Calcutta High Court
Jagrati Trade Services Private Limited vs Augustus Avani Land Developers Private ... on 10 November, 2025
IN THE HIGH COURT AT CALCUTTA
ORIGINAL SIDE
COMMERCIAL DIVISION
Present:
The Hon'ble Justice Krishna Rao
IA No. G.A. 1 of 2020
(Old No. G.A. 39 of 2020)
In
E.C. (COM) No. 127 of 2024
(Old No. EC 212 of 2014)
Jagrati Trade Services Private Limited
Versus
Augustus Avani Land Developers Private Limited
-And-
Starlight Real Estate (Ascot) Mauritius Limited & Anr.
Mr. Mainak Bose, Sr. Adv.
Ms. Pubali Sinha Chowdhury
Mr. Sarosij Dasgupta
Ms. Arpita Dey
Ms. Mini Agarwal
... For the award-holder/ decree-holder.
Mr. Aman Hingorani, Sr. Adv.
Ms. Debjani Mitra
2
Mr. Rajat Dutta
... For the applicants.
Hearing Concluded On : 01.09.2025
Judgment on : 10.11.2025
Krishna Rao, J.:
1. The applicants, namely, (1) Starlight Real Estate (Ascot) Mauritius Limited and (2) Starlight Real Estate Mauritius Limited have filed the present application being G.A. No. 1 of 2020 (Old G.A. No. 39 of 2020) under Order XXI, Rule 58 and Section 151 of the Code of Civil Procedure, 1908 read with Section 36 of the Arbitration and Conciliation Act, 1996 raising objections for execution of the Arbitral Award dated 16th May, 2013, on the ground that the Arbitral Award is a product of fraud and collusion but on the basis of the said Arbitral Award, the decree-holder has filed an execution proceeding being Execution Case (Com) No. 127 of 2024 which consequentially becomes in-executable.
2. The award-holder raised preliminary objection with regard to the maintainability of the objection filed by the applicants. Award-holder submits that the application filed by the applicants is hit by both the provisos of sub-rule (1) of Rule 58 of Order XXI.
3. Mr. Mainak Bose, Learned Senior Advocate representing the award holder submits that the money which was lying in the bank account of 3 the judgment-debtor company maintained with the Hongkong and Shanghai Banking Corporation, Fort Branch, Mumbai stood attached and was withdrawn by the Learned Receiver in terms of the order passed by this Court. On receipt of the said amount from bank, the Receiver has paid the said amount to the award-holder with the satisfaction of the award holder and the interest part is also paid by the bank to the Receiver and the Receiver has kept the same in separate account of the Receiver.
4. Mr. Bose submits that by an order dated 15th July, 2014 and 22nd July, 2014 passed in the execution proceedings, reveals that the applicants were fully aware of the fact that the attachment has already been made and money was paid by the bank from the account of the judgment-
debtor to the Learned Receiver appointed by this Court and thus the application is hit by clause (b) of the proviso to sub-rule (1) of Rule 58 of Order XXI of the Code of Civil Procedure, 1908. He submits that the Learned Advocate representing the applicants prayed for time to take appropriate steps for staying the operation of the order of attachment and handing over money to the judgement-debtor but no such application was filed instead the applicants has filed a suit being C.S. No. 284 of 2014 challenging the arbitral Award dated 16th May, 2013, which subsequently stood dismissed by the appellate Court and affirmed by the Hon'ble Supreme Court.
5. Mr. Bose submits that the application filed by the applicants is barred by res-judicata. The applicants before filing of the present application 4 have filed a suit before this Court being C.S. No. 284 of 2014. In the said suit also, the applicants have raised the issue of fraud and collusion between the directors, non- requirement of Press Notes and the applicants are the 100% shareholders of the judgment-debtor company and are affected by the arbitral award passed by the Learned Arbitrator. He submits initially this Court partly dismissed the suit filed by the applicants and in an appeal, the appellate Court has dismissed the entire suit on merit. The applicants have preferred Special Leave Petition before the Hon'ble Supreme Court but the same was also dismissed. In support of his submissions, he has relied upon the judgment in the case of Asgar and Others Vs. Mohan Varma and Others reported in (2020) 16 SCC 230. He submits that it is a trite law that a shareholder has no right in the assets of the Company and relied upon the judgment in the case of Bacha F. Guzdar Vs. Commissioner of Income Tax, Bombay reported in AIR 1955 SC 74.
6. Mr. Bose submits that the Hon'ble Division Bench has come to a specific finding that the applicants have no right to sue either for the money of the judgment-debtor company nor do they have any right in law to bring any derivative action on behalf of the judgment-debtor company against the director, the wrongdoers and the perceived unlawful recipient of the judgment-debtor's money by way of damages.
7. Mr. Aman Hingorani, Learned Senior Advocate representing the applicants submits that Section 36 of the Arbitration and Conciliation Act, 1996 provides for enforcement of the arbitral award under the 5 Code of Civil Procedure, 1908 in the same manner as if it is a decree of the Court. He submits that for the purpose of execution/ enforcement of an arbitral award is deemed to be decree and accordingly, the applicants have filed the present application under Order XXI, Rule 58 and Section 151 of the CPC read with Section 36 of the Arbitration and Conciliation Act, 1996. He submits that the applicants were not the parties to the arbitral proceeding and therefore cannot file an application under Section 34 of the Arbitration and Conciliation Act, 1996, thus the applicants have filed the present application. He relied upon the judgment in the case of Tara Logitech Private Ltd. Vs. Religare Finevest Limited and Another reported in 2014 SCC OnLine Del 7528.
8. Mr. Hingorani submits that Order XXI, Rule 58 mandates the Executing Court to adjudicate the objection as if it were a suit and the final order shall have the force of a decree within the meaning of the definition of 'decree' in Section 2(2) of the Code of Civil Procedure, 1908. He submits that the provision requires inquiry in respect of the validity of the rights of the party, on which the findings can be given by the Executing Court only after extending the opportunity for adducing the evidence to the parties. Mr. Hingorani in support of his submissions, has relied upon the following judgments:
"(i) Southern Steelmet And Alloys Ltd. vs. B.M. Steel, Madras, reported in 1991 MAD LW 243;
(ii) Gopana Subba Rayudu vs. Pasupuleti Venkata Ramana and Others, reported in (2009) 6 ALD 544;6
(iii) Tara Logitech Private Ltd. vs. Religare Finvest Limited, reported in 2014 SCC OnLine Del 7528;
(iv) State of Madhya Pradesh vs. Megma Leasing Limited, reported in 2008 Law Suit (MP) 132;
(v) Ghasi Sahu and Another vs. Himachal Sahu and Another, reported in 1986 SCC OnLine Ori 1;
(vi) Avtar Singh vs. Gurjeet Kaur, reported in (1997) 1 RCR (Civil) 6;
(vii) Dr. M. Ramachandra Rao vs. Papayya Sastry & Anr., reported in (1973) 1 AP LJ 243;
(viii) Kancherla Lakshminarayana vs. Mattaparthi Syamala & Ors., reported in (2008) 14 SCC 258;
(ix) Bhavan Vaja and Ors. vs. Solanki Hanuji Khodaji Mansang and Others, reported in (1973) 2 SCC 40."
9. Mr. Hingorani submits that Order XXI, Rule 58(2) of the Code of Civil Procedure, 1908, provides that all questions arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claims and objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit.
10. Mr. Hingorani submits that a judgment, decree or order obtained by playing fraud upon the Court, Tribunal or Authority is a nullity and non-est in the eye of law. It can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceeding. He submits that most solemn proceedings stand vitiated if they are 7 actuated by fraud. Fraud is an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. He relied upon the judgment in the case of A.V. Papayya Sastry and Others Vs. Government of A.P. and Others reported in (2007) 4 SCC 221. He also relied upon the judgment in the case of Vishnu Vardhan @ Vishnu Pradhan Vs. The State of Uttar Pradesh and Others reported in 2025 SCC OnLine SC 1501.
11. Mr. Hingorani submits that the Code of Civil Procedure, 1908, permits a party even at the stage of execution, to object to the decree, both on the grounds of fraud as well as lack of subject matter jurisdiction. He submits that if it appears that the arbitration proceedings were a sham and a fraud leading to the passing of the arbitral award, the award shall be treated as null and void and non-enforceable in law. He relied upon the judgment in the case of State of Uttar Pradesh and Another Vs. R.K. Pandey and Another reported in 2025 SCC OnLine SC 52. He submits that there is no bar under law even for a stranger to the proceedings, who has an independent legal right to appear and contest the execution proceedings and whose property interests will be adversely affected in execution proceedings, to point out that the arbitral award sought to be executed is a nullity. He relied upon the Judgement in the case of M/s. India Cements Capital Limited Vs. William and Others reported in 2015 SCC OnLine Ker 24805, Kiran Devi Chouraria Vs. Jhumur Mal Singh and Others reported in 2023 8 SCC OnLine Sikk 84 and Kancherla Lakshminarayana Vs. Mattaparthi Syamala and Others reported in (2008) 14 SCC 258.
