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2018 DIGILAW 407 (ORI)

Subrat Ranjan Dash v. ACC Ltd. , Bhubaneswar

2018-04-12

S.K.MISHRA

body2018
JUDGMENT S.K. MISHRA, J. - The petitioner, being the opposite party in Arbitration Petition No.156 of 2017 of the Court of learned District Judge, Dhenkanal assails the order passed by the learned Judge on 30.10.2017 allowing an application filed by the sole opposite party-petitioner, thereby passing an order of stay of the award made by the sole arbitrator in favour of the present petitioner. The impugned award has been delivered on 30.10.2017 directing the present opposite party to pay sum of Rs.48,60,891/- along with interest @ 9% p.a. w.e.f. 15.12.2010. As against that award, the sole opposite party i.e. ACC Ltd filed an application under Section 34 of the Arbitration & Conciliation Act, 1996, hereinafter referred to as the ‘Act’ for brevity in that application, it also filed an application under Section 36 of the Act for stay of the award. In his order, the learned District Judge has directed himself to consider the only and short question that arose before him that is whether the provision of Order XLI Rule 5 of the Code of Civil Procedure, 1908, hereinafter referred to as the ‘CPC’ for brevity, is applicable to a proceeding filed under Section 34 of the Act. The learned District Judge took into consideration the reported cases of Associates Builders v. Delhi Development authority, AIR 2015 SC 620 , P.R. Shah Shares and Stock Brokers Pvt. Ltd. vs. B.H.H. Securities Pvt. Ltd., (2012) 1 SCC 594 , wherein the Hon’ble Supreme Court has held that while dealing with a petition under Section 34 of the Act, the Court does not sit in appeal over the award of Arbitral Tribunal and the award can be challenged under Section 34 of the Act only on the grounds mentioned in Section 34 (2) of the Act. The learned District Judge also took into consideration the reported case of Kanpur Jal Sansthan and others vs. Bapu Constructions, (2015) 5 SCC 267 , wherein the Hon’ble Supreme Court has held that provision of Order XLI, Rule 5 of the CPC applies to proceeding before the learned District Judge but learned District Judge did not follow the judgment passed in the Kanpur Jal Sansthan (supra). But, having regard to the ratio decided in P.R. Shah Shares and Stock Brokers Pvt. Ltd. (Supra), the learned District Judge held that a petition under Section 34 of the Act is not an appeal. But, having regard to the ratio decided in P.R. Shah Shares and Stock Brokers Pvt. Ltd. (Supra), the learned District Judge held that a petition under Section 34 of the Act is not an appeal. Hence, the provision of Order XLI Rule 1 (3) and Rule 5 of the CPC will not be applicable. Without imposing any condition, the learned District Judge has stayed the award of the sole arbitrator. In advancing argument, Mr. Acharya, learned Counsel for the opposite party would argue that application under Section 34 of the Act not being an appeal imposing the condition available in Order XLI, Rule 1 (3) and Rule 5 of the CPC would be illegal. He relies upon the case of the Rendezvous Sports World vs. Board of Control for Cricket in India, 2016 SCC Online Bombay 6064. It is appropriate to take note of the said paragraph, which reads as follows : “62. I find that, the two decisions cited by Mr. Khambhata are perfectly applicable to the facts of the case on hand. The remedy available to an aggrieved award-debtor is under Section 34 of the Arbitration Act. This remedy has not been taken away by the Amending Act. A vested right available to the award-debtor would be only in the matter of challenge to the arbitral award which has remained intact. Section 36 of the Arbitration Act pertains only to the enforcement of an award and its executability. The original Section 34, imposed a disability on the award-holder in executing the award the award during pendency of the challenge to the award. This disability provided only an interim relief against execution of the award to the award-debtor, until his challenge to the award was decided. The right to interim relief cannot be a vested or accrued substantive right. In any case, even this interim advantage is not completely taken away. The disability imposed on the award-holder under original Section 36 was absolute. The award was simply not executable during pendency of the challenge to it. Under the amended Section 36, this disability has been only made relative. Firstly, what was available earlier on a platter has to be now asked for. Secondly, grant of it can be conditional.” 2. A plain reading of this paragraph leaves no doubt in the mind of the Court that after amendment of Section 36 of the Act, the situation has changed. Firstly, what was available earlier on a platter has to be now asked for. Secondly, grant of it can be conditional.” 2. A plain reading of this paragraph leaves no doubt in the mind of the Court that after amendment of Section 36 of the Act, the situation has changed. Previously, the provision, as it stood, only on filing an application under Section 34 of the Act would stay further proceeding of the execution of the award passed by the Arbitral Tribunal. Section 36 of the Act, prior to and after amendment, reads as follows: Pre-amendment. “36. ENFORCEMENT:- Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court. Post-amendment. 