Telangana High Court
Ism Focal Point vs M/S Medico Abroad on 16 March, 2020
Author: M.S.Ramachandra Rao
Bench: M.S. Ramachandra Rao
HONOURABLE SRI JUSTICE M.S. RAMACHANDRA RAO
AND
HONOURABLE SRI JUSTICE T. AMARNATH GOUD
CIVIL REVISION PETITION NOS.394 AND 395 OF 2020
COMMON ORDER:(Per Hon'ble Sri Justice M.S.Ramachandra Rao) Civil Revision Petition No.394 of 2020 is filed under Article 227 of the Constitution of India challenging the order dt.07.11.2019 passed in Interlocutory Application No.735 of 2019 in A.O.P.No.790 of 2015 on the file of XI Additional Chief Judge, City Civil Court, at Hyderabad.
2. The said AOP had been filed under Section 34 of the Arbitration and Conciliation Act, 1996 by the petitioner challenging Arbitral Award dt.18.12.2010 passed by the learned Arbitrator in a dispute arising out of a Memorandum of Understanding dt.02.07.2007 between the parties.
3. In the said AOP, the petitioner had filed Interlocutory Application No.735 of 2019 under Section 36 of the said Act to stay all further proceedings pursuant to the said award and also to stay the attachment of the properties in EXE-1046-2019 titled as M/s. Medico Abroad Vs. M/s. ISM Focal Point, pending the said AOP.
4. After hearing the contentions of both sides, the said Interlocutory Application No.735 of 2019 was allowed on 07.11.2019 and stay of all proceedings pursuant to the Arbitral Award ::2:: MSR,J & TA,J crp_394&395_2020 dt.18.12.2010 was granted till disposal of the above AOP.No.790 of 2015 on condition of deposit of 1/4th of the award amount within one month from the date of the said order.
5. This is assailed in Civil Revision Petition No.394 of 2020.
6. After Interlocutory Application No.735 of 2019 was allowed, Interlocutory Application No.1125 of 2019 in Interlocutory Application No.735 of 2019 in AOP.No.790 of 2015 was filed by the petitioner to permit him to furnish Bank Guarantee to the extent of 1/4th amount of the amount awarded in lieu of deposit of the amount as directed in the order dt.07.11.2019 passed in Interlocutory Application No.735 of 2019 in A.O.P.No.790 of 2015 on the file of XI Additional Chief Judge, City Civil Court, at Hyderabad.
7. The said Interlocutory Application No.1125 of 2019 was dismissed by the XI Additional Chief Judge, City Civil Court, Hyderabad on 11.12.2019.
8. This was questioned in Civil Revision Petition No.395 of 2020 by the petitioner.
The contentions of the petitioner
9. The counsel for petitioner contended that the Arbitral Award passed by the learned Arbitrator between the parties on 18.12.2010 suffers from various errors including fraud played by the respondent on the Arbitrator and that the Arbitrator was got appointed by the respondent by approaching this Court in Arbitration Application No.1 ::3:: MSR,J & TA,J crp_394&395_2020 of 2010 by giving a non-existent address. Reliance is also placed on certain proceedings initiated by the respondent in the High Court at Delhi and in the Supreme Court of India apart from the Court of Additional District and Sessions Judge, at Gurugram.
10. It is further contended by the counsel for petitioner that the petitioner is only an individual and the petitioner entity is not a company, but the respondent had described the petitioner as a 'Managing Director' of the non-existent Company by name M/s. ISN Focal Point and obtained an arbitral award which is patently illegal. The stand of the respondent
11. The respondent filed a counter in I.A.No.735 of 2019 in AOP.No.790 of 2015 denying that it had played any fraud on the petitioner.
12. It also contended that it had got sole arbitrator appointed under Section 11 of the Act by approaching this Court; and that the arbitral award was passed by the learned arbitrator on 18.12.2010 and the said Award did not suffer from any error.
13. It also contended that validity of the Award can only be decided in the main O.P., but not in the I.A.No.735 of 2019 in AOP.No.790 of 2015.
14. After referring to the contentions of both sides, the Court below allowed I.A.No.735 of 2019 in AOP.No.790 of 2015 on 07.11.2019, and directed the petitioner to deposit 1/4th amount of the amount ::4:: MSR,J & TA,J crp_394&395_2020 awarded within one (01) month as a condition precedent for grant of stay of all further proceedings pursuant to the Arbitral Award dt.18.12.2010.
