Gujarat High Court
State Of Gujarat vs M/S. Kcl-Srk Jv on 20 July, 2023
Author: N.V.Anjaria
Bench: N.V.Anjaria
NEUTRAL CITATION
C/SCA/9821/2023 ORDER DATED: 20/07/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 9821 of 2023
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STATE OF GUJARAT
Versus
M/S. KCL-SRK JV
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Appearance:
MR KAMAL TRIVEDI, ADVOCATE GENERAL assisted by MR
TIRTHRAJ PANDYA, AGP and MS NIRALI SHARDA, AGP for the
Petitioner(s) No. 1,2
DELETED for the Respondent(s) No. 2
MR MIHIR JOSHI, SR. ADVOCATE with MS SHIVANI
RAJPUROHIT(5377) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE J. C. DOSHI
Date : 20/07/2023
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) The petitioners-State of Gujarat and Executive Engineer, Road and Buildings Division, Bharuch have invoked the jurisdiction of this Court under Article 227 of the Constitution seeking to challenge order dated 08.05.2023 passed below Exhibit 24 by learned 3rd Additional Sessions Judge, Bharuch.
1.1 It was an order passed in the proceedings of Civil Misc. Application No. 59 of 2022, which again was an application under Section 34 of the Arbitration and Conciliation Act, 1996.
1.2 Exhibit 24 was an application filed by the Page 1 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined respondent praying before the Commercial Court below to accept the original title deeds of both properties described and identified as 'Avalon' as well as 'Shaswat' as sufficient solvent security. Another prayer was to direct to permit respondent no.1 to withdraw the amount of Rs. 54,90,50,790/- or any part thereof.
2. The operative part of the impugned order is thus, "Considering the above made observations made by this court, and the observations made by Hon'ble Apex Court in Smt. Tribeni Devi case (supra), the final adjudication of present application is deferred by this court till the filing of above said additional documents, which appears to be of utmost importance for satisfying this court qua the market value of residential properties, ie., "the Avalon" and "the Shashwat", which are offered to be tendered as securities herein. Now to come up on 06.06.2023 for tending the above said documents to the satisfaction of this court."
3. Setting out the facts in the background, disputes arose between the petitioner State and the respondent company from a contract executed between them, which was for construction of four-lane road at Ankleshwar-Jagadia-Rajpardi-Pratapnagar Road Km.0/0 to 44/0, District Bharuch. In view of the disputes, the respondent Company invoked arbitration clause in the contract and put forth its claim of Rs. 157 crores (approximately). The petitioner State filed Page 2 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined counter claim for the amount of Rs. 126,49,76,051/-. The Arbitral Tribunal declared its award dated 30.03.2022 and partly allowed the claim of the respondent to the tune of Rs. 88,06,77,892/-, after giving set off for the award of Rs.3,10,22,227/- in favour of the petitioners.
3.1 The aggrieved petitioners filed application under Section 31 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') nomenclatured as Civil Misc. Application No. 9 of 2022. Respondent filed Execution Application No. 52 of 2022 seeking to execute the award of the arbitrator and to sell the movable and immovable assets of the petitioner. The petitioner also filed application exhibit 5 in the proceedings of Civil Misc. Application, which was an application under section 9 of the Act praying for interim relief against the award.
3.2 By order dated 21.10.2022, the Commercial Court stayed the execution and implementation of the award on condition that the applicant deposits 60% of the awarded amount with its interest. It was stated that the aforesaid order was not complied with by the petitioners herein as the 60% of the awarded amount was not deposited. It was stated that the petitioners prayed for time on the ground that it wanted to challenge the said order dated 21.10.2022 before the High Court.
Page 3 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined 3.3 No appeal however was preferred, but what was subsequently preferred was a review application. The review application was withdrawn by the petitioner State on 15.03.2023. Upon seeking extension of time, the petitioners deposited 60% of the amount of Rs.54,90,50,790/-. As per the aforesaid order dated 24.10.2022, respondent was permitted to withdraw the amount subject to submission of solvent security.
3.4 In application Exhibit 24, it was the case of the respondent that it was in light of above that it had been depositing the original deeds of the immovable property - Plot No. 8 admeasuring 1062.57 sq. mtrs. and Plot No.9 admeasuring 1143 sq. mrs. forming part of Final Plot No. 71 at village Bodakdev, Taluka Daskroi, District Ahmedabad, as well as constructed residential house thereupon where property is referred as 'Avalon'. The original documents of immovable property no. 18 in Ambica Smruti Cooperative Housing Society admeasuring 1946 square metres forming part of Final Plot No. 74, 75, 76/1 at village Bodakdev, Taluka Dascroi was also sought to be deposited along with constructed residential house. It was the property known as 'Shashwat Bungalows'.
