Allahabad High Court
M/S U.P. Rajya Vidyut Utpadan Nigam Ltd. ... vs M/S Adani Enter. Ltd. Thru. Its M.D. ... on 9 January, 2025
Author: Pankaj Bhatia
Bench: Pankaj Bhatia
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Neutral Citation No. - 2025:AHC-LKO:1766 Court No. - 7 Case :- MATTERS UNDER ARTICLE 227 No. - 3254 of 2023 Petitioner :- M/S U.P. Rajya Vidyut Utpadan Nigam Ltd. Thru. Auth. Repre. Shri Pradeep Soni And Others Respondent :- M/S Adani Enter. Ltd. Thru. Its M.D. Ahemdabad And Another Counsel for Petitioner :- Suyash Manjul,Pritish Kumar,Vibhanshu Srivastava Counsel for Respondent :- Manish Mehrotra,Abhishek Dwivedi,Brijesh Kumar,Pranjal Krishna,Utkarsh Srivastava Hon'ble Pankaj Bhatia,J.
1. Heard Sri Pritish Kumar, learned Counsel for the petitioner assisted by Sri Suyash Manjul and Vibhanshu Srivastava, learned Advocates as well as Sri Vikram Nankani, learned Senior Advocate through video conferencing assisted by Sri Abhishek Dwivedi, Sri Pranjal Krishna and Sri Utkarsh Srivastava, learned Counsel appearing on behalf of the respondent.
2. The present petition has been filed challenging the order dated 22.05.2023, whereby the application filed by the petitioners seeking to be deleted from the array of parties in the execution application filed by the respondent no.1-company was rejected.
3. The facts in brief as emerge from the pleading and the arguments are that petitioners M/s Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL), Chattisgarh Mineral Development Corporation Limited (CMDC) and Maharashtra State Power Generation Company Limited (MAHAGENCO) are public sector undertaking under the control of State Governments. It is claimed that the respondent no.2-company floated a request to participate as per terms of the proposal for international competitive bidding. Subsequently, a contract was said to have been entered into in between the the respondent no.1 and the respondent no.2 being mining contract dated 05.02.2011. It is also clear that in terms of the agreement in between the respondent no.1 and the respondent no.2, there existed an Arbitration Clause. Invoking the said Arbitration Clause, a claim was made by the respondent no.1, before the panel of Arbitrators. An interim award dated 31.01.2017 was passed by the panel of Arbitrators, wherein, it was directed that the respondents to the arbitration proceedings are liable to pay an amount of Rs.73.94 crores. The following interim arbitral award was awarded:
"Respondent is hereby directed to make payment of an amount of Rs.73.94 crores by way of an Interim Award, to Claimant, which inter alia includes an amount of Rs.53.44.72.080/- which has been paid by Claimant towards land acquisition to IDCO on behalf of Respondent and an amount of Rs.20.5 crores which Claimant was required to reimburse to Respondent being an amount of expenses incurred by Respondent in respect of the coal block under the terms of request for proposal and this amount has been admittedly paid by Claimant to Respondent. Respondent is hereby directed to pay to Claimant, the above referred two amounts within six months from the date of this Interim Award.
Signed, sealed and delivered to the respective parties on this 31 day of January, 2017."
4. For execution of the said interim arbitral award, an execution application came to be filed, which is contained as Annexure-7. In the said execution application, the name of the parties were shown as respondent no.2-Company as well as three petitioners companies. In para 9 of the said application, it was stated that the amount awarded in terms of the interim award was to be executed against the respondent no.2-company as well as the petitioners-companies. In the affidavit filed in support of the execution application, it was stated that the respondent no.2-company, against which, an interim award has been passed, is managed, controlled by the respondent no.2-company and is an alter ego of petitioners-companies. In the said execution application, an application came to be filed by the petitioners-company mainly on the ground that they have been wrongly impleaded as they were neither a party to the arbitration agreement nor a notice was ever served upon them nor any interim award was passed against them. The said application was opposed by the respondent no.1-company and ultimately, an order came to be passed by the trial court rejecting the applications filed by all the petitioners separately. Challenging the said order, the present application has been filed under Article 227.
5. Sri Pritish Kumar, learned Counsel appearing on behalf of the petitioners draws my attention to the notice served by the respondent no.1-company, which was served only against the respondent no.2-company. He further draws my attention to the agreement, which was entered into in between the respondent no.1-company and the respondent no.2-company showing the respondent no.2 as a buying owner. He further argues to demonstrate that before the Arbitrator, the respondent no.2-company was impleaded as respondent and in fact, the interim award came to be passed only against the respondent no.2-company. He then draws my attention to the execution application by saying that the name of the petitioners were wrongly included in the name of the parties.
