Calcutta High Court
Gaurav Churiwal vs Concrete Developers Llp And Ors on 27 June, 2024
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
OCD-11
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
(Commercial Division)
IA NO. GA-COM/2/2024
In EC/283/2023
GAURAV CHURIWAL
Vs
CONCRETE DEVELOPERS LLP AND ORS.
BEFORE:
The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
Date : 27th June, 2024
Appearance:
Mr. Ratnanko Banerjee, Sr. Adv.
Mr. Kumarjit Banerjee, Adv.
Ms. S. Chakraborty, Adv.
Ms. Tanishka Khandelwal, Adv.
...for the award-holder
Mr. Sabyasachi Choudhury, Adv.
Mr. Sayantan Bose, Adv.
Mr. Shounak Mukhopadhyay, Adv.
Ms. Manisha Das, Adv.
...for the judgment-debtors
The Court:- Upon notice to parties, GA/1/2024 is treated to be on the
day's list and is taken up for hearing along with GA/2/2024.
The two applications have been taken out by the judgment-debtors for
recall of two orders passed in an enforcement/execution proceeding arising out
of an order passed under Section 17 of the Arbitration and Conciliation Act,
1996 whereby all the respondents in the arbitral proceeding, including the
present judgment-debtors, were directed to set apart an amount of Rs. 6 crore in a separate interest-bearing account. Such account was directed to be opened in the name of the judgment debtor no. 1-LLP (Limited Liability Partnership). 2
By virtue of the first order under recall dated February 20, 2024, the learned Single Judge had, in connection with the execution proceeding from the said order, recorded that an adjournment was prayed for on behalf of the award- debtors and that it was the third time that the matter was being adjourned at the request of the award-debtors. The Learned Single Judge further observed that the award-holder seeks execution of an interim order dated April 17, 2023 and that the award-debtors had unsuccessfully challenged the interim order, which appeal was disposed of on November 24, 2023. In the light of the said observation, the learned Single Judge went on to observe that the Court sees no further reason to adjourn the execution proceeding particularly when the interim order was passed in April, 2023 and that the award-debtors nos. 2 to 7 will file their individual affidavit of assets by February 27, 2024. It was also clarified by the learned Single Judge that even though learned counsel appearing for the award-debtors submits that only one award-debtor had challenged the interim order, the other award-debtors (2 to 7) were added as proforma respondents in the appeal and were hence parties to that proceeding.
By the second order under recall, the learned Single Judge had observed that the award-debtor sought an extension of time to file the affidavit of assets which were directed to be filed by February 27, 2024. Such extension was granted till March 7, 2024 and the matter was directed to appear for the examination of the judgment-debtors on March 15, 2024, on which date the first award-debtor was to be examined. The award-debtors were also given a choice in the matter as to who would be examined first.
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Learned counsel appearing for the award-debtors, in support of the two applications, submits at the outset that although one challenge under Section 37 of the 1997 Act, at the behest of the Limited Liability Partnership (LLP) was turned down, another under Section 37 is at present pending at the instance of the remaining award-debtors in their individual capacity. As such, learned counsel requests the Court to take up the said pending challenge under Section 37 before deciding on the present applications.
It is also pointed out by learned counsel that the said other application under Section 37 was filed much prior to the orders under recall being passed.
Learned counsel for the award-debtors places reliance on Section 28 of the Limited Liability Partnership Act, 2008 to impress upon the Court that the partner is not personally liable, directly or indirectly, for an obligation referred to in Section 27(3) solely by reason of being a partner of the LLP.
It is argued that the very concept of the Limited Liability Partnership Act, 2008 is to segregate between the identities of the LLP itself, which is a separate juristic entity, and its partners in their individual capacity. In fact, the said distinction was the premise of enactment of the Act as opposed to the case of an ordinary partnership, where the partners are jointly and severally liable for the acts of the partnership firm.
As such, it is contended that merely the dismissal of the appeal under Section 37 at the behest of the LLP itself does not preclude the partners, in their individual capacity, as independent and separate entities, to prefer an independent challenge.
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Thus, a line of distinction is sought to be drawn between the very premise of the dismissed challenge under Section 37 by the LLP and the pending challenge at the behest of the individual partners, who are separate entities.