12. Mr. Hingorani submits that the plea of arbitral award is a nullity can be taken at any stage and also in a collateral proceeding. He submits that the plea that an arbitral award is not executable being a nullity can be raised before the Executing Court. He relied upon the judgment in the case of Hindustan Zinc Limited (H.L.Z.) Vs. Ajmer Vidyut Vitran Nigam reported in (2019) 17 SCC 82 and in the case of Vishu Vardhan @ Vishu Pradhan Vs. The State of Uttar Pradesh & Ors.
reported in 2025 SCC OnLine SC 1501.
13. Mr. Hingorani submits that when the applicants have filed the suit challenging the award, in the said suit, the award-holder has filed an application under Order VII, Rule 11 of the Code of Civil Procedure, 1908, stating the fact that determination of questions relating the execution, discharge and satisfaction of the impugned arbitral award can only be determined by the Court executing the Award and not by way of a separate suit. He submits that the said submissions of the Learned Advocate for the award-holder is recorded in the order dated 14th May, 2015 and now the award-holder cannot take different view.
14. Mr. Hingorani submits that it is well settled that in the case where an objector lacks locus standi, the Executing Court must invoke its inherent power when fraud stares upon the Executing Court so as to ensure that the benefits do not accrue to the fraudulent party. He 9 submits that even where the source of information happens to be a person who has no locus standi, the Court cannot close its eyes and decline to exercise its inherent powers on being satisfied that as a result of underhand arrangement between two parties a fraud has been perpetrated and its process has been abused. In support of his submissions, he has relied upon the judgment in the case of Raghavan (Died) and Others Vs. Sivakumar and Others reported in 2023 SCC OnLine Mad 6677 and in the case of Smt. Tahera Sayeed Vs. Sri M. Shanmugam and Others reported in (1986) 2 AP LJ 348 (AP) and in the case of Punjab Merchantile Bank Ltd. Vs. Kishan Singh and Another reported in ILR (1963) 1 P&H 201.
15. Mr. Hingorani submits that the applicants are not the signatory to the arbitration agreement nor party to the arbitration proceedings and cannot prefer application under Section 34 of the Arbitration and Conciliation Act, 1996, but are prejudicially affected by the fraudulent award, thus have filed the present application.
16. Heard the Learned Counsel for the respective parties, perused the materials on record and the judgments relied by the parties. Before filing the present application, the applicants have filed a Civil Suit being C.S. No. 284 of 2014 praying for declaration that the arbitral award was non-est and illegal and not binding upon the applicants.
Three individuals, namely, Neeraj Kumar Pandey, Rajendra Gajanan Deshpande and Rajen Krishan Sikka had no authority to represent the award holder, setting aside the award and injunction restraining 10 recovery of money on the basis of award and refund of money if already realized. In the said suit, the award holder filed an application under Order VII, Rule 11 of the Code of Civil Procedure, 1908 for rejection of plaint.
17. The case of the applicants is that following the relaxation of the norms as to the foreign investment in the real estate business in the country, the applicants caused the Augustus Avani Land Developers Private Limited to be incorporated in India with paid-up capital or reserves equivalent to US $ 10 million with the intention that the Augustus Avani Land Developers Private Limited and the Jagrati Trade Services Private Limited, Indian collaborator would be the promoters of the Ascot Realty Private Limited, joint venture company to take up real estate projects in India. The joint venture agreement was entered in the month of July, 2007. As per the case of the applicants, the applicants control 100% of the paid-up capital in the Augustus Avani Land Developers Private Limited. Though several directors were appointed on the Board of the Augustus Avani Land Developers Private Limited but by the end of April 2009, Mr. Neeraj Kumar Pandey remained as a sole director of said company.
18. In the suit, it was alleged that sometimes in the year 2009, Mr. Neeraj Kumar Pandey purportedly inducted Shri Rajendra Gajanan Deshpande and Rajen Krishan Sikka as directors on the Board of the Augustus Avani Land Developers Private Limited and caused payment of Rs.1 Crore each to them. The applicants decided to revoke the 11 authority of the said individuals to operate the bank account of the Augustus Avani Land Developers Private Limited and held an Extra-
ordinary General Meeting of the Augustus Avani Land Developers Private Limited in the end of December, 2009 to remove the three individuals from the Board of Directors of Augustus Avani Land Developers Private Limited and to induct others therein. Mr. Neeraj Kumar Pandey had not ensured that the account of the Augustus Avani Land Developers Private Limited were audited in time, the applicants and its representatives had no access to relevant Portal of the Ministry of Corporate Affairs to file the statutory forms for removal of the three individuals as directors of the Augustus Avani Land Developers Private Limited.
19. In the year 2011, Augustus Avani Land Developers Private Limited filed a Writ Petition before the Bombay High Court through the three individuals as directors praying for a direction upon the banks of the Augustus Avani Land Developers Private Limited to honour the two cheques of Rs. 15 Crores and Rs. 5 Crores that had been signed on behalf of the Augustus Avani Land Developers Private Limited and made out in favour of the Ascot Realty Private Limited i.e. joint venture company. The banks of the Augustus Avani Land Developers Private Limited stated before the Bombay High Court that the shareholders of the Augustus Avani Land Developers Private Limited had advised the bank not to allow any further transactions pertaining to the Augustus Avani Land Developers Private Limited, the Bombay High Court 12 required notices to be issued to the applicants and, upon the applicants objecting to the money being paid to the Ascot Realty Private Limited, the Writ Petition was dismissed. After dismissal of the Writ Petition, the three individuals have filed review application in the said Writ Petition but the same was also dismissed.
20. It was also the case of the applicants in the suit that in the month of July 2014, they received a letter from the bankers of the Augustus Avani Land Developers Private Limited informing them that an execution case instituted before this Court, a Receiver was appointed with a direction on the bank to pay the Receiver, a sum in excess of Rs.
28.51 Crores from the account of the Augustus Avani Land Developers Private Limited. It is the case of the applicants that first time the applicants came to know about the arbitral proceeding and execution proceeding. It was also the contention of the applicants in the suit that as per arbitration clause of the joint venture agreement, the arbitral proceeding to be conducted at Singapore, but the Augustus Avani Land Developers Private Limited and Ascot Realty Private Limited, both under the clutches of persons in control of the Jagrati Trade Services Private Limited, had altered the arbitration agreement clause without notice to other parties to the joint venture agreement to obtain award in favour of the award-holder.
21. Section 11 of the Code of Civil Procedure, 1908 reads as follows:
"11. Res judicata.--No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and 13 substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigating under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.
Explanation I.--The expression "former suit"
shall denote a suit which has been decided prior to a suit in question whether or not it was instituted prior thereto.
Explanation II.--For the purposes of this section, the competence of a Court shall be determined irrespective of any provisions as to a right of appeal from the decision of such Court.
Explanation III.--The matter above referred to must in the former suit have been alleged by one party and either denied or admitted, expressly or impliedly, by the other.
Explanation IV.--Any matter which might and ought to have been made ground of defence or attack in such former suit shall be deemed to have been a matter directly and substantially in issue in such suit.
Explanation V.--Any relief claimed in the plaint, which is not expressly granted by the decree, shall for the purposes of this section, be deemed to have been refused.
Explanation VI.--Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating .
[Explanation VII.--The provisions of this section shall apply to a proceeding for the execution of a decree and references in this section to any suit, issue or former suit shall be construed as references, respectively, to a proceeding for the execution of the decree, question arising in such proceeding and a former proceeding for the execution of that decree.
14Explanation VIII. --An issue heard and finally decided by a Court of limited jurisdiction, competent to decide such issue, shall operate as res judicata in a subsequent suit, notwithstanding that such Court of limited jurisdiction was not competent to try such subsequent suit or the suit in which such issue has been subsequently raised.]"
22. In the present application also, the applicants have taken the same grounds which the applicants have taken in the civil suit being, C.S. No. 284 of 2014. In an application filed by the award holder under Order VII, Rule 11 of the Code of Civil Procedure, 1908, in the suit, this Court by a judgment dated 14th May, 2015 held that challenge to the award has now become barred by limitation. It is a settled law that what cannot be done directly cannot be permitted to be done indirectly.
