Bombay High Court
Hindustan Construction Company ... vs Pratap Industrial Products on 17 February, 2023
Author: R.I. Chagla
Bench: R.I. Chagla
62-ial-823-2023.doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.823 OF 2023
IN
EXECUTION APPLICATION NO.1259 OF 2022
Hindustan Construction Company ...Applicant /
Ori. Respondent
In the matter between
Pratap Industrial Products ...Applicant /
Judg. Creditor
Versus
Hindustan Construction Co. Ltd. ...Respondent
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Mr. Aslam Khan for Ori. Applicant / Judgment Creditor.
Mr. Mayur Khandeparkar, Jatin Pore, Ankita Agrawal and Gaurav
Suryavanshi i/b. DSK Legal for the Applicant.
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CORAM : R.I. CHAGLA J.
DATE : 17 February 2023.
ORDER :
1. By this Interim Application, the Applicant / Original Respondent has sought vacation / cancellation / rescinding of Warrant of Attachment dated 9th November, 2022 issued in the Execution Application in respect of scheduled property being office situated at Hincon House, LBS Marg, Vikhroli (W), Mumbai 400 083. 1/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 :::
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2. The above Execution Application has been filed in execution of the Award passed by the Arbitral Tribunal on 30th October, 2021. The Petition under Section 34 of the Arbitration and Conciliation Act, 1996 had been filed by the Applicant challenging the Arbitral Award before the District Court, Shimla on 26th February, 2022. The District Court, Shimla by an order dated 30th June, 2022 had recorded that the Applicant had deposited the amount of Rs.30,41,214/- towards the awarded amount in the Court through bank draft. At the request of the learned Counsel for the Respondent, the list of objections were to be taken up for consideration on 16th September, 2022.
3. The present Execution Application has been filed on 3rd August, 2022 and registered on 26th September, 2022 by the Respondent before this Court.
4. The Warrants of Attachment dated 9th November, 2022 had been issued under Order XXI Rule 54 of the Code of Civil Procedure by this Court. The Warrants of Attachment were signed by Registrar of this Court on 18th November, 2022. Further, the date of service of the Warrant of Attachment relating to the subject property 2/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc of the Applicant was on 13th December, 2022.
5. The District Judge, Shimla by an order 21st December, 2022 granted stay of the operation, implementation and execution of the impugned Award dated 30th October, 2021 passed by the Arbitral Tribunal till disposal of the Appeal in order to avoid multiplicity of the litigation inter se between the parties. The Court recorded that fact that the sum of Rs.30,41,214/- being 75% of the awarded amount had been deposited before this Court through the bank draft which is reflected in order dated 30th June, 2022. There is a finding that the Applicant had complied with the mandatory provision of Section 19 of the Micro, Small and Medium Enterprises Development Act, 2006 ("MSMED Act"). The contention of the Respondent that the amount deposited by the Applicant is short of 75% of the amount in terms of the award was rejected by holding that as per the record the Applicant had deposited 75% of the amount in compliance with the said provision of the Act.
6. The present Interim Application is being filed on 9th January, 2023 which seeks raising of the attachment in respect of the subject property.
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7. Mr. Mayur Khandeparkar, the learned Counsel appearing for the Applicant has submitted that there is no executable decree on account of the stay of the Arbitral Award by order dated 21st December, 2022. He has submitted that the Warrants of Attachment which were issued on 9th November, 2022 was on account of the Respondent suppressing the fact of the filing of the Section 34 Petition challenging the Arbitral Award as well as the fact that the Applicant had deposited 75% of the awarded amount in compliance with the mandatory requirement of Section 19 of the MSMED Act. He has submitted that suppression of these facts are in violation of Order XXI Rule 11 (2) (d) of the Code of Civil Procedure, 1908 (for short "CPC"). He has taken this Court through the provision of Order XXI Rule 11(2), wherein it is provided that every application for execution of a decree which is to be in writing, signed and verified by the Applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case shall contain in a tabular form, the particulars mentioned in (a) to (j) and in particular what is relevant to note is (d) viz. whether any appeal has been preferred from the decree. He has submitted that by suppression of the fact that the Appeal / Petition had been filed under Section 34 of the Arbitration Act against the Arbitral Awards, 4/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc the Execution Application has not been filed in accordance with the requirement of order XXI Rule 11 (2) (d) of the Code of Civil Procedure, 1908.
8. Mr. Khandeparkar has further submitted that the subject property of the Applicant which is attached is worth more than Rs.300 Crores and this is averred in paragraph 5(c) of the Interim Application and which is not been controverted. The awarded sum by the Arbitral Tribunal is under Rs.1 Crores including interest. Mr. Khandeparkar has further submitted that the there cannot be operation, execution and implementation of a decree which is stayed. Accordingly, the present Application has sought lifting of the attachment under Order XXI Rule 58 of the CPC. This provision pertains to adjudication of claims to, or objections to attachment of property. The proviso to Order XXI Rule 58 does not apply in the present case as the attached property has neither been sold nor there has been any designedly or unnecessarily delay in taking out the present Application. Mr. Khandeparkar has submitted that present Interim Application has been filed on 9th January, 2023 and the date of service of Warrant of Attachment of the subject property on the Applicant is on 13th December, 2022. Hence, there is no delay in 5/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc taking out the Interim Application.
