Executive Engineer vs Tm/S Budharaja Mining And
2021 Latest Caselaw 9135 Ori

                     IN THE HIGH COURT OF ORISSA AT CUTTACK

                                  ARBA No.6 of 2021

                 Executive Engineer, Head Work          ....     Appellants
                 Division, Samal Barrage and others
                                                  Mr.Ajodhya Ranjan Dash,
                                           Additional Government Advocate

                                           -versus-

                 TM/s Budharaja Mining and            .... Respondent
                 Construction Ltd.
                                           Mr.S.P.Mishra, Senior Advocate
                                        along with Mr.Avijit Pal, Advocate

                       CORAM:
                       JUSTICE K.R. MOHAPATRA

                                        ORDER

Order No.                              01.09.2021
  7.        1.       This matter is taken up through hybrid mode.

2. This Arbitration Appeal has been filed by the functionaries of the State of Odisha under Section 37 of the Arbitration and Conciliation Act, 1996 (for short 'the Act').

3. As the Respondent has already entered appearance through learned Counsel, this Court feels that interest of justice will be best served if the matter is heard on merit on the adjourned date.

4. Hence, issue notice. As the Respondent has already entered appearance no requisites for issuance of notice need be filed.

5. Put up this matter on 15th November, 2021 on which date an endeavour shall be made for disposal of the appeal on merit.

// 2 //

6. LCR be called for so as to reach this Court by the next date.

(K.R. Mohapatra) Judge

8. I.A. No.12 of 2021

1. This is an application filed by the State-Appellants under Section 36(2) of the Act praying inter alia to stay operation of judgment dated 18th February, 2021 passed in Arbitration Petition No.18 of 2018 (Annexure-1) and further to stay further proceeding in Execution Proceeding No.1 of 2019 pending before learned District Judge, Angul.

2. It is submitted by Mr. Dash, learned AGA that the matter is posted tomorrow, i.e., 2nd September, 2021 for attachment of the property of the State-Appellants. He, therefore, prays for stay of further proceeding of the Execution Proceeding No.1 of 2019 till disposal of the Appeal.

3. Mr. Mishra, learned Senior Advocate vehemently opposes the above submission of Mr. Dash, learned AGA and submits that in view of the specific provision under Section 36(3) of the Act, this Court may stay operation of the arbitral award subject to condition as may deem fit by recording the reasons. He also placed reliance on a decision of the Hon'ble Supreme Court in the case of Pam Developments Private Limited Vs. State of West Bengal, reported in (2019) 8 SCC 112, relevant portion of which runs as under:-

"26. Arbitration proceedings are essentially alternate dispute redressal system meant for early/quick resolution of disputes and in case a money decree -- award as passed by the arbitrator against the Government is allowed to be automatically stayed, the very purpose of quick resolution

// 3 //

of dispute through arbitration would be defeated as the decree-holder would be fully deprived of the fruits of the award on mere filing of objection under Section 34 of the Arbitration Act. The Arbitration Act is a special Act which provides for quick resolution of disputes between the parties and Section 18 of the Act makes it clear that the parties shall be treated with equality. Once the Act mandates so, there cannot be any special treatment given to the Government as a party. As such, under the scheme of the Arbitration Act, no distinction is made nor any differential treatment is to be given to the Government, while considering an application for grant of stay of a money decree in proceedings under Section 34 of the Arbitration Act. As we have already mentioned above, the reference to CPC in Section 36 of the Arbitration Act is only to guide the court as to what conditions can be imposed, and the same have to be consistent with the provisions of the Arbitration Act.

xx xx xx

28. Section 36 of the Arbitration Act also does not provide for any special treatment to the Government while dealing with grant of stay in an application under proceedings of Section 34 of the Arbitration Act. Keeping the aforesaid in consideration and also the provisions of Section 18 providing for equal treatment of parties, it would, in our view, make it clear that there is no exceptional treatment to be given to the Government while considering the application for stay under Section 36 filed by the Government in proceedings under Section 34 of the Arbitration Act.

29. Although we are of the firm view that the archaic Rule 8-A of Order 27 CPC has no application or reference in the present times, we may only add that even if it is assumed that the provisions of Order 27 Rule 8-A CPC are to be applied, the same would only exempt the Government from furnishing security, whereas under Order 41 Rule 5 CPC, the Court has the power to direct for full or part deposit and/or to furnish security of the decretal amount. Rule 8-A only provides exemption from furnishing security, which would not restrict the Court from directing deposit of the awarded amount and part thereof."

In that view of the matter, he submits that the State should not be treated in a different manner; rather it should be treated as any other litigants. In case, this Court thinks it proper to stay the proceedings in Execution Case No.1 of 2019, it should direct the

// 4 //

Appellants to deposit the awarded amount to secure the award. It is his submission that learned District Judge, Angul, while disposing of the petition under Section 34 of the Act held that the Petitioners (Appellants herein) are liable to pay simply interest @ 9% per annum on the total awarded amount of Rs.1,77,50,015.87 from 1st July, 2004 till the date payment is made. The Claimant-Respondent having already paid Rs.53,25,005/-, it is entitled to the rest of the awarded amount with simple interest at the rate of 9% per annum. It is his submission that as on date, the Respondent is entitled to receive Rs.7.00 crore (rupees seven crore) approximately. Thus, the Appellants may be directed to deposit an amount of Rs.7.00 crore as a condition precedent for stay of further proceedings in Execution Proceeding No.1 of 2019.

4. Mr. Dash, learned AGA does not dispute the legal position in Pam Developments Private Limited (supra). He, however, submits that since the Appellants are the State machinery, the Respondent will be paid its legitimate dues if the Appellants fail in this appeal. As such, there being no threat from the side of the Appellants with regard to payment of the awarded amount, if any to the Respondent, there should be an un-conditional order of stay of further proceedings of Execution Proceeding No.1 of 2019.

5. Taking into consideration the rival contentions of the parties, more particularly the ratio decided in the case of Pam Developments Private Limited (supra) the Appellants are liable to deposit certain amount as a condition precedent for stay of further proceedings in Execution Proceeding No.1 of 2019 pending before learned District Judge, Angul.

// 5 //

6. Accordingly, this Court feels that an amount of Rs.3.50 crore (rupees three crore fifty lakh) will be just and equitable to be deposited by the Appellants as a condition precedent for stay of further proceedings in the Execution Case.

7. Therefore, this Court directs that in the event the Appellants/Petitioners deposit a sum of Rs.3.50 crore (rupees three crore fifty lakh) before the executing Court within a period of four weeks hence, further proceeding in Execution Proceeding No.1 of 2019 pending before learned District Judge, Angul shall remain stayed till the next date.

7.1 It is further directed that on deposit of the aforesaid amount the same shall be kept in fixed deposit in a nationalized Bank renewable from time to time by the executing Court until further orders. Failure, if any, on the part of the Appellants to deposit the aforesaid amount within the time stipulated above, the executing Court will be at liberty to proceed with the Execution Proceeding No.1 of 2019 in accordance with law.

8. Issue urgent certified copy of the order on proper application.

(K.R. Mohapatra) Judge

s.s.satapathy