are essentially to be first applied. Since, the Arbitration Act is

a self-contained Act, the provisions of the CPC will apply only

insofar as the same are not inconsistent with the spirit and

provisions of the Arbitration Act."

Even if it is held by the Supreme Court in the above noted decision

that the provision contained under Order 41 Rule 5 of the Code is

directory in nature and can only be used as a tool for guidance yet we

feel that it would be prudent to recapitulate the legislative intent behind

the incorporation of the aforesaid provision. The important factor one

would jurisprudentially perceived from the said provision is that mere

filing of an appeal does not ipso facto render the stay of the executability

of a decree. Even the Appellate Court shall not pass an order of stay in

absence of any sufficient cause nor without recording the satisfaction on

the factors required. Therefor, including the satisfaction that the security

has been given by the appellant in due performance of the decree or the

order directing the security or the condition of depositing the decreetal

amount has been uniformly adopted as a practice on the rule of

prudence than of universal application. The aforesaid provision is

intended to strike a balance between the rights of the parties as opposed

to an unjust enrichment upon a successful litigant and a premium to the

unsuccessful litigant. It has been a uniform practice to secure an

amount either in the form of the deposit in the court or the security in

protento satisfaction of a decree depending upon a varied factors and the

special facts involved in the given case.

We do not find any ambiguity in adopting such practice at the time

of granting stay but the moot question is what further order could be

passed amounting to variation, modification of the said order. Neither

Section 36 of the Act nor Order 41 Rule 5 of the Act contemplate such

situation as no express provision of such nature has been incorporated.

This lead us to consider the Division Bench Judgement of the Gujarat

High Court in case of Manibhai & Brothers (Supra) wherein it is

categorically observed that there has been a long standing practice when

the court exercises the power permitting the withdrawal of the amount

deposited by the judgment debtor to secure the stay of the execution in

exercise of the power under Section 151 of the Code. The Division Bench

held that permitting withdrawal of the amount does not tantamount to

modifying the order of stay but because of the long-standing practice

such orders have passed subject to furnishing the security in this words:

"21. In the opinion of this Court, permitting withdrawal of

the amount would also not amount to modifying the stay order as

by virtue of this order the respondent has not been asked to pay

any additional sum nor are the terms of stay order granted by the

court in any manner being modified. All that is being done is that

in view of a long settled practice, the applicant is being permitted

to withdraw the amount deposited by the respondent in compliance

with the stay order subject to the applicant furnishing security as

directed by the court. By adopting this course of action, the

respondent judgment-debtor is not in any manner prejudiced

inasmuch as against withdrawal of the amount the applicant

would be required to furnish such security as the court deems fit.

The only consequence is that instead of money lying in the deposit

with the bank, the decree-holder gets to enjoy the same, subject of

course, to furnishing security for withdrawal of the amount."

With all humility and the respect to the Division Bench of the

Gujarat High Court we could not persuade ourselves to accept and adopt

the theory of long standing practice and the exercise of power by the

Court on such ipse dixit. The proviso appended to Sub-Section 3 of

Section 36 never intended to be squeezed and restricted to the provision

of Order 41 Rule 5 of the Code but having expanded the horizon of the

applicability of the provisions of the Code. Naturally, the Court can

exercise the power if there has been an express provision in the Code

which is not in contradiction with the spirit and object of the special Act

as held in PAM Developers (Supra). The power enshrined under Section

151 of the Code can be exercised if there is no express provision

contained in the Code or the Special Act. The legislature at the time of

promulgating the procedural law i.e., Code could not presume all

eventualities and precisely for such reason the inherent power is retained

in the Code to secure the ends of justice i.e., ex debito justitiae.

As held in Nahar Industrial Enterprises Ltd. Vs. Hong Kong &

Shanghai Banking Corporation, reported in (2009) 8 SCC 646 the

power reserved under Section 151 of the Code can never be construed as

the conferment of an extraordinary jurisdiction of the Court and when a

specific provision dealing with a particular situation is provided therein,

such inherent power should not be resorted to. It can only be applied in

a grey area more particularly to fill up the gap securing the end of justice

or prevent injustice to the party. Such inherent power should be

exercised with great care and caution and not in a casual or routine

manner. It owes a greater responsibility upon the court while preventing

injustice and advancing the justice to the litigant. We do not find any

ambiguity that neither Section 36 of the Act nor Order 41 Rule 5 of the

Code conferred power upon the Court to permit the withdrawal of the

amount deposited in terms of the order of stay as in a deserving case the

Court may pass an order in exercise of the inherent powers provided in

Section 151 of the Code. The Judgment is, what has been decided on the

basis of the facts involved therein. Though the Division Bench of the

Gujarat High Court has augmented the theory of long standing practice

but such observations must be viewed on the facts involved therein. In

the said case while passing order of stay directing the deposit of decreetal

amount, the liberty was granted to the decree holder to apply for the

withdrawal thereof and in fact, such liberty was exhausted and the

Division Bench, therefore, does not find any infirmity in the order

permitting the withdrawal of the case with replenishment with the bank

guarantee.

