Delhi High Court
Augmont Gold Pvt Ltd vs One97 Communication Limited on 27 September, 2021
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~ (Original Side)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 14th September, 2021
Pronounced on: 27th September, 2021
+ ARB. A. (COMM) 30/2021
AUGMONT GOLD PVT. LTD. ..... Appellant
Through: Mr. Dayan Krishnan, Sr. Adv.
with Mr. Pankaj Bhagat, Adv.
versus
ONE97 COMMUNICATION LIMITED ..... Respondent
Through: Mr. Sandeep Sethi, Sr. Adv.
with Mr. Niraj Singh, Adv.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
% JUDGMENT
1. The appellant impugns order dated 24th January, 2021, passed
by the learned Arbitral Tribunal in Arb. P. 303/2019.
2. For the sake of convenience, the appellant and respondent are
referred to as "Augmont" and "One97", respectively.
Facts
3. The dispute arises out of an agreement, dated 1st August, 2018,
between Augmont and One97. Vide Clause 2.1 of the agreement,
One97 undertook, against consideration, to host a Gold Accumulation
Plan (GAP) of Augmont, over the Paytm platform owned and
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managed by One97. The manner in which transactions were effected,
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under the agreement, is perhaps best represented by the following
process charts, provided with the agreement, of which Chart 1 sets
out the manner in which the customer could purchase digital gold,
Chart 2 sets out the manner in which the customer could redeem the
gold and Chart 3 sets out the manner in which the customer could sell
back the gold to Augmont, which may be reproduced thus:
CHART 1
Step Process Process Action
Owner
1 Customer Customer sees the live price of gold
on Paytm Platform
2 Customer Customer confirms the buy quantity
of Rs 1 upwards
3 Customer Customer redirected to payment
page
4 One97 Customer makes payment through
preferred payment options
5 Augmont- Augmont-Bullion generated invoice
Bullion details are relayed to One97 system
6 One97 One97 system generates a digital
invoice on behalf of Augmont-
Bullion
7 Augmont- Augmont-Bullion credits the
Bullion quantity in the customer account.
CHART 2
Step Process Process Action
Owner
1 Customer Customer selects 'Get Delivery'
within Gold section of Paytm
Platform and is redirected to product
catalogue. Each product has its
making + delivery charges indicated
2 Customer Customer selects the product
3 Customer Customer confirms delivery address
4 Customer Customer pays for making + delivery
/One97 + taxes on the Paytm Platform
5 One97 One97 system tells Augmont to debit
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customer GAP Account balance
6 Augmont- Augmont-Bullion debits
Bullion corresponding Gold from customer
GAP account balance
7 One97/ Order gets created in both One97
Augmont- system and Augmont system
Bullion
8 Fulfillment Augmont-Bullion processes the
order and the invoice is generated
CHART 3
Step Process Process Action
Owner
1 Customer Customer desirous of selling gold
in the GAP Account goes to Paytm
Platform
2 One97 System to check if the customer
has the holding of gold in his
account
3 One97/ If yes, gold rate is blocked and
Augmont- system allows customer to proceed
Bullion further
4 Customer Customer confirms account details
and confirms the transaction in the
time window for which gold rate is
blocked
5 One97 One97 issues an instantaneous
digital receipt of sale on behalf of
Augmont-Bullion
6 One97 One97 initiates transfer of money
to customer's account
7 Augmont- Augmont-Bulllon remits the money
Bullion to One97 on T + 1
4. The present dispute does not concern Chart 2, and essentially
involves the procedures stipulated in Charts 1 and 3, more
specifically in Chart 3.
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5. In simple terms, the procedure followed, for purchase of gold
and sale back of gold to Augmont, may be explained thus:
(i) Procedure for purchase of gold
(a) A customer, who desires to avail the benefit of the
scheme promulgated vide the aforesaid agreement, would
have to open an account, known as the GAP account.
(b) The customers would make payment to Augmont,
across the Paytm platform of One97, to purchase the
digital gold.
(c) The details of the invoice, required to be raised on
the customer, would be transmitted by Augmont to
One97.
(d) On the basis of the said details, One97 would
generate a digital invoice on the customer, on behalf of
the Augmont.
(e) The quantity of digital gold purchased by the
customers would be credited into the GAP account of the
customers by Augmont.
(ii) Procedure for sale back of gold to Augmont
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(a) This procedure applies where the customer desires
to sell gold, earlier purchased by it, held in its GAP
account, to Augmont.
(b) The customer would, for the said purpose, proceed
to the Paytm platform of One97.
(c) The system set up by One97 would check if the
customer held gold in its GAP account.
(d) If so, the gold rate would be blocked, so that the
customer could proceed to sell the gold at the rate then
prevalent. For this, a specific time window would be
provided.
(e) The customer would confirm the transaction in the
said time window.
(f) One97 would issue an instantaneous digital receipt
of sale, on behalf of Augmont, acknowledging receipt of
digital gold from the GAP account of the customer.
(g) One97 would then transfer an amount equivalent to
the value of the gold which is sold back by the customer
to Augmont, on the basis of the blocked gold rate, to the
customer's account.
(h) On the next date, Augmont would credit the said
amount to the account of One97.
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6. The dispute between Augmont and One97 essentially arose
because, between 5th January, 2019 and 7th January, 2019, there was a
glitch in the system as a result of which certain customers repeatedly
sold back, to Augmont, gold from their GAP accounts, without the
debiting of gold from the accounts.
7. One97 claimed to have paid corresponding amounts to the said
customers. This, naturally, resulted in a windfall to such customers,
who continued to retain the gold purportedly sold back to Augmont in
their GAP accounts and were also paid the value of the said gold by
One97.
8. On One97 calling upon Augmont to remit, to One97, the
payments thus made to the customers, Augmont demurred from doing
so, on the ground that a fraud had taken place owing to the negligence
of One97. As against this, One97 alleged negligence on the part of
Augmont.
9. The glitch was resolved after 7th January, 2019.
10. The contractual relationship between the parties continued till
21st February, 2019. However, according to One97, Augmont did not
remit, to One97, the amounts paid by One97 to the the customers after
7th January, 2019, against the gold sold back by the customers to
Augmont. As a result, on 21st February, 2019, One97 terminated the
agreement with Augmont. Augmont, vide response dated 4th March,
2019, objected to the said termination.
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11. A dispute thus arose between the parties, in respect whereof a
notice, invoking arbitration, was issued by One97 to Augmont on 19th
March, 2019.
12. As the parties were unable to appoint, between themselves, an
arbitrator to arbitrate on the aforesaid dispute, One97 filed Arb. P.
303/2019 before this Court under Section 11(6) of the Arbitration and
Conciliation Act, 1996 ("the 1996 Act").
13. Vide the following order dated 17th January, 2020, a learned
Single Judge of this Court disposed of Arb. P. 303/2019:
"On the last date of hearing, I have heard the learned counsels
for the parties at length.
Today, learned counsels appearing for the parties state, they
have agreed that the matter be disposed of with the
appointment of an Arbitrator.
Learned counsels also state, they agree with the following:
1. The parties shall not be entitled to raise any
allegations of fraud in their claim/ counter-claim
before the learned Arbitrator.
2. However all the defences of both the parties are
kept open to be taken before the learned Arbitrator.
3. This order shall not prevent either of the parties
from commencing/ pursuing any criminal complaint /
investigation.
The above statements are taken on record.
Further in view of the joint request of the counsel for the
parties, this court appoints Justice Manmohan Singh, a retired
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Judge of this court as the Sole Arbitrator, who shall adjudicate
the disputes / differences between the parties.
The appointment of the Justice Manmohan Singh shall be
governed by the Arbitration and Conciliation Act, 1996.
Parties shall appear before the learned Arbitrator after taking
prior appointment on his mobile number being 9717495001.
The petition stands disposed of."
14. Subsequently, IA 7080/2020 was filed by Augmont, before this
Court, for clarifying the order dated 17th January, 2020, specifically on
the issue of whether it was entitled to raise a plea of fraud in its
defence to the claims set up by One97.
15. This application was disposed of by this Court, vide the
following order dated 22nd October, 2020:
"This is an application filed by the respondent with the
following prayers:
"a. clarify its order dated 17.01.2020, and
b. pass such other order(s) in favour of the
respondent, as this Hon'ble court deems fit and
proper."
In effect, by this application, the respondent is seeking
clarification of order dated January 17, 2020. The clarification
as sought by the respondent is that the respondent is within its
right to raise a plea of fraud in its defence. I find that the
order dated January 17, 2020 is very clear. That apart, I also
find that the learned Arbitrator in his order dated July 29,
2020 has also said in para 3 as under:
*****
3. In the Statement of Defense filed by the
respondent, the plea of fraud is also taken. The said
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plea is contrary to the orders passed by the Hon'ble
High Court of Delhi. The said issue raised by the
counsel for the claimant has a force. The same will
also be considered at the appropriate time."
As the order dated January 17, 2020 does not require any
clarification, the application is dismissed."
16. Though no detailed arguments were advanced in that regard by
Mr. Dayan Krishnan, learned Senior Counsel for the Augmont
(perhaps advisedly), Augmont seeks to take exception to the finding,
of the learned Arbitral Tribunal, that Augmont had, before this Court,
given up its right to plead fraud in the arbitral proceedings. After the
order dated 22nd October, 2020 - which, it appears, was never carried
further - it is not open, in my opinion, for Augmont to urge such a
contention. Clearly, the learned Arbitral Tribunal is correct in holding
that the Augmont had given up its right to plead fraud in the arbitral
proceedings. I concur with this view, as expressed by the learned
Arbitral Tribunal.
