Gujarat High Court
Gujarat Industrial Development ... vs Graphite India Ltd., on 27 November, 2019
Author: J. B. Pardiwala
Bench: J.B.Pardiwala
C/FA/2080/2016 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
CIVIL APPLICATION (FOR DIRECTION) NO. 1 of 2018
In
R/FIRST APPEAL NO. 2080 of 2016
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GRAPHITE INDIA LTD., Versus GUJARAT INDUSTRIAL DEVELOPMENT CORPORATION (GIDC) LTD ========================================================== Appearance:
MR SHASHVATA U SHUKLA for the PETITIONER(s) No. MR MB GANDHI, SENIOR ADVOCATE WITH MR RUTVIJ M BHATT for the RESPONDENT(s) No. ========================================================== CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR.JUSTICE VIRESHKUMAR B. MAYANI Date : 27/11/2019 IA ORDER (PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1 Rule returnable forthwith. Mr. Rutvij Bhatt, the learned counsel waives service of notice of rule for and on behalf of the opponent (original appellant).
2 This is an application at the instance of the original respondent of First Appeal No.2080 of 2016 with the following prayers:
"9a. That this Hon'ble Court may be pleased to admit and allow this appeal.
9b. That this Hon'ble Court may be please to direct the registry to call for the records and proceedings pertaining to the arbitrator and after examining the same be pleased to quash and set aside the judgement passed by the learned District Judge dated 26/08/2016 in CMA/209/2014 and further be pleased to quash and set aside the award passed by the learned Arbitral Tribunal dated 20.04.2014;Page 1 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020
C/FA/2080/2016 IA ORDER
9c. That the appellants may be granted such further and other relief or
relief's as the nature and circumstances of the case may require."
3 The facts giving rise to this application, as pleaded in this application, are as under:
"2 Pursuant to the directions issued by this Hon. Court in Civil Application (for stay) No.9284 of 2016, the opponent has deposited a sum of Rs.13,62,31,208/ (Rupees thirteen crores sixty two lakhs thirty one thousand two hundred and eight only) before the Registry of this Hon'ble Court on 24.11.2016. Such sum of Rs.13,62,31,208/comprises of the Claim Amount of Rs. 9,02,16,045/and interest calculated at the rate of 12% per annum till the date of award I.e. 20/02/2014.
3 However, it appears upon 'verification that the opponent has not deposited the interest accruing from the date of the award till the date of deposit of money before this Hon'ble Court. The opponent has merely deposited the principal amount with interest up to the date øf the award. However, the opponent is also required to pay, as directed under the award, interest from the date of the award till the date of realization of the payment.
4 For the sake of ready reference of this Hon'ble Court, last paragraph of the Arbitral Award on Page 79 is reproduced herein:
"5. Keeping in view the totality of the facts and circumstances we direct with regard to the future interest that in case the total due amount under this award is paid by the respondent to the claimant within a period of 90 days from the date of award, no interest Will be payable for this period of 90 days. In case the respondent failed to make the payment within 90 days from the date of award, the claimant shall be entitled to recover and the respondent shall pay the future interest (simple) at the rate of 15% p.a. On the awarded amount of Rs. 9,02,16,045 (Rųpees Nîne Ckore Two Lacs Sixteen Thousand Forty Five only) for the date of Award till the date of realization of payment."
5 The applicant has calculated such sum of money representing the interest payable by the opponent from the date of the award till the date of deposit of the same before this Hon'ble Court. Such amount works out to Page 2 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020 C/FA/2080/2016 IA ORDER Rs.3,51,84,258/(Rupees three crores fifty one lakhs eight four thousand two hundred and fifty eight only) for a period of 949 days.
6 The applicant through their Advocate addressed a Notice to the opponent calling upon them to deposit such sum of Rs. 3,51,84,258/on 07.04.2017. Such Notice was duly received by opponent on 10.04.2017. In spite of the same, the opponent did not deposit the sum of Rs. 3,51,84,258/. The opponent has also not replied to the said Notice till date.
