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IN THE HIGH COURT OF CALCUTTA
RAVI KRISHAN KAPUR, J.
Damodar Valley Corporation - Appellant
Versus
Reliance Infrastructure Ltd. - Respondent
GA 1 of 2020 [Old No.GA 175 of 2020] AP 40 of 2020
Decided on : 23-12-2021
Arbitration and Conciliation Act, 1996 - Section 36(2) and 34 - Arbitration - Seeking for stay of an award - Arbitral award - Setting aside or suspension of an award - Award has been passed in respect of disputes and differences which had arisen out of three interconnected and inter-linked contracts entered into by and between the parties for construction of two units of 600 M.W power plants each near Raghunathpur in District of West Bengal.
Finding of the Court :
The amended section 36 of the Act in its new avatar, makes a significant change by incorporating the provisions which provides that filing of an application under section 34 shall not by itself render an award unenforceable, unless the Court grants an order of stay and imposes such conditions as it deemed fit and proper. Such discretion is to be exercised judicially depending upon the facts and circumstances of the case - Amount to re-writing section and emasculating the very object and purpose of amendment. Accordingly, the submission made on behalf of the petitioner that the hearing of this application be postponed stands rejected - Since award is a money award, court direct that there shall be a stay of the award subject to the condition that the petitioner deposit 50% of awarded amount by way of cash security or its equivalent to the satisfaction of the Registrar Original Side, High Court at Calcutta. Upon such deposit being made, the Registrar Original Side is directed to make a fixed deposit of the said amount with any nationalised bank and keep the same renewed till disposal of the application under section 34 of the Act or until further orders of Court. Remaining 50% of awarded amount be secured by way of bank guarantee(s) of a nationalised bank by the petitioner to the satisfaction of the Registrar Original Side, High Court.
Result: IA and Old No.GA disposed of.
JUDGMENT :
Ravi Krishan Kapur, J.
1. This is an application under section 36(2) of the Arbitration and Conciliation Act, 1996 (‘the Act’). The petitioner prays for stay of an award dated 21 December, 2019 (‘the award’).
2. The award has been passed in respect of disputes and differences which had arisen out of three interconnected and inter-linked contracts entered into by and between the parties for construction of two units of 600 M.W power plants each near Raghunathpur in the District of Purulia, West Bengal.
3. The award directs the petitioner to pay the respondent a sum of approximately of Rs.898 crores, particulars whereof are set out hereunder :
Cash Component of Award-Rs.898 Crores (approx.) - pending since December, 2019
|
| INR Component | Euro Component | Euro converted to INR @ Rs.78.81 | Total in INR | ||||
| Description of Claim | Principal | Interest @ 10% from 21.08.2017 to 21.12.2019 | Principal | Interest @ 10% from 21.08.2017 to 21.12.2019 | Principal | Interest @ 10% | Principal | Interest @ 10% from 21.08.2017 to 21.12.2019 |
| Total Award | 497,95,24,067 | 125,33,57,665 | 2,83,09,443 | 66,00,167 | 223,10,67,183 | 52,01,59,163 | 721,05,91,251 | 177,35,16,828 |
4. Being aggrieved by the award, the petitioner has also filed an application under section 34 of the Act being AP 40/2020.
5. It is submitted on behalf of the petitioner that in view of an earlier order dated 8 September, 2021 passed by a Coordinate Bench, the application filed under section 34 of the Act ought to be heard first, before the hearing of this application. It is also submitted on behalf of the petitioner that there is no question of any security being provided in terms of section 36 of the Act since the award is ex facie perverse. Significantly, the petitioner chooses not to make any submissions insofar as the mode or manner of security as a condition for grant of stay of the award is concerned.
6. On behalf of the respondent, it is submitted that in view of the amended section 36(2) of the Act, it is now obligatory on the party seeking stay to secure the award on such terms and conditions which a Court may deem fit and proper. The phrase “have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure 1908” mean that the relevant provisions of the Code of Civil Procedure, 1908 may be taken into consideration but the same are not mandatory. In this context, reliance is placed on the decision of Pam Development Private Limited vs. State of West Bengal reported in (2019) 8 SCC 112 [at paragraphs 8, 9, 19, 20, 21, 22, 23 and 25].
7. I have considered the submissions made on behalf of the parties.
8. I find that the award is for a sum of approximately Rs.898 crores. Under section 36 of the unamended Act, an arbitral award became enforceable only after the objection under section 34 of the Act was dismissed. The pendency of the proceedings under section 34 thus became an impediment for enforcement of an award which often took years if not decades. The pendency of such proceedings also effectively jettisoned the entire process for enforcement of awards making it impossible to even seek an order from the Court directing the award debtor to deposit any part of the award in Court. This was also in conflict with the object of having an expeditious alternative dispute realisation forum. It was to rectify this mischief [which had also been pointed out in National Aluminum Co. Ltd. vs. Pressteel & Fabrications reported in (2004) 1 SCC 540] that an amendment was incorporated to section 36 of the Act. In the said decision, the Supreme Court had criticized the then prevailing situation in the following words:
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