Bombay High Court
Unique Chains Pvt Ltd vs V.G.N.Jewellers And 5 Ors on 9 August, 2021
Author: B.P. Colabawalla
Bench: B.P. Colabawalla
(31) carbp.385.2021 .doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM. ARBITRATION PETITION NO. 385 OF 2021
Unique Chains Pvt Ltd. ... Petitioner
Vs
V. G. N. Jewellers and ors ... Respondents
Mr.Sharad Bansal a/w Ms.Khushbu Prabhu i/b. Mr. Raju Jain for
the petitioner.
None for the Respondents.
CORAM : B.P. COLABAWALLA, J.
MONDAY , 9 th AUGUST, 2021 P.C. :
1 The above petition is fled under Section 9 of the Arbitration and Conciliation Act, 1996 seeking various reliefs against the respondents including a prayer for deposit of a sum of Rs.1,47,98,910/-. It appears that both respondents are duly served, but none has appeared on behalf of the respondents.
2 By the Order dated 30st June, 2021, this Court noted that the respondents have admitted that a sum of Rs.1,13,77,002/- was due and payable from the respondents to the Vina Khadpe, PA Page 1 of 7 (31) carbp.385.2021 .doc petitioner, and the only excuse for non payment was the usual recitation of the pandemic, lockdown etc. This Court noted that the debt was admitted in writing, and therefore, granted ad-
interim relief in terms of prayer clauses (c) and (d) of the petition. The Court also directed that the affdavit of disclosure [as required under prayer clause (c)] was to be fled on or before 19th July, 2021. When the matter is called out today, despite service, none have appeared on behalf of the respondents. 3 In this factual background, the learned advocate appearing on behalf of the petitioner submitted that this is a ft case where an order of deposit ought to be made against the respondents. He submitted that the respondents have admitted that the entire balance of Rs.1,13,77,002/- is due and payable by the respondents to the petitioner. He submitted that if this be the case, then it would be appropriate for this Court to pass an order of deposit. To substantiate the aforesaid argument, the learned advocate has relied upon the decision of this Court in the case of Kotak Mahindra Bank Ltd. Vs. Williamson Magor & Co. Ltd & anr. [2021 SCC Online Bom 305] , and more particularly paragraphs 31 and 32 thereof.
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(31) carbp.385.2021 .doc 4 I have heard the learned advocate appearing on behalf of the petitioner. I have also perused the papers and proceedings in the above petition. Despite the order passed by this Court on 30th June 2021 [and the same being duly served on the respondents on 2nd July, 2021], no affdavit of disclosure is fled till date. Further, the liability of the respondents to the petitioner is duly admitted to the extent of Rs.1,13,77,002/-. The learned advocate appearing on behalf of the petitioner has also brought to my attention that the invoices under which the supply of jewellery were made, has a clause which stipulates that payment must be made within the credit period of 15 days and failure to make payment within the credit period would attract interest @24% p.a. It is under these circumstances, the petitioner has prayed for an order of deposit to the extent of Rs.1,47,98,910 /- which comprises of the principal amount of Rs.1,13,77,002/- together with interest @24% p.a. from the date of each outstanding invoice till the date of fling of the petition. 5 In view of the facts narrated earlier, I fnd considerable force in the arguments canvassed on behalf of the petitioner. This Court, in the case of Kotak Mahindra Bank Ltd. Vina Khadpe, PA Page 3 of 7
(31) carbp.385.2021 .doc Vs. Williamson Magor & Co. Ltd & anr. (Supra) has clearly laid down that where the defence is prima facie untenable, the petitioner has a good chance of success, and the defence is moonshine, an order of deposit to secure the claim can be made and indeed should be made under Section 9 of the Arbitration and Conciliation Act, 1996. The relevant portion of this decision reads thus :
"31. Lest it be argued either here or in any other forum that no case has been made out under Order 38 Rule 5 of the Code of Civil Procedure, 1908 ("CPC"), which seems to me more or less the habitual and automatic chanting of every respondent in a Section 9 Petition, this needs to be stated: that is not the law. The recent decision of the Division Bench of this Court (RD Dhanuka and VG Bhisht JJ) in Essar House Private Limited v Arcellor Mittal Nippon Steel India Ltd makes it clear that there is no requirement that for such relief an iron-clad case under Order 38 Rule 5 of the Code of Civil Procedure, 1908 ("CPC") must be made out (or, if not argued, that the Court must hunt for it). The Division Bench reafrmed the principle that has long been settled, and restated repeatedly, but which seem to be reagitated in the wrong way again and again. The