Telangana High Court
M/S. Jain Housing And Constructions ... vs Honble Sole Arbitrator on 4 July, 2024
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SHRI JUSTICE ANIL KUMAR JUKANTI
Civil Revision Petition No.1783 of 2024
ORDER:(Per the Hon'ble the Chief Justice Alok Aradhe) Mr. Naveen Kumar Murthi, learned counsel represents Mr. T.Sanjay Reddy, learned counsel for the petitioner.
Mr. K.V.Bhanu Prasad, learned Senior Counsel appears for Mr. K.Sai Sri Harsha, learned counsel for respondent No.2.
2. In this petition under Article 227 of the Constitution of India, the petitioner has assailed the validity of the order dated 15.12.2023, passed by the Special Court in the cadre of District Judge for Trial and Disposal of Commercial Disputes at Hyderabad (hereinafter referred to as 'the Commercial Court'), in I.A.No.123 of 2022 in COP.No.87 of 2022, by which the Commercial Court while dealing with a prayer for grant of interim stay of arbitration award dated 11.03.2022, has stayed the enforcement of the award subject to the petitioner ::2::
depositing 50% of the amount of award with interest within a period of two months from the date of the order.
3. Facts giving rise to filing of this petition briefly stated are that a learned Single Judge of this Court, by order dated 28.04.2020, passed in Arbitration Application No.67 of 2018, appointed the sole arbitrator to adjudicate the dispute between the parties. The Arbitral Tribunal passed an award dated 11.03.2022 in favour of respondent No.2. The petitioner challenged the aforesaid award by way of a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short 'the A&C Act') viz., COP.No.87 of 2022. The petitioner filed an application under Section 36(2) of the A&C Act viz., I.A.No.123 of 2022, seeking stay of the award. The Commercial Court, by order dated 15.12.2023, stayed the award subject to following conditions:
"In the result, the petition is allowed to stay the enforcement of the award passed by the learned arbitral tribunal on condition of depositing ::3::
of 50% of the amount awarded by the learned arbitral tribunal with interest calculated till the date of this order within two months from the date of the order. Upon such deposit, the respondent No.2 is permitted to withdraw the said amount on furnishing of an undertaking to reimburse the same to the petitioner in case of succeeding in the above COP."
4. Learned counsel for the petitioner submitted that the petitioner is ready and willing to deposit 50% of the principal amount and the Commercial Court erred in directing the petitioner to deposit 50% of the interest also and in permitting respondent No.2 to withdraw the same. Therefore, it is submitted that the impugned order be set aside.
5. On the other hand, learned Senior Counsel for respondent No.2 has supported the order passed by the Commercial Court.
6. We have considered the submissions made on both sides and have perused the record.
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7. The Commercial Court, in its sound discretion, has directed the petitioner to comply with 50% of the money decree and has stayed the remaining 50% of the money decree. The aforesaid order, which has been passed while executing a money decree, has been passed with a view to balance equities between the parties and to ensure that no undue hardship is caused to respondent No.2 on account of stay of the award passed by the Arbitrator.
8. The Supreme Court in Pam Developments Private Limited v. The State of West Bengal 1, while dealing with the issue of discretion of the Court to grant the stay of money decree, has held as under:
"A Full Bench of the Calcutta High Court, while considering the question as to whether in an appeal preferred by the Government, the Government is entitled to get stay of execution of decree impugned by taking aid of Order XXVII Rule 8A of the CPC, even if the conditions 1 (2019) 8 SCC 112 ::5::
mentioned in Clauses (a) and (b) of subrule (3) of Rule 5 of Order XLI are not complied with, held as follows:
"36. In order to resolve the aforesaid controversy, one must examine the legislative intent for incorporating Order 27, Rule 8A in the Code. The aforesaid provision was engrafted to exempt the Government to furnish security as a guarantee for due performance of a decree as mentioned in Rules 5 and 6 of Order XLI. Notwithstanding such exemption, discretionary power of the Court to grant stay of execution of a decree can be exercised in favour of the Appellant Government only if it satisfies the Court as to the existence of clauses (a) and (b) of Rule 5(3) of Order XLI. As "substantial loss" to the appellant is a condition precedent to grant stay, execution of a money decree is ordinarily not stayed since satisfaction of a money decree does not amount to irreparable injury to the appellant as the remedy of restitution is available to him in the event the appeal is allowed. [See, Sihor Nagar Palika Bureau v. Bhabhlubhai Virabhai, 2005 (4) SCC 1, para 6]. Under ::6::
such circumstances, when the court chooses to exercise its discretion in favour of the appellant- State to grant stay of execution of a money decree, it must be balance the equities between the parties and ensure that no undue hardship is caused to a decree holder due to stay of execution of such decree. Hence, in appropriate cases, the Court in its discretion may direct deposit of a part of the decretal sum so that the decree holder may with draw the same without prejudice and subject to the result of the appeal. Such direction for deposit of the decretal sum is not for the purpose of furnishing security for due performance of the decree but an equitable measure ensuring part satisfaction of the decree without prejudice to the parties and subject to the result of the appeal as a condition for stay of execution of the decree."
37. To hold that the Court is denuded of such equitable discretion while granting stay of execution of a money decree in favour of the Government, would cause grave hardship to deserving decree holders who in the facts of a given case may be entitled to enjoy part satisfaction of the decree without ::7::
prejudice and subject to the result of the appeal as a condition for stay of execution of the entire decree.
9. The order passed by the Commercial Court neither suffers from any jurisdictional infirmity nor from any error apparent on the face of the record warranting interference of this Court in exercise of supervisory jurisdiction under Article 227 of the Constitution of India.
10. In the result, the Civil Revision Petition fails and is, hereby, dismissed. No costs.
As a sequel, miscellaneous petitions, pending if any, stand closed.
__________________ ALOK ARADHE, CJ ________________________ ANIL KUMAR JUKANTI, J Date: 04.07.2024 LUR