17. One97, who was the claimant before the learned Arbitral
Tribunal, urged, in para 19 of the Statement of Claim, that the
technical glitch, which had occurred in the system between 5th and 7th
January, 2019, was attributable to negligence on the part of Augmont.
As a result thereof, it was averred that customers were able to place
repeated orders for sale of the same gold, resulting in remittance, by
One97 to the customers, of a total amount of ₹ 5,77,73,767/-. This
amount, it was asserted, was required to be remitted by Augmont to
One97, by the next day. One97 alleged that, even after 7th January,
2019, when the glitch no longer continued, several customers had sold
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back digital gold to Augmont across One97's Paytm platform, against
which payment had been credited into their accounts by One97 at the
live rate of gold existing as on that date. These amounts, too, were, it
was asserted, reimbursable by Augmont to One97 within one working
day. This position, it was alleged, continued even after termination of
the agreement, as gold continued to remain in the GAP account of the
customers, and the accounts were required to be closed.
18. By way of evidence of payments having been made by it to the
customers, against sale back, of gold, to Augmont, One97 placed on
record a copy of its ledger accounts for the periods 5th to 7th January,
2019 as well as for the period thereafter. For the period between 7th
January, 2019 and 21st February, 2019, One97 claimed to be entitled
to payment, from Augmont, of an amount of ₹ 2,16,42,352/ -, as per
terms and conditions set out in the agreement.
19. A tabular representation of the manner in which this amount
was worked out was provided thus, in the Statement of Claim filed
before the learned Arbitral Tribunal:
S. No. Particulars Amount to Amount to
be paid by be paid by
Respondent Claimant
to Claimant to
Respondent
1. Valuation of sell 7,71,28,935
transactions from ..
November, 2018 till
31.01.2020 including
commission
(excluding 55485
transactions on 5th, 6th
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and 7th January, 2019)
2. Excess received from 12,51,888
Respondent against
failed orders along
with commission.
3. Amount recovered by 35,77,448
the Claimant.
4. Amount held by 5,06,57,247
Claimant for Buy
Orders
Total 2,16,42,352
20. In view of the aforesaid, One97 claimed, from Augmont, a total
amount of ₹ 12,86,24,185/ - in three claims, of which Claim No. 1
pertained to the period 5th to 7th January, 2019, Claim No. 2 pertained
to the period 7th January, 2019 till termination of the agreement and
Claim No. 3 pertained to the gold which continued to remain in the
custody of Augmont.
21. The prayer clause in the Statement of Claim reads as under:
"In the facts and circumstances set forth as above and the
submissions made hereinabove and in the fact and
circumstances of the present case, it is most respectfully
prayed that this Hon'ble Tribunal may be pleased to:-
a) pass an award directing the Respondent to make
payment to the tunes of outstanding of Rs.6,94,43,874/-
(Rupees Six Crores Ninety Four Lakhs Forty Three Thousand
Eight Hundred Seventy Four Only) along with future and
pendente-lite interest@ 18% p.a.;
b) pass an award directing the· Respondent to make
payment for outstanding sum of Rs.2,61,22,319/- (Rupees
Two Crores Sixty One Lakhs Twenty Two Thousand Three
Hundred Nineteen Only) along with future and pendente-lite
interest@ 18% p.a.;
c) pass an award directing the Respondent to make
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payment of a sum of Rs.3,30,57,992/- (Rupees Three Crores
Thirty Lakhs Fifty Seven Thou sand Nine Hundred Ninety
Two Only) along with future and pendente-lite interest @
18% p.a. for a sum which is equivalent to the quantity of Gold
that is in custody of the Respondent;
d) award the cost of the arbitration in favour of the
Claimant; and
e) pass any order or further order(s) as this Hon'ble
Tribunal may deem fit and proper in the facts and
circumstances of the present case."
22. One97 also filed, before the learned Arbitral Tribunal, an
application, under Section 17 of the 1996 Act, seeking securing of the
amount of ₹ 12,86,24,185/-, claimed by it against Augmont.
The Impugned Order
23. The order dated 24th January, 2021, passed by the learned
Arbitral Tribunal on the said application of One97 constitutes the
subject matter of challenge in the present appeal, at the instance of
Augmont.
24. The reasoning of the learned Arbitral Tribunal is essentially
contained in paras 18, 20, 22 to 24, 26 to 32, 35, 37 to 41 of the
impugned order which, for ready reference, are reproduced as under:
"18. There is no dispute that after 7th January, 2019, even
the parties continued to work the Agreement. For default of
the Respondent, the contract was initially terminated by
Notice dated 21st February, 2019 with immediate effect. For
the period 8th January, 2019 to 21st February, 2019 while the
Agreement was worked the Customers of the Respondent
continued to sell gold from their GAP accounts and the
Claimant instantly made payment to the said customers.
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Despite there being no dispute for transactions during the
period, the Respondent failed to reimburse the due amounts to
the Claimant for the period despite there being no dispute.
This amount as on date of filing of Section 17 application was
a sum of Rs.2,61,22,319 /- and forms part of Prayer (a) of the
said application. It is argued on behalf of the claimant that
there is no dispute or controversy for this period or the said
amount and yet the Respondent has failed to pay the said sum
to the Claimant.
*****
20. Thus, prima facie, the claimant is entitled to receive
the said amount which has gone from the pocket of the
claimant. Thus, the value of said transactions have gone from
the pocket of the claimant without any controversy between
the parties. The said amount is receivable by the claimant
even if denial by the respondent.
*****
22. As per facts in the present case, after 7th January,
2019, till the date of termination of agreement, actually both
parties understood that despite of transactions prior to 7th
January 2019, the understandings between their business
activists would continue as per agreement and the amount
sought to be protected in relief (a) the amount was paid with
the confirmation of the respondent. Thus, the said amount is
to be protected in the interest of justice and for the purpose of
commercial business.
23. The Respondent has not denied having given its
confirmation of the said transaction. The Respondent is
directed to pay the said amount to the Claimant within two
weeks from the date of receipt of Order. The interim order is
passed accordingly. However, since the Claimant has raised
his claim in the Statement of Claim, which is to be decided as
per its own merit after the trial, the Claimant shall give an
undertaking by way of affidavit within one week from the
date of receipt of this order that in case the said relief is
decided in favour of the Respondent, the Claimant shall
secure the said amount after passing the award.
24. Pertaining to relief (b) is concerned about quantity of
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gold in custody of the Respondent in Para 35 of the Statement
of Claim on Page 44, the corresponding reply of the
Respondent is on page 77 in Para 'hh'. There is a mere evasive
denial.
26. As on 31st January, 2019, a total quantity of 7.06 Kgs
of gold was lying with the Respondent. Needless to add, the
said gold didn't belong to Respondent but instead to various
customers, and the Respondent was merely a custodian
thereof for and on behalf of the customers. On the termination
of the said Agreement, the Respondent was liable to make
over the said gold to the Claimant, but failed to do so and this
claim forms subject matter of prayer (b) of the present Section
17 application.
27. In response to prayer (b), the Respondent does not
deny that it is holding gold belonging to customers, but the
Respondent stated that as and when a customer makes a
request for sale to the Claimant, the Claimant may forward
the said request to the Respondent and the Respondent shall
satisfy the said claim. Firstly, the Respondent cannot hold the
gold of third parties. Secondly, it is the obligation of the
Claimant to pay the sale value of gold as and when sold by
the customer from their GAP Account. Despite termination of
Agreement, the Claimant has continued to satisfy the sale
values of every customer instantly. In fact even after
termination of the Agreement, the Claimant is continuously
making payment to the customers instantly as and when sales
are made by the respective customer. This shall continue to
happen day after day.
28. There is no denial by the Respondent that it held the
quantity of gold of customer as referred by the Claimant. It is
also not denied that they are mere custodian of the said gold.
It is also not denied that the said gold belongs to Customers.
In fact, in para (1) on page 51 of the Statement of Defense,
the Respondent admits that it is custodian of the gold lying in
customer's GAP accounts. There is valid justification or
reason of the Respondent to hold or continue to hold the said
gold belonging to the customers.
29. It is argued on behalf of the claimant that the
respondent by its email dated 4th December, 2019 admitted
its liability and agreed to pay Rupees one Crore upfront and
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the rest in future commission. However, no amount was paid
since then. The said e-mail is referred by the counsel. The
counsel for the respondent on the other hand submitted that
the said admission was without prejudice. Therefore, the
prayer is to be considered on merit.
30. The Section 17 Application was filed on the basis of
the position as on 31st January 2019. Since then inasmuch as
the customers continued to sell gold lying in their GAP
Accounts, a number of transactions took place and the
Claimant paid to the customers a further sum of Rs.
26,06,094/-, which the Respondent has not reimbursed to the
Claimant. In addition, the stock of gold lying in GAP
Accounts stood revised to 6.49 kgs. but the value of the said
gold rose to Rs.3,85,71,507 /- because in the meantime the
price of per unit of gold had gone up. After having considered
the arguments of the parties, this Arbitral Tribunal, prima
facie, is of the view that the amount mentioned in prayer is
liable to be protected. There is no cause or reason for the
Respondent to withhold said gold and thereby exploit the
customers and the Claimant. In as much as it has no right to
hold the said gold, as admitted by the Respondent, prayer (b)
of the application deserves to be allowed. In fact, the
Claimant is agreeable to deposit by the Respondent of the
today's sale value of the gold held by the Respondent with
this Tribunal.
