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2016 DIGILAW 24 (MEG)

Union of India v. Krishna Enterprise

2016-09-08

DINESH MAHESHWARI

body2016
ORDER : Dinesh Maheshwari, J. By way of this revision petition, the Chief Engineer, Military Engineering Service, Shillong Zone and the Garrison Engineer, Military Engineering Service, Shillong Division, East Khasi Hills District, Meghalaya (hereinafter referred to as 'the petitioners'/'the judgment-debtors'), have questioned the legality of proceedings in (ARB) Execution Case No.1 (T) of 2016 by the Court of Additional Deputy Commissioner (Judicial), Shillong for execution of an arbitral award made in favour of the non-petitioners (hereinafter also referred to as 'the decree-holders'). 2. The relevant background aspects of the matter could be noticed as follows: Under a contract dated 28.09.2006 between the parties, the non-petitioners herein were to render periodical services to OTM ACCN at Happy Valley under the Garrison Engineer, Shillong. The disputes having arisen, matter was referred to arbitration; and ultimately, the sole arbitrator made an award dated 17.12.2015 in favour of the non-petitioners in the following terms:- ".....Thus the Claimant's total due comes to (Rs.3,41,092.35p + Rs.75000) = Rs.4,16,092.35p/-. The Respondents shall pay the said due amount of Rs.4,16,092.35p/- to the Claimant within a period of 3 (three) months from the date of the award with interest @10% per annum from the date of completion of work i.e., 11-06-2007 till realization of the entire due amount failing which the amount shall carry interest @15% per annum from the expiry of three months till realization of the whole amount." 3. The arbitrator further held the non-petitioners entitled to the cost of proceedings quantified at Rs.50,000/-. 4. It appears that on 11.03.2016, the present petitioners made an application under Section 33 of the Arbitration and Conciliation Act, 1996 ['the Act of 1996'] seeking rectification of the award but, on 01.04.2016, the learned Arbitrator rejected the said application while observing that the same was barred by time and was misconceived too, because the petitioners were seeking review of the award on merits, which was not permissible in law. 5. 5. It is noticed that on 01.04.2016 itself, the present non-petitioners made an application seeking execution of the award aforesaid against 'Union of India represented by Chief Engineer, Military Engineering Service, Shillong Zone, Spread Eagle Falls, Shillong' by way of "attachment of the moveable properties and assets including vehicles upto the satisfaction of the decreetal amount that may be found in the office of the Judgment Debtor and also by attachment of bank accounts of the Judgment Debtor with the State Bank of India, Shillong Branch, Shillong." On the application so filed, the learned Executing Court recorded the following order on 01.04.2016:- "01.04.2016 Record put up. M/s Krishna Enterprise has filed the execution of the award dated 17.12.2015 which has been passed in Arbitration proceeding No.2/2014 passed by the sole arbitrator for satisfaction of the decreetal amount that may be found in the office of the Judgment Debtor which is Union of India represented by Chief Engineer, Shillong Zone, Spread Eagle Falls. Let the decree holder take steps for the execution to be taken up by the bailiff of the Court. Fix 17.05.2016 for report on the execution." 6. Thereafter, on 06.04.2016, without any other order and without any other proceeding, the learned Additional Deputy Commissioner (Judicial), Shillong issued the warrant of attachment to the Bailiff of the Court under Rule 30 Order 21 of the Code of Civil Procedure ['CPC'] while stating as under:- "Whereas the Judgment Debtors has been ordered under Award/Decree of the Arbitrator for necessary Execution of the Award/Decree passed on 17.12.2015 in Arbitration proceeding No.2/2014 to pay to the Decree Holder the sum of Rs.10,71,847.79 as noted in the margin and WHEREAS the said amount of Rs.10,71,847.79 has not been paid. AWARD/DECREE RS. P Principal With interest upto 17.12.2015 9,64,971.35 Cost 50000 Interest From 17.12.2015 to 17.03.2016 @ 10% 25374.28 Interest From 17.03.2016 to 31.03.2016 6502.16 Cost of Execution 25000 Total 10,71,847.79 These are to command you to attach the movable property of the said Judgment Debtor as set forth in the schedule here into annexed or which shall be pointed out to you by the said Decree Holder sufficient to cover the amount of this warrant and unless the said Judgment Debtor shall pay to you the said sum of Rs.10,71,847.79 together with Rs.100 the cost of this attachment to hold the same until further orders from this Court. You are further commanded to return this warrant on or before the 17th day of May 2016 with an endorsement certifying the day on which and the manner in which it has been executed or why it has not been executed. Given under my hand and the seal of the Court, this 6th day of April, 2016. Sd/- Additional Deputy Commissioner (Judicial) East Khasi Hills." 