Learned counsel next argues that the interim order passed under Section 17 of the 1996 Act is not executable as a money decree, since the same merely directs the deposit of an amount in a particular account. As such, it is argued that the award-holder cannot reap the benefit of Section 36 of the Code of Civil Procedure, which enables the execution procedure regarding a decree to be applied in respect of an order as well.
Learned counsel next contends that by the order dated February 20, 2024, the learned Single Judge, while directing the filing of individual affidavits of assets by the award-debtor nos. 2 to 7, overlooked the fact that a challenge to the order under execution was pending even at that juncture at their behest.
The mere fact that the said award-debtors were parties, as proforma respondents, to the previously refused challenge under Section 37 could not, in any manner, preclude them from urging their own grounds in the challenge under Section 37 pending at their behest independently.
Learned counsel, in support of his submissions, also places reliance on Order 21 Rule 41 of the Code of Civil Procedure to argue that the trappings and the modalities for execution of a decree for the payment of money cannot be equated with an interim order directing a particular sum of money to be set apart by depositing the same in a particular bank account.
Learned Senior Counsel appearing for the award-holder contends that the present applications ought to be decided first, irrespective of the pendency of a 5 challenge under Section 37 at the behest of the award-debtor nos. 2 to 7. It is submitted that since the award-debtors were parties to the dismissed challenge, as was noted by the learned Single Judge in the order dated February 20, 2024, it cannot be said that they are not bound by the said order as well, at least for the purpose of execution of the interim order impugned therein.
It is next argued that the award-debtors have been repeatedly seeking adjournments, which was noted in all the orders passed in connection with execution proceeding. Learned Senior Counsel further points out that even in the order dated February 29, 2024, an extension of time for filing affidavits of assets was prayed for by the award-debtor nos. 2 to 7. As such, they cannot resile from such position now by seeking a recall of the orders February 20, 2024 and February 29, 2024.
Although learned counsel for the award-debtors seeks to submit on the merits of the pending challenge under Section 37 as well, this Court does not take into account such submissions in view of the present matters pertaining only to the recall applications filed in connection with the execution proceeding and the challenge under Section 37 not being before the Court.
Upon comprehensive perusal of the materials on record, it is seen that in the interim order passed under Section 17 of the 1996 Act (which is the genesis of the matter), a specific direction was given to all the respondents, including the award-debtor nos. 2 to 7, to "set apart a sum of Rs. 6 crores in a separate interest bearing account".
The direction to deposit a particular sum of money in a particular bank account tantamounts to a direction to pay a sum of money, equivalent to a 6 money decree/order. Although there is a subtle difference in modality between deposit and direct payment, it cannot be gainsaid that virtually both tantamount to the same, the effect being that the award-debtor is to part with the said sum of money, either by depositing it somewhere or by paying it to some entities.
Thus, a cardinal distinction cannot be drawn fundamentally between the execution of a money decree in its usual sense and enforcement of a decree which directs a particular party to deposit an amount in a bank account.
Moving on to Section 36 of the Code of Civil Procedure, although under the provisions of Section 19(1) of the 1996 Act, the provisions of the Code of Civil Procedure are not applicable directly to an arbitral proceeding, fact remains that the principles of execution as laid down in the Code of Civil Procedure have been borrowed by Courts time and again while deciding applications for enforcement even under Section 36 of the 1996 Act.
Going by such logic, there is no reason why the interim order under Section 17 in question can be said to be inexecutable by following the same procedure as a money decree/order.
Moving on to the next issue, learned counsel for the award-debtors has argued that the in view of the LLP and its individual partners being different juristic entities, the order under Section 37 passed in connection with the appeal preferred by the LLP cannot be determinant of the rights of the individual partners and/or operate as a bar to the said partners preferring a separate and independent challenge under Section 37.
There cannot be any doubt that the individual partners, even if arrayed as respondents in a previous challenge, can always prefer an appeal under Section 7 37 in their independent capacity as partners. However, we cannot confuse between the concept implicit in Section 28 of the LLP Act, 2008 and the principle underlying Order 41 Rules 22 and 33 of the Code of Civil Procedure.