In Aviation Travels Private Ltd. (Supra) the suit for damages was

decreed ex parte and an application for setting aside the ex parte

judgment was also dismissed so also the application for review.

Subsequently, the order was carried to the Supreme Court and a plea

was taken that the summons were never served and, therefore, there was

no occasion to file a written statement to contest the case. A plea was

taken that the rule applicable to the Original Side of the Bombay High

Court provides for waiver of the summon if the lawyer appears and filed

the vokalatnama. In such backdrop, it was held that nobody would be

benefited by an ex parte order as it was a simplicitor case for damages

and a direction was passed to deposit certain amount as condition

precedent for filing the written statement and contesting the suit in

accordance with law. However, the decree holder being a trust and there

were a number of beneficiaries of the trust, the Apex Court directed the

disbursement of certain amount subject to the condition that those

withdrawals would not create any special equity and shall be subject to

the outcome of the suit. Our endeavour has failed to find out any ratio

touching upon the point involved herein above. As indicated above, the

Court is not powerless to pass an order permitting the withdrawal of the

deposited amount upon replacement with the security but while

exercising such power other mitigating factors are also required to be

seen.

Since the provision of the Code is held to be a guiding factor and

there is no express provision preserved in the Court in contemplation to

a situation as has arisen herein, one can borrow the principles of the

other provisions as guidance in exercise of the inherent power. Order 39

Rule 4 though restricted to the injunction contained a provision relating

to modification, variation of the said order in the changed circumstances.

Such principle can be borrowed while permitting the withdrawal of the

deposited amount in exercise of the inherent power. The Co-ordinate

Bench of this Court in case of M/s. Satyen Construction (supra) has

somewhat followed the aforesaid principle though not expressly which

would be evident from the following excerpts as under:

"(5) Once the application carried at the post-stay order stage

is treated as an application for interim measures under Section 9

of the Act, the order impugned becomes appellable since Section 37

of the Act permits an order granting or refusing to grant any

interim measure to be the subject matter of an appeal. Thus, the

appeal is found to be maintainable. However, since the grounds

carried in the application are not found to be worthy, the order

impugned is not interfered with. It now appears that certain

subsequent events may have arisen which may not have been

brought to be notice of the Arbitration Court. If such is the case,

there is nothing stopping the award-holder from invoking Section 9

of the Act afresh.

Reverting back to the facts, the only ground shown in the said

application is that one of the partners was infected with the Corona Virus

twice and has to incur huge expenditure for his treatment. It is further

stated that the wife is terminally ill and the liquidity has been lost. In

order to have working capital in successful running of the business, the

money is needed and, therefore, he should be permitted to withdraw the

said sum of Rs. 1.50 crores. There is no corroborative material in

support of the aforesaid contention whether the said partner suffered

illness prior to the order dated 15th January, 2021. As held by the Co-

ordinate Bench of this Court in M/s. Satyen Construction (supra) if the

grounds set forth in the application is not satisfactory, it is not obligatory

on the part of the court to replenish the amount so deposited with the

bank guarantee. Furthermore, there is no material disclosed

constituting a changed circumstances nor we find any findings returned

in the impugned order on facts. We, thus, cannot concur with the

impugned order. The same is hereby set aside. Appeal is allowed.

No costs.

Urgent photostat certified copies of this judgment, if applied for, be made available to the parties subject to compliance with requisite

formalities.

I agree.

(T. S. Sivagnanam, J.)

(Harish Tandon,J.)

IN THE HIGH COURT AT CALCUTTA CIVIL APPELLATE JURISDICTION ORIGINAL SIDE

APO/95/2021 WITH AP/89/2015 STATE OF WEST BENGAL AND ANR.

VS.

DILIP KUMAR SAHA

BEFORE :

THE HON'BLE JUSTICE T.S.SIVAGNANAM AND THE HON'BLE JUSTICE HARISH TANDON DATED : NOVEMBER 29, 2021.

[Via Video Conference]

Appearance :

Mr. S.N. Mookherji, Learned A.G.

Mr. Anirban Ray, Ld. G.P.

Mr. Paritosh Sinha, Ld. AOR.

Mr. Arindam Mandal, Advocate ...for State/appellant Ms. Hashnuhana Chakraborty, Advocate ...for respondent

The Court :- After delivery of the judgement the learned Counsel on

behalf of the respondent prays for stay of the operation of the impugned

order.

We do not find any ground to stay the operation of the impugned order

and, therefore, prayer for stay is rejected.

(T.S. SIVAGNANAM, J.)

(HARISH TANDON, J.) GH/pa.