31. Thus, the prayer (b) is allowed. The respondent is
directed to furnish a Bank Guarantee for a sum of
Rs.3,30,57,992/-in favour of the claimant within two weeks
from today.
32. With respect to the transactions of 5th, 6th and 7th of
January, 2019, the Claimant seeks protection of amount as
mentioned in para (c) of the prayer in the application.
*****
35. The plea of fraud is barred by the order of reference by
the order of the Hon'ble Delhi High Court dated 17th January,
2020 which records the statement of the Respondent's counsel
that they shall not raise any plea of fraud. Even the said plea
in view of Clause 12 of the agreement where the obligation to
carry out KYC requirements for every customer is solely and
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exclusively of the Respondent. The claimant is not to
undertake any KYC process for Respondent customers. The
Claimant is only required to provide customer name, unique
customer ID, State and Pincode to the Respondent at the time
of opening of GAP Account as per Clause 12.1. Indisputably,
all these three details have been provided and are available
with the Respondent for each customer. For every user of the
Claimant, the claimant only undertakes a verification by OTP
as per Clause 1.1.44. At the time of becoming a 'Paytm User',
the concerned person is only to disclose his name, his mobile
number and complete verification of One Time Password
'OTP' sent to his disclosed mobile number. For all 'Paytm
users', the said process has been undertaken as alleged. The
complete list of the said customer is given in Annexure C-9 of
the Statement of Claim.
*****
37. The Respondent has also admitted in para (v) on page
64 of the statement of defense that the Respondent is
responsible for de biting gold balance from customer's GAP
accounts. It is however alleged that the glitch or error was on
the Claimant's system and not of the Respondent and that a
fraud has been committed.
38. During the course of submissions, the Respondent's
counsel has relied upon RBI Master Directions dated
11.10.2017 and 25.02.2016 to allege that as per the said
Master Directions the Claimant was also to undertake KYC
requirement for its users. Admittedly, the Respondent not take
any such plea in its statement of defence in its reply with
respect to the said RBI Master Directions. In any case, the
said RBI Master Directions applies to entities dealing in
Prepaid Payment Instruments (PPIs). The Claimant states and
confirms that the Claimant does not issue any PPIs as it is
clear from the Certificates of Authorization issued by Reserve
Bank of India and Settlement Systems Act 2007 for setting up
and operating payment system in India. In fact on 25.07.2017,
the Certificate of Authorization issued by RBI under Payment
& Settlement Systems Act, 2007 in favour of the Claimant
was cancelled as the business of PPI undertaken by the
Claimant uptill that date was transferred to the company
known as Paytm Payment Bank Limited (PPBL), which is a
separate legal entity. The portion of Certificate of
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Authorization issued by RBI under Payment & Settlement
Systems Act, 2007 indicates that the Claimant is not an issuer
of PPL
39. Prima facie, it appears that the said pleas are not
tainable because of the reason that it was the responsibility of
the respondent to maintain the GAP Account and it follows
therefrom that the responsibility for deduction of the sale
quantity from the GAP account of each customer is of the
Respondent. As far as 55458 transactions are concerned,
despite sale of certain quantity, the requisite debit was not
made in the GAP account of the customers of the Respondent.
40. It is not denied and disputed that the Respondent sent
the requisite sale confirmation for each transaction to the
Claimant, whereupon the Claimant has no option, but is
instead duty bound to pay each customer the sale value. There
was no other option. Under the API System of the Respondent
of the Statement of Defense, the code for a successful
transaction is "200" and the code for failure is "400". For
each of the said 55458 transactions, indisputably the
Respondent's system sent code of "200" and not "400". The
Claimant is liable and has paid to each customer the sale
value. Hence, the Respondent's plea is prima facie without
any force.
41. The Respondent did not deny that it maintained the
GAP Accounts of the customers. It also did not dispute that
the accounts were not debited on account of sale made. It is
admitted that the payments were made by the Claimant to the
customers. Admittedly, the Respondent did not reimburse the
said payments to the Claimant."
25. Consequent on the aforesaid reasoning, the learned Arbitral
Tribunal issued the following directions, in para 42 of the impugned
order:
"42. After having gone through the entire gamut of the
matter, this Arbitral Tribunal passes the following directions:-
a) The Respondent shall pay a sum of
Rs.2,61,22,319/- to the Claimant, which is undisputed
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amount and is payable as per agreement. The
Respondent is directed to pay the same to the Claimant
within two weeks from the date of receipt of this order.
The interim order is passed accordingly. As far as
interest component is concerned, the said aspect would
be considered at the time of passing the final award.
b) The Respondent is directed to furnish the Bank
Guarantee for a sum of Rs.3,30,57,992/- in favour of
the Claimant within four weeks from today.
c) With regard to prayer (c) is concerned, the plea
raised by both the parties will be decided after leading
the evidence in view of facts and circumstances of the
case. No doubt, the Claimant at this stage is able to
make a prima facie case in its favour, but still the
Tribunal is not inclined to pass the order of furnishing
the bank guarantee. However, the balance is to be
strike between the parties to some extent. Under these
circumstances, in case the Respondent change its
hand/fifty one percent ownership of the Respondent,
the Respondent shall secure the amount by opening of
open an escrow account before changing its hands and
duly inform the Arbitral Tribunal as well as the
counsel for the Claimant and maintain such balance
during the pendency of the Arbitral Tribunal till the
final award is passed."
26. Augmont is in appeal.
Rival submissions
27. I have heard Mr. Dayan Krishnan, learned Senior Counsel for
Augmont and Mr. Sandeep Sethi, learned Senior Counsel for One97,
at great length. Detailed written submissions have also been filed by
both learned Senior Counsel.
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28. Mr. Dayan Krishnan submits that the direction, in the impugned
order, of the learned Arbitral Tribunal, to Augmont, to pay, to One97,
₹ 2,61,22,319/-, resulted in grant, at an interim stage, of the final relief
sought by One97, which was impermissible. He submits that, under
the agreement between Augmont and One97, the responsibility of
conducting the requisite KYC exercise was of One97, for which
purpose, Mr. Dayan Krishnan relies on Clauses 12 and 3.1 of the
agreement. The respondent, according to him, defaulted in this
obligation and Augmont could hardly be directed to recompense
One97 for its default. In this context, Mr. Dayan Krishnan also relies
on Clause 15.7 of the agreement, to contend that the integrity of the
system was required to be maintained at all times. Additionally,
submits Mr. Dayan Krishnan, One97 was remiss in its obligation to
check the debit balance at all times, before selling the gold to the
customer.
29. Mr. Dayan Krishnan also faults the learned Arbitral Tribunal
for having returned the finding that the liability, to reimburse One97
for the payments allegedly made by One97 to customers, even after 7th
January 2019, stood admitted by Augmont. He submits that there is no
such admission. In fact, Mr. Dayan Krishnan sought to contend, by
referring to the corresponding paragraphs from the Statement of
Defence filed by Augmont before the learned Arbitral Tribunal, in
response to the Statement of Claim of One97, that Augmont had, in no
uncertain terms, denied both the factum of payment, by One97 to
customers after 7th January, 2019, but also the assertion, of One97,
that it had done so after confirmation of sale had been received from
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Augmont. Mr. Dayan Krishnan emphasises the fact that, in fact,
Augmont had filed a counter-claim, for the said purpose before the
learned Arbitral Tribunal. He submits that, save and except for its own
ledger, One97 had filed no document to vouchsafe its claim of having
paid customers even after 7th January, 2019. Mr. Dayan Krishnan also
drew my attention to the relevant pages of the ledger, as filed by
One97 before the learned Arbitral Tribunal, to contend that the ledger
did not even disclose the names of the payees, to whom payments had
been made. Augmont had categorically denied the validity of the
ledger. In these circumstances, he submits that the learned Arbitral
Tribunal ought not to have treated the ledger as a proof of payment
having been made by One97 to customers after 7th January, 2019.
30. Mr. Dayan Krishnan further submits that there was no
justification for the learned Arbitral Tribunal to direct furnishing by
Augmont of a bank guarantee covering the value of the gold in its
possession, after termination of the contract. He points out that, in
fact, before the learned Arbitral Tribunal, Augmont had clearly stated
that, as and when any customer claimed the gold, Augmont would
release the gold to the said customer. No occasion, therefore, arose,
according to Mr. Dayan Krishnan, for securing the value of the gold.
The prayer for furnishing of a bank guarantee for ₹ 3,30,57,992/-
covering the value of the gold remaining in the possession of
Augmont after termination of the agreement on 21st February, 2019,
was also, according to him, thoroughly unjustified.
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31. The third limb of Mr. Dayan Krishnan's attack on the impugned
order was that the learned Arbitral Tribunal had failed to abide by the
provisions of Order XXXVIII Rule 5 of the CPC, the satisfaction of
the pre-requisites of which was a sine qua non for directing furnishing
of any kind of security under Section 17(1)(ii)(b) of the 1996 Act. He
submits that the learned Arbitral Tribunal has not addressed itself, at
all, to the financial condition of One97, or to the possibility of
frustration of any ultimate arbitral award, were security not to be
directed. That apart, Mr. Dayan Krishnan submits that, before
directing security under Section 17(1)(ii)(b) of the 1996 Act, the
learned Arbitral Tribunal was required to record a finding that the
party, who was being directed to provide security, was dissipating its
assets with the intent of defeating the ultimate arbitral award to be
posted in the matter. No such finding, he submits, is forthcoming in
the impugned order.
