Til Limited vs Shapoorji Pallonji & Co. Private ...
2023 Latest Caselaw 5599 Cal

Item No. 7
28.08.2023

GB C.O. 2080 of 2023

TIL Limited Vs.

Shapoorji Pallonji & Co. Private Limited

Mr. Rajarshi Dutta, Mr. D. Basu, Mr. Debjyoti Saha, Mr. Rahul Poddar ... for the Petitioner.

Mr. Suman Kr. Dutt, Mr. Sankarshan Sarkar, Mr. Bhaskar Mukherjee, Ms. Nafisa Yasmin ... for the Opposite Party.

The revisional application arises out of an order dated

June 13, 2023 passed by the learned Judge, Commercial

Court at Alipore in Arbitration Execution Case No.03 of

2022. By the order impugned, the learned court rejected I.A.

No.02 of 2023, which was an application for recalling of an

order dated April 5, 2023 passed in I.A. No.01 of 2022.

I.A. No.01 of 2022 was filed by the award holder with

prayers for directions upon the judgment debtor to furnish

security to the extent of Rs.3,19,30,564/- or in the alternative

to deposit the entire amount in a short term interest bearing

fixed deposit till the execution was satisfied. Such application

was disposed of on April 5, 2023, by the learned Commercial

Judge directing the award debtor to secure the entire amount

within four weeks from the date of the order in the form of a

renewable bank guarantee in favour of the petitioner/award

holder, to be deposited with the learned Registrar, Alipore,

till further orders.

The learned Commercial Judge considered the

allegations made by the award holder that the award debtor

was trying to surreptitiously withdraw the money lying in the

bank account and was also selling out valuable assets.

Relying on the decisions of the Hon'ble Apex Court in

the matter of Pam Development Pvt. Ltd. versus State

of West Bengal reported in (2019) 8 SCC 112, Satyen

Construction versus State of West Bengal reported in

2020 SCC OnLine Cal 805 and Siliguri Jalpaiguiri

Development Authority versus Bengal Unitech

Universal Siliguri Projects Limited reported in 2022

SCC OnLine Cal 1754, the learned court held that the law

mandated that for the execution proceeding to remain

stayed, the money awarded would have to be secured. While

the rights of the award holder were not crystallised till the

disposal of the application under Section 34 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred

to as the 'said Act'), the award holder had the statutory

safeguard under Section 36 of the said Act to be secured in a

fruitful manner, for the entirety of the arbitral award.

Relying on the decisions of the Hon'ble Apex Court,

the learned Commercial Judge held that the award holder

should be secured for the amount awarded by the learned

Arbitral Tribunal along with interest amounting to

Rs.3,19,30564/-, and directed that renewable bank guarantee

of the entire amount in favour of the award holder be

deposited with the learned Registrar, Alipore, till further

orders.

The award debtor filed an application for recalling of

the said order on the following grounds:-

"(i) The Award Holder should not be permitted to rely on the application filed by them since the verification of the application filed by the Award Holder was not in the manner as per the Order VI Rule 15A of Code of Civil Procedure, 1908, as amended, by the Commercial Court Act, 2016. It was submitted that the effect of not verifying a pleading in the manner provided in order VI Rule 15A of Code of Civil Procedure, 1908, as amended, particularly sub-rule (4) thereof, is that a party shall not be permitted to rely on such pleading.

(ii) The application filed by the Award Holder cannot be entertained since this Ld. Commercial Court cannot entertain the execution application."

The said recalling application was dismissed on the

ground that except under situations enumerated by the

Hon'ble Apex Court in several decisions, a court could not

recall its own order. The Commercial Judge did not recall the

order dated April 5, 2023.

According to the learned Judge, the tests were laid

down in the decision of Budhia Swain and Others

versus Gopinath Deb and Others reported in (1994) 4

Supreme Court Cases 396 and the decision of Indian

Bank versus M/s. Satyam Fibres India Pvt. Ltd.

reported in 1996 (5) SCC 550. Unless the award was

obtained by fraud, misrepresentation or the court committed

an apparent error, the power of recall could not be exercised.