It is not been alleged that the proforma defendant (Augustus Avani Land Developers Private Limited) was prevented by the defendants nos.
3 to 5 (three individuals) to challenge the award. In so far as other reliefs are concerned, they are required to be adjudicated at the trial and suit cannot be dismissed as against the other defendants. Since, the prayer for setting aside of award is barred by law, I hold that the suit so far as it relates to setting aside of the award against the defendant no.1 is concerned is not maintainable. The application is allowed in part.
23. The applicants have preferred an appeal against the order dated 14th May, 2015. In the said appeal, the award holder has filed cross appeal.
The appellate Court disposed of both the appeals by a judgment dated 3rd December, 2019, by passing the following judgment:
15"30. There is no doubt that it is the shareholders of a company who control the same but the day-to-day affairs and the management of a company is usually entrusted, in accordance with the articles of association thereof, to a board of directors of the company. When directors of a company are in place, the shareholders of the company cannot carry out the day-to-day management of such company; though the shareholders have the authority to remove any director that they may wish to as long as they muster the numerical strength to have an appropriate resolution passed. In corporate jurisprudence, the shareholders of a company as a collective and the company are completely separate and distinct juristic persons and the formal divide is scarcely blurred. If a decision is taken by the board of directors of a company which the shareholders may not approve of, the governing statute and, invariably the articles of association of the company, provide a remedy to the shareholders to remove all or any of the directors and to replace them. The new directors may undo the wrong committed by the perceived recalcitrant directors. However, if the wrong done by the perceived recalcitrant directors is irreversible, the company may sue such directors for the loss occasioned to the company. As and by way of a default mechanism, in company jurisprudence a derivative action is permissible when the wrongdoers are themselves in control of the company and may not permit any action in the name of the company to remedy the wrong. A derivative action, as the word itself suggests, is where the eo nomine plaintiffs derive their authority from the company itself and, in the classical form of a derivative action in company jurisprudence, the shareholders must sue for and on behalf of the company, where the wrongdoers are arrayed as the defendants and the company is also arrayed as a defendant but all the reliefs in the suit are for the benefit of the company and no relief claimed can be for the personal benefit of the eo nomine plaintiffs other than what may indirectly result to them by virtue of such eo nomine plaintiffs being shareholders of the company.
31. On a plain reading of the plaint - since a more searching reading of the plaint is 16 unnecessary in the present case - the wrongs alleged to have been committed are wrongs committed qua the company. It is true that the plaintiffs parked their funds in the company but, upon the company receiving such funds, they became the funds of the company and the allegations in the plaint that the defendants made merry with the funds of the proforma defendant have to be seen, legally, to be monies apparently stolen from the proforma defendant company; and not from the plaintiffs.
32. In this case, on the basis of the allegations in the plaint which have to be taken as true and correct while assessing a demurrer, the defendant Nos. 3 to 5 are accused of siphoning Rs.1 core each from the till of the proforma defendant in 2009. Even if it is assumed that it was so done as the plaintiffs allege, whether or not the plaint discloses any cause of action, it is ex facie apparent that the suit filed in the year 2014 prohibits the pursuance of such claim. To boot, no relief in such regard has been claimed. The remainder of the suit revolves around the arbitral award and the money flowing out of the proforma defendant to the second defendant joint venture company as a result.
33. It was, undoubtedly, the proforma defendant which suffered the arbitral award and the proforma defendant as an independent juristic entity had a right to question such award. In the absence of the proforma respondent having questioned the award - whatever may be the circumstances or reasons therefor - a vicarious challenge to the award cannot be maintained by any other. At the highest, even if the proforma defendant had not challenged the award because wrongdoers were in control of such company, it was open to the plaintiffs to sue the perceived wrongdoers or the recipients of the money as long as the plaintiffs sued on behalf of the company and the action was instituted as such. The cause of action was that of the company; never mind the beneficial consequence to the plaintiffs if the money were to be recovered.
34. This is not a hyper-technical point as to the form of the action; it is the matter of substance that goes to the root of the claim and even if the 17 plaintiffs had brought a derivative action, they could not have challenged the award but they could have sued the wrongdoers and the perceived unlawful recipients of the proforma defendant's money in damages, where the damages were suffered by the proforma defendant.
35. The plaint is fashioned as a frontal attack on the arbitral award and all the reliefs from (a) to
(g) pertain to the arbitral award and the arbitral award alone.
36. It is possible to imagine several scenarios where an arbitral award or a decree of court is made against a person, but it affects another who was not a party to the arbitral reference or to the suit. Clearly, in such a scenario, such a person cannot be proceeded against in the enforcement of the arbitral award or the execution of the decree.
The fallacy in the plaintiffs' case here is that they claim to be affected or prejudiced by the arbitral award or the enforcement thereof in course of the execution proceedings instituted in this court. Legally speaking, the award of May 16, 2013 was not rendered against the plaintiffs or either of them. Again, the arbitral award was not enforced against the plaintiffs or either of them. Clearly, the arbitral award was against the proforma defendant and it was also enforced against the proforma defendant and the money went out of the bank account of the proforma defendant. If at all, the plaintiffs are to blame for the circumstances in which they find themselves. It is the plaintiffs' admission that the third defendant was appointed on the board of directors of the proforma defendant. Though the plaintiffs claim that there were other directors on such board; but, upon the resignation of such other directors, the third defendant came to be the sole surviving director of the proforma defendant. Ordinarily, there cannot be a singlemember board of directors of any company and when a director finds himself to be the lone member of the board of a company, usually, such director has the power and authority to induct another and, thereafter, for the two together to co-opt or induct further directors as the articles of association of the relevant company may provide.
1837. Without being overly critical, it is plain to see that there is no legal basis to the claim in the plaint. For instance, the plaintiffs claim that the plaintiffs held a meeting on December 15, 2009 and revoked the authority of the third and fourth defendants as the signatories of the bank account of the proforma defendant. Ordinarily, such authority to designate an authorised signatory is a management activity which is entrusted to the board of directors of the company and the shareholders of the company, even all of them as a collective, cannot usurp such authority. Again, the plaintiffs claim that they held an extraordinary general meeting of the proforma defendant on December 22, 2009. However, ordinarily, general meetings of a company, including any extraordinary general meeting, is convened by the board of directors of the company and not by its shareholders. Though the shareholders of any company can requisition a meeting and, subject to the articles of association of the relevant company and the provisions of the governing statute, the board of directors is obliged to convene an extraordinary general meeting upon a notice in such regard being issued by the requisite number of shareholders, even an extraordinary general meeting cannot be directly called by the requisitioning shareholders in the absence of the board of directors failing to convene such requisitioned meeting within the statutorily ordained time.
38. On the most charitable reading of the plaint - which is what is required of a court in seisin of an objection in the nature of demurrer - it discloses no semblance of any cause of action against any of the defendants whether in respect of the arbitral award of May 16, 2013 or otherwise. As noticed above, only the party aggrieved by an arbitral award may challenge the award; and the plaintiffs are not parties to the award of May 16, 2013. At any rate, no suit is maintainable to challenge an arbitral award, particularly since the Act of 1996 is the entire repository in respect of the arbitration law in the country and all matters pertaining to arbitration in this country are covered by such statute and the rights and remedies pertaining to arbitral references and arbitral awards are governed thereby. The Act of 1996 is, 19 after all, an amending and consolidating Act and unless other statutes provide for statutory arbitration and alternative mechanisms for challenge (for example, the Micro, Small and Medium Enterprises Development Act, 2006, the National Highways Act, 1956 and the West Bengal Co-operative Societies Act, 2006), it is only the Act of 1996 that may be looked into in respect of any matter pertaining to arbitration in this country and any remedy in respect thereof. It is utterly puerile to suggest that since there is no express provision in any statute prohibiting the challenge to an arbitral award by way of a civil suit, Section 9 of the Code permits such a challenge. The authority of a court to receive and try a suit of a civil nature under Section 9 of the Code is tempered by the caveat in its last limb, "excepting suits of which their cognizance is either expressly or impliedly barred." In the remedy against an arbitral award being exclusively covered by the Act of 1996, which is the complete Code as regards arbitration law in this country, a challenge to an arbitral award de hors the Act of 1996 has to be regarded as impliedly barred within the meaning of the relevant expression in Section 9 of the Code.