32. Mr. Sandeep Sethi, learned Senior Counsel for One97, disputes
all submissions advanced by Mr. Dayan Krishnan. He contends that,
as per the agreement, the responsibility to ensure KYC compliance
was always of Augmont and that the learned Arbitral Tribunal was
entirely justified in so holding. He also seeks to endorse the finding of
Augmont having admitted its liability in respect of the transactions
which took place after 7th January, 2019, in which respect he has
invited my attention to the averments contained in para 33 of the
Statement of Claim which were not traversed in the corresponding
para ff of the Statement of Defence except by way of bald denial. He
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has also invited my attention to para 40 of the impugned order, which
reads as under:
"It is not denied and disputed that the Respondent sent the
requisite sale confirmation for each transaction to the
Claimant, whereupon the Claimant has no option, but is
instead duty bound to pay each customer the sale value. There
was no other option. Under the API System of the Respondent
of the Statement of Defense, the code for a successful
transaction is "200" and the code for failure is "400". For
each of the said 55458 transactions, indisputably the
Respondent's system sent code of "200" and not "400". The
Claimant is liable and has paid to each customer the sale
value. Hence, the Respondent's plea is prima facie without
any force."
33. Additionally, he relies on the observation, in para 19 of the
impugned order, that the liability to reimburse One97, for the payment
made in respect of the transactions which took place after 7th January,
2019, was not disputed by Augmont during hearing. Mr. Sethi points
out that there is no unequivocal denial, by Augmont, of the payments
having been made by One97 after 7th January, 2019. He also submits
that his client had, by way of evidence of such payments, produced a
ledger, which was accepted by the learned Arbitral Tribunal as prima
facie evidence thereof. No substantial ground, for questioning the
veracity of the ledger had, he submits, been advanced by Augmont
before the learned Arbitral Tribunal.
34. In so far as the direction to furnish a bank guarantee, covering
the value of the gold which continued to remain with Augmont after
the termination of the agreement, was concerned, Mr. Sethi submits
that One97 was continuing to make payments to customers even after
the agreement stood terminated, which fact, too, he submits, did not
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meet with any substantial traversal on the part of Augmont. He
submits, moreover, that One97 was responsible to ultimately close the
accounts of all customers, which would necessitate, in the ultimate
eventuate, payment of the price of the gold to the customers in whose
GAP accounts gold remained unsold. Despite the fact that One97 was
continuing to pay customers, he submitted that Augmont had made no
reimbursement or remittance to One97 after 5th January, 2019, and
even after 7th January, 2019, when the system was in working order.
No exception, therefore, according to Mr. Sethi, could be taken to the
direction, of the learned Arbitral Tribunal, to Augmont, to furnish a
bank guarantee covering the value of the gold in its possession.
35. Mr. Sethi further submits that, while exercising its jurisdiction
under Section 17(1)(ii)(b) of the 1996 Act, the learned Arbitral
Tribunal was not shackled by the restrictions governing the exercise of
jurisdiction under Order XXXVIII, Rule 5 of the CPC, 1908, and that
the law, in this regard, was well settled.
Analysis
Applicability of Order XXXVIII Rule 5, CPC
36. Mr. Dayan Krishnan advanced, as his opening submission, the
contention that the impugned order of the learned Arbitral Tribunal
was vitiated as it did not appropriately examine the applicability of
Order XXXVIII Rule 5 of the CPC. Mr. Krishnan submits that, apart
from the existence of a prima facie case, the balance of convenience
and irreparable loss, Order XXXVIII Rule 5 requires, for its
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satisfaction, a finding to the effect that the respondent was not only in
financially impecunious circumstances but was seeking to dissipate its
assets with a view to defeat the arbitral award, in the event that the
award was in favour of the appellant. More precisely, Mr. Krishnan
submits that, even if the learned Arbitral Tribunal were to be regarded
as having taken, into consideration, the financial condition of his
client, there is no finding, whatsoever, to the effect that his client was
seeking to dissipate its assets, with a view to defeat the ultimate
arbitral award. In the absence of such a finding, contends Mr.
Krishnan, no relief, under Section 17(1)(ii)(b) of the Act, could have
been granted.
37. This is an aspect which comes up for consideration in case after
case, and there are decisions galore on the point. Judicial opinion, in
this respect, is mixed. It requires to be examined, therefore, in some
detail.
38. Parliamentary statutes are not mere pen and parchment. They
are living, breathing entities which pulsate with life. As in the case of
any living entity, the intent of a plenary statutory legislative
instrument is best discerned from its words, and the manner in which
it chooses to express itself.
39. Before adverting to precedents, therefore, let us examine, in the
first instance, the provisions.
40. Section 17(1)(ii)(b) and (e) read thus:
"17. Interim measure is ordered by arbitral tribunal. -
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(1) A party may, during the arbitral proceedings,
apply to the arbitral tribunal -
*****
(ii) for an interim measure of protection in
respect of any of the following matters,
namely:-
*****
(b) securing the amount in dispute in
the arbitration;
*****
(e) such other interim measure of
protection as may appear to the arbitral
tribunal to be just and convenient,
and the arbitral tribunal shall have the same power for
making orders, as the court has for the purpose of, and
in relation to, in the proceedings before it."
41. It is, by now, settled that the power of the Arbitral Tribunal
under Section 17 and the power of the Court under Section 9 of the
1996 Act are co-extensive and co-equal in character. The judgment of
this Court in Avantha Holdings Ltd. v. Vistra ITCL India Ltd 1, to
this effect, has expressly been approved by the Supreme Court in its
recent decision in Arcelor Mittal Nippon Steel India Ltd. v. Essar
Bulk Terminal Ltd 2, to that extent.
42. Equally, the concluding clause in Section 17(1)(ii) makes it
clear that the power of the Arbitral Tribunal, for making an order
1
2020 SCC OnLine Del 1717
2
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under Section 17 would be the same as the power of a Court, in
relation to proceedings before it. On the basis of this statutory
clarification, it has been held, in various decisions, that the Arbitral
Tribunal, exercising jurisdiction under Section 17, is required to bear
in mind the provisions of Orders XXXVIII and XXXIX of the CPC.
43. Section 17(1)(ii)(b) empowers the Arbitral Tribunal to secure
the amount in dispute in the arbitration. Prior to its amendment by
Section 10 of the Arbitration and Conciliation (Amendment) Act,
2015, with effect from 23rd October, 2015, Section 17 read thus:
"17. Interim measures ordered by arbitral tribunal. -
(1) Unless otherwise agreed by the parties, the
arbitral tribunal may, at the request of a party, order a
party to take any interim measure of protection as the
arbitral tribunal may consider necessary in respect of
the subject-matter of the dispute.
(2) The arbitral tribunal may require a party to
provide appropriate security in connection with a
measure ordered under sub-section (1)."
44. The power to direct furnishing of security, in connection with
the subject matter of the arbitral dispute, therefore, vested in the
Arbitral Tribunal even under the pre-amended Section 17, by virtue of
sub-section (2) thereof. The law relating to the power to direct
furnishing of security, as a measure of interim protection, as
enunciated in the pre-amended regime would, therefore, continue to
apply, to that extent, even after Section 17 was amended w.e.f. 23rd
October, 2015.
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45. In a case arising under the pre-amended Section 9, the Supreme
Court, in Arvind Constructions v. Kalinga Mining Corporation 3,
while noting the view expressed by the High Court of Bombay that
exercise of jurisdiction under Section 9 of the 1996 Act was not
controlled by Order XXXVIII Rule 5 of the CPC, observed that the
extent to which the said view was correct "requires to be considered in
an appropriate case", but that it was not inclined to answer the
question finally in the case before it. Even so, the Supreme Court
observed that it was "prima facie inclined to the view that exercise of
power under Section 9 of the Act must be based on the well-
recognised principles governing the grant of interim injunctions and
other orders of interim protection or the appointment of a receiver".
Following the said decision, and the decision in Firm Ashok Traders
v. Gurumukh Das Saluja 4, a Division Bench of this Court, in Ajay
Singh v. Kal Airways Pvt Ltd 5, which arose under the amended
Section 17, held thus, in para 27 of the report:
"Though apparently, there seem to be two divergent strands
of thought, in judicial thinking, this court is of the opinion
that the matter is one of the weight to be given to the
materials on record, a fact dependent exercise, rather than of
principal. That Section 9 grants wide powers to the courts in
fashioning an appropriate interim order, is apparent from its
text. Nevertheless, what the authorities stress is that the
exercise of such power should be principled, premised on
some known guidelines - therefore, the analogy of Orders 38
and 39. Equally, the court should not find itself unduly bound
by the text of these provisions rather it is to follow the
underlying principles."
(Emphasis supplied)
3
(2007) 6 SCC 798
4
(2004) 3 SCC 155
5
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46. The law enunciated in Ajay Singh5 continues, undisturbed, till
date. It is clearly laid down in the said decision that the Section 9
court is not constrained by the express wordings of Order XXXVIII
Rule 5, but is required to keep the principles underlying the said
provision in mind.
47. To have an idea of the principles underlying Order XXXVIII
Rule 5, one needs to look no further than the short decision of the
Supreme Court in Raman Tech & Process Engg v. Solanki Traders6.