Referring to the decision of A.R. Antulay versus R.S.

Nayak & Anr. reported in AIR 1988 SC 1531, it was held

that the court could recall its own order on certain

circumstances, namely, when the decision was rendered in

ignorance of a fact or a necessary party had not been served

or a necessary party had died and the estate was not

represented or unless the order was recalled, a party would

suffer serious injustice. The learned Commercial Judge

arrived at the finding that the laws applicable in case of

exercise of power of recall were not satisfied in the facts of

the present case. Thus, the application for recalling was

rejected.

Mr. Rajarshi Dutta, learned advocate appearing on

behalf of the petitioner submits that the learned court did not

take into consideration the specific objection raised in the

recalling application. Order 6 Rule 15A of the Code of Civil

Procedure as amended by the Commercial Courts Act, 2016,

mandated that the pleadings were to be verified in a

particular manner. Such procedure, not having been followed

by the award debtor, the application for execution of the

award could not have been entertained and no orders could

have been passed on the basis of such application.

Next contention of Mr. Dutta was that the learned

commercial court lacked the jurisdiction to entertain the

application for execution of the award as Section 42 of the

Arbitration and Conciliation Act, 1996 (hereinafter referred

to as the said Act) would be a bar. Mr. Dutta submits that the

commercial court did not have the jurisdiction to decide the

execution proceeding as the initial application under Section

9 of the said Act, had been filed before the learned District

Judge at Alipore.

According to Mr. Dutta, the decision in State of

West Bengal and Others versus Associated

Contractors reported in (2015) 1 SCC 32, ought to have

been taken into consideration by the learned court, while

deciding the issue of jurisdiction. Relying on paragraphs 11,

12, 19 to 25 of the said judgment, Mr. Dutta submits that a

three Judges Bench of the Hon'ble Apex Court had decided

that Section 42 of the said Act would apply to applications

made after the arbitral proceedings had come to an end,

provided that they were made under Part-1 of the statute.

Only exception to such principle were applications under

Section 8 and 11 of the said Act. Mr. Dutta submits that the

execution has been filed after the arbitral proceeding and as

such, Clause 'f' of paragraph 25 of the judgment in

Associated Contractors (supra) would squarely apply.

The decision in Sundaram Finance Limited

versus Abdul Samad and Another reported in (2018)

3 SCC 622 was distinguished by Mr. Dutta on the ground

that Associated Contractors (supra) was not considered by

the Apex Court, in the said decision. Secondly, Associated

Contractors (supra) was a decision by a Bench of larger

composition and ought to be followed by this Court.

Associated Contractors (supra) did not make a distinction

with regard to the applicability of Section 42 in execution

proceedings. In Associated Contractors (supra) all

applications filed before, after and during an arbitration

proceeding would have to be filed before the same court. An

execution proceeding, being a proceeding initiated after the

arbitration concluded, could not be instituted before a court

other than the court before which the application under

Section 9 of the said Act had been filed.

Mr. Suman Dutt, learned advocate appearing on

behalf of the opposite party, submits that Associated

Contractors (supra) did not deal with applications for

execution of an award, while deciding the scope of Section 42

of the said Act. He refers to paragraphs 16, 17 and 20 of the

said decision and submits that the Hon'ble Apex Court

rendered the decision in respect of applications filed under

Part-1 of the said Act. Section 42 of the Act dealt with issues

of jurisdiction in respect of arbitral proceedings. Reliance

was placed on the decision of Sundaram Finance

Limited (supra).

The learned counsel also relies on a decision of this

Court in the matter of BLA Projects Pvt. Ltd. versus

Asansol Durgapur Development Authority passed in

C.O. 1898 of 2019, and submits that a similar point as has

been raised by Mr. Rajarshi Dutta, was raised before a

learned coordinate Bench. The learned Judge discussed the

ratio of Associated Contractors (supra) and Sundaram

Finance Limited (supra) and arrived at a conclusion that

paragraph 25 of the decision in Associated Contractors

(supra) would clearly indicate that the Hon'ble Apex Court

had held that Section 42 would apply to applications made

under part-1. According to the learned Judge, Section 36 of

the Act was an enabling provision, by which an award holder

could seek execution of the award. The modalities for such

proceeding had to be in accordance with the Code of Civil

Procedure. Thus, an application for execution was filed under

the provision of the Code of Civil Procedure and was not an

application under Part-1 of the said Act.

