S. Ravindra Bhat, J.

C.M. APPL. 12159/2011 IN EFA (OS) 26/2011

For the reasons mentioned in the application, C.M. Appl. 12159/2011 is allowed.

EFA (OS) 23/2011 & C.M. APPL. 10277/2011 AND EFA (OS) 26/2011 & C.M. APPL. 12158/2011

1. This common judgment would dispose of two appeals directed against a judgment and order of a learned single judge of this Court, dated 24-03-2011 in EP No. 112/2010. The impugned judgment overruled the contentions of the appellant in EFA No. 23 of 2011, (hereafter “B.K.Modi”) that execution proceedings were not barred in any manner, by operation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereafter “SICA”). The second appeal (EFA 26/2011) is by Morgan Securities Ltd (hereafter “Morgan”); it claims to be aggrieved by a part of the same order, to the extent it excludes one of the properties of B.K. Modi, on the ground that it is a dwelling house (hereafter “the suit property”) from execution proceedings.

2. The facts necessary for deciding the controversy are set out hereafter. M/s Modi Rubbers Ltd. borrowed Rs 5 Crores from Morgan Securities through an inter corporate deposit on 20-3-2001; the money was payable in ninety days with 21% interest. V.K. Modi and B.K. Modi stood as guarantors. On the failure of the Modi Rubber Pvt. Ltd to pay back the inter-corporate deposit with interest within the required time, Morgan Securities referred the matter to arbitration. The Sole arbitrator allowed the claim and granted the award in favour of the Morgan Securities, on 6th May 2004. Modi Rubber, V.K. Modi and the Appellant were held jointly and severally liable to pay Rs 6,72, 63,015/- (up to the date of reference) with interest @ 21% from the date of reference till the date of award and simple interest @ 18% p.a. from the date of award till realization to the Respondent. Morgan Securities, filed Execution Petition No. 84/2004 against V.K. Modi for execution of award dated 06.05.2004.

3. In the meanwhile on 17.05.2004, the Board for Industrial Finance and Reconstruction (BIFR) declared Modi Rubbers Ltd a sick industrial company under SICA and sanctioned a revival scheme 08.04.2008, which was challenged by the Morgan Securities before AAIFR. In respect of this award, objections under Section 34 of the Arbitration and Conciliation Act were filed by B.K. Modi, (OMP 277/2001) V.K. Modi (OMP 278/2004) and Modi Rubbers Pvt. Ltd (OMP 267/2001). The objections were dismissed by a Learned Single Judge by common order dated 21st October 2009. The three judgment debtors, i.e B.K. Modi, V.K Modi and Modi Rubbers Pvt. Ltd. filed appeals against this order. B.K Modi withdrew his appeal (FAO (OS) 39/2010) on 19th January 2010. The appeals of Modi Rubbers Pvt. Ltd. and V.K. Modi FAO (OS) 620/2009, were subsequently dismissed vide order dated 09.02.2010. Thus, B.K. Modi’s liability as a judgment debtor to satisfy the decree and award attained finality, on 19-1-2010.

4. On 23.02.2010, Modi Rubbers was discharged by BIFR as its net worth turned positive. The BIFR directed Modi Rubbers to implement the unimplemented portion of the sanctioned revival scheme. The appeal, with respect to the sanctioned scheme before the AAIFR, was withdrawn, shortly after, on 23.04.2010. Morgan Securities then proceeded against B.K Modi and Modi Rubbers for execution of the arbitral award through Execution Petition No. 111 and 112/ 2010. Both B.K Modi and Modi Rubbers gave an undertaking before the Court that they would not create any third party interest in respect of their assets. Against this order of the High Court dismissing their appeal in FAO (OS) 620/2009, Modi Rubbers preferred a petition under Article 136 of the Constitution, before the Supreme Court, being SLP (C) No. 14293/2010. The Supreme Court issued notice and stayed the execution proceedings on 05.07.2010. In respect of the undertaking given by Modi Rubbers Ltd. to the High Court in Execution Petition No. 111/2010, it approached this High Court