Paras 4 to 6 of the report in that case read as under:
"4. The object of supplemental proceedings (applications
for arrest or attachment before judgment, grant of temporary
injunctions and appointment of receivers) is to prevent the
ends of justice being defeated. The object of Order 38 Rule 5
CPC in particular, is to prevent any defendant from defeating
the realization of the decree that may ultimately be passed in
favour of the plaintiff, either by attempting to dispose of, or
remove from the jurisdiction of the court, his movables. The
scheme of Order 38 and the use of the words 'to obstruct or
delay the execution of any decree that may be passed against
him' in Rule 5 make it clear that before exercising the power
under the said Rule, the court should be satisfied that there is
a reasonable chance of a decree being passed in the suit
against the defendant. This would mean that the court should
be satisfied that the plaintiff has a prima facie case. If the
averments in the plaint and the documents produced in
support of it, do not satisfy the court about the existence of a
prima facie case, the court will not go to the next stage of
examining whether the interest of the plaintiff should be
protected by exercising power under Order 38 Rule 5 CPC. It
is well settled that merely having a just or valid claim or a
prima facie case, will not entitle the plaintiff to an order of
attachment before judgment, unless he also establishes that
the defendant is attempting to remove or dispose of his assets
with the intention of defeating the decree that may be passed.
6
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(2008) 2 SCC 302
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Equally well settled is the position that even where the
defendant is removing or disposing his assets, an attachment
before judgment will not be issued, if the plaintiff is not able
to satisfy that he has a prima facie case.
5. The power under Order 38 Rule 5 CPC is a drastic
and extraordinary power. Such power should not be exercised
mechanically or merely for the asking. It should be used
sparingly and strictly in accordance with the Rule. The
purpose of Order 38 Rule 5 is not to convert an unsecured
debt into a secured debt. Any attempt by a plaintiff to utilize
the provisions of Order 38 Rule 5 as a leverage for coercing
the defendant to settle the suit claim should be discouraged.
Instances are not wanting where bloated and doubtful claims
are realised by unscrupulous plaintiffs by obtaining orders of
attachment before judgment and forcing the defendants for
out of court settlement, under threat of attachment.
6. A defendant is not debarred from dealing with his
property merely because a suit is filed or about to be filed
against him. Shifting of business from one premises to
another premises or removal of machinery to another
premises by itself is not a ground for granting attachment
before judgment. A plaintiff should show, prima facie, that his
claim is bona fide and valid and also satisfy the court that the
defendant is about to remove or dispose of the whole or part
of his property, with the intention of obstructing or delaying
the execution of any decree that may be passed against him,
before power is exercised under Order 38 Rule 5 CPC.
Courts should also keep in view the principles relating to
grant of attachment before judgment. (See Premraj
Mundra v. Md. Manech Gazi 7 for a clear summary of the
principles.)"
(Emphasis supplied)
48. Premraj Mundra7, which was specifically approved - and,
indeed, relied upon - by the Supreme Court in Raman Tech &
Process Engg. Co.6, postulated the following "guiding principles", in
7
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para 18, to govern exercise of jurisdiction under Order XXXVIII Rule
5:
"(1) That an order under Order 38, Rules 5 & 6, can only be
issued, if circumstances exist as are stated therein.
(2) Whether such circumstances exist is a question of fact
that must be proved to the satisfaction of the Court.
(3) That the Court would not be justified in issuing an
order for attachment before judgment, or for security, merely
because it thinks that no harm would be done thereby or that
the defts. would not be prejudiced.
(4) That the affidavits in support of the contentions of the
applicant, must not be vague, & must be properly verified.
Where it is affirmed true to knowledge or information or
belief, it must be stated as to which portion is true to
knowledge, the source of information should be disclosed, &
the grounds for belief should be stated.
(5) That a mere allegation that the deft. was selling off &
his properties is not sufficient. Particulars must be stated.
(6) There is no rule that transactions before suit cannot be
taken into consideration, but the object of attachment before
judgment must be to prevent future transfer or alienation.
(7) Where only a small portion of the property belonging
to the deft. is being disposed of, no inference can be drawn in
the absence of other circumstances that the alienation is
necessarily to defraud or delay the pltf's claim.
(8) That the mere fact of transfer is not enough, since
nobody can be prevented from dealing with his properties
simply of cause a suit has been filed. There must be additional
circumstances to show that the transfer is with an intention to
delay or defeat the pltf.'s claim. It is open to the Court to look
to the conduct of the parties immediately before suit, & to
examine the surrounding circumstances, to draw an inference
as to whether the deft. is about to dispose of the property, & if
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so, with what intention. The Court is entitled to consider the
nature of the claim & the defence put forward.
(9) The fact that the deft. is in insolvent circumstances or
in acute financial embarrassment, is a relevant circumstance,
but not by itself sufficient.
(10) That in the case of running businesses, the strictest
caution is necessary & the mere fact that a business has been
closed, or that its turnover has diminished, is not enough.
(11) Where however the deft. starts disposing of his
properties one by one, immediately upon getting a notice of
the pltf.'s claim, &/or where he had transferred the major
portion of his properties shortly prior to the institution of the
suit & was in an embarrassed financial condition, these were
grounds from which an inference could be legitimately drawn
that the object of the deft. was to delay and defeat the pltfs'.
claim.
(12) Mere removal of properties outside jurisdiction, is not
enough, but where the deft. with notice of the pltfs'. claim,
suddenly begins removal of his properties outside the
jurisdiction of the appropriate Court, & without any other
satisfactory reason, an adverse inference may be drawn
against the deft. Where the removal is to a foreign country,
the inference is greatly strengthened.
(13) The deft. in a suit is under no liability to take any
special care in administering his affairs, simply because there
is a claim pending against him. Mere negect, or suffering
execution by other creditors, is not a sufficient reason for an
order under Order 38 of the Code.
(14) The sale of properties at a gross undervalue, or benami
transfers, are always good indications of an intention to defeat
the pltfs. claim. The Court must however be very cautious
about the evidence on these points & not rely on vague
allegations."
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49. Post amendment, Section 17(1)(ii)(b) specifically empowers the
Arbitral Tribunal to secure the amount in dispute in the arbitration.
50. To what extent would the exercise of power, by the Court,
under Section 9(1)(ii)(b) or by the Arbitral Tribunal under Section
17(1)(ii)(b) of the 1996 Act be governed by provisions of Order
XXXVIII Rule 5 of the CPC?
51. Order XXXVIII Rule 5 CPC reads as under:
"5. Where defendant may be called upon to furnish
security for production of property. -
(1) Where, at any stage of a suit, the Court is
satisfied, by affidavit or otherwise, that the defendant,
with intent to obstruct or delay the execution of any
decree that may be passed against him, -
(a) is about to dispose of the whole or any
part of his property, or
(b) is about to remove the whole or any part
of his property from the local limits of the
jurisdiction of the Court,
the Court may direct the defendant, within a time to be
fixed by it, either to furnish security, in such sum as
may be specified in the order, to produce and place at
the disposal of the Court, when required, the said
property or the value of the same, or such portion
thereof as may be sufficient to satisfy the decree, or to
appear and show cause why he should not furnish
security.
(2) The plaintiff shall, unless the Court otherwise
directs, specify the property required to be attached
and the estimated value thereof.
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(3) The Court may also in the order direct the
conditional attachment of the whole or any portion of
the property so specified.
(4) If an order of attachment is made without
complying with the provisions of sub-rule (1) of this
rule, such attachment shall be void."
52. A bare reading of Order XXXVIII Rule 5 CPC reveals that the
statutory sine qua non, for a direction by the Court, to furnish security
under the said provision, is the satisfaction, of the Court, that the
defendant, "with intent to obstruct or delay the execution of any
decree that may be passed against him", (a) is about to dispose of the
whole or any part of his property, or (b) is about to remove the whole
or any part of his property from the local limits of the jurisdiction of
the Court.
53. Clearly, therefore, a Court would be acting without jurisdiction
if, in the absence of prima facie material to indicate satisfaction of the
considerations specified in one of Clauses (a) and (b) of Order
XXXVIII Rule 5 (1), it directs the defendant to provide security.
54. Section 17(1)(ii)(b) [or Section 9(1)(ii)(b)] does not expressly
incorporate the considerations stipulated in Order XXXVIII Rule 5(1).
It merely empowers the Arbitral Tribunal (in the case of Section 17)
or the Court (in the case of Section 9), to secure the amount in dispute
in arbitral proceedings. Courts have, however, even after the
amendment of Section 9 and Section 17, with effect from 23rd
October, 2015, been adopting the view that the exercise of jurisdiction
under Section 9 or 17, even if not circumscribed by the express words
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of Order XXXVIII Rule 5, has to abide by the guiding principles
thereof.
55. One of the earliest decisions of a Division Bench of this Court,
after the amendment of Sections 9 and 17 with effect from 23rd
October, 2015, is Ajay Singh5. As already noted hereinabove, the
Division Bench, in Ajay Singh5, held that though the Section 9 Court
was not bound by the express words of Order XXXVIII Rule 5 of the
CPC, while exercising jurisdiction under Section 9(1)(ii)(b), the
guiding principles behind the provision were required to be borne in
mind. Mutatis mutandis, this enunciation of law would apply to
exercise of jurisdiction under Section 17(1)(ii)(b) as well.
Order XXXIX Rule 10, CPC
56. While exercising jurisdiction under Section 17, however, the
Arbitral Tribunal is required to bear in mind not only Order XXXVIII
but also Order XXXIX CPC. Order XXXIX Rule 10 CPC reads as
under:
"10. Deposit of money, etc., in Court. - Where the
subject-matter of a suit is money or some other thing capable
of delivery and any party thereto admits that he holds such
money or other thing as a trustee for another party, or that it
belongs or is due to another party, the Court may order the
same to be deposited in Court or delivered to such last-named
party, with or without security, subject to the further direction
of the Court."
57. The learned Arbitral Tribunal holds, in the impugned order,
that, inasmuch as the right of One97 to reimbursement of the amounts
paid by it to the customers who sold back the digital gold to Augmont
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between 8th January, 2019 and 21st February, 2019 stood admitted by
Augmont, the interests of justice deserved issuance of a direction, to
Augmont, to secure the amount.
