Jaipur Municipal Corporation v. Shilpa Construction
2018-09-14
ALOK SHARMA, MOHAMMAD RAFIQ
body2018
DigiLaw.ai
JUDGMENT : MOHAMMAD RAFIQ, J. 1. This appeal has been preferred by Jaipur Municipal Corporation through the Chief Executive Officer, Jaipur and Mayor (hereafter the Objector) assailing the order dated 17.8.2018 passed by the Commercial Court No. 1, Jaipur in the course of proceedings under Section 34 of the Indian Arbitration and Conciliation Act, 1996 (Act of 1996) against the award dated 18.7.2016 passed by the Arbitrator. The Arbitrator by his award held the claimant entitled to a sum of Rs.4,66,40,116/- with interest @ 12% per annum effective the date of the award. 2. The objections under Section 34 of the Act of 1996 against the award dated 18.7.2016 originally filed in the Court of District and Sessions Judge, Jaipur Metropolitan, Jaipur, were transferred to the Court of Additional District Judge No. 1, Jaipur Metropolitan City, Jaipur which Court after hearing the application of the appellants by order dated 14.2.2017 held that the respondent was not entitled to execute the award. The respondent then filed a writ petition being S.B. Civil Writ Petition No. 3297/2017 against the order aforesaid, which was dismissed by this Court. The matter was thereafter taken to the Supreme Court by the respondent. The Supreme Court vide order dated 15.5.2018 set aside both the orders of the Commercial Court/Additional District & Sessions Judge, Metropolitan and that of this Court, in view of the judgment of Board of Control for Cricket in India v. Kochi Cricket Pvt. Ltd. etc. reported in (2018) 4 Scale 502 and directed the court below to hear the arguments on the application u/s. 34 as also on the stay application within four months. 3. It may be noted herein that the Supreme Court in Kochi Cricket Pvt. Ltd, supra has taken the view that there would be no automatic stay on the execution of the award of by mere filing objections even in cases arising out of disputes prior to the Arbitration and Conciliation (Amendment) Act, 2015, which came into force with effect from 23.10.2015. In the meantime, Commercial Courts have been established in the State of Rajasthan and the present case has been transferred to Commercial Court No. 1, Jaipur.
In the meantime, Commercial Courts have been established in the State of Rajasthan and the present case has been transferred to Commercial Court No. 1, Jaipur. The learned Commercial Court while hearing the application filed by the petitioner/objector has by the impugned judgment passed a conditional order of stay namely; that the operation of the award dated 18.7.2016 would remain stayed till disposal of the objections, if the objector Jaipur Nagar Nigam deposited 25% amount of the award in the Court or furnished a bank draft of 25% of the award amount to the claimant within 15 days against a bank guarantee as security all subject to the outcome of the objection petition. The Court below further directed that if the objector did not comply with its interim order, the award in issue could be executed. In taking that view, the Commercial Court has relied on the judgment of the Supreme Court in Malwa Strip Pvt. Ltd. v. Jyoti Ltd., (2009) 2 SCC 426 : AIR 2009 SC page 1581 and Kayamuddin Shamsuddin Khan v. SBI, (1998) 8 SCC 676 . 4. Dr. Prakash Chandra Jain, counsel for the objector has argued that the Commercial Court ought to have heard the main application u/s. 34 itself and finally decided the objections filed. It has however heard only the application for stay. Dr. PC Jain submitted that Order 41 Rule 5 CPC was not attracted to the present case arising out of the Act of 1996. The compliance of the award even in part and even subject to condition of security by way of a bank guarantee could not to be insisted against the Jaipur Municipal Corporation in view of Order 27 Rule 8A CPC. Dr. PC Jain submitted that the Municipal Council, a statutory body, would fall within the purview of “Government” and therefore it cannot be required to furnish a bank guarantee or security when it challenges a money decree as the award dated 18.7.2016 is. It was submitted that the objector was ready and willing to argue the main objection petition filed under Section 34 of the Arbitration Act itself and the Commercial Court has wrongly recorded in its impugned order that the counsel for both the parties were not ready to argue the main application u/s. 34 and were prepared to advance arguments only on the stay application. 5.