39. In the light of the above discussion, it is completely unnecessary in the present context to embark on an exercise to discover whether it is permissible to partially reject the plaint. The plaint in this case cries out to be rejected in its entirety as being an animal that is not known to legal science. Whatever other remedy may be available to the plaintiffs against the defendants, the plaintiffs are not entitled to any of the reliefs claimed in the present suit even if all the allegations in the plaint are accepted at face value. Expressed in another way, the plaint plainly does not disclose any modicum of cause of action. If the plaintiffs are not legally entitled to canvass any of the reliefs claimed, the plaint is liable to be rejected. The rejection here is of the plaint as a whole.
40. It may be observed, in passing, that the tools available to a court for the initial scrutiny of a plaint, as to whether it discloses a cause of action or whether all the parties need be proceeded against or all the reliefs claimed can be considered, include not only Order VII Rule 11 of the Code for 20 the rejection of the plaint but also Order VI Rule 16 thereof for striking out any pleadings and Order I Rule 10(2) for striking out any unnecessarily improper defendant. Such provisions are available to be applied by a civil court at all stages of the suit.
41. Since the plaint pertaining to the present suit is found not to disclose any cause of action and the plaintiffs are found not to be legally entitled to any of the releifs claimed, the plaint is liable to and is rejected as a whole. Accordingly, the plaintiffs' appeal, APO 261 of 2015, fails and the first defendant's cross-objection, OCO 2 of 2015, succeeds. The order impugned stands appropriately modified."
24. The applicants have preferred a Special Leave Petition against the Judgment of the appellate Court dated 3rd December, 2019 and by an order dated 6th February, 2024, the Hon'ble Supreme Court dismissed the Special Leave Petition by passing the following order:
"1. Heard learned counsel for the parties.
2. We are not inclined to interfere with the decision of the High Court. We, however, make it clear that any other remedy that the petitioners would have invoked either in the proceedings for execution of the award or before any other forum are kept open. All contentions that are available to them in law can be raised and argued.
3. The Special Leave petition are dismissed accordingly.
4. Pending applications stand disposed of."
25. In the case of Asgar and Others Vs. Mohan Varma and Others reported in (2020) 16 SCC 230, the Hon'ble Supreme Court held that:
"21. While dismissing the special leave petition against the judgment of the High Court, 21 this Court in its order dated 25-7-2014 [South Coast Spices Exports (P) Ltd. v. Mohan Varma, 2014 SCC OnLine SC 1706] observed that:
"4. Insofar as the question of compensation for improvements made by the appellants is concerned, the appellants were free to pursue an appropriate remedy for the redressal of their grievances in accordance with law."
These observations as contained in the order of this Court cannot be construed to mean that the respondents would be deprived of their right to set up a plea of constructive res judicata if the appellants were to raise such a claim. The appellants were, as this Court observed, free to pursue the "appropriate remedy for redressal of their grievances in accordance with law." This must necessarily be construed to mean that all defences of the respondents upon the invocation of a remedy by the appellants were kept open for decision. The liberty granted by this Court was not one-sided. It encompasses both the ability of the appellants to take recourse and of the respondents to raise necessary defences to the invocation of the remedy. Therefore, we do not find any merit in the submission urged on behalf of the appellants that the earlier judgment of the Kerala High Court and the order of this Court preclude the respondents from raising the bar of constructive res judicata."
26. In the case of Sheodan Singh Vs. Daryao Kunwar (SMT) reported in 1966 SCC OnLine SC 98, the Hon'ble Supreme Court held that:
"9. A plain reading of Section 11 shows that to constitute a matter res judicata, the following conditions must be satisfied, namely--
(i) The matter directly and substantially in issue in the subsequent suit or issue must be the same matter which was directly and substantially in issue in the former suit;22
(ii) The former suit must have been a suit between the same parties or between parties under whom they or any of them claim;
(iii) The parties must have litigated under the same title in the former suit;
(iv) The court which decided the former suit must be a court competent to try the subsequent suit or the suit in which such issue is subsequently raised; and
(v) The matter directly and substantially in issue in the subsequent suit must have been heard and finally decided by the court in the first suit. Further Explanation 1 shows that it is not the date on which the suit is filed that matters but the date on which the suit is decided, so that even if a suit was filed later, it will be a former suit if it has been decided earlier. In order therefore that the decision in the earlier two appeals dismissed by the High Court operates as res judicata it will have to be seen whether all the five conditions mentioned above have been satisfied.
14. This brings us to the main point that has been urged in these appeals, namely, that the High Court had not heard and finally decided the appeals arising out of Suits Nos. 77 and 91. One of the appeals was dismissed on the ground that it was filed beyond the period of limitation while the other appeal was dismissed on the ground that the appellant therein had not taken steps to print the records. It is therefore urged that the two appeals arising out of Suits Nos. 77 and 91 had not been heard and finally decided by the High Court, and so the condition that the former suit must have been heard and finally decided was not satisfied in the present case. Reliance in this connection is placed on the well-settled principle that in order that a matter may be said to have been heard and finally decided, the decision in the former suit must have been on the merits. Where, for example, the former suit was dismissed by the trial court for want of jurisdiction, or for default of plaintiff's appearance, or on the ground of non-joinder of parties or misjoinder of parties or multifariousness, 23 or on the ground that the suit was badly framed, or on the ground of a technical mistake, or for failure on the part of the plaintiff to produce probate or letters of administration or succession certificate when the same is required by law to entitle the plaintiff to a decree, or for failure to furnish security for costs, or on the ground of improper valuation or for failure to pay additional court fee on a plaint which was undervalued or for want of cause of action or on the ground that it is premature and the dismissal is confirmed in appeal (if any), the decision not being on the merits would not be res judicata in a subsequent suit. But none of these considerations apply in the present case, for the Additional Civil Judge decided all the four suits on the merits and decided the issue as to title on merits against the appellant and his father. It is true that the High Court dismissed the appeals arising out of Suits Nos. 77 and 91 either on the ground that it was barred by limitation or on the ground that steps had not been taken for printing the records. Even so the fact remains that the result of the dismissal of the two appeals arising from Suits Nos. 77 and 91 by the High Court on these grounds was that the decrees of the Additional Civil Judge who decided the issue as to title on merits stood confirmed by the order of the High Court. In such a case, even though the order of the High Court may itself not be on the merit the result of the High Court's decision is to confirm the decision on the issue of title which had been given on the merits by the Additional Civil Judge and thus in effect the High Court confirmed the decree of the trial court on the merits, whatever may be the reason for the dismissal of the appeals arising from Suits Nos. 77 and 91. In these circumstances though the order of the High Court itself may not be on the merits, the decision of the High Court dismissing the appeals arising out of Suits Nos. 77 and 91 was to uphold the decision on the merits as to issue of title and therefore it must be held that by dismissing the appeals arising out of Suits Nos. 77 and 91 the High Court heard and finally decided the matter for it confirmed the judgment of the trial court on the issue of title arising between the parties and the decision of the trial court being on the merits the High Court's decision confirming that decision must also be deemed to be on the merits. To hold otherwise would make res 24 judicata impossible in cases where the trial court decides the matter on merits but the appeal court dismisses the appeal on some preliminary ground thus confirming the decision of the trial court on the merits. It is well settled that where a decree on the merits is appealed from, the decision of the trial court loses its character of finality and what was once res judicata again becomes res sub-judice and it is the decree of the appeal court which will then be res judicata. But if the contention of the appellant were to be accepted and it is held that if the appeal court dismisses the appeal on any preliminary ground, like limitation or default in printing, thus confirming toto the trial court's decision given on merits, the appeal court's decree cannot be res judicata, the result would be that even though the decision of the trial court given on the merits is confirmed by the dismissal of the appeal on a preliminary ground there can never be res judicata. We cannot therefore accept the contention that even though the trial court may have decided the matter on the merits there can be no res judicata if the appeal court dismisses the appeal on a preliminary ground without going into the merits, even though the result of the dismissal of the appeal by the appeal court is confirmation of the decision of the trial court given on the merits. Acceptance of such a proposition will mean that all that the losing party has to do to destroy the effect of a decision given by the trial court on the merits is to file an appeal and let that appeal be dismissed on some preliminary ground, with the result that the decision given on the merits also becomes useless as between the parties. We are therefore of opinion that where a decision is given on the merits by the trial court and the matter is taken in appeal and the appeal is dismissed on some preliminary ground, like limitation or default in printing, it must be held that such dismissal when it confirms the decision of the trial court on the merits itself amounts to the appeal being heard and finally decided on the merits whatever may be the ground for dismissal of the appeal.
