Calcutta High Court
Rashmi Metaliks Limited vs Nem Engineering Projects Private ... on 11 January, 2022
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/462/2021
RASHMI METALIKS LIMITED
-vs-
NEM ENGINEERING PROJECTS PRIVATE LIMITED
For the petitioner : Mr. Ratnanko Banerji, Sr. Adv.
Mr. Debjit Mukherjee,
Mr. Debdut Mukherjee,
Ms. Meghajit Mukherjee,
Mr. Kaniskh Kejriwal,
Mr. Shivangi Thard,
Mr. Ramendu Agarwal
For the Respondent : Mr. Surojit Nath Mitra, Sr. Adv.
Mr. Rajarshi Dutta,
Mr. Debraj Saha,
Mr. Debasish Sarkar,
Mr. S. Das.
Heard on : 16.12.2021, 22.12.2021
Judgment on : 11.01.2022
Ravi Krishan Kapur, J.:
1. This is an application under Section 36(2) of the Arbitration and
Conciliation Act, 1996 ("the Act"), wherein the petitioner has prayed
for stay of operation of an award dated October 6, 2021 (as corrected
by a letter dated October 7, 2021)[the award] passed by the Arbitrator.
2. The disputes by and between the parties relate to the process of
setting up of a D.I Pipe Manufacturing Plant at Kharagpur. Pursuant
to negotiations, the parties had entered into a contract dated 31
March, 2021, whereby construction and installation work for sanction
of a D.I. Manufacturing Plant was entrusted to the respondent. The
contract contained an arbitration clause and the award is a
culmination of the disputes and differences which had been referred
to arbitration.
3. By the said award, the Arbitrator has directed the petitioner, to pay a
sum of Rs.75,69,103.66/- to the respondent, particulars whereof are
set out hereinbelow:
Sl. No. Particulars of Award Amount
(i) Principal sum : Rs.35,29,760.75
(ii) Interim Interest @ 10% per : Rs.32,30,939.91
annum calculated from 7th
August, 2012 to 30th
September, 2021
(iii) Interest for pre-reference : Rs.3,08,403.00
period @ 18% P.A. from due
dates of the four unpaid
bills to date of reference.
(iv) Cost of Arbitration : Rs.5,00,000.00
Total : Rs.75,69,103.66
4. The primary contention made on behalf of the petitioner is that by an
ad-interim order dated 29 October, 2021 passed by a Coordinate
Bench, stay of operation of the award was granted on the condition
that, the petitioner would deposit 50% of the principal amount of the
award by way of bank draft to the Registrar Original Side, High Court
Calcutta. Hence, it is contended on behalf of the petitioner, that the
order dated 29 October, 2021 ought to continue till the disposal of the
application under Section 34 of the Act. In this connection reliance is
also placed on an unreported judgement in Kolkata Metropolitan
Development vs. South City Projects Calcutta Ltd.
5. On behalf of the respondent, it is submitted that, there is no question
of permitting the petitioner to secure only 50% of the principal
amount. The award is a composite award for an amount of
Rs.75,69,103.66/- and the petitioner is obliged to secure the entire
awarded amount. In respect of the ad-interim order dated 29 October,
2021, it is contended that, the same was only an ad-interim measure
and cannot be binding at the final hearing of this application. The
respondent also relied on Pam Developments Private Ltd. Vs. State of
West Bengal AIR 2019 SC 3937, Hyder Consulting (UK) Limited vs.
Governor, State of Orissa (2015) 2 SCC 189, Board of Trustees for the
Port of Kolkata vs. ABG Kolkata Container Terminal Private Limited
2019 SCC OnLine Cal 4009 and Kanpur Jal Sansthan and Another vs.
Bapu Constructions (2015) 5 SCC 267.
6. I have considered the submissions made on behalf of the parties.
7. At the outset, I find that the award is a speaking award and has been
passed after considering the rival contentions of the parties. The
Learned Arbitrator appears to have taken into consideration the
pleadings filed on behalf of the parties, framed issues and dealt with
the respective claims as well as the counterclaims of the parties. I also
find that the Arbitrator has held that:-
"It, therefore, appears from the record that excepting filing
the counter statement of claim and counter claim, the
respondent had not participated in the proceeding at all
either to cross-examine the claimants' witness or by
producing any witness of its own or by advancing any oral
argument in the matter inspite of several notices were given
by the tribunal".
8. Accordingly, at this prima facie stage and being fully aware that the
application under Section 34 of the Act is pending adjudication, I am
prima facie satisfied that there is per se no illegality nor perversity nor
violation of any law which ex facie appears from a plain reading of the
award. I reiterate that these are my prima facie findings and the
merits of the challenge to the award would be finally considered at an
appropriate stage.
9. On the merits of this application, I do not find that the ad-interim
order dated 29 October, 2021 passed at an interlocutory stage by a
Coordinate Bench can or ought to be bind a Court finally hearing the
application.
10. It is trite law that ad-interim orders by their very nature are orders of
moment. Such orders are certainly capable or being altered or varied
at different stages of the proceeding. A decision or direction at an ad
interim or interlocutory stage of the proceeding is not of the kind
which operates as res judicata. Accordingly, the contention of the
petitioner that this Court is bound to continue the order dated 29
October, 2021 stands rejected. In respect of the decision relied on by
the petitioner, I am of the view that the same is inapposite and
distinguishable in the facts and circumstances of this case. In the said
decision, the Court had given due weight to the fact of the petitioner
was a statutory corporation.
11. I also find merit in the argument of the respondent, relying on the
decision reported in Hyder Consulting (UK) Limited vs. Governor, State
of Orissa (2015) 2 SCC 189 that the awarded amount inclusive of
interest constitutes a 'sum' for which the award has been made.
Accordingly, I am of the view that the award ought to be secured for
the entire awarded amount of Rs.75,69,103.66/-.
12. I am also of the view that, the amended Section 36 of the Act,
contemplates securing the award holder for the entirety of the
awarded amount. Moreover, the security must be real and not illusory
nor meaningless. It is true that, pending the final hearing of the
application under Section 34 of the Act, the rights of the parties are
not yet finally crystallized. Nevertheless, in view of the amended
Section 36 of the Act, an award holder is only entitled to be secured
for the entirety of the awarded amount, unless there are reasons
otherwise as contemplated under the amended section 36 of the Act.
13. In view of the aforesaid, I direct that there shall be a stay of the
award subject to the condition that the petitioner shall deposit 50% of
the awarded amount of Rs.75,69,103.66/- by way of cash security or
its equivalent to the satisfaction of the Registrar Original Side, High
Court at Calcutta. Upon such deposit being made, the Registrar
Original Side is directed to make a fixed deposit of the said amount
with any nationalised bank and keep the same renewed till the
disposal of the application under Section 34 of the Act or until further
orders of Court. The remaining 50% of the awarded amount of
Rs.75,69,103.66/- shall be secured by way of bank guarantee(s) of a
nationalised bank by the petitioner to the satisfaction of the Registrar
Original Side, High Court. The aforesaid exercise is to be completed
within a period of four weeks from the date of this order. In the event
security as directed above is furnished, there shall be stay of
execution of the award till disposal of AP 462 of 2021.
14. With the aforesaid directions, IA No:GA 1 of 2021 in AP 462 of 2021
stands disposed of.
(Ravi Krishan Kapur, J.)
