Arun Pandey & Ors. vs Vikas Arora & Anr.
2022 Latest Caselaw 485 Del

                            $~33
                            *    IN THE HIGH COURT OF DELHI AT NEW DELHI
                            %                                                     Date of Decision: 16.2.2022
                            +      EFA(OS)(COMM) 2/2022
                                   ARUN PANDEY & ORS.                                   ..... Appellants
                                               Through                  Mr     Pawanjit   Singh      Bindra,
                                                                        Sr.Adv.with Mr Manish Gandhi, Adv.
                                                versus
                                   VIKAS ARORA & ANR.                                  ..... Respondents

                                                Through                 Mr Rajat Sehgal with MrAarant
                                                                        Sarangi, Advs.
                                   CORAM:
                                   HON'BLE MR JUSTICE RAJIV SHAKDHER
                                   HON'BLE MR JUSTICE TALWANT SINGH

[Court hearing convened via video-conferencing on account of COVID-19]

RAJIV SHAKDHER, J. (Oral):

CM No.8565/2022

1. Allowed, subject to just exceptions.

EFA(OS)(COMM) 2/2022& CM No.8564/2022[Application filed on behalf of the appellants for interim relief]

2. This is an appeal preferred against the order of the learned Single Judge dated 19.7.2022, passed in OMP(ENF.)(COMM.) 30/2020 filed by the appellants under Section 36 of the Arbitration and Conciliation Act, 1996 [in short, the "Act"].

2.1. Via the aforesaid petition, the appellants sought enforcement of the arbitral award dated 25.10.2018 [in short "award"]. 2.2. It is not in dispute that the award was based on consent, which was founded on an agreement i.e., Settlement Deed dated 15.9.2018 [in short, "SD"].

Signature Not Verified Signed By:VIPIN KUMAR RAI

Signing Date:21.02.2022 15:06:24

3. Mr Rajat Sehgal, who appears on behalf of the respondents, says that the present appeal is not maintainable for the reason that, curiously enough, the appellants had instituted an enforcement petition under Section 36 of the Act, whereas the respondents are the persons in whose favour the award has been passed.

4. There were two issues, which had been raised by the appellants' while pressing the enforcement petition; these are referred to in paragraph 1 of the impugned order.

5. Insofar as the first issue is concerned, Mr Pawanjit Singh Bindra, learned senior counsel, who appears on behalf of the appellants, says that nothing survives in the said issue. This issue concerns withdrawal of FIR No.211 dated 29.5.2016, registered with P.S. Sushant Lok, Gurgaon, Haryana.

5.1. It is not disputed before us by the counsel for the parties that the aforesaid FIR has become inefficacious, in view of the fact that the objections to the closure report were withdrawn by the respondents. We are told that an order, to that effect, has been passed by the concerned court on 12.10.2020.

5.2 For the purposes of good order and record, Mr Sehgal will file the order dated 12.10.2020 with the Registry of this Court.

6. The other issue, that the appellants had raised before the learned Single Judge [and has also been raised before us] is, as to who was liable to pay the amounts due and outstanding qua Andhra Bank.

"8. It is apparent from the reading of the sub-paragraph (ii) of paragraph 3 of the settlement deed dated 15.09.2018, as quoted above, that the petitioners are liable to pay a sum of Rs.3 crores to Andhra Bank for releasing the mortgaged

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Signing Date:21.02.2022 15:06:24 property (property bearing House No. Birch Court - 59, Nirvana Country, Sector-50, Gurugram, Haryana). Admittedly, the said property belongs to the respondents and was mortgaged for taking loan by Sports fit World Pvt. Ltd. The petitioners had agreed to pay Rs.3 crores for release of the said property. The word "upto" used in the said clause had limited the obligation of the petitioners under the Award. It did not, in any manner, absolve the petitioners from the liability, if any, towards Andhra Bank as Andhra Bank was not a party to the present dispute. The same does not imply that the respondents were required to pay the balance amount of the loan. The respondents could not insist on payment of any additional sum for release of the said property. In this view, since the Award does not specifically require the respondents to discharge the liability towards Andhra Bank, no orders to this effect can be passed in this petition.

9. Similarly, this Court is also unable to accept that any obligation has been placed on the respondents to discharge the liability towards Andhra Bank, in terms of the said sub paragraph (iv) of paragraph 3 of the settlement deed as quoted above. The Petitioners were obliged to deposit a sum of Rs.3 crores in a Fixed Deposit Receipt (FDR) if Andhra Bank did not accept the OTS of Rs.3 crores and release the mortgaged property within a period of six months. In such a case, the respondents were obliged to utilize the Fixed Deposit to discharge the liability of Andhra Bank and for no other purpose. However, that does not mean that the respondents were obliged to discharge further liability of Andhra Bank over and above Rs.3 crores as contemplated in sub paragraph

(iv).

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Signing Date:21.02.2022 15:06:24

10. Mr. Lamba further submits that parties had agreed to apportion the liability in terms of sub paragraph (iii) of 3 of the Settlement Deed. However, this Court finds that there is nothing stated in the award whereby the respondents were obliged to discharge the liability of Andhra Bank."[Emphasis is ours]

6.1. Mr Bindra has submitted that there is an error, and, in this context, has drawn our attention to paragraphs 1(i) and (iv) of the SD 6.2. According to Mr Bindra, the liability of the appellant qua Andhra Bank was confined to Rs.3 crores, and any amount that the Andhra Bank may claim over and above the said amount was to be paid by the respondents.