16. The next case to which reference has been made is Ashgar Ali Khan v. Ganesh Das [LR (1917) 44 IA 213] . In that case the appellant in pursuance of a deed of dissolution of partnership, executed a bond for the payment of some money to the 25 respondent. He sued to set aside the bond on the ground of fraudulent misrepresentation as to the amount due. The trial court and on appeal the District Judge held that the alleged fraud was not established, and dismissed the suit. Upon a further appeal to the Judicial Commissioner it was held without entering into the merits, that the appellant could not avoid the bond as he did not claim to avoid the deed. The final court of appeal thus refused to determine the issue of fraud and dismissed the suit on another ground. In a subsequent suit by the respondent upon the bond, the appellant raised as a defence the same case of fraud. It was held that the issue raised by the defence was not res judicata since the matter had not been finally decided by the final Court of appeal. That case also has no application to the facts of the present case, for in that case the final court of appeal did not decide the question of fraud and dismissed the suit on another ground. In such a case it is well-settled that there can be no res judicata where the final appeal court confirms the decision of the courts below on a different ground or on one out of several grounds and does not decide the other ground. The reason for this is that it is the decision of the final court which is res judicata and if the final court does not decide an issue it cannot be said that that issue has been heard and finally decided. In the present case, however, the result of the decision of the High Court in dismissing the appeals arising from Suits Nos. 77 and 91 is to confirm the judgment of the trial court on all the issues which were common and thus it must be held that the High Court's decision does amount to the appeals being heard and finally decided."
27. In the case of Srihari Hanumandas Totala Vs. Hemant Vithal Kamat & Ors. reported in (2021) 9 SCC 99, the Hon'ble Supreme Court held that:
"12. The appellant filed a revision petition before the High Court assailing the 1-7-2019 order of the trial court. The High Court dismissed [Srihari Hanumandas Totala v. Hemant Vithal Kamat, 2021 SCC OnLine Kar 3827] the appeal upholding the 26 reasoning of the trial court on all the three grounds raised in the Order 7 Rule 11 application. On the ground of res judicata, the High Court placed reliance on the decision of this Court in Soumitra Kumar Sen v. ShyamalKumar Sen, and observed that the learned trial Judge correctly came to the conclusion that the application filed under Order 7 Rule 11(d) on the ground of res judicata could not be decided merely by looking into the averments in the plaint. In the view of the High Court, a plaint could be rejected under Order 7 Rule 11 only if it was not maintainable on the basis of the averments contained in the plaint. In the present application, such a determination would require the production of pleadings, the issues framed and the judgment in the previous suit, to compare it with the present suit. This exercise, the High Court held, could not be undertaken merely by looking into the plaint averments as held in Soumitra Kumar Sen. Pursuant to the dismissal of the revision petition by the High Court, the appellant has approached this Court challenging the order of the High Court.
19. At this stage, it would be necessary to refer to the decisions that particularly deal with the question whether res judicata can be the basis or ground for rejection of the plaint. In Kamala v. K.T. Eshwara Sa, the trial Judge had allowed an application for rejection of the plaint in a suit for partition and this was affirmed by the High Court. S.B. Sinha, J. speaking for the two-Judge Bench examined the ambit of Order 7 Rule 11(d) CPC and observed :
"21. Order 7 Rule 11(d) of the Code has limited application. It must be shown that the suit is barred under any law. Such a conclusion must be drawn from the averments made in the plaint. Different clauses in Order 7 Rule 11, in our opinion, should not be mixed up. Whereas in a given case, an application for rejection of the plaint may be filed on more than one ground specified in various sub- clauses thereof, a clear finding to that effect must be arrived at. What would be relevant for invoking clause (d) of Order 7 Rule 11 of the Code are the averments made in the plaint. For that purpose, there cannot be any addition or subtraction. Absence of jurisdiction on the 27 part of a court can be invoked at different stages and under different provisions of the Code. Order 7 Rule 11 of the Code is one, Order 14 Rule 2 is another.
22. For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of evidence can be looked into. The issues on merit of the matter which may arise between the parties would not be within the realm of the court at that stage. All issues shall not be the subject- matter of an order under the said provision."
25.3. To determine whether a suit is barred by res judicata, it is necessary that (i) the "previous suit" is decided, (ii) the issues in the subsequent suit were directly and substantially in issue in the former suit; (iii) the former suit was between the same parties or parties through whom they claim, litigating under the same title; and (iv) that these issues were adjudicated and finally decided by a court competent to try the subsequent suit.
25.4. Since an adjudication of the plea of res judicata requires consideration of the pleadings, issues and decision in the "previous suit", such a plea will be beyond the scope of Order 7 Rule 11(d), where only the statements in the plaint will have to be perused."
28. The grounds on which the appellants have filed the suit are one and the same of the present application. It is true that the suit is dismissed on an application filed under Order VII Rule 11 of the Code of Civil Procedure, 1908 but the appellate Court while deciding the appeal has decided the suit on merit in its entirety. The first contention of the applicants that the first directors of the respondent were Mehar Karan Singh and Manoj Chandramohan Vinchoo who were inducted as directors of the respondent on 3rd May, 2007. Thereafter, Robert Keane was appointed as Additional Director on 12th September, 2007. On the same date Mehar Karan Singh ceased to be a director and Neeraj 28 Kumar Pandey was appointed as alternate director to Robert Keane. On 12th August, 2008, Alok Sureshchandra Vajpeyi was appointed as an Additional Director. On 24th September, 2008, Neeraj Kumar Pandey's designation was changed as Nominee Director. On 2nd April, 2009, Alok Sureshchandra Vajpeyi ceased to be a Director. On 31st March, 2009 and 23rd April, 2009, Manoj Vinchoo and Robert Keane respectively ceased to be the directors of the respondent. By virtue, thereof, Neeraj Kumar Pandey remained as the sole director of the respondent no.1 and was authorized to operate bank account. Neeraj Kumar Pandey illegally, wrongfully and unauthorizedly held Board Meeting and appointed two new directors, namely, Rajendra Gajanan Deshpande and Rajen Krishan Sikka as Additional Directors of the respondent without taking consent of the applicants, though the applicants are the 100% shareholder of the respondent.
29. The appellate Court in its judgment dated 3rd December, 2019, considered the said issue raised by the appellant and come to the findings that:
"30. There is no doubt that it is the shareholders of a company who control the same but the day-to-day affairs and the management of a company is usually entrusted, in accordance with the articles of association thereof, to a board of directors of the company. When directors of a company are in place, the shareholders of the company cannot carry out the day-to-day management of such company; though the shareholders have the authority to remove any director that they may wish to as long as they muster the numerical strength to have an appropriate resolution passed. In corporate jurisprudence, the shareholders of a company as a 29 collective and the company are completely separate and distinct juristic persons and the formal divide is scarcely blurred. If a decision is taken by the board of directors of a company which the shareholders may not approve of, the governing statute and, invariably the articles of association of the company, provide a remedy to the shareholders to remove all or any of the directors and to replace them. The new directors may undo the wrong committed by the perceived recalcitrant directors. However, if the wrong done by the perceived recalcitrant directors is irreversible, the company may sue such directors for the loss occasioned to the company. As and by way of a default mechanism, in company jurisprudence a derivative action is permissible when the wrongdoers are themselves in control of the company and may not permit any action in the name of the company to remedy the wrong. A derivative action, as the word itself suggests, is where the eo nomine plaintiffs derive their authority from the company itself and, in the classical form of a derivative action in company jurisprudence, the shareholders must sue for and on behalf of the company, where the wrongdoers are arrayed as the defendants and the company is also arrayed as a defendant but all the reliefs in the suit are for the benefit of the company and no relief claimed can be for the personal benefit of the eo nomine plaintiffs other than what may indirectly result to them by virtue of such eo nomine plaintiffs being shareholders of the company.
31. On a plain reading of the plaint - since a more searching reading of the plaint is unnecessary in the present case - the wrongs alleged to have been committed are wrongs committed qua the company. It is true that the plaintiffs parked their funds in the company but, upon the company receiving such funds, they became the funds of the company and the allegations in the plaint that the defendants made merry with the funds of the proforma defendant have to be seen, legally, to be monies apparently stolen from the proforma defendant company; and not from the plaintiffs."
3030. Taking into consideration of the pleadings of the suit filed by the applicant prior to filing of the present application, issue raised in the suit and in the present application, parties to the suit, claim made by the applicants in the suit and in the present application and the order passed by the appellate Court in the appeal filed by the applicant and the cross objection filed by the respondent, this Court finds that the appellate Court has decided the issue finally raised by the applicants in the suit on merit. The applicants have also preferred Special Leave Petition against the judgment of the appellate Court but the Hon'ble Supreme Court has not interfered with the judgment of the appellate Court. The Hon'ble Supreme Court had given liberty to the applicants that any other remedy that the applicants would have invoked either in the proceeding for execution of the award or before any other forum.
