Calcutta High Court
Union Of India & Anr vs Palm Development Pvt. Ltd on 5 September, 2018
Author: Ashis Kumar Chakraborty
Bench: Ashis Kumar Chakraborty
IN THE HIGH COURT AT CALCUTTA
ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
G.A. No. 1903 of 2018
with
A.P. NO.1121 of 2016
Union of India & Anr.
VS.
Palm Development Pvt. Ltd.
BEFORE:
The Hon'ble JUSTICE ASHIS KUMAR CHAKRABORTY
For the petitioners : Ms. Aparna Banerjee, Advocate
For the respondent : Mr. Priyankar Saha, Advocate
Judgement on : 5th September, 2018
Ashis Kumar Chakraborty, J.
In this application under Section 36(2) of the Arbitration and Conciliation Act, 1996, as amended by Act 3 of 2016 (in short "the Act of 1996"), the petitioner Union of India, represented through the General Manager, Eastern Railway has prayed for stay of operation of the award dated August 08, 2016 (hereinafter referred to as "the impugned award") made by an arbitrator. By the impugned award the petitioner has been directed to pay Rs. 16,10,750/- to the claimant, the respondent herein. The impugned award further directs the petitioner to pay Rs. 10,90,100/- to the respondent together with interest upon award at the rate of 8%, per annum till realisation.
According to Ms. Banerjee, learned counsel appearing in support of this application that in terms of the provisions contained in sub-section (2) of Section 36 of the Act of 1996 the petitioner Union of India has filed this application for stay of operation of the impugned award and in view of the provisions of Rules (8A) and (8B) of Order XXVII of the Code of Civil Procedure, 1908 (hereinafter referred to as "the Code") it is exempted from furnishing any security under Rules 5 and 6 of Order XL1 of the Code for stay of operation of any money decree. Consequently, the Proviso to sub-section (3) of Section 36 of the Act of 1996 is not applicable to the petitioner who is entitled to obtain unconditional stay of operation of the impugned award.
On the other hand, Mr. Priyankar Saha, learned advocate appearing for the claimant award holder, the respondent herein strongly opposed the contention of the petitioner Union of India that it is entitled to obtain unconditional stay of operation of the impugned award without furnishing any security. Relying on a Full Bench decision of this Court in the case of Union of India-vs.- Amitava Pal reported in AIR 2015 Cal 189, Mr. Saha submitted that in view of the provisions contained in Rule (8-A) of Order XXVII of the Code, even if the petitioner Union of India is exempted from furnishing security under Rules 5 and 6 of Order XL1 of the Code but, in order to obtain unconditional stay of operation of the impugned award the petitioner has to fulfil the stipulations in clauses (a) and (b) of sub-rule (3) of Rule 5 of Order XL1. It was contended that in order to obtain unconditional stay of execution of the impugned award the petitioner has to satisfy -
(a) that substantial loss may result to it unless the order directing the stay of execution is made; and
(b) that the petitioner has made this application without unreasonable delay. It was argued when the present respondent has already filed an application for execution of the impugned award and thereafter, the petitioner filed this application it cannot be said that the petitioner has filed the application without unreasonable delay. It was further submitted by the respondent that in the application the petitioner has not alleged that unless the order for stay of operation of the impugned award is passed, any substantial loss will be caused to itself. In support of its contention that as a condition for obtaining stay of operation of the arbitral award, the petitioner has to secure the entire awarded amount learned counsel appearing for the respondent also relied on the decision of a learned Single Judge of this Court in the case of Commissioner Health, Directorate of Health Services -vs.- M/s. Nitapol Industries reported in AIR 2018 Cal 54.
In her reply, Ms. Banerjee submitted that the decision of the learned Single Judge in the case of M/s. Nitapol Industries (supra) is an authority for interpreting the provisions in section 19 of the Micro, Small and Medium Enterprises Development Act,2006 and the said decision has no application in this case. She further submitted that in the present case the arbitral award was made before the Act 3 of 2016 came into force and, as such, with the filing of the application under section 34 of the Act of 1996 by the petitioner, the execution application filed by the respondent remained stayed. But subsequently, in view of the decision of the Supreme Court in the case of Board of Control for Cricket in India -vs- Kochi Cricket Club Pvt. Ltd. reported in (2018) 6 SCC 287 the respondent has once again started to procced with its said execution application E.C. No. 513 of 2016 and , as such, the petitioner has filed this application without any delay. She further submitted that in the application the petitioner has also stated that unless operation of the impugned award is stayed the petitioner being Government Authorities will suffer financial losses, which is public money.
I have considered the materials on record as well as the arguments advanced by the learned counsel for the respective parties. Considering the materials on record it appears that by an order dated April 13, 2010 passed in an application under Section 11(6) of the Act of 1996 a learned Single Judge of this Court appointed the arbitrator who made/published the award on August 08, 2016. It further appears that the present petitioner filed an application, A.P. No. 1121 of 2016 for setting aside of the said award within 120 days from the date of receipt of the same. Therefore, in terms of the Proviso to sub-section (3) of Section 34 of the Act of 1996 by order dated February 13, 2017 a learned Single Judge of this Court admitted the application, A.P. No. 1121 of 2016 after condonation the delay. In the meantime, since the petitioner did not file the application for setting aside of the said award within 90 days from the date of receipt of the same the respondent, as the award holder filed an application for execution of the impugned award. However, since the arbitral proceeding in the present case had commenced before October 25, 1995, that is, before the coming into effect of the Act 3 of 2016 and in view of Section 26 thereof, the parties had accepted that as per the provisions contained in original Section 36 of the Act of 1996 with the admission of the application, A.P. No. 1121 of 2016, under Section 34 of the Act of 1996 the operation of the impugned award stood automatically stayed. It appears that it was only after the pronouncement of the decision of the Supreme Court in the case of Board of Cricket Control for of India (supra) the respondent once again moved the execution application, E.C. No. 513 of 2016. By an order dated July 04, 2018 a learned Single Judge of this Court held that in the absence of an order of stay of the enforcement of the award by the adjourned date, the award holder shall be permitted to proceed with the execution application. By the said order the hearing of the execution application was adjourned for four weeks. Immediately, thereafter on July 19, 2018 the petitioner filed the present application praying for stay of operation of the impugned award.