6.3. It is, however, not disputed by Mr Bindra that payments to Andhra Bank had to be made "immediately" by the appellants, and that steps had to be taken for release of the mortgaged property of respondent no.1, within a maximum period of six months. [See clause 1 (iii) and (ii) of of the SD.] 6.4. It is, however, not disputed by Mr Bindra that the appellants did not take steps in the matter towards payment of Rs.3 crores to the Andhra Bank, up-until such time the respondent no.1 moved the Court via OMP(ENF)(COMM.) 55/2019 for enforcement of clause 1 (ii), (iv) and (vi) of the SD.

7. We may note that, in this context, Mr Sehgal has drawn our attention to various orders passed by the Court in the respondent no.1's enforcement petition i.e., orders dated 26.4.2019, 9.5.2019 and 14.5.2019. [See pages 287, 292 and 294 of the case file.] 7.1. Admittedly, the aforementioned amount of Rs.3 crores was paid in two tranches. In the first instance, Rs.1 crore was paid, and, thereafter, Rs.2

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Signing Date:21.02.2022 15:06:24 crores was paid. Rs.2 cores was paid, concededly, by way of a demand draft, which was handed over to the respondents on 14.5.2019; the demand draft though was drawn in favour of Andhra Bank.

8. The record also shows that Andhra Bank has not arrived at a settlement with the mortgagor i.e., respondent no.1. There is no dispute that the property mortgaged to Andhra Bank is a residential property of respondent no.1. It is also not disputed that the principal borrower is appellant no.3 i.e., Sportsfit World Pvt. Ltd., who was a party to the SD along with appellant nos.1 and 2.

8.1. It is also not in dispute that, at the moment, an appeal is pending adjudication before the Debts Recovery Appellate Tribunal, preferred by the Andhra Bank. This appeal has been preferred by the Andhra Bank against the order dated 26.08.2019, passed by the Debts Recovery Tribunal-II, Chandigarh in a proceeding, which was filed by respondent no.1 against the Andhra Bank.

8.2. In sum, because of the clear breach of obligations by appellant no.1, the matter involving payment of dues of Andhra Bank could not get settled. 8.3. Furthermore, conjoint reading of clause 1(i) and (iii), to our minds, makes it crystal clear that, apart from anything else, the appellants were required to pay Rs.4 crores to the respondents. 8.4. As noted above, this liability that the appellants had undertaken vis-a- vis the respondents was in addition to the liability that the appellants had agreed to discharge, in respect in outstanding dues of Andhra Bank, as captured in the SD.

9. Mr Bindra concedes that no payment whatsoever has been made to the respondents. Mr Bindra, however, says that since the respondents

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Signing Date:21.02.2022 15:06:24 breached the SD, these payments were not paid. 9.1. We tend to disagree with this submission of Mr Bindra. 9.2. A plain reading of clause 1(i) along with clause 1(iii) would show that the total sum payable to the respondents, besides the sums the appellants had to pay to Andhra Bank, was Rs 4 crores.

9.3. The liability to pay Rs.4 crores commenced from 30.1.2020, and that the appellants were required to pay the said sum in tranches of Rs.1 crore per annum. At least three tranches of Rs.1 crore has become due and payable, however, nothing has been paid by the appellants, as yet. 9.4. Insofar as Mr Bindra's contention that the respondents were in breach because it did not settle dues of Andhra Bank is concerned, we are unable to persuade ourselves to agree with this submission advanced by Mr Bindra. As noted above, the appellants were required to pay monies to the Andhra Bank immediately, albeit within a maximum period of six months. Apart from anything else, this obligation was breached by the appellants. 9.5. We also agree with Mr Sehgal that in this case, the enforcement petition, if at all, should have been moved by the respondents and not by the appellants.

10. Therefore, we find no error of fact or law in the impugned judgement. 10.1. The conduct of the appellants shows that they do not intend to discharge their obligations, as undertaken by them under the SD. 10.2. As a matter of fact, we are told that the respondents have also filed their enforcement petition i.e., OMP(ENF)(COMM.) 123/2021. Mr Sehgal has screen-shared the orders dated 18.1.2022 and 7.2.2022 passed in the said petition, which is indicative of the fact that the appellants have been directed to file an affidavit- of-disclosure concerning their assets. That direction does

Signature Not Verified Signed By:VIPIN KUMAR RAI

Signing Date:21.02.2022 15:06:24 not appear to have been complied with up until now. 10.3. Mr Sehgal is directed to place the copies of the orders, referred to hereinabove, which have been passed in the aforementioned enforcement petition, on record.

11. Thus, for the foregoing reasons, we find no merit in the appeal. The same is, accordingly, dismissed.

12. Consequently, pending application shall stand closed.

RAJIV SHAKDHER, J

TALWANT SINGH, J FEBRUARY 16, 2022/pmc

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Signature Not Verified Signed By:VIPIN KUMAR RAI

Signing Date:21.02.2022 15:06:24