The applicants chose to file the present applicant under Order XXI Rule 58 but the issues which the applicants have raised has already been decided finally by the appellate Court in its judgment dated 3rd December, 2019.
31. In the Case of Asgar & Ors. (Supra) the Hon'ble Supreme Court categorically held that:
"Insofar as the question of compensation for improvements made by the appellants is concerned, the appellants were free to pursue an appropriate remedy for the redressal of their grievances in accordance with law.
These observations as contained in the order of this Court cannot be construed to mean that the respondents would be deprived of their right to set 31 up a plea of constructive res judicata if the appellants were to raise such a claim. The appellants were, as this Court observed, free to pursue the "appropriate remedy for redressal of their grievances in accordance with law." This must necessarily be construed to mean that all defences of the respondents upon the invocation of a remedy by the appellants were kept open for decision. The liberty granted by this Court was not one-sided. It encompasses both the ability of the appellants to take recourse and of the respondents to raise necessary defences to the invocation of the remedy. Therefore, we do not find any merit in the submission urged on behalf of the appellants that the earlier judgment of the Kerala High Court and the order of this Court preclude the respondents from raising the bar of constructive res judicata."
32. In the present case, the applicants have not filed the suit for compensation claiming damage that due to the alleged act of fraud by the decree holder and judgment debtor, the applicants have suffered loss. The applicants have filed the present application on the contest that the award is not executable on the ground of fraudulent act of decree holder but the ground of fraud has already been decided by the Hon'ble Appellate Court in an appeal preferred by the applicants along with the cross appeal of the decree holder.
33. In view of the above, this Court finds that the application filed by the applicants under Order XXI, Rule 58 of the Code of Civil Procedure, 1908 is barred by res-judicata.
34. Order XXI, Rule 58 of the Code of Civil Procedure, 1908, reads as follows:
"58. Adjudication of claims to or objections to attachment of, property.--32
(1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained: Provided that no such, claim or objection shall be entertained--
(a) where, before the claim is preferred or objection is made, the property attached has already been sold; or
(b) where the Court considers that the claim or objection was designedly or unnecessarily delayed.
(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit.
(3) Upon the determination of the questions referred to in sub-rule (2), the Court shall, in accordance with such determination,--
(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or
(b) disallow the claim or objection; or
(c) continue the attachment subject to any mortgage, charge or other interest in favour of any person; or
(d) pass such order as in the circumstances of the case it deems fit.
(4) Where any claim or objection has been adjudicated upon under this rule, order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.33
(5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (I), refuses to entertain it, the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute;
but, subject to the result of such-suit, if any, an order so refusing to entertain the claim or objection shall be conclusive."
35. The decree holder had filed an Execution Case No. 212 of 2014 for execution of the award dated 16th May, 2013. By an order dated 10th June, 2014, this Court passed an interim order in the execution proceeding restraining the judgment debtor from operating the bank Account No. 019-350636-001 with the Hongkong and Shanghai Banking Corporation Limited and from withdrawing any sums therefrom or otherwise dealing with the amounts lying to the credit of the said bank account without leaving therein a credit balance of Rs.
29 crores until the decretal amount is paid by the judgment debtor to the Joint Venture Company Ascot Realty Private Limited. On 26th June, 2014, this Court appointed a Receiver and directed the bankers of the judgment debtor to prepare a draft/ pay order for a sum of Rs.
28,51,83,561/- and to hand over the same to the Receiver by 4th July, 2014 and thereafter the attachment order will stand vacated.
36. By an order dated 10th July, 2014, this Court directed the Receiver immediately hand over the sum of Rs. 28,51,83,561/- to Ascot Realty Private Limited by issuing cheque from his account. This Court further directed that the Hongkong and Shanghai Banking Corporation Limited to prepare another bank draft of Rs. 42,08,219.18 in favour of Receiver 34 and the Receiver was directed to deposit the same in the bank account and to hand over the sum to the decree holder by 21st July, 2014. On 22nd July, 2014, Learned Counsel for the applicants entered appearance in the said execution proceeding and informed this Court that the applicants are ready with an application and considering the submissions of the Learned Counsel for the applicants, this Court directed the Receiver to stay his hands for a period of two weeks or until further orders whichever is earlier. This Court further directed that if the applicants filed their application, the same may be listed on the returnable date. The applicants instead of filing an application in the execution proceeding have filed suit challenging the award and consequential relief.
37. At the time of hearing of the present application, this Court called for report from the Receiver and on 5th August, 2025, the Receiver has filed report wherein he has stated that in terms of the order dated 10th July, 2014, the Receiver paid an amount of Rs. 28,51,83,561/- on the same day to Ascot Realty Private Limited and also acknowledged the receipt of the same. In the report, it is further mentioned that as per order dated 12th August, 2014, the Receiver has created fixed deposit of Rs.
42,08,219.18/- being the interest and the said amount is still lying with the bank as fixed deposit.
38. As per first proviso of Order XXI, Rule 58, no such claim or objection shall be entertained, 35
(a). Where before the claim is preferred or objection is made, the property attached has already been sold or,
(b). Where the Court considers that the claim or objection was designedly or unnecessarily delayed.
The applicants have prayed for the following reliefs in the present application:
"(a) The execution proceedings being E.C. No. 212 of 2014 be dismissed;
(b) The Receiver be directed to recover the sum of Rs.28,51,83,561/- attached under the Orders of this Hon'ble Court, and release the same, along with the sum of Rs. 42,08,219.18p., together with interest accrued thereupon in favour of the Respondent;
(c) Pending disposal of this application, execution proceedings being E.C. No.212 of 2014 be stayed;
(d) Ad interim orders in terms of prayers above;
(e) Costs of and incidental to this application be costs in the cause;
(f) Such further or other order or orders be passed and/or direction or directions be given as to this Hon'ble Court may deem fit and proper."
39. Order XXI, Rule 55 of the Code of Civil Procedure, 1908, reads as follows:
"55. Removal of attachment after satisfaction of decree.--Where--
(a) the amount decreed with costs and all charges and expenses resulting from the attachment of any property are paid into Court, or 36
(b) satisfaction of the decree is otherwise made through the Court or certified to the Court, or
(c) the decree is set aside or reversed, the attachment shall be deemed to be withdrawn, and, in the case of immovable property, the withdrawal shall, if the judgment-debtor so desires, be proclaimed at his expense, and a copy of the proclamation shall be affixed in the manner prescribed by the last preceding rule."
40. In the case of Kancherla Lakshminarayana Vs. Mattaparthi Syamala reported in (2008) 14 SCC 258, the Hon'ble Supreme Court held that:
"26. It was urged before the High Court that the provisions of Order 21 Rule 58 read with the provisions of Order 21 Rule 101 spell out the duty of the court to adjudicate all the questions relating to the rights of the parties and that the executing court had failed to consider the provisions in the proper perspective and it should have decided as to whether the decree between the first and second respondents is a collusive decree merely meant to defeat the right of the appellant herein. The aforementioned proviso to Rule 58 and more particularly clause (a) thereof was the only provision relied upon by the High Court which is clear from the observations made in internal p. 10 of the judgment of the High Court in the following words:
"Clause 5 of Order 21 Rule 58 CPC deals with a situation where the claim or objection under the proviso to sub-rule (1) is refused to be entertained by the court, the party against whom such order is made may dispute, but, subject to the result of such suit, if any, an order so refusing to entertain the claim or objection shall be conclusive. The highest bidder in the auction-sale has been declared 37 as the purchaser and that therefore, the proviso to Order 21 Rule 58 CPC is attracted."
We have already shown that this is not the situation in law. The High Court further went on to suggest that a merely (sic mere) agreement-holder could not prevent the right of the auction-purchaser to get the sale confirmed. This statement is also patently an incorrect statement in law. We have, therefore, no hesitation in holding that the High Court and the trial court were in utter error in relying on the proviso to clause (a) to Rule 58 Order 21 CPC. The appeal has, therefore, to succeed. The executing court thus shall be obliged to decide the objections raised by the appellant."