5. Per contra, Shri Rahul Kamwar, learned counsel for the respondent opposed the appeal and citing the judgment of the Delhi High Court in HPL (India) Ltd. v. ORG Enterprises and judgment of this Court in Shri Balaji Industrial Products Ltd. v. AIA Engineering Ltd., D.B. Civil Writ Petition No. 16794/2017 dated 25.10.2017 submitted that the present appeal having been filed against the interlocutory order passed on the interim stay application pending final adjudication on the objections u/s. 34 is not maintainable. The provision for appeal under the Act of 1996 does not so provide. Further after amendment of Section 34 vide Arbitration and Conciliation (Amendment) Act, 2015 with effect from 23.10.2015, the Supreme Court in Board of Control for Cricket in India, supra has ruled that there would be no automatic stay even in cases arising prior thereto. Mr. Rahul Kamwar submitted that therefore to argue as the counsel for the objector did, that the Commercial Court had no jurisdiction to pass the impugned order or erred in law in insisting even on conditional deposit of 25% of the awarded sum, is wholly without any substance. The matter lay wholly within the civil court's discretion which in the facts of the case has been reasonably and judiciously exercised as the award under challenge was effectively a money decree. 6. Heard. Considered. 7. In our view, the argument that the Jaipur Municipal Corporation does falls within the purview of “Government” referred to in Order 27 Rule 8A CPC is wholly untenable. The Supreme Court in Kanpur Jal Sansthan v. Bapu Constructions, (2015) 5 SCC 267 , has held that the word “Government” within the meaning of Order 27 Rule 8A CPC only means Government proper i.e. Central Government or State Government and does not include an instrumentality or agency of the State or a statutory body. Appellant Jal Sansthan in that case albeit held to an extended wing or agency of the State was yet not treated as “Government” within the meaning of Order 27 Rule 8A of CPC. That defence is not available to the objector. 8. In the instant case by the impugned order the objector has been required to pay 25% of the award amount (wholly secured) conditionally to enjoy stay on the execution of the remainder award dated 18.7.2016 which is in the nature of a money decree.
That defence is not available to the objector. 8. In the instant case by the impugned order the objector has been required to pay 25% of the award amount (wholly secured) conditionally to enjoy stay on the execution of the remainder award dated 18.7.2016 which is in the nature of a money decree. Section 36(2) of the Amendment Act of 2016 provides that where an application to set aside an arbitral award has been filed in the Court under Section 34, the filing of such an application shall not by itself render that award unforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose. Sub-section (3) of Section 36 provides that upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing. This provision very importantly has been subjected to a proviso, which inter alia stipulates that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908. The award of the Arbitrator thus even while the objection thereof under Section 34 are pending consideration, shall have to be for the purpose of execution treated as money decree and it would be subject at least analogously to the provisions of Order 41 Rule 5 CPC as they apply to any other money decree. This was the position even prior to amendment aforesaid as was held by the Supreme Court in Kanpur Jal Sansthan (supra) that Order 41 Rule 5 CPC in principle is applicable even to arbitral awards. Further the Supreme Court while relying on the earlier judgment in Pandey & Co.
This was the position even prior to amendment aforesaid as was held by the Supreme Court in Kanpur Jal Sansthan (supra) that Order 41 Rule 5 CPC in principle is applicable even to arbitral awards. Further the Supreme Court while relying on the earlier judgment in Pandey & Co. Builders (P) Ltd. v. State of Bihar, (2007) 1 SCC 467 , has held that Order 41 Rule 5 CPC in principle is also applicable to an appeal preferred before the High Court u/s. 37 of the Arbitration Act, for there was no provision in the 1996 Act prohibiting the appellate court from taking recourse to the underlying principles of CPC as long as such recourse was not in conflict with the spirit and principles engrafted in the 1996 Act. 9. In consequence of the above discussion, despite the objections of the claimant to the maintainability of this appeal against the interlocutory order passed by the Commercial Court, which objection we are presently eschewing having examined the merits of the case, we are not inclined to interfere with the impugned order as it is reflective of the discretion of the court below which has in the facts of the case been judiciously exercised. There is no infirmity in the impugned order. The appeal is dismissed.