7 The applicant was therefore constrained to issue 2" Notice, through their Advocate on 21.07.2017. Vide such Notice the applicant called upon the opponent to deposit the sum of Rs. 3,51,84,258/ before the Registry this Hon'ble Court within 4 weeks for the receipt of the said Notice. The opponent has duly received the said Notice. Mare than one Year has passed thereafter, yet the opponent has not deposited the said sum before the Registry of this Hon'ble Court. The opponent has also not replied to the said Notice.
8 In View of the aforesaid, the respondent has also become liable to pay interest on the unpaid sum of Rs. 3,51,84,258/ from 24.11.2016 till the date of realization of payment. The applicant is entitled to the interest at the rate of 15% per annum on such unpaid amount of Rs. 3,51,84,258/ as awarded in the Arbitral Award.
9 Since the opponent has not deposited such amount, it has become necessary to make present application seeking further direction to the opponent to do so. Hence the present application."
4 Thus, it appears from the materials on record that as disputes arose between the parties, the same came to be referred for arbitration. There is an arbitral award in favour of the applicant herein. As per the arbitral award, the opponent - the Gujarat Industrial Development Corporation (for short, 'the GIDC') has to pay an amount of Rs.9,02,16,045/ (Rupees Nine Crore Two Lakh Sixteen Thousand Forty Five only) with interest at the rate of 2% per annum. The arbitral award came to be challenged by the GIDC by filing the Civil Application No.209 of 2014 under Section 34 of the Arbitration and Conciliation Act, 1996 Page 3 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020 C/FA/2080/2016 IA ORDER (for short, 'the Act, 1996') in the Court of the 2nd Additional District Judge at Bharuch. The said application came to be rejected by the Court below vide order dated 29th March 2016.
5 Being dissatisfied with the order passed by the 2nd Additional District Judge, Bharuch rejecting the application under Section 34 of the Act, 1996, the GIDC preferred the First Appeal No.2080 of 2016. The appeal preferred by the GIDC in this Court under Section 37 of the Act, 1996 has been ordered to be admitted and on the civil application, this Court passed an order dated 3rd October 2016 staying the execution, implementation and operation of the judgement and award passed by the Arbitral Tribunal, as affirmed by the District Court subject to certain conditions. Paras 4 and 5 of the order passed by this Court on the civil application preferred by the GIDC reads thus:
"4. Having heard learned Counsels appearing on behalf of the respective parties and the controversy in the main First Appeal and considering the fact that the judgment and award declared by the learned Arbitral Tribunal, confirmed by the learned District Court, can be said to be a money decree, if further implementation and execution of the impugned judgment and award is stayed on condition that the applicant shall deposit the entire amount, as awarded by the learned Arbitral Tribunal together with interest and cost with the Registry of this Court and on such deposit the original claimant is permitted to withdraw 50% of the amount together with proportionate interest and cost on furnishing the bank guarantee to the satisfaction of the Registrar General of this Court and the balance 50% of the amount together with proportionate cost and interest is permitted to withdrawn by the original claimant unconditionally, the same shall be in the interest of both the parties and the same shall meet the ends of justice at this stage. The learned Counsels appearing on behalf of the respective parties do not invite any further reasoned order while passing the aforesaid interim order.
5. In view of the above, the present application is allowed. Further execution, implementation and operation of the impugned judgment and award passed by the learned Arbitral Tribunal, confirmed by the learned District Court, is hereby stayed during pendency and final disposal of the main First Appeal on condition that the applicant shall deposit the entire amount, as awarded by the learned Arbitral Tribunal with cost and Page 4 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020 C/FA/2080/2016 IA ORDER interest with the Registry of this Court within a period of six weeks from today and on such deposit the respondent - original claimant shall be permitted to withdraw 50% of the amount so deposited with proportionate cost and interest on furnishing the bank guarantee to satisfaction of the Registrar General, High Court, which shall be continued to be renewed till final disposal of the main First Appeal and the balance 50% of the amount together with proportionate cost and interest is permitted to be withdrawn by the respondent unconditionally. However, the aforesaid shall be without prejudice to the rights and contentions of the respective parties in the main First Appeal."
