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IN THE HIGH COURT OF CALCUTTA
I.P. MUKERJI, J.
Balkrishna Garodia – Appellant
Vs.
Nikunj Kumar Lohia & Ors. – Respondent
EC No. 332 of 2010, EC No. 402 of 2011
Decided On : 31-08-2015
EXECUTION APPLICATION - ARBITRAL AWARD - ENFORCEMENT - LIMITATION - "DEEMED" TRANSFER OF SHARES - EFFECT - EXECUTION OF AWARD - SCOPE - MANDATORY INJUNCTION - LIMITATION PERIOD.
Fact of the Case:
Execution applications were filed to enforce an arbitral award dated 3rd October, 1983, made a rule of the court on 21st September, 1984. The award declared that 3843 equity shares of the Fabric company and 4,000 equity shares of the Fibre company, along with blank signed transfer deeds, were deemed to have been transferred to the petitioner's group. The petitioner argued that the respondents had not fulfilled their obligations under the award and that the execution application was a continuation of a proceeding instituted in 1995 by one of the members of the petitioner's group.
Finding of the Court:
The court held that the award recorded a concluded act of physical delivery of the shares along with signed blank transfer forms and that it was coupled with the declaration that the shares were deemed to have been transferred to the second group. The court further held that the award did not provide that the petitioner's group would be put in possession of the business premises, that the members of the first group would vacate them, and that the petitioner's group would start running the business. The court also held that the execution application was barred by limitation as it was filed more than 12 years after the passing of the award and decree.
Issues: 1. Whether the execution application was barred by limitation? 2. Whether the award provided for reciprocal promises to be performed by the parties? 3. Whether the subject matter of the award and decree remained the same after passage of 32 years?
Ratio Decidendi: 1. The court held that the execution application was barred by limitation as it was filed more than 12 years after the passing of the award and decree. The court reasoned that the award and decree envisaged positive acts to be done by the parties, which amounted to a decree of mandatory injunction for which the period of limitation was three years from the date of the decree under Article 135 of the Limitation Act, 1963. 2. The court held that the award provided for reciprocal promises to be performed by the parties and that the respondents had performed their part of the obligations by handing over the share certificates and the signed blank share transfer forms in respect of the Fabric and Fibre companies to the petitioner's group. Therefore, the court held that no obligations were outstanding. 3. The court held that the subject matter of the award and decree did not remain the same after passage of 32 years. The court reasoned that the petitioner or his group had deliberately not chosen to take control of the Fabric and Fibre companies and that the respondents have retained control. The court further held that the debts of the company and those receivable by the company do not remain the same and that the entire complexion of these two companies has undergone a change in these 32 years.
Final Decision: The execution applications were dismissed on merits and as barred by limitation.
I.P. MUKERJI, J.
1. There are two execution applications for enforcement of an arbitral award dated 3rd October, 1983. It was passed by two Joint Arbitrators chosen by the parties and approved by this court by an order dated 10th August, 1983. This award was made a rule of this court on 21st September, 1984. In the proceedings before this court in 1983 and before the learned arbitrators there were two sets of parties divided into two groups. Hari Prasad Lohia and Narayan Prasad Garodia constituted the first group. Omprakash Bhartia, Haricharan Garodia and Bal Krishna Garodia constituted the second group. The petitioner belongs to the second group.
2. The award proceeds as follows. Three companies were involved. East India Cotton Manufacturing Co. Ltd. referred to as the “Cotton company”, Fibre Processors Pvt. Ltd. referred to as the “Fibre company” and East India Fabrics Manufacturing Co. Ltd. referred to as the “Fabric company”. Before the award, the Fibre and Fabric companies belonged to the first group. 3843 equity shares of the Fabric company and 4,000 equity shares of the Fibre company together with the blank signed transfer deeds were in the possession of the Joint Arbitrators. The award recorded that the shares and transfer deeds were handed over to the second group. The award further said. “We adjudge and hold that the said 3843 equity shares in the said Fabric company and the said 4000 equity shares in the said Fibre company shall be deemed to have been transferred by the first group to the second group or its nominee or nominees.” All the directors of the Fabric and the Fibre companies would have to resign. In their place nominees of the second group would have to be appointed as directors. The award also recorded that all statutory books of these companies were handed over to the second group together with other records, books of accounts etc. The award went on to say that 27,770 equity shares in the Cotton company belonging to the second groups, before the award were in the possession of the Joint Arbitrators together with blank transfer deeds were handed over to the first group. All statutory books, other documents and records were also similarly handed over by the second to the first group. The first group would have to indemnify the second group against all claims after 27th April, 1980. The transfer of business was with effect from 27th April, 1980.
3. It appears that in 1995 one of the members of the petitioner’s group made an application for execution [G.A. 379 of 1995] for enforcement of this award. The application is still pending. No steps have been taken to pursue it.
4. It appears that subsequent to the award there have been diverse proceedings between the parties upto the Supreme Court. But in this execution application we are not concerned with their subject matter or outcome save in outline. It may be noted that by an order dated 30th November, 1992, the Supreme Court upheld the decree dated 21st September, 1984 in terms of the award dated 3rd October, 1983.
5. In 2003 some 20 years after pronouncement of the awards and some 19 years after the judgment in terms of that award, the petitioner made an application in this Court (T 93 of 2003) which was renumbered (EC 69 of 2003) for enforcement of the said award. On 5th February, 2004, by an order passed by this court the said application was allowed to be withdrawn with liberty to file a fresh application on the self-same facts. In 2010 the petitioner filed present application of EC 332 of 2010 for execution of the decree. He has also taken out another application for EC 402 of 2011 and a connected application GA 2902 of 2012. In addition he has taken out an application under Section 340 of the Criminal Procedure Code GA 2033 of 2012 alleging purjury against the members of the first group asking this court to refer the matter to the appropriate learned Criminal Court for trial.
SUBMISSIONS:
6. Mr. Jayanta Mitra, learned Advocate General, movin
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