It referred to the plea of petitioner in the application under Section 34 of the Act to set aside the said Award and in particular, the plea of fraud raised by the petitioner about the respondent mentioning false address and obtaining ex parte arbitration award.
It referred to the amendment made in 2015 by Act 3 of 2016 requiring an applicant challenging an award under Section 34 of the Act to obtain an order of stay specifically and held that it is empowered to impose conditions while granting stay of all further proceedings in Arbitral proceedings; that it was a fit case to grant such stay of execution of proceedings pursuant to the Arbitral Award dt.18.12.2010 on condition of deposit of 1/4th amount of the amount awarded within one (01) month from the date of the order failing which stay order would stand vacated.
15. In Interlocutory Application No.1125 of 2019, which was decided on 11.12.2019, the Court below observed that the petitioner did not chose to prefer any Revision against the order dt.07.11.2019 passed in I.A.No.735 of 2019 in AOP.No.790 of 2015; and without challenging the said order in this Court, the petitioner could not have sought for modification of the said order.
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It also observed that petitioner is only a representative of the petitioner-Company and he cannot be permitted to furnish a Bank Guarantee in his personal capacity and he cannot be permitted to deposit the awarded amount.
16. The counsel for respondents reiterated the contentions raised by them in the Court below in Interlocutory Application No.735 of 2019 and Interlocutory Application No.1125 of 2019. The consideration by the Court
17. No doubt, there is an ex parte award dt.18.12.2010 passed against the petitioner which has been challenged in AOP.No.790 of 2015 by the petitioner before the XI Additional Chief Judge, City Civil Court, at Hyderabad.
18. One of the contentions raised therein by the petitioner is also that the petitioner is not a registered company and the deponent of the affidavit filed in these applications is not the Managing Director of the petitioner and the Award itself was obtained by giving a wrong address of the petitioner and the award is vitiated by fraud.
19. Undoubtedly, this is a plea which is required to be gone into in the application under Section 34 of the Act filed by the petitioner and it would be improper to express any opinion at this stage by this Court, or by the Court below on the said aspect.
20. In Interlocutory Application No.735 of 2019, the Court below had taken into account the said plea and held that it was a fit case to ::6:: MSR,J & TA,J crp_394&395_2020 grant stay of all further proceedings pursuant to the said Award on condition of deposit of 1/4th amount of the amount Awarded within one month from the date of the said order, and also incorporating a default clause.
21. In the facts and circumstances of the case, we are of the opinion that the Court below has correctly exercised its discretion and has granted stay of execution of the Arbitral Award dt.18.12.2010 by permitting the petitioner to deposit 1/4th amount of the amount awarded within one month from the date of the order, and we do not wish to interfere with the same since we do not find that the exercise of discretion by the Court below is in any away perverse or erroneous.
22. We are also of the view that the petitioner is not entitled to give a bank guarantee in lieu of such deposit as the respondent, having succeeded in the arbitration, cannot be totally denied the fruits of the award since it would take some more time for the AOP to be decided.
23. So we agree with the Court below insofar as the Court below also refused to permit the petitioner to furnish a Bank Guarantee.
24. However, we are inclined to grant further time to the petitioner to make the deposit of the amount directed to be deposited in the order dt.07.11.2019 passed in Interlocutory Application No.735 of 2019 in A.O.P.No.790 of 2015 on the file of XI Additional Chief Judge, City Civil Court, at Hyderabad, and dispose of Civil Revision Petition No.394 of 2020 directing that there shall be stay of all further ::7:: MSR,J & TA,J crp_394&395_2020 proceedings of the arbitral Award dt.18.12.2010 till disposal of the AOP.No.790 of 2015 on condition of petitioner depositing 1/4th amount of the amount awarded within one month from the date of receipt of copy of this order, failing which the said order would stand vacated.
25. Keeping in view the contention of petitioner that petitioner entity itself is not a registered company, and it is not possible for the petitioner entity to deposit the award amount, we permit the SPA holder of the petitioner to make the deposit of the 1/4th amount of the amount awarded as directed in this order within the time stipulated above and we permit the respondent to withdraw the same without furnishing any security.
26. Accordingly, the Civil Revision Petitions are disposed of. No order as to costs.
27. As a sequel, miscellaneous petitions pending if any, in these Revisions, shall stand closed.
____________________________ M.S.RAMACHANDRA RAO, J _______________________ T.AMARNATH GOUD, J Date: 16-03-2020 ndr