9. Mr. Aslam Khan, the learned Counsel appearing for the Original Applicant / Judgment Creditor has submitted that the attachment levied on the subject property is prior to the order passed by the District Court, Shimla in the Section 34 Petition filed by the Applicant granting stay to the operation, implementation and execution of the Arbitral Award. He has submitted that the Warrant of Attachment has thus not been erroneously issued. He has further submitted that the amount which had been deposited by the Applicant before the District Court, Shimla does not amount to 75% of the award and thus there was non compliance of the mandatory provision of the Section 19 of the Act. He has submitted that the arbitral award which is subject matter of the execution having been stayed subsequently by the order dated 21st December, 2022 passed by the District Judge, Shimla would result in no further proceedings being taken in execution and accordingly, the executing Court cannot entertain or pass orders in the present Interim Application which seeks lifting of the attachment. He has relied upon the decision of the Supreme Court in the case of Barnes Investments Ltd. & Ors. Vs. Raj 6/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc K. Gupta & Ors.1, wherein the Supreme Court has held that, in the event there is a stay of the execution of the decree it was not open for the Court to proceed with the execution proceedings.
10. Mr. Aslam Khan has further submitted that the order dated 21st December, 2022 passed by the District Judge, Shimla is being appealed from and in view of that Court being on vacation, the Appeal has still date not been filed. He has submitted that the District Court, Shimla did not have pecuniary jurisdiction to entertain the Appeal preferred by the Applicant from the Arbitral Award when filed, hence the Appeal was kept under objection. The issue of preliminary jurisdiction had been raised at the time of filing of the Arbitral Appeal / Petition under Section 34 of the Arbitration and Conciliation Act, 1996 but thereafter the District Court, Shimla was conferred jurisdiction by Notification dated 17th October, 2022.
11. Mr. Aslam Khan has further submitted that the Applicant had not deposited any amount at the time of filing of Appeal and this has been suppressed. He has submitted that the not mentioning of the amount deposited by the Applicant before the 1 MANU/SC/0421/2021 in Civil Appeal No.5042 of 2001 decided on 6th August, 2001.
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62-ial-823-2023.doc Court of the District Judge, Shimla was on account of the Respondent not having deposited the requisite amount under Section 19 of the MSMED Act. He has further submitted that the non mentioning of the fact that the Applicant had deposited some amount in the Appeal filed before the Court of District Judge, Shimla was neither deliberate nor wilful and was on account of bonafide belief.
12. Having considered the submissions, in my view the issuance of warrants of attachment under Order XXI Rule 54 of the Code of Civil Procedure, 1908 by this Court was without knowledge of the fact that the Applicant had deposited 75% of the awarded amount as has been held by the District Judge, Shimla before that Court and in compliance with the provisions of Section 19 of the MSMED Act. Further, the subject property of the Applicant has been stated to be more than Rs.300 Crores at paragraph 5(c) of the Interim Application, which has not been controverted.
13. It is necessary to note that the suppression of the fact that the Applicant had filed an Appeal / Petition before the Court of the District Judge, Shimla is in violation of Order XXI Rule 11 (2)
(d) which is a mandatory requirement for filing the Execution 8/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc Application under the Code of Civil Procedure, 1908. It is further necessary to note that the Execution Application had been filed on 3rd August, 2022, whereas the Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 by the Applicant in the District Court, Shimla was on 26th February, 2022. In view of the suppression of the Petition having been filed under Section 34 of the Arbitration Act, 1996 in the Execution Application filed thereafter, this would disentitle the Judgment Creditor from seeking any relief in the Execution Application including for issuance of Warrant of Attachment under Order XXI Rule 54 under Code of Civil Procedure, 1908.
14. The District Court, Shimla having stayed the Arbitration Award dated 30th October, 2021 would result in the execution not being proceeded with. There cannot be any operation, execution and implementation of the decree which is stayed by the Court in proceedings filed under Section 34 of the Arbitration and Conciliation Act, 1996. Thus, there is no purpose of continuation of the attachment on the subject property of the Applicant, particularly considering that it has been held by the District Court, Shimla that 75% of the Arbital Award has been deposited by the Applicant in that 9/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc Court. Further, considering the awarded amount as against the value of the subject property as aforementioned, no purpose would be served in the continued attachment on the subject property of the Applicant.
15. I do not find any merit in the submission of Mr. Aslam Khan for the Judgment Creditor that in view of the Arbitral Award being stated, this Court cannot entertain the present Interim Application. The decision of the Supreme Court in the case of Barnes Investments Ltd. & Ors.(Supra) is a case where there had been stay of the execution of the Appellant's decree and that the stay was operative and in those circumstances it was held that the Court cannot proceed with the Execution Proceedings. This decision is not applicable to an Application under Order XXI Rule 58 of the CPC. Under this provision adjudication of claims or objections to attachment of property can be entertained by the Court. Further, the Court is required to proceed to adjudication upon the claim or objection made to the attachment of property in execution of the decree on the ground that such property is not liable to such attachment. The only exception mentioned in the proviso being where before the claim is preferred or objection to the attachment, 10/11 ::: Uploaded on - 27/02/2023 ::: Downloaded on - 05/06/2023 13:02:41 ::: 62-ial-823-2023.doc the property attached has already been sold and / or where the Court considers that the claim or objection was designedly or unnecessarily delayed. This exception is inapplicable in the present case. Thus, all questions arising between the parties to a proceeding under this rule and relevant to the adjudication of the claim or objection shall be determined by the Court dealing with the claim or objection.
16. Having found merit in the case made out by the Applicant for raising of the attachment levied on the subject property, the relief sought for is granted. Hence, the following order:
(i) The Warrant of Attachment dated 9th November, 2022 issued in the Execution Application in respect of the schedule property being office situated at Hincon House, LBS Marg, Vikhroli (W), Mumbai 400 083 is vacated / cancelled / rescinded.
(ii) It is made clear that the rights and contentions of the Respondents particularly with regard to the proceedings in the Courts at Shimla, Himachal Pradesh are kept open.
(iii) This Application is accordingly disposed of.
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