Since the decision in this application involves the scope and purport of the provisions contained in Rule 5 of Order XLI, of the Code it is expedient to consider the said provisions, which are reproduced herein below:
ORDER XLI APPEALS FROM ORIGINAL DECREES "1. ............ 2 ...............
3...............
3-A...........
4..............
"5. Stay by Appellate Court- (1) An appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of an appeal having been preferred from the decree; but the Appellate Court may for sufficient cause order stay of execution of such decree.
[Explanation- An order by the Appellate Court for the stay of execution of the decree shall be effective from the date of the communication of such order to the Court of first instance, but an affidavit sworn by the appellant, based on his personal knowledge, stating that an order for the stay of execution of the decree has been made by the Appellate Court shall, pending the receipt from the Appellate Court of the order for the stay of execution or any order to the contrary, be acted upon by the Court of first instance.] (2) Stay by Court which passed the decree- Where an application is made for stay of execution of an appealable decree before the expiration of the time allowed for appealing therefrom, the Court which passed the decree may on sufficient cause being shown order the execution to be stayed.
(3) No order for stay of execution shall be made under sub-rule (1) or sub-rule (2) unless the Court making it is satisfied-
(a) that substantial loss may result to the party applying for stay of execution unless the order is made;
(b) that the application has been made without unreasonable delay; and
(c) that security has been given by the applicant for the due performance of such decree or order as may ultimately be binding upon him.
(4) [Subject to the provisions of sub-rule (3)], the Court may make an ex parte order for stay of execution pending the hearing of the application.
[(5) Notwithstanding anything contained in the foregoing sub-rules, where the appellant fails to make the deposit or furnish the security specified in sub-rule (3) of Rule 1, the Court shall not make an order staying the execution of the decree.]"
6.........."
A bare reading of sub rule (5) of Rule 5 of Order XLI makes it clear that in an appeal against a decree for payment of money, the appellate Court shall not make an order staying execution of the decree unless the appellant deposits or furnishes security as specified in sub-rule (3) of Rule 1 of Order XLI. The language used in Rule (8-A) of Order XXVII is clear and unambiguous to exempt the Union of India and the State Government from furnishing any security under Rule 5 of Order XL1 for obtaining stay of operation of any money decree passed against it. In the case of Kanpurjal Sansthan - vs- Bapu Construction, reported in (2015) 5 SCC 267, while dealing with a question whether an extended wing of the State can claim the benefit of Order XXVII Rule (8-A) of the Code of not furnishing any security under Order XL1 Rule 5 of the Code for obtaining stay of operation of the money decree passed by it, the Supreme Court held that the term " Government" under Rules (8-A) and (8-B) of Order XXVII of the Code means Government proper, that is Central Government or State Government in exclusivity and does not include an extended agency or instrumentality of the State. In the present case, there is no dispute that the petitioner Union of India represented by the General Manger of the Eastern Railway enjoys the exemption granted by Rule (8-A) of Order XXVII of the Code. When by virtue of Rule (8-A) of Order XXVII of the Code, the Government, as the appellant is exempted from furnishing any security as a condition for obtaining stay of operation of the money decree I am unable to find any sound reasoning in the contention of the respondent that the Government still is required to fulfil the stipulations in clauses (a) and (b) of sub-rule (3) of Rule 5 of Order XL1. However, I am bound by the Full Bench decision of this Court in the case of Amitava Pal (supra) cited by the respondent. In any event, as mentioned earlier, the petitioner has filed this application immediately after passing of the said order dated order dated July 04, 2018 in E.C. No.516 of 2016. Thus, I find that the petitioner has filed this application without undue delay. In the application, it has also been stated that unless operation of the impugned award is stayed the petitioner being Government Authorities will suffer financial losses, which is public money. For all these reasons, I do not find any merit in the contentions raised by the respondent in this case. Further, as rightly pointed out by the petitioner that the decision of the learned Single Judge in the case of M/s. Nitapol Industries (supra) is an authority for interpreting the provisions in section 19 of the Micro, Small and Medium Enterprises Development Act,2006. Under Section 19 of the said Act no application for setting aside any decree, award or other order made by the State Micro Small Enterprises Facilitation Council shall be entertained by any court unless the appellant (not being the supplier) has deposited with it, seventy five percent of the amount in terms of the decree, award or, as the case may be, the other order. Thus, the said decision in the case of M/s. Nitapol Industries (supra) has no application in this case.
For all the foregoing reasons, I find that the petitioner is entitled to obtain an order for unconditional stay of operation of the impugned award made by the learned Arbitrator. Accordingly, the award dated August 08, 2016 made by the learned Arbitrator shall remain stayed till disposal of the application, A.P. 1121 of 2016.
With the above directions the application, G.A. No.1903 of 2018 stands allowed. There shall however, be no order as to costs.
Urgent certified copies of this judgment, if applied for, be made available to the parties subject to compliance with all requisite formalities.
(ASHIS KUMAR CHAKRABORTY, J.)