58. To my mind, a direction under Section 17, by the learned
Arbitral Tribunal to secure the admitted amount during the arbitral
proceedings may not justify interference in exercise of the jurisdiction
vested in this Court by Section 37 of the 1996 Act, either on first
principles or on merits, unless the finding of admission of liability on
the part of the party who is asked to make the deposit is itself found to
suffer from perversity or patent illegality.
59. If the finding of admitted liability, as arrived at by the learned
Arbitral Tribunal, and which constitutes, inter alia , the basis of the
impugned direction to secure the amount, is not found deserving of
interference under Section 37, the inexorable sequitur, in my view,
would be that the consequential direction, to secure the admitted
amount, would be equally impervious to such interference.
60. The learned Arbitral Tribunal has, in fact, placed reliance on the
decision of this Court in NHAI v. Jetpur Somnath Tollways 8 which
has been held, by a Division Bench of this Court NHAI v.
Bhubaneswar Expressway Pvt. Ltd9 to have been rendered in the
context of Order XXXIX Rule 10 of the CPC.
8
2017 SCC OnLine Del 11312
9
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2021 SCC OnLine Del 2421
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61. In Sanjeev Sarin v. Rita Wadhwa10 this Court has held that the
exercise of jurisdiction under Order XXXIX Rule 10 of the CPC has
to be on principles analogous to those which apply to Order XII Rule
6 of the CPC. This judgment was affirmed, on merits, by the Division
Bench of this Court, vide order dated 27th August, 2018 in FAO (OS)
50/2018 (Rajiv Sarin v. Rita Wadhwa).
62. The High Court of Bombay has lowered the bar still further, in
Rajul Manoj Shah v. Navin Umarshi Shah11, by holding thus (in
para 22 of the report, authored by Oka, J., as he then was):
"Considering the scheme of Rule 10 of Order XXXIX, we
find it difficult to accept the Delhi view as correct. On its
plain reading, Rule 10 is applicable when subject matter of
the suit is money or some other thing capable of delivery. An
order of deposit can be made provided the party to the suit
admits that he holds such money or thing as a trustee of other
party. The order of deposit can be passed when the party
admits that the money or the thing held by the party belongs
to the other party or the money is due to the other party. Rule
6 of Order XII is a discretionary provision which empowers
the Court to pass a judgment on admission made either in the
pleadings or otherwise, whether orally or in writing.
Therefore, in a suit where there is a clear admission of a fact
which enables the Court to pronounce a judgment on
admission, the Court may in its discretion pronounce the
judgment on admission and thereafter in terms of sub-rule (2)
of Rule 6 of Order XII, the Court is under a mandate to make
a decree on admission. Thus, if in a given case, there is a
clinching admission by a defendant that he is holding the
money or some other thing capable of delivery as a trustee for
the plaintiff and the Court is satisfied that it is a fit case to
exercise discretion by passing a judgment on admission under
Rule 6 of Order XII, the Court would very well pass a
judgment on admission so that by executing the decree drawn
10
2018 SCC OnLine Del 6658
11
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2018 SCC OnLine Bom 8206
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in terms of the said judgment, the plaintiff gets the money or
the thing capable of delivery. If such a stringent test is to be
applied for applicability of Rule 10 of Order XXXIX, the
provision of Rule 10 will virtually become redundant. Rule
10 confers powers on the Court to pass an interim order
directing the money to be deposited in the Court or to be
delivered to the party for whose benefit the concerned party is
holding the same as a trustee. There is a power vesting in the
Court to direct the party to deposit property ordered to be
delivered or to furnish a security. The power under Rule 10 of
Order XXXIX is a power to pass an interim order pending
suit. But the power under Rule 6 of Order XII is a drastic
power of passing a decree on admission without conducting
trial. The standards applicable to a provision conferring
power to pass a decree on admission cannot be applied to
Rule 10 of Order XXXIX which empowers the Court to pass
an interim order. Therefore, in our view, the test applicable
for passing the judgment on admission under Rule 6 of Order
XII of the said Code cannot be imported in Rule 10 of Order
XXXIX. If the conditions provided in Rule 10 of Order
XXXIX are satisfied, the Court can exercise the power under
Rule 10 by directing the payment of money to the party for
whose benefit the same is being held as a trustee or to direct
deposit of the money in the Court."
In the context of Order XII Rule 6 of the CPC, it is well settled 12 that
the admission, on the basis of which judgment is rendered under the
said provision, is not required necessarily to be in the pleadings, but
may also be in the documents filed with the plaint or even in any
cognate instrument. Borrowing the analogy, therefore, a Court, or an
Arbitral Tribunal, which directs deposit of an amount by defendant,
which, in its view, is admitted to be payable by the defendant to the
plaintiff, is not acting without jurisdiction or even in an illegal
manner, if such admission is found to exist in a document executed
12
Refer Uttam Singh Duggal & Co. v. Union Bank of India, (2000) 7 SCC 120, Urmila Devi v. Laxman
Singh, 2015 SCC OnLine Del 8487, Delhi Jal Board v. Surendra P. Malik, (2003) 104 DLT 151 and
Jasmer Singh Sarna v. Electronics Trade and Technology Development Corp Ltd, ILR (2001) II Delhi
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by the defendant, even if it is not reflected in the pleadings before the
court.
63. An arbitral order which arrives at such a conclusion, would not,
therefore, merit interference in exercise of the appellate jurisdiction
vested by Section 37 of the 1996 Act.
Scope of Section 37(2)
64. The legislature, consciously and deliberately, has provided only
for the filing of objections under Section 34 of the 1996 Act, against a
final award, but has made interlocutory orders of Arbitral Tribunal
amenable to appeal under Section 37(2). The reason for this
differential dispensation is, unfortunately, not immediately
forthcoming either from the provisions of the 1996 Act, or from the
Statement of Objects and Reasons thereto. The UNCITRAL model,
which admittedly constitutes the basis of the 1996 Act, too, does not
enlighten on this aspect.
65. Having said that, so long as such a differential treatment has
been extended, by the statute, to interlocutory orders under Section 16
or 17 of the 1996 Act, vis-à-vis final awards, the intent of the
legislature in doing so has to be respected.
66. Section 37(2) envisages appeals, to the Court, from orders
passed by the Arbitral Tribunal either under sub-sections (2) or (3) of
Section 16, accepting the objection regarding want of jurisdiction in
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the Arbitral Tribunal, or granting or refusing to grant an interim
measure under Section 17. Sections 16(2) and (3) read thus:
"16. Competence of arbitral tribunal to rule on its
jurisdiction. -
*****
(2) A plea that the arbitral tribunal does not have
jurisdiction shall be raised not later than the
submission of the statement of defence; however, a
party shall not be precluded from raising such a plea
merely because that he has appointed, or participated
in the appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the
scope of its authority shall be raised as soon as the
matter alleged to be beyond the scope of its authority is
raised during the arbitral proceedings."
67. At a bare glance, the difference between orders passed under
sub-sections (2) and (3) of Section 16, and an order passed under
Section 17, is starkly apparent. Orders passed under sub-section (2)
and (3) of Section 16 rule on the jurisdiction and authority of the
Arbitral Tribunal to deal with the arbitral proceedings. Any orders
accepting the objection to the jurisdiction of the Arbitral Tribunal
would, therefore, in that sense, be final, as a decision thereon would
conclude the issue of whether the Arbitral Tribunal possesses
jurisdiction and authority to arbitrate. As against this, an order of
interim protection under Section 17 - especially an order under
Section 17(1)(ii)(b) such as the order under challenge - is
fundamentally discretionary in nature, and does not put an end to the
lis. Such orders would abide by the final award, to be passed later in
the arbitral proceedings.
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68. On the scope of interference with the exercise of discretion by
the Arbitral Tribunal under Section 17(1)(ii)(b), I have had occasion
to observe thus, in Dinesh Gupta v. Anand Gupta 13:
"60. This position is additionally underscored, where the
order of the arbitrator is relatable to Section 17(1)(ii)(b) or
(e), and directs furnishing of security. Direction, to litigating
parties, to furnish security, is a purely discretionary exercise,
intended to balance the equities. The scope of interference, in
appeal, with a discretionary order passed by a judicial forum,
stands authoritatively delineated in the following passages,
from Wander Ltd v. Antox India P Ltd 14:
"13. On a consideration of the matter, we are afraid,
the appellate bench fell into error on two important
propositions. The first is a misdirection in regard to the
very scope and nature of the appeals before it and the
limitations on the powers of the appellate court to
substitute its own discretion in an appeal preferred
against a discretionary order. The second pertains to
the infirmities in the ratiocination as to the quality of
Antox's alleged user of the trademark on which the
passing-off action is founded. We shall deal with these
two separately.
14. The appeals before the Division Bench were
against the exercise of discretion by the Single Judge.
In such appeals, the appellate court will not interfere
with the exercise of discretion of the court of first
instance and substitute its own discretion except where
the discretion has been shown to have been exercised
arbitrarily, or capriciously or perversely or where the
court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions.
An appeal against exercise of discretion is said to be an
appeal on principle. Appellate court will not reassess
the material and seek to reach a conclusion different
from the one reached by the court below if the one
13
MANU/DE/1727/2020
14
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1990 Supp SCC 727
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reached by that court was reasonably possible on the
material. The appellate court would normally not be
justified in interfering with the exercise of discretion
under appeal solely on the ground that if it had
considered the matter at the trial stage it would have
come to a contrary conclusion. If the discretion has
been exercised by the trial court reasonably and in a
judicial manner the fact that the appellate court would
have taken a different view may not justify
interference with the trial court's exercise of discretion.