6. The Counsel for the petitioners further draws my attention to Section 35 of The Arbitration and Conciliation Act to argue that the petitioners-company are not the persons claiming under the respondent no.2-company and as such, recourse to Section 35 as proposed to be resorted too was also unjustified. In support of his contention, it is argued that in the case of Cheran Properties Limited vs Kasturi and Sons Limited and others; (2018) 16 SCC 413, Section 35 of the Arbitration and Conciliation Act was interpreted in a different context and as Section 35 has no application to the facts of the present case, the benefit of Cheran Properties Limited (Supra) would also not be available to the respondents-company. My attention is also drawn to the judgment in the case of Gemini Bay Transcription Private Limited vs Integrated Sales Service Limited and another; (2022) 1 SCC 753 to argue that the language used under Section 48 of the Arbitration Act relating to enforcement of foreign awards is similar in terms of the language used under Section 34 and in the said case of Gemini Bay Transcription Private Limited (Supra), all the issues were considered and held that non-party to the arbitration cannot be made to suffer the consequences of an award, to which, they were not the party. My attention has also been drawn to the judgment in the case of Mitsui OSK Lines Ltd. (Japan) vs Orient Ship Agency Pvt. Ltd.; 2020 SCC OnLine Bom 217, wherein, the Bombay High Court had the occasion to consider the judgment in the case of Bhatia Industries & Infrastructure Limited vs Asian Natural Resources (India) Limited and another; 2016 SCC OnLine Bom 10695 and after considering the rival submissions, the following was recorded:
"65. Having considered the rival submissions, it appears from the relief sought for in the Chamber Summons, that there is a desperate attempt on the part of the Award Holder to enjoy the fruits of the Foreign Award passed in its favour by going against entities which were neither parties to the arbitration agreement nor to the Foreign Award. The Award Holder has stated that the Foreign Award had been passed in Japan way back on 2nd February 2009 in its favour and which was accepted as a decree of this Court by order dated 28th January 2014. The Award Holder had sought to execute the award by taking out various proceedings in execution. However, out of the awarded amount, Rs. 66,26,84,888.95 mentioned in the Execution Application filed in the year 2014, the Award Holder is stated to have been able to satisfy the award only to the extent of approximately Rs. 2 Crores. In the present Chamber Summons in order to make the proposed Additional Respondents personally liable for satisfying the Foreign Award which is deemed to be a decree of this Court, the Award Holder has applied for the Corporate Veil of the Judgment Debtor to be lifted to try and reach out to what is alleged to be the real persons behind the Judgment Debtor who are claimed to be the Jalalis as well as the Associate Companies of the Judgment Debtor. Various facts have been adverted to by the Award Holder and which have been set out herein above in order to attempt to satisfy this Court that the Judgment Debtor has sought to defeat and delay the execution of the Foreign Award by various means including by siphoning off funds to the Associate Companies which are also in the hands of the Jalalis. Various financial statements have been relied upon by the Award Holder with an attempt to show that the assets of the Judgment Debtor were being depleted, both by satisfying the loans which had been granted to the Associate Companies by the Judgment Debtor as well as benefiting the Jalalis who were controlling the Judgment Debtor as well as Associate Companies by paying out large sums from these companies to the Jalalis as managerial remuneration/employees benefit expenses. This has been referred to in paragraph 26 of the said Affidavit in Support of the Chamber Summons which has been referred to above. This has been termed as regular siphoning off structured by the Jalalis of the Respondent's monies and gradual reduction of the Respondent's assets by methods and devices which have been set out in the said paragraph.
69. The Chamber Summons appears on the face of it to be an attempt on the part of the Award Holder to trace monies in the hands of the Additional Respondents, particularly, since the Additional Respondents were not parties to the arbitration proceedings and/or the Foreign Award. Such personal liability sought to be imposed upon the Additional Respondents can only be determined in a substantial suit being filed by the Award Holder against the Additional Respondents. By allowing the Award Holder to execute the Foreign Award against the Additional Respondents by making them personally liable, the Executing Court would indeed be proceeding behind and/or beyond the decree."
7. The Counsel for the petitioner again places reliance upon the judgment of the LSS Ocean Transport DMCC vs KI (International) Limited; Goyal Ispat Private Limited; 2023 LawSuit (Mad) 879. Para 33 of the said judgment reads as under:
"33. Execution of a foreign arbitral award is different from enforcement as per the provisions of Sections 47 and 49 of the Arbitration and Conciliation Act, 1996. Only after the foreign arbitral award is converted into a decree after satisfying all the statutory requirements, the foreign arbitral award is converted to a decree as per Section 49 of the Arbitration and Conciliation Act, 1996. In the case on hand, the arbitral award cannot be converted into a decree against the second respondent since the second respondent was not a party to the arbitration and the arbitral award was also not passed against them. They have also categorically denied that they and the first respondent are a single economic entity and that they have committed an act of impropriety to deprive the petitioner of recovering its dues as per the arbitral award. An enforcement petition under Sections 47 and 49 of the Arbitration and Conciliation Act, 1996, cannot be ordered against the second respondent as the provisions of the Part-II of the Arbitration and Conciliation Act, 1996 makes it clear that enforcement petitions are maintainable maintainable only against the parties against whom an arbitral award has been passed."
