Calcutta High Court
Balkrishna Garodia vs Nikunj Kumar Lohia & Ors on 31 August, 2015
Author: I.P. Mukerji
Bench: I.P. Mukerji
EC No. 332 of 2010
EC No. 402 of 2011
GA No. 2033 of 2012
GA No. 2902 of 2012
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
Original Side
Balkrishna Garodia
Vs.
Nikunj Kumar Lohia & Ors.
For the petitioner/
Decree Holder :- Mr. Jayanta Kumar Mitra, Ld. Advocate General
Ms. Rakhi Shroff
Mr. S.G. Muskara, Advocates
For the Respondents:- Mr. Jishnu Saha, Senior Advocate
Mr. Ashish Mukherjee
Mr. Arpita Saha, Advocates
Judgement On: - 31st August, 2015
I.P. MUKERJI, J.
There are two execution applications for enforcement of an arbitral award dated 3rd October, 1983. It was passed by two Joint Arbitrators chosen by the parties and approved by this court by an order dated 10th August, 1983. This award was made a rule of this court on 21st September, 1984. In the proceedings before this court in 1983 and before the learned arbitrators there were two sets of parties divided into two groups. Hari Prasad Lohia and Narayan Prasad Garodia constituted the first group. Omprakash Bhartia, Haricharan Garodia and Bal Krishna Garodia constituted the second group. The petitioner belongs to the second group.
The award proceeds as follows. Three companies were involved. East India Cotton Manufacturing Co. Ltd. referred to as the "Cotton company", Fibre Processors Pvt. Ltd. referred to as the "Fibre company" and East India Fabrics Manufacturing Co. Ltd. referred to as the "Fabric company". Before the award, the Fibre and Fabric companies belonged to the first group. 3843 equity shares of the Fabric company and 4,000 equity shares of the Fibre company together with the blank signed transfer deeds were in the possession of the Joint Arbitrators. The award recorded that the shares and transfer deeds were handed over to the second group. The award further said. "We adjudge and hold that the said 3843 equity shares in the said Fabric company and the said 4000 equity shares in the said Fibre company shall be deemed to have been transferred by the first group to the second group or its nominee or nominees." All the directors of the Fabric and the Fibre companies would have to resign. In their place nominees of the second group would have to be appointed as directors. The award also recorded that all statutory books of these companies were handed over to the second group together with other records, books of accounts etc. The award went on to say that 27,770 equity shares in the Cotton company belonging to the second groups, before the award were in the possession of the Joint Arbitrators together with blank transfer deeds were handed over to the first group. All statutory books, other documents and records were also similarly handed over by the second to the first group. The first group would have to indemnify the second group against all claims after 27th April, 1980. The transfer of business was with effect from 27th April, 1980.
It appears that in 1995 one of the members of the petitioner's group made an application for execution [G.A. 379 of 1995] for enforcement of this award. The application is still pending. No steps have been taken to pursue it. It appears that subsequent to the award there have been diverse proceedings between the parties upto the Supreme Court. But in this execution application we are not concerned with their subject matter or outcome save in outline. It may be noted that by an order dated 30th November, 1992, the Supreme Court upheld the decree dated 21st September, 1984 in terms of the award dated 3rd October, 1983.
In 2003 some 20 years after pronouncement of the awards and some 19 years after the judgement in terms of that award, the petitioner made an application in this Court (T 93 of 2003) which was renumbered (EC 69 of 2003) for enforcement of the said award. On 5th February, 2004, by an order passed by this court the said application was allowed to be withdrawn with liberty to file a fresh application on the self-same facts. In 2010 the petitioner filed present application of EC 332 of 2010 for execution of the decree. He has also taken out another application for EC 402 of 2011 and a connected application GA 2902 of 2012. In addition he has taken out an application under Section 340 of the Criminal Procedure Code GA 2033 of 2012 alleging purjury against the members of the first group asking this court to refer the matter to the appropriate learned Criminal Court for trial.
SUBMISSIONS:
Mr. Jayanta Mitra, learned Advocate General, moving the execution application made some straight forward submissions. I will indicate those submissions in outline now.
First of all, he submitted that the award was declaratory in nature with consequential reliefs.
Secondly, he said that the court had no power to add to alter or subtract from the decree. It had to enforce it as it was. Thirdly, the decree contained mutual obligations. The first group would get the Cotton company. It has got it under the decree. But this group has not fulfilled its obligations towards the second group. Although the share certificates and blank transfer forms have been handed over by them to the second group, they have not registered and issued those shares, or relinquished possession of these companies. They are running the same. The Board of Directors of these companies did not resign. The learned Advocate General explained the meaning of the word "deemed" used in the award by referring to "deeming provisions" in various statutes. He cited East End Dwellings Co. Ltd. v. Finsbury Borough Council reported in (1951) 2 All England Law Reports 587, The State of Bombay v. Pandurang Vinayak Chaphalkar and ors. reported in AIR 1953 SC 244, Industrial Supplies Pvt. Ltd. v. Union of India (UOI) & ors. and Union of India (UOI) & ors v. Industrial Supplies Pvt. Ltd. reported in (1980) 4 SCC 341 and Union of India & Ors. v M/s. Jalyan Udyog and another B reported in AIR 1994 SC 88.