7. On the same date i.e., 06.04.2016, simultaneously and along with the aforesaid warrant, the learned Additional Deputy Commissioner (Judicial), Shillong also sent a communication to the Branch Manager, State Bank of India, Main Branch, Shillong, obligating him to attach the account maintained in the name of the Chief Engineer, Shillong Zone, S.E. Falls, Shillong while stating as under:- "To, The Branch Manager, State Bank of India, Main Branch, Shillong East Khasi Hills District, Meghalaya. You are directed to attach the Bank Account No.01000050868 in the State Bank of India, Shillong, Main Branch, in the name of Chief Engineer, Shillong Zone, SE falls, Shillong, in connection with the above-mentioned case. Given under my hand and the seal of this Court today, the 6th day of April 2016. Sd/- Additional Deputy Commissioner (Judicial) East Khasi Hills." 8. It appears that in compliance of the warrant of attachment so issued by the learned Additional Deputy (Judicial), Shillong, the bank concerned proceeded to put on hold the Bank Account in question, allegedly for the referred amount of Rs.10,71,847.79 on 19.04.2016. 9. Aggrieved of the proceedings so adopted and warrant of attachment so issued, the petitioners preferred this revision petition questioning the legality and propriety of the proceedings with the submissions, inter alia, that the Executing Court acted wholly illegally in directly issuing the warrant of attachment of the entire bank account of the petitioners without any specific order and without appreciating that attachment of the entire bank account in the execution proceedings against the Union of India and its officers would cause serious inconvenience and may hamper other works of public and national importance. 10. 10. At the initial stage of consideration of this revision petition, it was given out on behalf of the petitioners that they were seeking modification of the award in question but, in any case, they were ready to make payment of the amount that would otherwise be payable after leaving aside the amount referred to in the application under Section 33 of the Act of 1996; and a cheque bearing number 415733, drawn on the State Bank of India, Shillong Branch for an amount of Rs.7,48,520/- was indeed handed over before the Court on 05.05.2016 to the petitioner No.2. In the totality of circumstances, this Court found it appropriate and hence ordered that the attachment of the bank account of the petitioners shall stand withdrawn immediately. Though, with such an order, this revision petition could have been disposed of at that stage itself, but looking to the issues concerning legality and validity of the proceedings in such an execution case, this petition was kept pending and record of (ARB) Execution Case No.1 (T) of 2016 was requisitioned. On 05.05.2016, this Court observed and directed as under:- 05.05.2016 By way of this revision petition, the Chief Engineer, Military Engineering Service, Shillong Zone and the Garrison Engineer, Military Engineering Service, Shillong Division, East Khasi Hills District, Meghalaya, have questioned the proceedings as adopted by the learned Additional Deputy Commissioner (Judicial), Shillong in (ARB) Execution Case No.1 (T) of 2016 wherein, for the purpose of execution of an arbitral award, straightaway an order of attachment of the petitioners' Bank Account as maintained with the State Bank of India, Main Branch, Shillong has been issued. It is submitted that even when the respondents prayed for execution of the arbitral award, the learned Executing Court on the one hand in its order dated 01.04.2016, only took note of the prayer of the applicants and merely ordered the decree holder to take steps for execution to be taken up by the bailiff of the Court but thereafter, without any specific order from the Court, directly the warrant of attachment of the bank account was issued that has resulted in serious administrative difficulties. It is also submitted that while taking up the execution proceeding against the Union of India and its officers, the learned Executing Court ought to have examined that total attachment of the entire bank account of the petitioners would cause serious inconvenience and may hamper the other works of public and national importance. Upon taking up this matter yesterday i.e., 04.05.2016, this Court posed question to the learned counsel for the petitioners, if they were ready to make payment at least of the admitted amount that could be considered at present payable even going by the contents of the application under Section 33 of the Arbitration and Conciliation Act,1996, as moved by the petitioners. Learned counsel for the petitioners prayed for time to complete his instructions. Today, the learned counsel for the petitioners has handed over a cheque bearing No.415733, drawn today on the State Bank of India, Shillong Branch for a sum of Rs.7,48,520/- in the name of the respondent-M/s Krishna Enterprise, which according to the petitioners, would be payable if their application under Section 33 were to be accepted and if any other contention against the arbitral award is not accepted. The cheque has been accepted by the petitioner No.2-Shri Parmode Sharma, Proprietor, M/s Krishna Enterprise, present in the Court, who is identified by his counsel. A copy of the cheque and copy of the receipt be placed on the record of this petition. When the petitioners have made the payment of the aforesaid