8. The Counsel for the petitioner further placed reliance upon the judgment in the case of Cox and Kings Ltd. Vs SAP India Pvt. Ltd.; 2023 SCC OnLine SC 1634. In para 33, the following has been recorded:
"33. In Cheran Properties (P) Ltd. Vs Severn Trent Water Purification Inc., (2013) 1 SCC 641: (2013) 1 SCC (Civ) 689, the issue before this Court was wether the arbitral award could be enforced under Section 35 of the Arbitration Act against a non-signatory, who was a nominee of one of the signatories to the arbitration signatories. Section 35 of the Arbitration Act postulates that an arbitral award "shall be final and binding on the parties and persons claiming under them respectively". This Court observed that the expression "persons claiming under them" refers to every person whose capacity or position is derived from and is same as a party to the proceedings. It held that the non-signatory, being a nominee of one of the signatory parties, was bound by the arbitral award as it was claiming under the signatory."
9. In the light of the said submissions, the Counsel for the petitioners argues that the petitioners were wrongly impleaded as party and the trial court had erred in rejecting the application.
10. Sri Vikram Nankani, learned Senior Advocate appearing on behalf of the respondents opposed the petition primarily on the ground that the petition filed by the petitioners are premature. It is argued that the respondents were well within their rights to execute and press the award against the petitioners-company by virtue of the mandate of Section 35 of the Arbitration Act. It is further argued that the issue whether the petitioners can claim under the respondent no.2-company in terms of the language used under Section 35 is an issue to be decided after exchange of pleadings and there was no occasion for the petitioners to approach this Court at this stage against the order rejecting their applications. Sri Nankani draws my attention to the averments made in the execution application as recorded above and placed reliance on the judgments in the case of Gemini Bay Transcription Pvt. Ltd. (Supra) and Cox and Kings Ltd. (Supra). He further argues that at this stage, he is not going into the issue of "Group of Companies", as decided in the case of Cox and Kings Ltd. (Supra), as the entire case of the respondent no.1-company is that the petitioners are an alter ego of the respondent no.2-company, he argues that it is the petitioners, who are the beneficiaries of the four extractions and all the funding of the respondents-company are to be done by the petitioners-company in terms of the documents which are on record.
11. The Counsel for the respondents further places reliance on the judgment in the case of Bhatia Industries & Infrastructure Limited vs Asian Natural Resources (India) Limited; 2016 OnLine Bom 10695. He thus argues that the writ petition is premature and is liable to be dismissed.
12. Considering the submissions made at the bar, prima facie, in terms of the arbitration agreement, the awards including interim awards are to be enforced as a decree of the civil court. The provisions for execution under Order XXI Rule 11 of C.P.C. prescribes the details to be disclosed in the execution application. The same is quoted below:
"11. Oral application.--(1) Where a decree is for the payment of money the Court may, on the oral application of the decree-holder at the time of the passing of the decree, order immediate execution thereof by the arrest of the judgment-debtor, prior to the preparation of a warrant if he is within the precincts of the Court.
(2) Written application.--Save as otherwise provided by sub-rule (1), every application for the execution of a decree shall be in writing, signed and verified by the applicant or by some other person proved to the satisfaction of the Court to be acquainted with the facts of the case, and shall contain in a tabular form the following particulars, namely:--
(a) the number of the suit;
(b) the names of the parties;
(c) the date of the decree;
(d) whether any appeal has been preferred from the decree;
(e) whether any, and (if any) what, payment or other adjustment of the matter in controversy has been made between the parties subsequently to the decree;
(f) whether any, and (if any) what, previous applications have been made for the execution of the decree, the dates of such applications and their results;
(g) the amount with interest (if any) due upon the decree, or other relief granted thereby, together with particulars of any cross-decree, whether passed before or after the date of the decree sought to be executed;
(h) the amount of the costs (if any) awarded;
(i) the name of the person against whom execution of the decree is sought; and
(j) the mode in which the assistance of the Court is required whether,--
(i) by the delivery of any property specifically decreed;
(ii) by the attachment, or by the attachment and sale, or by the sale without attachment, of any property;
(iii) by the arrest and detention in prison of any person;
(iv) by the appointment of a receiver;
(v) otherwise, as the nature of the relief granted may require.
(3) The Court to which an application is made under sub-rule (2) may require the applicant to produce a certified copy of the decree.
13. In terms of Clause (i), it is open for the decree holder to plead and argues that award/ decree is to be executed against any person, whom the decree holders proposes to implead in terms of the mandate of Clause (i) of Order XXI Rule 11 of C.P.C.
14. In terms of the said mandate, the respondent no.1-company has filed the execution application and this fact was also clarified in the affidavit, whether the petitioners-company are liable to satisfy the interim award sought to be executed or not, is an issue to be decided by the executing court after considering the pleadings and the arguments of the parties, no material could be shown to suggest that the petitioners could never be impleaded in the execution application even despite there being clause (i) under Order XXI Rule 11 in view thereof, I do not see any reason to interfere in this writ petition at this stage.
15. The parties would be at liberty to raise all the pleas at the time of final hearing after the objections are filed and the evidence is led as may be advised under law. The application under Article 227 is dismissed.
Order Date: 9.1.2025
akverma (Pankaj Bhatia,J.)