Learned counsel met the point of limitation raised by Mr. Saha learned senior advocate for the respondents by submitting that the present execution application could be said to be a continuation of the proceeding instituted in 1995 by one of the members of the petitioner's group. He cited S.K. Sahgal, Additional Collector, Banaras v. Maharaj Kishore Khanna reported in AIR 1959 SC 809,Santi Ranjan Dass Gupta v. M/s Dasuram Mirzamal reported in AIR 1976 SC 2486, Government of Rajasthan v. Sangram Singh and others reported in AIR 1962 Rajasthan 483, Ramji Lal v Het Ram & Ors. reported in AIR 1978 P & H 233, H.B. Rajendra and others v. Vijaya Bank and another reported in AIR 1999 Karnataka 265. Mr. Saha submitted that the execution application, delayed by almost 20 years was barred by the laws of limitation. The petitioner could not take the benefit of the 1995 execution application filed by one of the members of his group. The petitioner's first execution application was filed in 2003, withdrawn in 2004 with liberty to file a fresh application. This liberty was availed of only in 2010. Even assuming that the petitioner could ride on the shoulders of a member of his group, still the execution application was barred by the laws of limitation because the award and decree envisaged positive acts to be done by the parties. This amounted to a decree of mandatory injunction for which the period of limitation was three years from the date of the decree under Article 135 of the Limitation Act, 1963. If this period of limitation was taken, then, the application of 1995 also was barred by the laws of limitation.
Mr. Saha took other very substantial points to resist the award. Alternatively, assuming that the period of limitation was twelve years, the present execution application could not be said to be a continuation of the 1995 application. Going by the structure and wording of the Limitation Act, 1963 each suit and application had to be filed within the time prescribed in it. Just because a member of a supporting group had filed the execution application within time, it could not be said that it also covered up the period of limitation for filing an application by the petitioner, unless it was pleaded in that application that the applicant was filing the application on behalf of the petitioner. That was not the case. Since the application for execution by the petitioner was filed much after 12 years it was barred by the laws of limitation. Next, he submitted that the award provided for reciprocal promises to be performed by the parties. The respondents had performed their part of the obligations by handing over the share certificates and the signed blank share transfer forms in respect of the Fabric and Fibre companies to the petitioner's group. All documents were also handed over to them. Therefore, the respondents had performed their obligations. No obligations were outstanding. He cited Jai Narain Ram Lundia v Kedar Nath Khetan and Ors. reported in AIR 1956 SC 359, Chen Shen Ling v Nand Kishore Jhajharia reported in 1973 3 SCC 376.
He submitted that a substantial part of the award was declaratory in nature There was nothing to execute with regard to that part of the award. He argued that the language of the award suggested that the same had been executed under the supervision of the Joint Arbitrators. In those circumstances also there was nothing left to be executed.
Furthermore, learned counsel contended that more than 30 years had elapsed since the passing of the award. The petitioner or his group had deliberately not chosen to take control of the Fabric and Fibre companies. The respondents have retained control. They have increased the share capital of the companies and augmented their assets. The debts of the company and those receivable by the company do not remain the same. In those circumstances the entire complexion of these two companies has undergone a change in these 32 years. Now the petitioner or his group cannot claim possession of the establishment of the company from the respondents in execution of the award and decree. The subject matter of the award and decree did not remain the same after passage of this length of time.
The respondent No.1 affirmed an affidavit-in-opposition on 10th March, 2011. This was in EC No. 332 of 2010. It is said therein that H.P. Lohia held shares in Fabric and Fibre companies. He died on 15th October, 1992. The Fabric company was indebted to H.P. Lohia for a sum of more than Rs. 16 lakhs. That is why the second group did not come to take possession of this company. It is further averred that the Fibre company has gone into liquidation in 1985. Now, the petitioner has to approach the company court to record its shareholding of the Fibre company.
The said respondent has also affirmed an affidavit in the execution application EC No. 402 of 2011. Nothing much is said in the affidavit-in-opposition. The deponent filed a further affidavit in the execution case of 2010. It is stated therein that the factory of Fibre was situated at Faridabad on the land owned by Cotton which had granted Fibre a 99 year's lease. Fibre was paying rent to cotton of Rs. 5,000/- per month only. It defaulted, after 1983. Before the respondent no. 1 could take any steps for determination of the lease, Fibre was directed to be wound up by an order of this court dated 28th May, 1985. According to the respondent no.1, Fibre went in to liquidation. Cotton filed an application in August, 2002 before the Company Court (C.A. No. 507 of 2002) under Section 535 of the Companies Act, 1956 for disclaimer of the said land. The said application is still pending. According to Mr. Saha, the petitioner and his group now wants to take possession and control of this land in Faridabad, by first becoming a contributory of Fibre and then contemplating to take steps for stay of the winding up.
