Calcutta High Court (Appellete Side)
Parvati Devi Khemka & Ors vs M/S. J.J. Grihanirman Private Limited on 20 December, 2018
1 24 20.12.2018
mb In the High Court at Calcutta Civil Revisional Jurisdiction Appellate Side C.O. No. 4242 of 2018 Parvati Devi Khemka & Ors.
-Vs.-
M/s. J.J. Grihanirman Private Limited Mr. Rjarshi Dutta, Mr. V.V.V. Sastry, Mr. Trideb Bose ...for the petitioners Mr. Abhishek Halder, Mr. Prabir Banerjee ...for the opposite party The present challenge is directed against an order, whereby the Additional District Judge granted stay of an arbitral award, comprised of two components - one, as to specific performance of a contract and the other, a money component, pertaining to costs.
Learned counsel for the petitioners argues that the condition for grant of such stay on the grant of security to the tune of Rs.50 lakhs was improper, since the said amount was extremely low. It is submitted that the Additional District Judge, in seisin of a challenge preferred by the opposite party under Section 34 of the Arbitration and Conciliation Act, 1996, did not consider at all the valuation of the property-in-question while arbitrarily fixing such 2 condition, in violation of a previous specific direction passed by this Court.
It is seen from the records that by an order dated November 13, 2018, passed in C.O. No. 3168 of 2018, this Court had directed, inter alia, that the court below would take up the proceeding under Section 34 of the Act of 1996 and would revisit the condition for grant of stay, if any, on a realistic appreciation of the nature of the award as well as the value of the property-in- question.
It is argued by the petitioners that the Additional District Judge did not take into account the value of the property at all. As far as the costs of Rs.32 lakh was concerned, the same was, in any event, due to the petitioners, since the petitioners had also paid the cost due to the tribunal from the opposite party.
It is submitted that, as per the admission of the opposite party itself in an application filed by the opposite party before the Additional District Judge, under Section 151 of the Code of Civil Procedure, the present market value of 1094 sq. ft. of a portion of the premises-in-question was Rs.65 lakhs. It is argued that, even if such rate is taken as a basis (although the rate itself is disputed by the petitioners), the valuation of the property to which the petitioners are entitled, being 50 per cent of the entire constructed area, comes to around Rs.3 crore 26 lakh.
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It is further submitted on behalf of the petitioners that the court below also proceeded on an erroneous premise that part possession of the premises-in-question had already been given to the petitioners, whereas the opposite party admitted in its application under Section 34 of the Act of 1996 that the opposite party was in exclusive possession of the said property. As such, the entire premise of the impugned order was erroneous, according to the petitioners.
Learned counsel for the opposite party candidly submits that the opposite party is not in a position to pay the equivalent of the market rate of 50 per cent of the premises-in-question. It is further submitted that such financial crunch is also related to the acts of the petitioners in not executing a sub-lease, for which the opposite party could not avail of the requisite loan from the bank.
Learned counsel for the opposite party further submits that instead of deposit of the decretal amount in court, furnishing of security was also a condition contemplated in law. In this context, learned counsel for the opposite party cites a judgment, reported at (2005) 4 SCC 1 (Sihor Nagar Palika Bureau vs. Bhabhlubhai Virabhai & Co.). In the said judgment, it was held, inter alia, on a consideration of Order XLI Rules 1(3) and 5(5) of the Code of Civil Procedure, that the discretion lay with the appellate court to direct either deposit of the amount disputed in the appeal or to permit 4 such security in respect thereof being furnished as the appellate court might think fit. It was further clarified that the discretion was to be exercised judicially and not arbitrarily, depending on the facts and circumstances of a given case. The said judgment also laid down that ordinarily, execution of a money decree was not stayed inasmuch as satisfaction of money decree does not amount to irreparable injury and in the event of the appeal being allowed, the remedy of restitution was always available to the successful party. In the facts of such case, the said proposition was applied by the Hon'ble Supreme Court.