3.5 According to the say of the respondent, in its application exhibit 24, both 'Avalon' and 'Shaswat' Bungalow were owned and occupied by the promoters of respondent no. 1 KCL SRK JV and another. It was Page 4 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined stated that Rupaba Barad and Induba Barad had connection with respondent no.1. It was stated that Rupaba's deceased husband was promoter and director in the Company. Similarly, husband of Induba BArad was promoter, shareholder and director.
3.6 Appellant herein objected to the said application on various grounds. The proceedings of Exhibit 24 application, which are pending before the Court below witnessed impugned interim order.
4. Learned Advocate General Mr. Kamal Trivedi assisted by learned Assistant Government Pleader Mr. Tirthraj to vehemently submitted that the observations made in order dated 08.05.2023 by the Court below, are without any legal basis and that the Court has disregarded the the submissions made on behalf of the petitioners. It was submitted that the reliance placed by the court in the impugned order on the decision of the Supreme Court in Trident India Ltd. Vs. Cham Ice & Cold Storage & Ors. [(2011) 14 SCC 586] was misplaced and that the decision of the Apex Court was in the context of peculiar facts and circumstances of the case before the Supreme Court not applicable in the present case.
4.1 It was next submitted that while the respondent Company along with its application for withdrawal of money - exhibit 24, furnished two valuation reports, however, the parameters and methods to arrive at the Page 5 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined realisable value of the two properties are not indicated. It was further submitted that the letter dated 09.05.2023 from the Axis Bank and letter dated 10.05.2023 from Bank of India produced by the respondent Company were given without even referring to the title deeds of the properties.
4.2 It was submitted that it was queer that the distress sale value determined in the valuation report prepared by Rajni Patel & Associates was completely adopted in the letter of Axix Bank in respect of the loan amount to be disbursed for both the properties. It was that such was not to be viewed as mere coincidence and that reports also therefore lack credibility. It was thus submitted that the decision of this Court in Manibhai and Bros. vs. Biral Cellulosic [(2016) SCC Online 157], the same was referred to by the Court below. It was submitted that in the said decision, which was in the context of similar situation, the Court directed the party to furnish the bank guarantee of nationalised bank and over and above, furnish the immovable property to secure the amount deposited.
4.3 It was further submitted by learned Advocate General that the security offed by two individuals on behalf of the respondent in form of residential properties could not be said to be a valid security inasmuch as those individuals have no privity of contract and that they have no nexus with the Page 6 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined respondent company. It was submitted that in absence of any privity of contract, the security sought to be pledged to secure a large sum of public money may not be permitted.
4.4 It was alternatively submitted that the Court may direct the respondent company to create an equitable mortgage on the two properties sought to be pledged whereby the two properties could be mortgaged with the bank and the bank guarantee of an equivalent amount can be furnished as solvent security.
4.5 On the other hand, learned senior advocate Mr.Mihir Joshi assisted by learned advocate Ms. Shivani Rajpurohit for the respondent raised a preliminary contention inter alia that the petition is directed against the interim order. It was submitted that therefore, this Court may not entertain the petition.
4.6 Seeking to counter the said preliminary submission, it was urged by learned Advocate General that the observations made in the order would depict that the Court below has expressed its conclusive opinion. It was submitted that the observation made by the Court below and the reliance placed on the order passed by the Supreme Court in Trident India Ltd. (supra) was misplaced. According to his submission, the Court below has kept the matter only for adjudication on the compliance of the directions issued in the impugned order. It was sought to be Page 7 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined submitted that the contention of the petitioner regarding discrepancy in the valuation of the properties, furnishing of bank guarantee instead of pledging of immovable properties as security are almost finally decided to be negatived. It was submitted that in such circumstances, the petitioner have to file the present petition.