In the case of Southern Steelmet and Alloys Ltd. Vs. B.M. Steel, Madras reported in 1991 Mad LW 243, the Madras High Court held that:
"2. Mr. K. Parasaran, the learned counsel for the appellant, referred to us the change of law after the amendment of the Civil Procedure Code by Central Act, 104 of 1976. There has been a drastic change in the literature, the mode of approach and the method by which a decision should be arrived at and which should be adopted by a civil court when an application under O. 21, R. 58 comes up for adjudication. Whilst under the earlier law, such an investigation of claim and objection to attachment of attached property was summary in nature, the present law provides as it were a significant departure in the matter of disposal and adjudication of such claims.
O. 21, R. 58, as it stands today reads as follows--
"58. Adjudication of claims to, or objections to attachment of, property--(1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained;38
Provided that no such claim or objection shall be entertained--
(a) Where, before the claim is preferred or objection is made, the property attached has already been sold; or
(b) where the court considers that the claim or objection was designedly or unnecessarily delayed.
(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the court dealing with the claim or objection and not by a separate suit, (3) Upon the determination of the questions referred to in sub-rule (3) the court shall, in accordance with such determination--
(a) allow the claim or objection and release the property from attachment either wholly or to such extent as it thinks fit; or
(b) disallow the claim or objection; or
(c) continue the attachment subject to any mortgage, charge or other interest in favour of any person; or
(d) pass such order as in the circumstances of the case it deems fit.
(4) Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree.
(5) Where a claim or an objection is preferred and the Court, under the proviso to sub-rule (1), refuses to entertain it the party against whom such order is made may institute a suit to establish the right which he claims to the property in dispute;
but, subject to the result of such suit, if any, an 39 order so refusing to entertain the claim or objection shall be conclusive".
The Rule contemplates a full enquiry into all questions including questions relating to right, title or interest in the property attached which arise between the parties to the proceeding and mandates that the court enquiring such a claim petition shall determine such questions. There is also an embargo on the institution of a separate suit for the determination of such above questions. Sub-cl. (4) of O. 21, R. 58 throws abundant light upon the nature and character of the decision ultimately to be arrived at by the civil court on such adjudication under O. 21, R. 58. It says that after the claim or objection has been adjudicated upon, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree. Though perforce an order is contemplated to be passed under O. 21, R. 58, C.P.C., that order has the legal effect of a decree. Such an order is a substitute for a decision resulting in a decree in an ordinary litigation. A decree as is understood both legally and commonly results in the adjudication of rights, privileges, and duties of a party to a legal proceeding. Such being the intendment of the amended Rule under O. 21, R. 58, C.P.C., in our view, the enquiry contemplated under O. 21, R. 58, C.P.C., is no longer of a summary nature, but should be full, realistic and after giving adequate opportunity to the parties concerned to prove their respective claims, rights, title and interest in the property attached. We are, therefore, of the view and rightly Mr. M. R. Narayanaswami appearing for the incorporated company agrees with us that there has not been such a full adjudication of the rights of parties by the learned Judge when he passed the order appealed against."
In the case of Gopana Subba Rayudu Vs. Pasupuleti Venkata Ramana & Ors. reported in (2009) 6 ALD 544, the Andhra Pradesh High Court held that:
"8. The claim submitted under Rule 58 of Order XXI CPC by a third party to a decree, is 40 similar to a suit. It needs to be examined, in detail, duly recording the evidence, that may be adduced by the parties. The reason is that, the adjudication, leading to the decree under execution, takes place without the participation to a claimant, and law provides a full opportunity to him to substantiate his claim. However, all that would be possible, only when an item of property is attached, in the course of execution of the decree. Rule 58 of Order XXI CPC reads as under:
"Adjudication of claims to, or objections to attachment of property.--(1) Where any claim is preferred to, or any objection is made to the attachment of, any property attached in execution of a decree on the ground that such property is not liable to such attachment, the Court shall proceed to adjudicate upon the claim or objection in accordance with the provisions herein contained:
Provided that no such claim or objection shall be entertained--
(a) where, before the claim is preferred or objection is made, the property attached has already been sold;
or
(b) where the Court considers that the claim or objection was designedly or unnecessarily delayed.
(2) All questions (including questions relating to right, title or interest in the property attached) arising between the parties to a proceeding or their representatives under this rule and relevant to the adjudication of the claim or objection, shall be determined by the Court dealing with the claim or objection and not by a separate suit.
9. From a perusal of this, it becomes clear that the cause of action for a claimant to submit an application under this provision arises, only if an item of property is attached in the course of execution, and not otherwise. The attachment can be of any movable property of different categories under Rules 42 to 53 or the one of immovable property under Rule 54 of Order XXI CPC. Rule 58 does not make any difference between movable 41 and immovable properties. Throughout the length and breadth of the Rule, the word 'attachment' occurs at many places, hardly leaving any doubt that the sine qua non to invoke that provision is existence of attachment. Even where an amount, which is not with the judgment-debtor, is attached in the execution, it is possible for one to invoke that provision."
In the case of State of Madhya Pradesh Vs. Megma Leasing Limited reported in 2008 LawSuit (MP) 132, the Madhya Pradesh High Court held that:
"8. As per impugned order the objection of the appellant has been dismissed only on the ground that appellant has failed to prove its title over the attached properties. Firstly, such finding has not been given by speaking order and considering all the material and papers placed by the parties on record. Secondly, before dismissing the aforesaid objections as per prescribed procedure of O.21 R.58 of CPC, the opportunity to adduce the evidence was not extended to either of the parties to prove their case. Thirdly, the provision of O.21 R.58 and 59 gives the mandate to executing court to hold the inquiry of such objections in the manner in which the Civil Suit is tired and apparently such procedure has not been adopted by the executing court.
12. It is noted that the provision of Order 21 Rule 58 CPC has been amended in the year 1976 and thereafter it is not a summary provision, it requires inquiry in respect of validity of rights of the party, on which the findings can be given by the court only after extending the opportunity for adducing the evidence to the parties. Admittedly in the case at hand in order to enquire the right and title of the appellant even after Eling the documents such procedure has not been followed by the Executing Court and in that way the impugned order has been passed contrary to the provision of Order 21 Rule 58 of CPC, On earlier occasion this question was answered by the Division Bench of the Madras High Court in the matter of M/s Southern Steelmet and Alloys Ltd., Appellant v. B. 42 M. Steel reported in AIR 1978 MADRAS 270, In which it was held as under:
4. ..............Wehavealready expressed the view that the adjudication referred to under Or. 21 Rule 58 C. P. Code not being summary and as it is the intention of the Legislature under the amended Civil Procedure Code that it should be a decision as if rendered in a regular suit resulting in an appealable decree, we are of the view that a fuller examination of the rights of parties has to be held in the instant case after giving them adequate opportunity to place all relevant materials before the trial court, so that it could ultimately decide and adjudicate on all questions including questions relating to right, title or interest in the property attached which either directly or indirectly arise between the parties to the proceedings. This not having been done, we are constrained to set aside the order of the learned Judge and remit the subject matter to the Original Side of this court for a fuller and detailed examination as contemplated under the amended provision and for an ultimate decision after adjudication of the rights of parties. To the above extent, the appeal is allowed. There will be no order as to costs."
In the case of Ghasi Sahu & Anr. Vs. Himachal Sahu reported in 1986 SCC OnLine Ori 1, the Orissa High Court held that:
"6. O. 43, R. 1 provides as to which of the orders are appealable. There is no mention that an order under O. 21, R. 58 is appealable O. 43, R. 1 is however, not conclusive, because of the special provision made in sub-rule (4) of O. 21, R. 58 which is reproduced for easy reference:--
"Where any claim or objection has been adjudicated upon under this rule, the order made thereon shall have the same force and be subject to the same conditions as to appeal or otherwise as if it were a decree."43
The aforesaid provision clearly indicates legislative intention to the effect that under. O. 21, R. 58 a claim or objection shall be adjudicated upon as if it were a suit and the final order shall have the force of a decree within the meaning of the definition of 'decree' in S. 2(2) of the Code. Such decree is appealable. This view is supported by a decision of this Court reported in (1979) 1 Cut WR 147, Kwality Restaurant v. Trilochan Singh Deo, in which it was held:--
"Fourthly, the old Rule gave a right of suit to the aggrieved party under O. 21, R. 63 C.P.C. but, under the new Rule, the remedy is by way of appeal and not by way of suit. It is only in cases where the Court refuses to entertain the claim or objection, then the remedy will be by way of a suit."