After referring to these principles Gajendragadkar, J. in
Printers (Mysore) Private Ltd. v. Pothan Joseph 15:
"... These principles are well established, but as
has been observed by Viscount Simon in
Charles Osenton & Co. v. Jhanaton 16, '...the
law as to the reversal by a court of appeal of an
order made by a judge below in the exercise of
his discretion is well established, and any
difficulty that arises is due only to the
application of well settled principles in an
individual case'."
The appellate judgment does not seem to defer to this
principle."
That this principle applies to exercise of appellate jurisdiction,
over discretionary interlocutory orders, passed by arbitrators,
under Section 17 of the 1996 Act, has been reiterated, by this
Court, in several decisions, including Bakshi Speedways v.
Hindustan Petroleum Corporation 17, EMAAR MGF Land
Ltd v. Kakade British Realities Pvt Ltd 18, Reliance
Communications Ltd v. Bharti Infratel Ltd. 19, Ascot Hotels
and Resorts Pvt Ltd v. Connaught Plaza Restaurants Pvt
Ltd. 20and Green Infra Wind Energy Ltd v. Regen Powertech
Pvt Ltd 21."
15
AIR 1960 SC 1156
16
1942 AC 130
17
2009 (162) DLT 638
18
2013 (138) DRJ 507
19
2018 SCC OnLine Del 6564
20
2018 (249) DRJ 329
21
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2018 SCC OnLine Del 8273
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69. In examining any challenge to an order passed by an Arbitral
Tribunal, whether interlocutory or final, the Court has to be mindful of
the preamble to the 1996 Act, as well as of Section 5 thereof.
Preambularly, the 1996 Act is "an Act to consolidate and amend the
law relating to domestic arbitration, international commercial
arbitration and enforcement of foreign arbitral awards as also to define
the law relating to conciliation and for matters connected therewith or
incidental thereto." The Act, therefore, seeks, avowedly, to foster the
arbitral process. Towards this end, Section 5 of the 1996 Act provides
thus:
"5. Extent of judicial intervention. - Notwithstanding
anything contained in any other law for the time being in
force, in matters governed by this Part, no judicial authority
shall intervene except where so provided in this Part."
70. In this context, one may also refer to Section 6, which reads
thus:
"6. Administrative assistance. - In order to facilitate the
conduct of the arbitral proceedings, the parties, or the arbitral
tribunal with the consent of the parties, may arrange for
administrative assistance by a suitable institution or person."
71. Every attempt is required to be made, therefore, to promote the
arbitral process, and every attempt at seeking to retard it, is, equally,
required to be eschewed. This philosophy, in my view, is required to
pervade the exercise of jurisdiction as much under Section 37(2), as
under Section 34 of the 1996 Act.
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72. Added to this, is the need for judicial circumspection, when the
order under challenge is discretionary in nature, as in the present case.
73. It is only in rare and extreme cases, therefore, that, in exercise
of its appellate jurisdiction under Section 37, a Court would interfere
with a discretionary order passed under Section 17. An order for
deposit, under Section 17(1)(ii)(b), is, fundamentally and at all times,
an order passed in exercise of its jurisdiction. Discretionary orders, by
their very nature, are amenable to judicial interference to a far lesser
degree than others.
74. In this context, it is necessary to differentiate between the scope
and ambit - expressions which often exist cheek by jowl - of Section
37 jurisdiction, vis-a-vis the reach and extent of such jurisdiction. The
scope of jurisdiction - which embraces its governing considerations -
is restricted, as already observed hereinabove. While remaining within
those constraints, however, the Court, in its appellate avatar, can
modify the award; something which is outside the reach of the Section
34 Court. Expressed otherwise, and more simply, having examined
the award/order under challenge within the limited scope of Section
34 or 37, if the Court finds that the interests of justice could be met by
modifying the decision of the Arbitral Tribunal, it can do so under
Section 37, but it cannot do so, under Section 34 22. This, in my
opinion, is one of the inevitable sequelae of the legislative
dispensation in conferring, on Courts, appellate jurisdiction over
orders passed under Section 17 by the Arbitral Tribunal, granting or
refusing to grant interim protection.
22
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Refer N.H.A.I. v. M. Hakeem, 2021 SCC OnLine SC 473
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Re. impugned direction to Augmont to pay, to One97, ₹ 2,61,22,319/-
for transactions between 8th January and 21st February, 2019
75. Returning to Mr. Dayan Krishnan's submission that the
impugned order deserves to be set aside, as it does not examine the
applicability of Order XXXVIII Rule 5 CPC, the above analysis
compels me to disagree with him. The learned Arbitral Tribunal has
directed payment of ₹ 2,61,22,319/- by Augmont to One97,
consequent on a finding, by it, that the liability of Augmont to
reimburse, to One97, the amounts paid by One97 to the customers
between 8th January, 2019 and 21st February 2019, stood admitted by
Augmont. For this purpose the learned Arbitral Tribunal has relied on
two circumstances. The first circumstance finds mention in para 19 of
the impugned order, in which it is stated, inter alia, thus:
"19. During the course of hearing, it is not denied on behalf
of respondent about the undisputed transactions after 7th June,
2019. In response to prayer (a), the Respondent has submitted
that it has itself filed a counterclaim and a Section 17
Application and the amounts payable to the Claimant under
the said prayer may be set off against the amounts found
payable to the Respondent under their Counterclaim or its
Section 17 Application. Admittedly, the Respondent's counter
claim is filed because of loss of profit, business, reputation,
goodwill and damages which is expressly barred under clause
28 of the Agreement, as per Clause 28 of the Statement of
Claim, as alleged by the claimant.
It is not proper that this Tribunal at this stage give the
finding about the impact of the case of the respondent's
counter-claim."
There is no averment, in the appeal by the appellant, to the effect that
the afore-extracted finding of the learned Arbitral Tribunal is, on facts,
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incorrect. Apparently, therefore, apart from the recitals in the counter-
claim and the Section 17 application filed by it, the appellant did not
deny, even during arguments before the learned Arbitral Tribunal, the
transactions effected after 7th January, 2019 and the factum of
payments made by One97 in connection therewith.
76. The learned Arbitral Tribunal has opined that, by so pleading,
Augmont had impliedly admitted its liability to reimburse, to One97,
the amounts claimed by it.
77. The second circumstance is that, for each of the 55458
transactions which took place between 5th and 7th January, 2019, the
respondent's system sent the code of "200" indicating success, rather
than "400" indicating failure. The statement in that regard is also on
record, and this position is found to be correct. That One97 did
actually reimburse the customers in respect of the transactions which
took place between 5th and 7th January, 2019 is, prima facie, borne out
by the record and, in any event, the finding of the learned Arbitral
Tribunal in that regard cannot be said to be such as would merit
interference in exercise of the appellate jurisdiction vested in this
Court.
78. Save and except for a bald denial, there is nothing to indicate
that this position changed after 8th January, 2019. Nor has it been Mr.
Dayan Krishnan's argument before this Court, that, having paid the
customers till 7th January, 2019, One97 suddenly stopped paying the
customers thereafter.
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79. The learned Arbitral Tribunal also relied on the ledger account
of One97, which was placed on record. In this context, Mr. Mehta has
invited my attention to para 33 of the Statement of Claim, filed by
One97 before the learned Arbitral Tribunal, and to the response by
Augmont in the corresponding para ff of its Statement of Defence.
Though there is a one line denial of the ledger in the Statement of
Defence, no further credible material has been produced on record by
Augmont in that regard. Section 34 of the Indian Evidence Act, 1872
makes books of accounts, maintained by a party in the ordinary course
of business, relevant in evidence. The learned Arbitral Tribunal has
specifically noted that no credible challenge had been advanced, by
Augmont, to the ledgers placed on record by One97. I have also seen
the copies of ledgers and find that they do in fact record payments
having been made by One97, against gold sold to Augmont after 7th
January, 2019. The particulars of each transaction are also to be found
in the said ledger account, even if the individual payee's
identifications are not forthcoming. In the absence of any credible
material advanced by Augmont to challenge the veracity of the ledger,
I, in the exercise of the appellate jurisdiction vested in me by Section
37(2) of the 1996 Act, am loath to interfere with the finding of the
learned Arbitral Tribunal in that regard.
80. I may note, in this context, that, apropos the ledger, the
submissions of Mr. Dayan Krishnan were entirely on the evidentiary
value of ledgers and as to whether it was sufficient to constitute
evidence of payment having not been made.
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81. Sufficiency of evidence is not an aspect on the basis of which,
in my view, an interlocutory order of the learned Arbitral Tribunal can
be set aside, in exercise of Section 37 jurisdiction.
82. Prima facie, if amounts were paid by One97 to the customers,
in respect of gold sold to Augmont, Augmont was liable to reimburse
One97 on the very next day.
83. The learned Arbitral Tribunal has, keeping in view all these
factors, arriving at a finding that the liability of Augmont, to
reimburse One97 in respect of the amounts paid by One97 to the
customers during the period 8th January, 2019 till the termination of
the contract on 21st February, 2019, was prima facie undisputable. It
has also observed that no concrete rebuttal, to these submissions, was
forthcoming in the stand of Augmont before it.