5. Upon careful consideration of the impugned order below exhibit 24, the Court while considering the prayer of the respondent to accept the original title deeds of the properties, opined 'Avalon' and 'Shaswat' as sufficient solvent security, inter alia made the following observations in sub-para of para 9, "This court has minutely taken into consideration the said valuation reports of (i.) Paresh Shah and Associates, as well as (ii.) Rajni Patel and Associates, qua "the Avalon" and "the Shashwat" respectively and after perusing the said reports, this court is of considered view that the said valuation reports are though, corroborative of the realizable sale value of the said residential properties as stated in the said reports, but looking at the huge sum of amount of public exchequer involved herein and the amount of sale consideration, which was paid by Ms. Rupalba Barad and Ms. Induba Barad for purchasing the said properties in 2006, which appears to be in lakhs and as per the valuation reports have escalated to multiple crores within a period of few years, this court finds it fit to direct respondent no.01 and/or Ms. Rupalba Barad and Ms. Induba Barad to place on record an additional report of one Government Sector Bank and one Private Sector Bank of their choice, qua the maximum loan amount, which can be secured by Page 8 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined mortgaging the said properties, by which this court will be in better position to ascertain the present realizable market sale value assessment of "the Avalon", and "the Shashwat"
respectively to the satisfaction of this court, as directed in "the said order".
5.1 The Court thereafter recorded the submissions of learned advocate for respondent no.1 company stating thus, "Further, Learned Advocate for respondent no.01 during the course of his submissions has submitted that one of the properties offered as security herein, was at one juncture mortgaged with Deutsche Bank and Religare as security for securing several crores of rupees. Respondent no.01 and / or Ms. Rupalba Barad and Ms. Induba Barad are further directed to place on record the "No Objection Certificate cum No-Encumbrance Certificate" qua the said properties, in original from the said financial institutions qua redemption of mortgage."
5.1.1 The proceedings however, came to be thereafter adjourned by observing as per the operative part narrated in paragraph 2 hereinabove.
5.2 In other words, the Court below, as the observations itself would indicate, deferred the final adjudication of the application till the filing of the said mentioned additional documents. The Court observed that the said documents were of importance for satisfying the Court in respect of the market value of the two residential properties offered to be tendered as security.
Page 9 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined 5.3 At the outset, it is thus to be stated that the aforesaid order dated 08.05.2023 sought to be called in question in the present petition is only an interim order. The final adjudication of exhibit 24 application is awaited. This is manifest from the operative observations of the Court below.
5.4 When the order is interim in nature, it is not possible for the Court to countenance the submission on behalf of the petitioner-State that the Court below has conclusively opined in respect of the contentions raised by it. When the order is not finalised, it has to be treated to be such where the court has not reached any conclusion. The court below could not be said to have even formed any final opinion in respect of the contentions of the petitioner regarding the discrepancy in the valuation of the properties and prayer regarding bank guarantee instead of pledging of the said immovable properties.
5.5 The order and the observations made therein suggest that the Court has initiated the process of application of mind, however, no final conclusion is arrived at, which is evident from the fact that the adjudication is deferred. The additional documents are yet to be filed on the basis of which the Court below is enjoined in and bound to apply mind before arriving at any ultimate conclusion.
5.6 It cannot be said that the Court below has Page 10 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023 NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined finally decided to accept the properties as securities nor it has been observed that the submission of the State about furnishing of bank guarantee, etc. are negatived. The order being interim in nature, all the issues are open at large on merits since the order is not finalised and only in the interim stage for consideration of application exhibit 24 is obtained.
5.7 An interim order could be questioned before the higher court provided, and only if it has the trappings of finality. This Court is not inclined to conclude that impugned order has such trappings. It has not crystallised, much less decided any rights of either of the side in relation to the prayers made in exhibit 24 application. It cannot be said that the final conclusions are drawn. The Court is in process of gathering the details to arrive at a final conclusion on merits.
5.8 In this view of the matter, the petition is premature. It is filed at a stage where no rights of the parties are crystalissed or finally decided. It is trite and well settled that the Court would not exercise the writ jurisdiction in respect of interim order of such nature.
6. Therefore, the present petition is not liable to be entertained for the aforesaid reasons and considerations.
Page 11 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023NEUTRAL CITATION C/SCA/9821/2023 ORDER DATED: 20/07/2023 undefined 6.1 However, in any view, while disposing the petition, it is observed and clarified that while adjudicating and deciding the application exhibit 24, the Commercial Court below shall not treat the observations in the present order as final, inasmuch as the observations could be said to be reflecting only the interim application in the mind by the Court only and they are of interim nature. The Court below shall not be influenced by them while deciding the application exhibit 24 finally and pass the order on merits after taking into account and appreciating the submissions of both the sides.
7. The present Special Civil Application is accordingly dismissed. Notice is discharged.
(N.V.ANJARIA, J) (J. C. DOSHI,J) BIJOY B. PILLAI Page 12 of 12 Downloaded on : Sat Sep 16 22:16:14 IST 2023