Delhi High Court
M/S Sterling & Wilson Electricals ... vs M/S Silicon Graphics Systems ... on 4 May, 2009
Author: Shiv Narayan Dhingra
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Reserve: 29.4.2009
Date of Order: May 04, 2009
OMP No. 678/2008
% 04.05.2009
M/s Sterling & Wilson Electricals
Pvt. Ltd. ... Petitioner
Through: Mr. Anurag Kumar, Advocate
Versus
M/s Silicon Graphics Systems (India)
Pvt. Ltd. ... Respondent
Through: Mr. Rajiv Tyagi, Advocate
JUSTICE SHIV NARAYAN DHINGRA
1. Whether reporters of local papers may be allowed to see the
judgment? No.
2. To be referred to the reporter or not? Yes.
3. Whether judgment should be reported in Digest? Yes.
ORDER
By this application under Section 9 of the Arbitration & Conciliation
Act, 1996 ( for short 'the Act') the petitioner has made a prayer that this Court
should direct the respondent to deposit the amount of the majority award which
was subject matter of challenge under Section 34 of the Act before the Court. It
is submitted by the petitioner that the respondent had filed frivolous objections
against the award and was not arguing the matter. The respondent company
was a 100% subsidiary of Indian Company and there was every likelihood of the
respondent company winding up from India and turning the award into a paper
decree. During arguments, learned Counsel for the petitioner submitted that the
Court should at least ask for some security in the form of bank guarantee or
property from the respondent. He submitted that due to recession many such
companies as that of the respondent were leaving the country without
discharging their liability.
2. Learned Counsel for the respondent on the other hand stated that
in view Section 36 of the Arbitration & Conciliation Act which prohibits the
execution of the award till disposal of the objections, this Court has no jurisdiction
to direct the respondent to deposit the amount as security or to give bank
guarantee which was just equivalent to deposit of the amount. He also argued
that the petitioner has placed no material on record to show that the respondent
was having any intention to close its business or to run away. He submitted that
though the respondent was a 100% subsidiary of US Company but it was an
Indian company registered under Indian law and in case of winding up, the
petitioner and all other creditors would get a due notice as required under law
and the respondent cannot run away just like that.
3. The question regarding deposit of amount during pendency of the
objections was considered by the Supreme Court in National Aluminum Co. Ltd.
v. M/s Pressteel and Fabrications Pvt. Ltd. & Anr. AIR 2005 SC 1514 wherein the
Supreme Court observed that an award when challenged under Section 34 of the
Act within the time stipulated therein, becomes unexecutable. There is no
discretion left with the Court to pass any interlocutory order in regard to the said
award except to adjudicate on the correctness of the claim made by the applicant
therein. Therefore, that being the legislative intent any direction from the Court
contrary to that also becomes impermissible.
4. In view of the above judgment, I consider that this Court cannot
direct the respondent to deposit the awarded amount in the Court during
pendency of the application under Section 34 of the Act. The petitioner has also
failed to place on record any material to show that the respondent was making
efforts to sell its properties or was diluting the worth of its shares or was
committing any such act which gives rise to the apprehension to the petitioner
that the respondent's wealth would be wiped away shortly or soon. In view of
this I consider that this application under Section 9 of the Act cannot be allowed
and is hereby dismissed.
May 04, 2009 SHIV NARAYAN DHINGRA, J.
vn