Irrespective of the award-debtor nos. 2 to 7 being independent juristic entities different from the LLP itself, the fact remains that they, in such individual capacity, were arrayed as proforma respondents in APO/65/2023 which was the application under Section 37 preferred by the LLP.
The law does not distinguish between a respondent and the 'proforma respondent' and the latter concept has evolved in jurisprudence merely to distinguish between the necessary and proper parties. Thus, whatever legal burden lay on regular respondents also applies to the proforma respondents.
Seen from such perspective, the present award-debtor nos. 2 to 7, who were respondents in APO/65/2023, are equally bound by the order of dismissal passed therein as the appellant-LLP.
A careful perusal of Order 41 Rule 22 of the Code of Civil Procedure shows us that even respondents can challenge a part of the decree or findings rendered in the impugned judgment in the concerned appeal. There was nothing to prevent the award-debtor nos. 2 to 7 from resorting to a similar mode in APO/65/2023.
More importantly, Order 41 Rule 33 of the Code of Civil Procedure enumerates that the Appellate Court shall have power to pass any decree and make any order which ought to have been passed or make and to pass or make such further or other decree or order as the case may require and this power may be exercised by the Court notwithstanding that the appeal is as to part of the 8 decree and may be exercised in favour of all or any of the respondents or parties, although such respondents or parties may not have filed any appeal or objection.
As such, despite the fact that the award-debtor nos. 2 to 7 were arrayed as respondents in the previous challenge, fact remains that the order passed therein is equally binding on them as the appellant.
Although such aspect will be considered in detail while taking up their independent challenge under Section 37, insofar as the prospect of the execution of the impugned order is concerned, since award-debtor nos. 2 to 7 were parties to the previous appeal where the LLP's challenge under Section 37 was turned down, it cannot be said that the learned coordinate Bench committed an error apparent on the fact of record in the order dated February 20, 2024 where it was recorded that even though learned counsel appearing for the award-debtors submitted that only one award-debtor had challenged the interim order, the other award-debtors (2 to 7) were added as proforma respondents in the appeal and were hence parties in that proceeding, thereby directing all the award- debtors to file their individual affidavit of assets.
It is found further that even on February 29, 2024, the award-debtor nos. 2 to 7 merely prayed for an extension of time to file affidavits of assets, thereby submitting to the jurisdiction of the executing Court without any demur even at that stage. It is pointed out by learned counsel for the award-debtors that the first recall application had already been affirmed on the previous date but had not yet been filed, for which the said issue was not raised. However, I fail to convince myself as to why the award-debtors could not point out before the learned Judge concerned that a challenge was being preferred to the previous 9 order, for which an adjournment could be sought by the said award-debtors. Instead of doing so, the award-debtor nos. 2 to 7 specifically sought an extension of time to file affidavits of assets and thereafter resile from such position by filing a recall application in respect of the said order.
In any event, I do not find any error apparent on the fact of the record or discovery of new material to justify a review of either the order dated February 20, 2024 or that of February 29, 2024. Needless to mention, a recall application or a modification application does not ordinarily lie unless there is palpable error on the face of the record or the learned Judge himself or herself feels that an error had been committed by him or her. In the present case, none of the said criteria are fulfilled, for which we are to take resort to the provisions and principles of Order 47 of the Code of Civil Procedure. Since the tests laid down therein are not met as well, as discussed above, I do not find any reason to recall the order dated February 20, 2024 and/or that of February 29, 2024.
Accordingly, GA/1/2024 and GA/2/2024 are dismissed on contest without any order as to costs.
It is categorically clarified, however, that the above observations were meant only for the specific purpose of disposal of the present applications and shall be tentative and inconclusive insofar as the still-pending challenge under Section 37 of the 1996 Act at the behest of the award-debtor nos. 2 to 7 is concerned. The said challenge under Section 37 of the 1996 Act (APO/71/2023), along with the connected application bearing GA/1/2024, shall be listed along with EC/283/2023 for hearing on July 4, 2024.
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However, in the meantime, the award-debtor nos. 2 to 7 shall comply with the orders dated February 20, 2024 and February 29, 2024 and file their individual affidavits of assets within July 3, 2024.
(SABYASACHI BHATTACHARYYA, J.) S.Bag