amount, of course, without prejudice to the submissions otherwise sought to be made in relation to the award in question, and in relation to the execution proceedings; and similarly, the respondent No.2 has accepted the same without prejudice to the submissions sought to be made by him, this Court is clearly of the view that the attachment of the bank account of the petitioners deserve to be withdrawn immediately. Ordered accordingly. Though with the aforesaid order, this Court would have considered disposal of this revision petition, but the learned counsel for the parties have submitted, and rightly so, that the larger issues concerning appropriate and proper proceedings in such an execution case being involved, the contention on behalf of the petitioners may be examined for pronouncement. In the totality of circumstances, this revision petition is admitted for consideration and ordered to be posted for hearing. The respondents being represented by Mr. In the totality of circumstances, this revision petition is admitted for consideration and ordered to be posted for hearing. The respondents being represented by Mr. S Sen, notice need not be issued. List this matter for hearing on 30.05.2016, as prayed. In the meantime, the record of (ARB) Execution Case No.1 (T) of 2016 be requisitioned from the Court of the Additional Deputy Commissioner, Shillong." 11. At the final hearing of the matter, learned counsel for the petitioners has contended that the Executing Court had acted wholly illegally while dealing with the execution application moved by the non-petitioners, particularly when it had failed to consider the requirements of Rule 17 Order 21 of the Code of Civil Procedure. Learned counsel submitted that the Executing Court ought to have recorded its satisfaction about compliance of the relevant requirements of Rules 11 to 14 of Order 21 CPC; and ought to have also ascertained the actual money payable under the decree (award) in question. Learned counsel submitted that the Executing Court acted wholly illegally in the present matter in issuing a blanket attachment order of the entire bank account, without ascertaining the amount due on the award in question and without limiting the attachment to the amount recoverable. 12. Learned counsel for the non-petitioners, in all fairness, has not contended against the submissions made on behalf of the petitioners; and frankly submitted that the procedure as adopted by the Executing Court cannot be said to be conforming to the requirements of law. 13. Having given thoughtful consideration to the submissions made and having examined the record, this Court is constrained to observe that the manner of dealing with the present execution case by the learned Additional Deputy Commissioner (Judicial), Shillong cannot be endorsed. 14. A look at Rule 17 Order 21 of the Code of Civil Procedure makes it clear that there are certain fundamental duties cast on a Court upon receiving an application for execution. The said Rule 17 Order 21 CPC reads as under:- "17. 14. A look at Rule 17 Order 21 of the Code of Civil Procedure makes it clear that there are certain fundamental duties cast on a Court upon receiving an application for execution. The said Rule 17 Order 21 CPC reads as under:- "17. Procedure on receiving application for execution of decree.- (1) On receiving an application for the execution of a decree as provided by rule 11, sub-rule (2), the Court shall ascertain whether such of the requirements of rules 11 to 14 as may be applicable to the case have been complied with; and, if they have not been complied with, the Court shall allow the defect to be remedied then and there or within a time to be fixed by it. (1-A) If the defect is not so remedied, the Court shall reject the application: Provided that where, in the opinion of the Court, there is some inaccuracy as to the amount referred to in clauses (g) and (h) of sub-rule (2) of rule 11, the Court shall, instead of rejecting the application, decide provisionally (without prejudice to the right of the parties to have the amount finally decided in the course of the proceedings) the amount and make an order for the execution of the decree for the amount so provisionally decided. (2) Where an application is amended under the provisions of sub-rule (1), it shall be deemed to have been an application in accordance with law and presented on the date when it was first presented. (3) Every amendment made under this rule shall be signed or initialled by the Judge. (4) When the application is admitted, the Court shall enter in the proper register a note of the application and the date on which it was made, and shall, subject to the provisions hereinafter contained, order execution of the decree according to the nature of the application: Provided that, in the case of a decree for the payment of money, the value of the property attached shall, as nearly as may be, correspond with the amount due under the decree." (underlining supplied) 15. A bare look at the record of present case makes it clear that when the execution application was filed on 01.04.2016, the learned Additional Deputy Commissioner (Judicial), Shillong only recorded the fact of moving of the application for execution of the award