84. In these circumstances, if the learned Arbitral Tribunal directed
One97 to deposit the amounts paid by One97 to the customers during
the period 8th January, 2019 to 21st February, 2019, as reflected from
its ledgers, pending decision in the arbitral proceedings, that direction,
in my view, cannot be said to suffer from perversity or patent
illegality as would warrant interference, by this Court, in exercise of
its jurisdiction under Section 37 of the 1996 Act.
85. No doubt, in the present case, the learned Arbitral Tribunal did
not direct deposit of the amount but, rather, directed Augmont to pay
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the amount to One97. There is substance in Mr. Dayan Krishnan's
submission that no direction for such outright payment could have
been made in exercise of Section 17 jurisdiction. Mr. Sethi, has,
however, no objection to the amount being deposited with the
Registrar General of this Court, awaiting the outcome of the arbitral
proceedings, instead of being paid to his client. In that view of the
matter, I am of the opinion that no case for interference with the
direction, to One97, to pay ₹ 2,61,22,319/- can be said to exist, subject
to the payment being made, not to One97 but being deposited with the
Registrar General of this Court.
Re. direction to Augmont to furnish bank guarantee for ₹
3,30,57,992/- for post-termination transactions
86. The second direction of the learned Arbitral Tribunal, with
which Augmont claims to be aggrieved, is the direction to One97 to
furnish a bank guarantee covering the value of the gold which
continued to remain with Augmont after 21st February, 2019
(hereinafter referred to as "the residual gold"), i.e. the date of
termination of the agreement. Mr. Dayan Krishnan submits that there
is no justification for such a direction. The contention of Augmont
before the learned Arbitral Tribunal, which has been reiterated by Mr.
Dayan Krishnan before me, is that if Augmont had no proprietarial
right over the gold lying unredeemed and unsold on the date of
termination of the agreement, neither had One97. He draws my
attention to the specific undertaking, given by Augmont before the
learned Arbitral Tribunal, to the effect that, were any customer to
approach the Augmont for redeeming gold or selling the gold to
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Augmont, Augmont would provide the requisite consideration to the
customer, whether by way of customer redeemable products and/or
the price of the gold. One97, he submits, had no right to claim the
value of the gold.
87. A reading of the impugned arbitral order discloses that the
learned Arbitral Tribunal has proceeded to justify this direction on the
premise that Augmont was merely a custodian of the gold lying
unredeemed and unsold on the date of termination of the agreement.
Coupling this fact with the observation that, even after termination of
the agreement, One97 was continuing to pay customers who sold back
the gold from their GAP accounts, the learned Arbitral Tribunal
deemed it appropriate to direct Augmont to secure the value of the
digital gold remaining in the customers' GAP accounts on the date of
termination.
88. Clause 24 of the agreement sets out the "obligations upon
termination". The said clause, with sub-clauses 24.2 to 24.4 thereof,
which are of some relevance, may be reproduced thus:
"24 OBLIGATIONS UPON TERMINATION
If this Agreement is terminated as provided herein:
24.1 One97 shall be responsible to immediately stop taking
any further Customer Purchase Order, Customer Redemption
Instruction, Transfer Instruction Favouring customer, Open
Sale Back Order, or accumulation of Product/ gold through
the Paytm Platform.
24.2 Augmont-Bullion shall be responsible to continue
providing services for a period of at-least 4 (Four) months
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from the date of termination ("Transition Period") for
effectuating redemption or selling of Gold by customers or
transfer of balance to an alternate GAP partner of One97
("Alternate GAP Platform").
24.3 One97 shall be responsible for informing and
communicating to Customer(s) regarding the termination of
the Agreement and arrangement between the Parties, and
offering the Customers to:
24.3.1 Redeem the Gold accumulated by them in their
GAP accounts, take delivery of the Customer
Redeemable Products and close GAP account, as the
case may be
24.3.2 Transfer balance into alternate GAP account as
prescribed by One97
24.4 For the Customer(s) who have neither redeemed the
product nor transferred to alternative GAP during the
Transition Period, Augmont-Bullion will be entitled to
repurchase such product at the end of Transition Period at
the then prevalent Live Rate of Gold-Sell Back, after
deducting applicable charges and Taxes, provided the
customer has not called for redemption. "
89. On a plain reading, there appears to be some inconsistency
between Clause 24.1, on the one hand, and Clauses 24.2 and 24.3 on
the other. Clause 24.2 requires Augmont to continue to provide
services, for at least four months beyond termination "for effectuating
redemption or selling of gold by customers or transfer of balance to an
alternate GAP partner of One97". Parallelly, Clause 24.3 requires
One97, mandatorily (as is apparent from the use of the word "shall")
to, consequent on termination of the agreement, offer the customers
either to redeem the gold continuing to remain in their GAP accounts,
take delivery of the customer redeemable products and close the GAP
account, or to transfer the balance in the GAP account into alternate
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GAP accounts, i.e. accounts managed by alternate GAP partners of
One97. Of these, the second option does not concern us.
90. Clauses 24.2 and 24.3, read together, clearly entitled the
customer, even after the termination of the agreement and at least for
four months, to redeem the gold continuing to remain in their GAP
accounts. "Closure" of the GAP account, as envisaged by Clause
24.3.1, would necessarily require payment, by One97, to the
customers, of an amount equivalent to the value of the gold lying in
the GAP account on the date of termination, i.e. the residual gold.
91. Clause 24.4 dealt with a situation in which the customer neither
chose to redeem the residual gold, nor to transfer the balance into an
alternate GAP account. In such circumstances, Augmont was entitled
to re-purchase the gold. In such a circumstance, too, it goes without
saying that One97 would have to pay the customer the value
equivalent to the gold thus purchased by Augmont "at the then
prevalent live rate of gold sell back, after deducting applicable charges
and taxes" (as is expressly stated in Clause 24.4).
92. Having said that, the agreement does appear to be somewhat
ambiguous regarding the status of the residual gold, which was neither
redeemed, nor purchased by Augmont, nor transferred to any alternate
GAP account, during the period of four months. How such gold would
have to be treated is, however, a conundrum which this Court, in
exercise of its Section 37 jurisdiction, is mercifully not called upon to
unravel. This aspect is, however, of significance in the present case,
given the fact that the learned Arbitral Tribunal has directed Augmont
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to secure the full value of the residual gold. Such a direction, viewed
any which way, could sustain only if there was, at least prima facie,
material on the basis of which it could be held that Augmont would be
liable, ultimately, to disgorge the full value of the residual gold to
One97.
93. The liability of One97 to pay customers who chose to exercise
their option of redemption or in respect of whose gold, Augmont
chose to exercise its option of re-purchase, to pay the customers,
cannot be gainsaid. The fact that such payments were indeed made by
One97, are reflected in from its ledger, have also been noted by the
learned Arbitral Tribunal.
94. One97 had, in its Statement of Claim, specifically claimed the
value of the residual gold, as one of its claims before the learned
Arbitral Tribunal. The power of the learned Arbitral Tribunal to
secure the said claim cannot, therefore, be denied. The only issue,
therefore, is whether the said interlocutory direction, as passed by the
learned Arbitral Tribunal in the impugned order, calls for interference
by this Court in exercise of its appellate jurisdiction under Section
37(2).
95. Unlike the direction for deposit of the monies paid by One97 to
the customers, during the period 8th January, 2019 to 21st February,
2019, in respect of which the learned Arbitral Tribunal had found the
amount to be admittedly payable to One97 by Augmont, there is,
prima facie, no justifiable basis on which it could be said that One97
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would be liable to pay the entire value of the residual gold to the
customers.
96. Even if there were, the learned Arbitral Tribunal, in directing
furnishing of a bank guarantee by Augmont, has not proceeded either
on the basis of a prima facie finding of liability of Augmont to pay the
entire value of the residual gold, or on the basis of any admission, or
admitted liability, of Augmont in that regard. All that the learned
Arbitral Tribunal holds is that Augmont was merely a custodian of the
residual gold and that One97 was, as a matter of fact, paying
customers, who sold back the gold to Augmont even after 21st
February, 2019. Any direction to Augmont, to secure the value of the
residual gold, could follow only if there was a further finding, at the
very least, that Augmont was liable to pay the said value of the
residual gold to One97. That finding, however, is absent.
97. Moreover, Clause 24.2 requires Augmont to continue providing
services for redemption or selling of gold only for four months after
termination. Whether such liability would continue in respect of
customers who did not choose either to sell back the gold to Augmont,
or to redeem the residual gold, is, in my view, arguable. There is no
prima facie view, in that regard, expressed by the learned Arbitral
Tribunal. Sans such a finding, the learned Arbitral Tribunal could not,
in exercise of its Section 17 jurisdiction, have directed securing, by
Augmont, of the entire value of the residual gold.
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98. The direction, by the learned Arbitral Tribunal to Augmont, to
furnish a bank guarantee covering the entire value of the residual gold
cannot, therefore, sustain.
Conclusion
99. For the aforesaid reasons, the impugned order is upheld to the
extent it directs securing, by Augmont, of ₹ 2,61,22,319/-, with the
modification that the said amount would not be paid to One97, but
would be deposited with the learned Registrar General of this Court,
and would abide by the outcome of the arbitral proceedings. The
direction, to Augmont, to furnish a bank guarantee of ₹ 3,30,57,992/-,
representing the value of the residual gold, is set aside.
100. The appeal stands disposed of accordingly.
101. Needless to say, the findings in this order are only for the
purposes of disposing of the present appeal, against the order passed
by the learned Arbitral Tribunal under Section 17 of the 1996 Act.
They would not, therefore, influence the learned Arbitral Tribunal on
taking a final view in respect of any of the issues in controversy
before it in the arbitral proceedings.
C. HARI SHANKAR, J.
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