Calcutta High Court
Dagcon (India) Private Limited vs Kolkata Metropolitan Development ... on 13 February, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
OCD-49,50,51,52
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
EC /434/2022
DAGCON (INDIA) PRIVATE LIMITED
VS
KOLKATA METROPOLITAN DEVELOPMENT AUTHORITY
AP /742/2022
KOLKATA METROPOLITAN DEVELOPMENT AUTHORITY
(FORMERLY KOLKATA IMPROVEMENT TRUST)
VS
DAGCON (INDIA) PRIVATE LIMITED
AP /745/2022
KOLKATA METROPOLITAN DEVELOPMENT AUTHORITY
(FORMERLY KOLKATA IMPROVEMENT TRUST)
VS
DAGCON (INDIA) PRIVATE LIMITED
AP-COM /942/2024
KOLKATA METROPOLITAN DEVELOPMENT AUTHORITY
(FORMERLY KNOWN AS KOLKATA IMPROVEMENT TRUST)
VS
DAGCON (INDIA) PRIVATE LIMITED
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 13th February, 2025.
Mr. Kishore Datta, Sr.Adv.
Mr. Sirsanya Bandopadhyay,
Sr. Standing Counsel
Mr. Avishek Guha, Adv.
Mr. Ankush Majumdar, Adv.
...for KMDA
Mr. Surajit Nath Mitra, Sr. Adv.
Mr. Sankarsan Sarkar, Adv.
Mr. Samriddha Sen, Adv.
Ms. Anshumala Bansal, Adv.
Mr. Richik Chowdhury, Adv.
Mr. Bhargav Varma, Adv.
...for Dagcon (India) Pvt. Ltd.
The Court: Learned Advocate General prays for stay of the award. Mr.
Mitra, learned senior advocate opposes such prayer on the ground unless the
security is furnished in terms of Section 36(3), the question of stay of the
award does not arise and the award-holder should be entitled to proceed with
EC 434 of 2022.
AP 745 of 2022 was disposed of by a learned coordinate Bench by an
order dated December 13, 2022 directing the award-debtor to put in the sum
awarded with the Registrar, Original Side by way of cash deposit within a
period of eight weeks from the date of the order. Upon such payment the
execution application would remain stayed till the disposal of the Section 34
application. The application for recall of the aforesaid order of His Lordship was
filed vide IA GA 1 of 2023. Such application was dismissed as withdrawn on
February 16, 2023. IA GA 2 of 2023 was filed by the award-debtor for
modification of the order of His Lordship by seeking a set off of the sum
awarded on the basis of the orders passed in the proceeding under the
Insolvency and Bankruptcy Code. The contention was that the resolution
professional had admitted the claim of the award-debtor to the tune of Rs. 80
crores which was the counter-claim in the arbitration proceeding. According to
the learned Advocate General, nothing is payable and the award stands
discharged. By an order dated April 25, 2023 His Lordship, dismissed the
application, inter alia, holding that the arbitral award should be enforced as it
stood and the amount awarded should be deposited. The order was carried in
appeal vide APO 88 of 2023. The Hon'ble Division Bench passed an interim
order for stay of the award till September 1, 2023 in the event a bank
guarantee was furnished by that date by the award-debtor. Accordingly, the
award-debtor furnished the bank guarantee of Rs. 80 crores to the satisfaction
of the Registrar, Original Side, Calcutta. It is submitted that the said bank
guarantee is valid till August 28, 2025. The appeal was ultimately dismissed by
a judgment dated September 26, 2024, inter alia, holding that the set off
claimed by the award-debtor was neither contractual, statutory nor legal. It
was at best an insolvency or equitable set off as claimed. The claim of the
award-debtor had only been admitted in the proceeding under the IBC when
the judgment dated April 25, 2023, was passed by the learned coordinate
Bench. The decision of the learned coordinate Bench was upheld. Learned
Advocate General submits that when the security in the form of bank
guarantee has already been deposited, the question of further deposit would
not arise and the execution should automatically remain stayed till the
disposal of the application under Section 34 of the Arbitration and Conciliation
Act, 1996.
Mr. Mitra, learned senior advocate for the award-holder submits that
the order of the Hon'ble Division Bench upholding the order of the learned
Single Judge led to revival of the order dated April 25, 2023. Thus, the question
of securing the amount by keeping the bank guarantee, which was deposited
on the direction of the Hon'ble Appeal Court at the interim stage renewed, will
not be proper security and it will be a violation and/or modification of the order
dated April 25, 2023. Further, it is submitted that the order of the Division
Bench was challenged by a Special Leave Petition and the Special Leave
Petition was rejected on 27th January, 2025.
Having heard the learned advocates for the respective parties, this
Court is of the view that upon dismissal of the appeal, the direction of the
learned coordinate Bench survives. The award-debtor was directed to deposit
the sum by way of cash deposit. The said order was neither valid nor modified
by the Appeal Court. Instead, the entire order was upheld. This Court, at this
stage, cannot modify the order dated April 25, 2023 which has attained finality.
Under such circumstances, the prayer of the learned Advocate
General that the bank guarantee may be directed to be kept renewed
immediately and this should be treated as sufficient for stay of the award is not
accepted. The bank guarantee is still valid. The award-debtor is required to
comply with the order dated April 25, 2023 as their challenge to the said order
has failed upto Hon'ble Apex Court. The award-debtor is entitled to take
back/encash the bank guarantee which was deposited in APO 68 of 2023 and
deposit the amount of Rs.80 crores by way of cash deposit or the award-debtor
may deposit Rs.80 crores in cash with the Registrar, Original Side, Calcutta,
and take return of the bank guarantee as the case may be. There will be an
unconditional stay of the award for a period of four weeks within which time
the deposit as directed hereinabove shall be made. In case of default, the
execution case shall proceed. If this order is complied with, the stay shall
continue till disposal of the application under Section 34 of the Arbitration and
Conciliation Act, 1996.
With the above mentioned direction, AP 745 of 2022 and AP-COM
942 of 2024 stand disposed of. EC 434 of 2022 and AP 742 of 2022 be de-
tagged.
AP 742 of 2022 shall be listed immediately upon the department
carrying out the necessary registration of the matter in the commercial
division. The learned advocate-on-record of the award-debtor shall accordingly
take steps.
(SHAMPA SARKAR, J.)
TR/