In the affidavit in reply and the supplementary affidavit filed by the petitioner it was denied that Rs. 16 lakhs were due and paying by the Fabric company to Hari Prasad Lohia.
According to paragraph-16 of the supplementary affidavit affirmed on behalf of the petitioner, on 6th February, 2015, a certain plot no. 21, Industrial Area, Dharuhira has been "reallotted" to the Fabric company in or about 2013. According to him the respondent said in an affidavit that the Fabric company had taken Rs. 4,90,000/- from Faridabad Weaving Factory Limited and Rs. 3,33,330.76/- from M/s Prabhat Powerlom Factory Private Limited. In another affidavit it was said that the company borrowed Rs. 16 lakhs from H.P. Lohia. There was inconsistency in the stand taken by the respondents. The statements were untrue.
CONCLUSIONS:
Now, let me analyse the award closely. The Joint Arbitrators declared that the shares of the Fabric and the Fibre companies were lying with them along with signed blank transfer deeds. By the award these documents were handed over to the second group. Furthermore, by the award the shares were also deemed to have been transferred to the second group. On my understanding of the award, this part of the award records a concluded act of physical delivery of the shares along with signed blank transfer forms. It is coupled with the declaration that the shares are deemed to have been transferred to the second group. The award goes on to record that the statutory books had been delivered to these companies. Clause-6 of the award also records that the first group handed over to the second group proforma balance sheets of these companies from 31st December, 1982 till 30th September, 1983.
Thereafter, there are some directions which can be conveniently called directions in the nature of "mandatory injunction". The directors of the Fabric and Fibre Companies were directed to resign. The Second Group was to appoint directors in those Companies. Other documents were to be delivered by the first group to the second group.
The grievance of the petitioner is that the establishments of the Fibre and Fabric companies are still in control of the first group. Even if the first group continued to control the properties of these two companies and their businesses, nothing prevented the petitioner or the members of the second group, on the basis of the award, to register, allot and issue the shares, convene a general meeting of each of the companies, constitute the Board of Directors and take decisions to take control of its assets and affairs.
The award was confined to granting paper control only, of the Fabric and Fibre companies, to the petitioner's group. The award did not provide that the petitioner's group would be put in possession of the business premises, the members of the first group would vacate them and the petitioner's group would start running the business. This part is absent from the award. This was no doubt the ultimate object of the award. Since it was not expressly spelt out, this court in an execution proceeding to enforce the award, cannot help the petitioner to achieve that end.
In the absence of any contemporaneous objection, I take it that the Second Group received the blank share transfer forms signed by members of the First Group together with the share certificates, the statutory books etc. of the Fibre and Fabric Companies. After handing over the shares and transfer deeds there is no act in relation thereto to be done in future, under the award. There is, in my opinion nothing more that this Court can do to enforce this kind of an award, declaring concluded transactions, substantially. It could, I suppose enforce the other directions the award asking the directors of the said two companies to resign or asking the first group to handover the other documents. That is also not possible because of what is stated below. Now, I come to the question of limitation. Learned Advocate General submitted that the execution application filed in 1995 by one of the members of the petitioner's group should be taken as the original application for execution and that the subsequent execution application should be considered as the continuation of those proceedings.
First of all, when Mr. Bhartia took out this execution application in 1995, he did not say that he was taking it out on behalf of himself and other members of the second group. If no execution proceeding had been started by the petitioner in 1995, there is, in my opinion, no question of continuation of that proceeding by this application.
If one considers the language and intent of the Limitation Act, 1963, one will not fail to notice that it provides for periods of limitation for appeals, suits and applications. Each appeal, each suit and each application has to be filed within the period of limitation. For example, a suit by X, if filed within the period of limitation against Y will not operate to save limitation for B sharing the same cause of action against Y. Each proceeding is separate and must be filed within the period of limitation.
Even if it is assumed that the execution application filed by Mr. Bhartia has to be taken as an execution application on behalf of the petitioner, still in my opinion the period of limitation is not saved. This is because a substantial part of the award and decree relates to declaration of action already taken and declaration of action deemed to have been taken. What remained after that were some ancillary obligations of members of the first group to hand over some remaining books, papers, documents and other records to members of the second group and to resign from the directorship of these two companies. This is like as a decree granting a mandatory injunction for which as Mr. Saha rightly pointed out the period of limitation was three years. Even, Mr. Bhartia's application of 1995 was out of time.
For all those reasons, the execution application [EC 332 of 2010] is barred by limitation.
For all those reasons, the execution application [EC 402 of 2011] is also barred by limitation For the reasons given above, each of the execution applications is dismissed on merits, as well.
No action is taken on the s. 340 application (Code of Criminal Procedure, 1973) numbered as GA 2033 of 2012. It is disposed of accordingly.
The application [G.A. 2902 of 2012] is also disposed of by the order. All interim orders are vacated.
Urgent certified photocopy of this Judgment and order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(I.P. MUKERJI, J.)