Calcutta High Court
Srei Equipment Finance Ltd vs Mohan Jha & Anr on 16 January, 2017
Author: Sanjib Banerjee
Bench: Sanjib Banerjee, Siddhartha Chattopadhyay
OD-2
APO 342 of 2016
GA 3062 of 2016
AP 570 of 2016
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
ORIGINAL SIDE
SREI EQUIPMENT FINANCE LTD.
-Vs-
MOHAN JHA & ANR.
Appearance
Mr Swatarup Banerjee, Adv.
Ms. Alivia Pal, Adv.
Mr. Pradip Kr. Roy, Adv.
Ms. S. Sarkar, Adv.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
And
The Hon'ble JUSTICE SIDDHARTHA CHATTOPADHYAY
Date: January 16, 2017.
The Court:- The propriety of the order in appeal has been questioned on
the principle that the mere pendency of a challenge to an arbitral award cannot
be a bar to a petition for interim measures being maintained under Section 9 of
the Arbitration and Conciliation Act, 1996.
The prayers in the petition under Section 9 of the said Act have been set
out at paragraph 23 of the stay petition. The appointment of a receiver has been
sought with a further prayer for the receiver to be directed to take possession of
the assets covered by the finance agreement. Security has also been sought. It
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appears that the usual prayers made by a finance company in a petition under
Section 9 of the said Act of 1996 have been made. The Single Bench declined to
consider the matter on merits by observing that it was impermissible for an
arbitral award to be executed during the pendency of a challenge thereto.
It does not appear from the prayers carried before the Single Bench that
these are prayers that are usually made in column 10 of any tabular statement
pertaining to a finance company's award. Most of the prayers pertain to the
protection of the assets during the pendency of the proceedings for challenging
the award. It is true that one of the prayers pertains to a direction on the
receiver to sell the assets, but such prayers are made on everyday basis in
petitions under Section 9 of the said Act pertaining to finance agreements, and,
more often than not, orders are also passed though the money realised from the
sale is not permitted to be appropriated prior to the arbitral award becoming
capable of enforcement.
Section 9 of the said Act permits a petition for interim measures to be
carried to the Court "before or during arbitral proceedings or at any time after
the making of the arbitral award but before it is enforced in accordance with
section 36 of the Act". Thus, it is apparent, on a plain reading of the provision,
that the commencement of the reference or the conclusion thereof are not the
starting and end-points for Section 9 of the said Act to be invoked by a party to
the reference. The principle is also highlighted by the fact that after the
Amending Act of 2015, there is no longer an automatic stay on the operation of
the arbitral award unless such a stay is specifically granted by the Court.
One has also to be alive to the fact that a petition for setting aside an
arbitral award would take time and there are many petitions in such regard
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which remain pending. An asset which, by its very nature, may be perishable or
deteriorates with time cannot be left unattended to merely because a challenge
to the award is pending. That would not enure to the benefit of either party.
Section 9 of the said Act permits a petition thereunder to be carried to a
Court and entertained even at a stage when an arbitral award has been passed,
but, by virtue of the in-built stay under Section 34 of the said Act of 1996 as it
stood prior to the amendment of 2015, the execution of the award is
impermissible.
The first respondent says that execution proceedings have been launched
and the same are pending. Such execution proceedings, if any, are clearly not maintainable and have to be dismissed for the mere asking. However, the petition under Section 9 of the said Act of 1996 filed by the appellant should be taken up for hearing.
Accordingly, the order impugned dated August 2, 2016 is modified by requesting the Single Bench to take up the appellant's petition under Section 9 of the said Act, AP No. 570 of 2016, and hear it without reference to the petition challenging the award and, at any rate, prior to taking up the petition challenging the award.
If the affidavit-in-reply in the Section 9 petition has not been filed yet, the same should be filed within a week from date, failing which the right to use the reply will stand forfeited.
APO No. 342 of 2016 and GA No. 3062 of 2016 are disposed of by modifying the order impugned dated August 2, 2016 to the extent as indicated above.
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There will be no order as to costs.
Urgent certified website copies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.
(SANJIB BANERJEE, J.) (SIDDHARTHA CHATTOPADHYAY, J.) sg.