6 It is the case of the applicant that the GIDC has failed to deposit the entire amount along with interest, as directed by this Court. It is pointed out that the GIDC has deposited the amount with interest accrued only upto 20th April 2014. The interest amount for the period, thereafter till the admission of the appeal and passing of the order on the civil application has not been deposited. The calculation, as put forward by the applicant in writing, is as under:
Principal as per award Rs.9,02,16,045/ Interest @ 12% from 20.11.2007 till 20.4.2014 as per Rs.4,60,15,163/ award (2342 days) Rs.13,62,31,209/ Interest @ 15% from 21.4.2014 till 3.10.2016 on the Rs.3,32,56,353/ awarded amount of Rs.9,02,16,045/ (897 days) (Date of order) (A) Interest @ 15% from 4.10.2016 till 24.11.2006 on the Rs.19,27,905/ awarded amount of Rs.9,02,16,045/ (52 days) (date of deposit in court) (cheque dtd. 15.11.2016)(B) Rs.17,14,15,460/ () Amount deposited by GIDC Rs.13,62,31,208/ Rs.3.51.84,258/ Interest @15% from 25,11,2006 to 27.11.2019 on Rs.1,58,61,835/ the outstanding amount of Rs.3,51,84,258/ (1097 days)(C) Rs.5,10,46,093/ Therefore interest not deposited by GIDC Rs.3,51,84,258/ (from 21.4.2014 till 24.11.2016) [(A) + (B)] (from 25.11.2016 till 27.11.2019) [(C)] Rs.1,58,61,835/ Total Rs.5,10,46,095/ Page 5 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020 C/FA/2080/2016 IA ORDER 7 In such circumstances referred to above, Mr. Unmesh Shukla, the learned counsel appearing for the applicant submits that the GIDC may be directed to deposit the balance amount or it may be clarified that as the GIDC has failed to comply with the order passed by this Court, there is no interim relief operating as on date and it would be open for the applicant to take appropriate steps for execution of the decree.
8 On the other hand, this application has been vehemently opposed by Mr. M. B. Gandhi, the learned senior counsel assisted by Mr. Rutvij Bhatt, the learned counsel for the GIDC. The only argument of Mr. Gandhi is that the GIDC is not obliged to make any payment towards the interest on and after the date of filing of the application under Section 34 of the Act, 1996. According to Mr. Gandhi, once an application is preferred under Section 34 of the Act, 1996, the parties in whose favour an award has been passed cannot proceed further to execute the same. In such circumstances, according to Mr. Gandhi, when the applicant was not entitled to get the award executed during that period, then he should not be asked to deposit the interest amount for that period.
9 Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the applicant is entitled to the reliefs as prayed for in this application.
10 We are not impressed by the submission of Mr. Gandhi, the learned senior counsel appearing for the GIDC. In our opinion, interest has nothing to do so far as Section 34 of the Act, 1996 is concerned. For the time being, we may proceed on the footing that after the filing of the application by the GIDC in the Court under Section 34 of the Act, 1996, the applicant could not have got the award executed, but it does not mean that during that interregnum period, the interest would also stop Page 6 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020 C/FA/2080/2016 IA ORDER ticking.
11 In our opinion, the GIDC is obliged to deposit the balance amount of Rs.5,10,46,093/ (Rupees Five Crore Ten Lakh Forty six Thousand Ninety Three only). We grant four weeks time to the GIDC to deposit the balance amount with the Registry of this Court, failing which, the interim relief granted earlier by this Court vide order dated 3rd October 2016 shall stand automatically vacated.
12 In the facts and circumstances of this case, whether the amount, as directed by us, is deposited or not, we are of the view that the First Appeal No.2080 of 2016 filed by the GIDC should be heard and disposed of at the earliest. We are saying so keeping in mind the provisions under Section 37 of the Act, 1996.
13 We direct the Registry to notify the First Appeal No.2080 of 2016 for final hearing on 8th January 2020 on top of the Board.
14 With the above, this civil application stands disposed of. Rule is made absolute. Direct service is permitted.
(J. B. PARDIWALA, J) (VIRESHKUMAR B. MAYANI, J) CHANDRESH Page 7 of 7 Downloaded on : Thu Jan 09 03:59:56 IST 2020