Division Bench said in the clearest terms that the principles of the CPC, including especially Order 38 Rule 5, are guides to a Section 9 Court and the order it makes under that Section. They are not fetters upon the Section 9 Court's discretion. On my reading of the Division Bench order, the position in law is that in such a case an order of deposit not only can be made, but ought to be made. In Valentine Maritime Ltd v Kreuz Subsea Pte Ltd , the Division Bench of this Court reiterated this position regarding Order 38 Rule 5 and also held that in appropriate case, where the defence is prima facie untenable, the Petitioner has a chance of success, and the defence is moonshine, an order of deposit to secure the claim can and indeed should be made under Section
9. This was also the view of another Division Bench of this Court in Jagdish Ahuja & Anr v Cupino Ltd. All three decisions referenced and explained the previous Division Bench decision in Nimbus Communications Ltd v. Board of Control Vina Khadpe, PA Page 4 of 7 (31) carbp.385.2021 .doc for Cricket in India, the Supreme Court decision in Adhunik Steels Ltd v Orissa Manganese & Minerals (P) Ltd. I followed the Division Bench decisions (referencing this law) in Parle Agro Pvt Ltd v Shree Aqua Purifer Pvt Ltd I followed the Division Bench decisions (referencing this law) in Parle Agro Pvt. Ltd. v. Shree Aqua Purifer Pvt. Ltd and IIFL Finance Ltd. V. Shrenik Dhirajmal Sirqya.
32. Williamson Magor has no defence at all. Khaitan's defence is untenable and, in view of the settled law on the subject, is unstatable and probably the most complete moonshine. There is a contract with a clear and unequivocal obligation cast on the Respondents. The Petitioner has an excellent chance of success Accordingly, the Respondents are required to deposit with the Prothonotary and Senior Master an amount of Rs.14.88 crores by 31st March 2021. I have rounded of the amount of deposit."
6. As it can be seen from the aforesaid decision, once the Court comes to the conclusion that the defence, if any, is a moonshine defence, the Court under Section 9 always has the power to pass an order of deposit of the amount in dispute in the arbitration. In the facts of the present case, the respondents have clearly admitted their liability in the sum of Rs.1,13,77,002/- and they have chosen not even to appear in the present matter or set up any defence. This being the position, I am of the opinion that this is a ft case where an order of deposit ought to be made. This order of deposit would be in addition to the ad-interim reliefs granted by the order dated 30th June, 2021.
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(31) carbp.385.2021 .doc 7 Under these circumstances, the Arbitration Petition is made absolute in terms of prayer clause (a) (c) & (d) which read thus :
"(a) Direct the Respondents to deposit before this Hon'ble Court a sum of Rs.1,47,98,910/- (Rupees One Crore Forty Seven Lacs Ninety Eight Thousand Nine Hundred and Ten only)
(c) Direct the Respondents to produce on oath a complete inventory of its assets and properties, including:
i. Immovable properties owned by Respondents in its possession and in the possession of any third parties. ii. Movable properties owned by Respondents in its possession and in the possession of any third parties. Iii. Shes, debentures, bonds, securities etc. held by Respondents in any entity;
iv All debts due and payable to Respondents by any third party.
v. Details of bank accounts which Respondents holds; vi. Details of stock in trade and raw materials of Respondent No.1;
vii Details of cash in hand with Respondent No.1.
(d) Restrain the Respondents and its servants and/or agents or any parties claiming through it by an order and injunction of this Hon'ble Court from parting with the possession, selling, transferring, encumbering alienating or disposing of or dealing with their assets / properties and/or creating any third party interest in respect of the said assets / properties;"
8 This order of deposit shall be complied with by the respondents within a period of four weeks from today. As a last chance, the affdavit of disclosure shall also be fled within a period of four weeks from today.
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(31) carbp.385.2021 .doc 9 A copy of this order shall be forthwith served by the advocate for the petitioner on the respondents. The above Section 9 Petition is disposed of in the aforesaid terms. There shall be no order as to costs.
10 This order shall be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned shall act on production by fax or e-mail of a digitally signed copy of this order.
B.P. COLABAWALLA, J.
Digitally
signed by
VINA
VINA ARVIND
ARVIND KHADPE
Date:
KHADPE 2021.08.12
21:23:22
+0530
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