It is also submitted on behalf of the opposite party that the challenge under Section 34 of the Act of 1996, taken out by the opposite party, has sufficient merits and if, at this premature juncture, the opposite party is directed to deposit the entire value of the portion of the suit building, which was directed in the award to be handed over to the petitioners, as well as the cost component of the award, it would be not only difficult for the opposite party to comply with, due to the acts of the petitioners themselves, but would also amount to the stay granted being rendered infructuous ab initio.
A consideration of the judgment cited by learned counsel for the opposite party reveals that the same was rendered in the context of an appeal, as envisaged in Order XLI Rules 1(3) and 5(5) 5 of the Code of Civil Procedure. It may be taken into account here that the conspectus and scope of Section 34 of the Act of 1996 and an appeal, as contemplated in Sections 96, 100 or 104 of the Code of Civil Procedure, are distinct and different in nature. A challenge by way of a regular appeal involves factual and legal aspects, which might be considered by the appellate court, being the first court of facts in the case of a first appeal or a first miscellaneous appeal, and even to a limited extent in a second appeal, if the same relates to a substantial question of law.
However, the ambit of Section 34 of the Act of 1996 is of a much restricted scale inasmuch as the challenge is confined to the yardsticks stipulated in the said section.
In fact, Section 34 of the said Act cannot be labelled as an appeal, amounting to continuation of a suit as per settled judicial position, but is of an independent nature having limited scope.
As such, the merits of an application under Section 34 of the said Act, at the prima facie stage of granting a stay and/or injunction, has to be on a higher pedestal than that of an appeal as envisaged in the Code of Civil Procedure and like statues.
The trial court did not take into account such aspect of the matter and/or the valuation of the property-in-question at all. Since the previous order of this Court, as referred to above, directing the court below to take into account the valuation as well 6 as all components of the award, has attained finality, the court below was bound to consider such aspects of the matter, which exercise was shirked by the court below.
In the circumstances, it is seen that even as per the market rate, as admitted by the opposite party itself before the Additional District Judge, the valuation of the portion of the suit property, which was directed by the award to be handed over to the petitioners, comes to more than Rs.3 crore.
As far as the cost component is concerned, the opposite party, in any event, owes the same to the petitioners, since the same was not a part of the subject matter of adjudication pertaining to the main dispute, but the cost as assessed by the arbitral tribunal.
However, it is made clear that the above observations are all tentative, made for the purpose of disposal of the present application only and will have no influence on the Additional District Judge at the time of hearing of the application under Section 34 of the Act of 1996.
In the facts of the case, C.O. No. 4242 of 2018 is allowed on contest, thereby setting aside the impugned order and granting stay of execution of the arbitral award-in-question till disposal of the application under Section 34 of the Act of 1996, bearing Miscellaneous Case (Arbitration) No. 7 of 2018, subject to the 7 condition that the present opposite party will deposit an amount of Rs.3 crore 32 lakh in the Court taking up the application under Section 34 of the Arbitration and Conciliation Act, 1996, in connection with the said miscellaneous case, within three weeks from date.
It is made clear that if such deposit is made, the concerned department/officer of the said Court will make arrangement for investment of the said amount, in a short-term interest bearing deposit, with any nationalised bank. The said amount and any interest which may accrue thereon, if deposited, will be subject to any order which may be passed thereon at the final disposal of the miscellaneous case. In the event of non-deposit of the aforesaid amount in its entirety, the stay granted hereby will stand automatically vacated without further reference to court. In the event the opposite party herein deposits at least an amount of Rs. 32 lakhs, only the money component of the award will remain stayed.
The Additional District Judge, Eighth Court at Alipore is requested to dispose of the aforesaid miscellaneous case as expeditiously as possible without granting any unnecessary adjournment to either side, positively within two working months from the date of communication of this order to the said Court. 8
Urgent certified website copies of this order, if applied for, be made available to the parties upon compliance of all requisite formalities.
(Sabyasachi Bhattacharyya, J.)