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2021 Supreme(Cal) 374
IN THE HIGH COURT AT CALCUTTA
I.P. Mukerji, Aniruddha Roy, JJ.
Airports Authority of India - Appellant
Vs.
Trans Bharat Aviation Private Limited - Respondent
CAN No.2 of 2021 in FMA No.787 of 2021
Decided On : 19-08-2021
Advocate Appeared:
For the Appellant : Mr. Probal Kumar Mukherjee Mr. Suhrid Sur
For the Respondent: Mr. Jishnu Chowdhury Ms. Rajshree Kajaria, Mr. Saptarshi Mukherjee Advs.
Headnote:
Code of Civil Procedure, 1908 - Order XLI Rule 5(3)(c) - Application - Suffering liquidity crunch - Bank guarantee - Cash deposit - Held, If security is in cash and invested in a bank, it could earn interest and principal along with interest would go to respondent in event of dismissal of appeal - A bank guarantee is only a fixed amount - Court dispose of modification application by directing that instead of cash security, applicant would be entitled to furnish an automatically renewable bank guarantee for Rs.4.5 crore by a nationalised bank in favour of learned Registrar General of this court, to be furnished which will be retained by learned Registrar General to credit of appeal - Enhanced amount would take care of interest amount, in case the respondent is successful - Appeal disposal of.
JUDGMENT :
1. The appellant is before us by an application. It is a statutory body under the Central Government.
2. Mr Mukherjee, learned senior advocate appearing for the applicant, submits that his client is suffering liquidity crunch. Our order dated 4th August 2021 directing it to deposit Rs.3.5 crore with the learned Registrar General, be modified to the extent that instead of cash deposit, the applicant would be permitted to furnish a bank guarantee.
3. Learned advocate Mr Chowdhury opposes this prayer.
4. Our view is that the intention of the legislature is to secure the awarded sum pending hearing of the appeal under section 37 of the Arbitration and Conciliation Act, 1996. The principles in obtaining such security are those in Order XLI Rule 5(3)(c) of the Code of Civil Procedure, 1908. In the Code, security has not been restricted to only cash security. It could be any security to the satisfaction of the court, sufficient, to satisfy the decree or order that “may ultimately” be made.
5. The respondent has a point. If the security is in cash and invested in a bank, it could earn interest and the principal along with the interest would go to the respondent in the event of dismissal of the appeal. A bank guarantee is only a fixed amount. In the event of the respondent succeeding, the bank guarantee may not be sufficient to satisfy the award with accrued interest till the disposal of the appeal.
6. Taking the inconvenience of the applicant into account as also the point which the respondent has been able to make, we dispose of this modification application – CAN No.2 of 2021 – by directing that instead of cash security, the applicant would be entitled to furnish an automatically renewable bank guarantee for Rs.4.5 crore by a nationalised bank in favour of the learned Registrar General of this court, to be furnished by 31st August 2021 which will be retained by the learned Registrar General to the credit of the appeal. This enhanced amount would take care of the interest amount, in case the respondent is successful.
7. We make it clear that after disposal of the appeal, the bank guarantee so furnished would abide by any order to be passed by the appropriate court.
8. The learned court below shall hand over the revoked or cancelled guarantee with such endorsement to the applicant.