dated 17.12.2015 and thereafter, merely said that the decree-holders would 'take steps for the execution to be taken up by the bailiff of the Court.' The order dated 01.04.2016 does nowhere reflect that after receiving the application for execution, the Executing Court at all examined the record and arrived at the satisfaction that the application was in order, after ascertaining as to whether the applicable requirements of Rules 11 to 14 of Order 21 had been complied with and the amount claimed was indeed due. Moreover, there had been no order passed by the Executing Court for attachment of any particular property or bank account. For the purpose of passing such an order, it was required of the Court that the amount due under the award was ascertained and then, care was taken to attach only that part of the account, which was corresponding with the amount due, as nearly as possible. 16. It is also noticed from the record that on 06.04.2016, the learned Additional Deputy Commissioner (Judicial), Shillong proceeded to issue a warrant of attachment of the bank account under Rule 30 Order 21 CPC, while reproducing the alleged due amount and particulars as stated by the present non-petitioners in the application, as if the said amount of Rs.10,71,847.79 was indeed found due against the petitioners. The learned Additional Deputy Commissioner (Judicial), Shillong did not examine if the amount of principal with interest as also the other amount of interest were calculated properly. Even while leaving this aspect aside, it is evident on the face of the record that the decree-holders (present non-petitioners) claimed an amount of Rs.25,000/- towards cost of execution. This amount of Rs.25,000/- is not emanating from the award in question. As to on what basis and as to how this amount towards cost of execution was also considered recoverable had not been specified by the decree-holders nor was it specified by the Executing Court. To cap it all, the learned Additional Deputy Commissioner (Judicial), Shillong, straightaway directed the Branch Manager of the bank concerned to attach the bank account of the petitioners under a separate communication dated 06.04.2016, as reproduced hereinabove. To cap it all, the learned Additional Deputy Commissioner (Judicial), Shillong, straightaway directed the Branch Manager of the bank concerned to attach the bank account of the petitioners under a separate communication dated 06.04.2016, as reproduced hereinabove. Under this command, literally read, the entire bank account of the petitioners was to be attached. Though learned counsel for the non-petitioners/decree-holders has attempted to refer to an endorsement of the bank that the said account was put on hold only for a sum of Rs.10,71,847.79, but it was neither specified by the Court nor by the bank that only the said amount of Rs.10,71,847.79 was put on hold and not the entire account. 17. All the aforesaid aspects of ambiguities, leading to the administrative difficulties of the petitioners, could have been avoided (and ought to have been avoided), if the concerned Executing Court had looked into the award, the execution application and the requirements of law. The fundamental jurisdictional error, apparent on the face of record in the present case, has been that the learned Executing Court neither recorded its satisfaction as required by Rule 17 Order 21 of the Code of Civil Procedure nor passed any specific order for issuance of warrant of attachment under Rule 30 Order 21 of the Code of Civil Procedure. The warrant and communication were issued by the Executing Court on 06.04.2016 as if it were dealing with some administrative proceedings. The procedure as adopted in this matter, is, therefore, required to be disapproved. 18. Having made the observations foregoing, this Court is of the view that in the facts and circumstances of the present case, where the petitioners have made part payment against the alleged dues, they may be permitted to make the submissions before the Executing Court as regards discharge or satisfaction of the award in question while leaving the matter to be dealt with further by the Executing Court in accordance with law. 19. Accordingly, this petition is allowed in the manner that the interim order dated 05.05.2016 withdrawing the attachment of the bank account of the petitioners is made absolute until further orders of the Executing Court. The petitioners are permitted to make submissions as regards discharge or satisfaction of the award in question and it shall be required of the Executing Court to determine the relevant questions in accordance with law. The petitioners are permitted to make submissions as regards discharge or satisfaction of the award in question and it shall be required of the Executing Court to determine the relevant questions in accordance with law. Obviously, at the time of passing of the final order in execution case, the payment made by the petitioners to the decree holders in this Court i.e., a sum of Rs.7,48,520/- by way of Cheque No. 415733 shall be duly taken into consideration and necessary adjustment shall be provided in accordance with law. 20. The record of Executing Court be returned immediately. 21. No order as to costs of this petition.