36. ENFORCEMENT. (1) Where the time for making an application to set aside arbitral award under Section 34 has expired, then, subject to provisions of Sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the Court. (2) Where an application to set aside the arbitral award has been filed in the Court under Section 34, the filing of such application shall not by itself render the award unenforceable, unless the Court grants an order of stay of operation of said arbitral award in accordance with the provisions of sub-section (3), on separate application made for that purpose. (3) Upon filing of an application, under Sub-section (2) for stay of 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: Providing 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 Code of Civil Procedure, 1908" 3. A plain reading of the proviso lead to the conclusion that the Court, while granting stay in the case of arbitral award for payment of money, have due regard to the provisions of grant of stay money degree under the provisions of Code of Civil Procedure, 1908. 4. In this connection, it is appropriate to take into consideration the provision of Rule 1 (3) and Rule 5 of the CPC of Order XLI of the Code. It is appropriate to take note of the exact words : “Order XLI Rule 1 (1) xxx xxx (2) xxx xxx (3) Where the appeal is against a decree for payment of money, the appellant shall, within such time as the Appellate Court may allow, deposit the amount disputed in the appeal or furnish such security in respect thereof as the Court may think fit.” Rule 5. Stay by Appellate Court – (1) An appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of appeal having been preferred from the decree, but the appellate Court may, for sufficient cause, order stay of execution of such decree. (2) Stay in court which passed the decree – Where an application is made for stay of execution of an appealable decree before the expiration of the time allowed for appealing there from, the Court which passed the decree may on sufficient cause being shown order the execution to be stayed. (3) No order for stay of execution shall be made under sub-rule (a) of sub-rule (2) unless the court making it is satisfied – (a) that substantial loss may result to the party applying for stay of execution unless the order is made; (b) that the application has been made without unreasonable delay; and (c) that security has been given by the applicant for the due performance of such decree of or as may ultimately be binding upon him. (4) Subject to the provisions of sub-rule (3), the Court may make an ex parte order for stay of execution pending the hearing of the application. (4) Subject to the provisions of sub-rule (3), the Court may make an ex parte order for stay of execution pending the hearing of the application. (5) Notwithstanding anything contained in the foregoing sub-rules, where the appellant fails to make the deposit or furnish the security specified in sub-rule (3) of rule 1, the Court shall not make an order staying the execution of the decree.” 5. Interpreting the aforesaid provision, this Court is of the opinion that if an application of stay of execution of the decree of an award is sought, then the aforesaid provision has to be complied with and it shall be within the jurisdiction of the Court in seisin of the matter to impose any reasonable conditions that may be deemed just and proper. My view gets support from the judgment rendered by the Hon’ble Supreme Court in the case of Board of Control for Cricket in India vs. Kochi Cricket Private Ltd. and Etc., which has been decided in Civil Appeal Nos.2879-2880 of 2018 on dated 18.03.2018. At paragraph 41 of the said judgment, the Hon’ble Supreme Court has held as follows : “41. This brings us to the manner of enforcement of a decree under the Code of Civil Procedure. A decree is enforced under the Code of Civil Procedure only through the execution process – see Order XXI of the Code of Civil Procedure. Also, Section 36 (3), as amended, refers to the provisions of the Code of Civil Procedure for grant of stay of a money decree. This, in turn, has reference to order LXI, Rule 5 of the Code of Civil Procedure, which appears under the Chapter heading. “Stay of Proceedings and of Execution”. This being so, it is clear that Section 36 refers to the execution of an award as if it were a decree, attracting the provisions of Order XXI and Order LXI, Rule 5 of the Code of Civil Procedure and would, therefore, be a provision dealing with the execution of arbitral awards.... xxx Thereafter, the Hon’ble Supreme Court has gone on to dismiss the appeal preferred by the BCCI. 6. xxx Thereafter, the Hon’ble Supreme Court has gone on to dismiss the appeal preferred by the BCCI. 6. Thus, in view of the aforesaid discussions, the Court is of the opinion that the learned District Judge has reached an erroneous conclusion that the provisions of Rule 5 of Order XLI of the Code, especially with respect to the imposition of condition will not be applicable to the present case has to be set aside. 7. Hence, the writ petition is allowed. The order dated 30.10.2017 passed in Arbitration Petition No.156/217 of the Court of learned District Judge, Dhenkanal is set aside. The matter is remanded back to the Court of learned District Judge, Dhenkanal for fresh adjudication, hearing and disposal of the application of stay. The parties are directed to appear before the said Court on 15.05.2018. The Writ Petition is disposed of accordingly. Issue urgent certified copy. Petition disposed of.