With regard to the contention of Mr. Rajarshi Dutta

that the verification was not in terms of Order 6 Rule 15A of

the Code of Civil Procedure, this Court is of the view that

such defect is a curable one, as the defect does not go to the

very root of the application for execution of the award. In the

matter of Harji Engineering Works Pvt. Ltd. verus

Hindustal Steelworks Construction Ltd. reported in

AIR 2022 Cal 18, a similar point was decided. Her

Lordship had held that the provision with regard to

verification of pleadings in a commercial suit was directory

and not mandatory. The relevant portion is quoted below:-

"17. The above discussion may be seen in addition to the general inclination of a court to treat procedural lapses with kindness unless a party disentitles itself to such benevolence by reason of its conduct or by operation of law. Without taking the avowed object to quick resolution of commercial disputes away from the 2015 Act, rules of procedure cannot be given precedence in a manner so as to defeat the substantive rights of the parties unless specifically prohibited by law. In the present case, Sub-rule (5) of Order VI Rule 15A can be passed into service in aid of the defendant. If a purposive interpretation is given to the various provisions contained therein, the discretion conferred on a court in the matter of striking out a pleading which is not verified by a Statement of Truth cannot be seen as a speed-breaker in the momentum of the Act."

Mr. Suman Dutt submits that Order 6 Rule 15A deals

with verification of pleadings. Order 6 Rule 1 of the Code of

Civil Procedure defines pleadings as plant and written

statement. Thus, an application under Order 21 of the Code,

would not be a pleading as contemplated under the

provisions of the Code of Civil Procedure and Order 6 Rule

15A of the Code, would not apply.

Having considered the rival contentions of the parties,

this Court is of the view that the learned court below had not

committed any error in directing the award debtor to secure

the arbitral award by furnishing a bank guarantee of the full

amount with interest. Although, it was an application made

by the award holder, the law is clear that unless the amount

was secured, the execution would proceed. Either way, if the

award debtor wants to press his application under Section 34

of the said Act and desires that the proceeding under Section

36 be stayed till the rights are decided, entire arbitral award

would have to be furnished or else the execution will

proceed.

The issue of jurisdiction and bar under Section 42 has

been answered by the Hon'ble Apex Court in Sundaram

Finance Limited (supra). Application for execution of an

award is not an application within Part-1 of the Arbitration

and Conciliation Act. According to the Hon'ble Apex Court,

Section 42 applied to those applications arising from the

arbitration agreement and the arbitration proceedings, but

not to a proceeding which stood terminated upon making of

the final award. Section 32 of the said Act was discussed and

it was held that an arbitral award passed by an Arbitral

Tribunal was deemed to be a decree under Section 36 of the

Act and there was no deeming provision anywhere to hold

that the Court within whose jurisdiction the arbitral award

was passed, should be taken to be the court which passed the

decree. For enforcement of an award the execution case

could be filed anywhere in the country, where such decree

could be executed, and there was no requirement to obtain a

transfer of the decree from the court which would have the

jurisdiction over the arbitral proceedings.

In the case in hand, the jurisdiction of the commercial

court has been invoked on the basis of the subject mater of

the dispute, the quantum of the arbitral award, the territorial

jurisdiction of the court over assets of the award debtor.

Under such circumstances, the point raised by Mr.

Rajarshi Dutta is not entertained by this Court. The Court

also does not find that the issue of incorrect verification of

the application goes to the very root of maintainability of the

execution case.

Accordingly, the revisional application is dismissed.

The petitioner is at liberty to raise all points available

at the time of hearing, apart from the question of

applicability of Section 42 of the said Act, which has been

decided here.

The observations in this order shall not influence the

learned court below while deciding the execution case.

Urgent photostat certified copy of this order, if applied

for, be given to the parties on priority basis.

(Shampa Sarkar, J.)