In AIR 1978 Mad 270, Southern Steelment and Alloys Ltd. v. B.M. Steel, Madras, a Division Bench held that the adjudication referred to under. O. 21, R. 58 C.P.C. (as amended in 1976) is not summary and as it is the intention of Legislature under the amended Code that it should be a decision as if rendered in a regular suit resulting in an appealable decree, the fuller examination of the rights of parties has to be held after giving them adequate opportunity to place all relevant materials before the Court so that the court could ultimately decide and adjudicate on all questions including questions relating to title or interest in the property attached. In AIR 1979 Delhi 230, Harbans Lal v. Smt. Ram Jawai Devi, a Division Bench held:--
"R. 58 of Order XXI has undergone a vital change by the amending Act 104 of 1976. The amendment now envisages that the adjudication under R. 58 would be final and conclusive adjudication, and would be appealable as if it were a decree."
In AIR 1979 Kant 89, Sidramappa Rachappa Chiniwar v. Shankarlingappa Veerappa Bilagi a learned single Judge took an indentical view. In AIR 1981 Pat 292, Ram Krishna Mandal v. Baikuntha Lal Mandal a Division Bench took an identical view and observed:--
44"The sub-rule (2) of R. 58 directs all questions including questions relating to the right, title or interest in the property attached arising between the parties to the proceeding or their representatives and relevant to the adjudication of the claim to be determined under this rule and a separate suit for the purpose has been barred. If the provision of appeal be held to be inapplicable in case of attachment before judgment, the losing party in such cases will be debarred from agitating his claim and challenging the order against him. The claim of title to immovable properties in other cases are subject to scrutiny by more than one court and it cannot be assumed that the legislature intended to discriminate in cases arising out of attachment before judgment.
In view of the principle laid down in the aforesaid decisions it is beyond the pale of controversy and it is the consistent judicial consensus that an order of adjudication under O. 21, R. 58 has the force of a decree and is appealable."
In the case of K. Venkarayappa Vs. Ellen Industries, Coimbatore reported in (1985) 2 APLJ 106, the Andhra Pradesh High Court held that:
"3. Order 21, R.58, C.P.C. gives a statutory and substantial right to a person to object to the attachment of any property in execution of a decree. When an application, in exercise thereof, has been filed, clauses (a) and (b) of proviso to sub- rule (1) of R.58 clothes Court with power to dismiss such an application in limine, or (a) that the property attached had already been sold out; or (b) it was intended to protract the proceedings and in that process the application was designedly made or unnecessarily has been filed. If the Court exercises that power, the applicant is relegated to vindicate this rights by ways of a regular suit as contemplated under sub-rule (5) of R.58 of O.21 thereof. If the Court did not exercise the power at 45 its inception in terms of the above provisions, then sub-rule (2) thereof enjoins the Court that all questions including the question relating the right, title or interest in the property attached shall be determined by that Court dealing with the claim or objection and not by a separate suit. Thereby, the Legislature intended that it is a mandatory duty cast on the court to hold an enquiry. The enquiry thereby posits that an opportunity to be given to the parties to adduce all necessary evidence in support of the claim or to resist such a claim by the opposite party and thereafter to give finality to the objection by that Court, subject to a right of appeal provided under sub-rule (4) thereof treating the order thereunder as a decree. The order thus becomes conclusive. Thereby the Legislature has manifested that holding an enquiry in adjudicating the right, title and interest of the objector in dealing with the claim or objection is mandatory and the order passed thereon shall be conclusive. Broached for this perspective, when we gleaned through the order passed, it must but be held that the lower Court passed the order under sub-rule(2) of R.58 of O.21, without holding an enquiry and without giving an opportunity to the party. It straightway passed the order on merits. Therefore the order is per se contrary to the mandatory language and scheme of the Code; thereby it is not only in excess of the jurisdiction but also is vitiated by material irregularity in exercise of its jurisdiction. The contention of the learned counsel for the respondent that it could be treated as an order under Clause (b) of proviso to sub-rule (1) of R.58 of O.21, cannot be given any credence for the reason that not merely the Court below did not express in terms thereof but a perusal of the order also indicates that it was passed on merits attracting sub-rule (2) of R.58 of ).21. Therefore, the order cannot be brought with clause (b) of proviso to sub- rule (1)of R.58 of O.21,CPC. The order of the lower Court is accordingly set aside and the appeal is allowed. The lower Court is directed to hold an enquiry after giving adequate opportunity to both parties and dispose of the same according to law. In view of the facts and circumstances, there shall be no order as to costs."46
In the case of Avtar Singh Vs. Gurjeet Kaur (Widow) reported in (1997) 1 RCR (Civil) 6, the Punjab and Haryana High Court Held that:
"5. It is a settled principle of law that the Court while determining the rights of the parties under this provision can record evidence if it considers proper. Seriously disputed questions of fact specially where they relate to Court records, purchase of stamp papers or a plea of fraud should and ought to be normally determined after giving an opportunity to the parties to lead evidence. Under proviso to Rule 58 of the Code an exception is carved out to say that in what cases the Court can decline to entertain such objections/This proviso, thus, has to be enforced only in the limited cases which fall strictly within the ambit and scope of the proviso. No doubt the scope of enquiry under this provision is a narrower one, but certainly it is enough to properly adjudicate the claim of an objector whose rights had accrued in the property prior to the passing of the order of attachment. Amendment of this provisions by the Amended Act, 1976 has been enlarged and is not to be governed with the earlier limited scope granted to the executing Court by previous pronouncements. The attachment and determination of respective rights in execution must be treated and actually dealt as an investigation of a wider meaning and consequence. The Madras High Court in the case of Southern Stelmet v. B.M. Steel, AIR 1978 Madras 270, held as under:--
"The adjudication under present Order XXI, Rule 58, C.P.C. is no longer summary and it is the intention of the Legislature that it should be a decision as if rendered in a regular suit resulting in an appealable decree. Fuller examination of the rights of the parties has to be made after giving them adequate opportunity to place all relevant materials before the Court."
6. Other High Courts have also expressed similar views.
7. The learned trial Court has made some observations in the impugned order without any detailed discussion on the subject that agreement 47 to sell is a collusive one and the agreement was entered into only to delay and defeat the execution of the decree. This finding of the learned trial Court is without any basis and in fact is without affording any opportunity to the objector to satisfy the Court in this behalf. The objector, as already noticed, was not given any chance to lead evidence. The objector who has filed an application with due explanation, as even noticed by the trial Court, in the present case, was entitled to a proper opportunity. The said objector had a right to explain and satisfy the Court that the delay was not by design and he had approached the Court without any inordinate delay."
41. The award holder does not dispute that Order XXI, Rule 58, the Executing Court has the power to make inquiry. The judgments referred by the applicants are related to the settled position of law that an application under Order XXI, Rule 58 is made before the Executing Court, the Court has the duty to make necessary inquiry. The facts of the present case are distinguishable from the facts of the cases referred by the applicants. In the present case, initially on 22nd July, 2014, the applicants through their learned Advocate entered appearance in the execution proceeding and submitted that their application is ready and accordingly, this Court directed the Receiver to stay his hand for a further period of two weeks or until further orders whichever is earlier and directed that if the applicant filed their application in course of the day, the same be listed on the returnable date. Though the applicants have submitted that their application is ready but instead of filing application, the applicants have filed a separate suit challenging award as well as further consequential reliefs. The suit filed by the applicants was dismissed by the appellate Court. In the meantime, the Receiver 48 appointed by this Court has received amount from the bank and paid to the Ascot Realty Private Limited and the interest part is also received from the bank and kept in separate fixed deposit as per order passed by this Court.
42. When the applicants have filed the present application at the relevant time there was no attachment and the amount of Rs. 28,51,83,561/-
has already been paid by the Receiver to Ascot Realty Private Limited.
The amount attached by the order of this Court is paid to the Ascot Realty Private Limited by the Receiver after receipt of the same from the bank in terms of the order passed by this Court. It is settled proposition of law that once an application under Order XXI, Rule 58 of CPC is filed, the Court has the duty to inquire into the matter, but in the present case, there is a special circumstance. The issue on the basis of which the applicants have filed the present application, the said issues have already decided by the Hon'ble appellate Court in an appeal on merit. The findings of the appellate Court are binding upon this Court and more specifically the order passed by the appellate Court is affirmed by the Hon'ble Supreme Court. Though the Hon'ble Supreme Court has given liberty to the applicants to raise issue before the appropriate proceeding but in the present application, the grievance of the applicants cannot be decided as the same is already decided by the appellate Court by its order dated 3rd December, 2019. This Court has already held that the application filed by the applicants is barred by res-judicata.
4943. In view of the above, G.A. No.1 of 2020 (Old No. GA 39 of 2020) is dismissed.
(Krishna Rao, J.)