IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SANGEETA K. VISHEN, J.
Rajkot Municipal Corporation – Petitioner
Versus
M/s. Jay Hind Project Ltd. – Respondent
R/Special Civil Application No. 19550 Of 2022
Decided On : 08-01-2024
Arbitration Award - Enforcement - Section 36 of the Arbitration and Conciliation Act, 1996 - 36(2) and 36(3) - The court held that the petition seeking stay of the implementation, execution, and operation of the award under Section 36 of the Act was not maintainable as no separate application for stay was filed. The court also emphasized the need for a separate application for stay of the operation of the arbitral award as per the provisions of sub-sections (2) and (3) of Section 36. The court referred to the judgments in Hindustan Construction Company Limited v. Union of India and Others and Sepco Electric Power Construction Corporation v. Power Mech Projects Ltd. to support its decision.
Fact of the Case:
The petitioner, Rajkot Municipal Corporation, sought a writ petition for direction to hear a civil miscellaneous application and stay the implementation, execution, and operation of an arbitration award. The respondent, M/s. Jay Hind Project Ltd., had filed an application for execution of the award and a Possession and Seizure Warrant, leading to the petitioner's grievance.
Finding of the Court:
The court found that the petition seeking stay of the award under Section 36 of the Act was not maintainable as no separate application for stay was filed. The court also noted that the petitioner had not taken steps to seek early hearing of the civil miscellaneous application. The court held that the extraordinary jurisdiction of the court under Article 226 and 227 of the Constitution of India was not the appropriate remedy for seeking stay of the award.
Issues: The issues involved the maintainability of the petition seeking stay of the implementation, execution, and operation of the arbitration award under Section 36 of the Act, and the petitioner's failure to seek early hearing of the civil miscellaneous application.
Ratio Decidendi: The court emphasized the need for a separate application for stay of the operation of the arbitral award as per the provisions of sub-sections (2) and (3) of Section 36. The court also held that the extraordinary jurisdiction of the court under Article 226 and 227 of the Constitution of India was not the appropriate remedy for seeking stay of the award.
Final Decision: The court rejected the petition, stating that the petitioner had not filed a separate application for stay of the award and that the extraordinary jurisdiction of the court under Article 226 and 227 of the Constitution of India was not the appropriate remedy for seeking stay of the award. The court also vacated the stay granted and discharged the rule, with no order as to costs. The operation of the judgment was stayed until 15.02.2024 to enable the petitioner to approach a higher forum.
JUDGMENT :
1. With the consent of the learned advocates appearing for the respective parties, the captioned writ petition is taken up for final disposal.
2. Issue rule, returnable forthwith. Mr Mitul K. Shelat, learned advocate for Ms Disha N. Nanavati, learned advocate waives service of notice of rule on behalf of respondent.
3. By this petition, Rajkot Municipal Corporation, that is, the petitioner (hereinafter referred to as the ‘petitioner Corporation’), inter alia, has prayed for passing of the appropriate orders directing the learned Principal Senior Civil Judge, Rajkot to hear Civil Miscellaneous Application no.47 of 2015 within a stipulated time limit and meanwhile to pass appropriate orders staying the implementation, execution and operation of the award dated 02.12.2014 passed by the learned Sole Arbitrator in Arbitration Reference case no.3 of 2013. Petitioner Corporation, has also prayed for direction to the learned Principal District Judge, Rajkot to hear Commercial Execution no.381 of 2021 preferred by M/s. Jay Hind Project Ltd., that is, the respondent (hereinafter referred to as ‘the respondent’) coupled with the further direction not to pass any order of disbursement for an amount of Rs.1,91,40,001/- deposited by the petitioner Corporation with the registry pending final hearing and disposal of Civil Miscellaneous Application no.47 of 2015.
4. The facts, in brief, are that the petitioner Corporation had executed a contract with the respondent for implementation and execution of Underground Drainage Project under Jawaharlal Nehru National Urban Renewal Mission. Owing to certain disputes, a retired learned District Judge was appointed as an Arbitrator, and the arbitration proceeding culminated into passing of the award dated 02.12.2014 whereby, 50% of the security deposit, that is, Rs.1,07,75,000/- was directed to be refunded and an amount of Rs.83,65,000/- to be paid towards other claims. Hence, the petitioner Corporation preferred a Civil Miscellaneous Application no.47 of 2015 before the learned Principal District Judge, Rajkot which remained pending. Civil Miscellaneous Application no.52 of 2015 has also been preferred by the respondent under the provisions of Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act of 1996”) which also, is pending.
4.1 After six years of filing of the Civil Miscellaneous Application no.47 of 2015, the respondent preferred Commercial Execution no.381 of 2021 before the learned Principal District Judge, Rajkot, inter alia, praying for execution of the award dated 02.12.2014 passed in Arbitration Reference case no.3 of 2013 under the provisions of Section 36 of the Act of 1996 read with Order XXI Rule 10 and 11 of the Code of Civil Procedure, 1908 (hereinafter referred to as “the Code”) together with the application under Order XXI Rule 41 read with Section 151 of the Code and it remained pending. In the said pending application, the respondent on 08.03.2021 preferred an application for Possession and Seizure (Jangam) Warrant to be executed against the petitioner Corporation. Neither the officer nor the learned advocate for the petitioner Corporation remained present before the Court though the notice was duly served, as a result whereof, order dated 11.03.2022 issuing the Seizure (Jangam) Warrant was granted. Being aggrieved, that the captioned writ petition with the above referred prayers.
5. Mr H. S. Munshaw, learned advocate appearing for the petitioner Corporation, submitted that award was passed on 02.12.2014 and immediately, within the period of limitation, in the month of February 2015, Civil Miscellaneous Application no.47 of 2015 under the provisions of Section 34 of the Act of 1996 was filed. The application remained pending for all these years and was not heard and therefore, there was no fault on the part of the petitioner Corporation. It is next submitted that despite the pendency of the Civil Miscellaneous Application no.47 of
Hindustan Construction Company Limited v. Union of India and Others
Chloro Controls (I) Pvt. Ltd. v. Seven Trent Water Purification Inc.
An unconditional stay of an arbitral award is impermissible unless specific statutory conditions under Section 36(3) of the Arbitration Act are fulfilled.
The main legal point established in the judgment is the discretion of the court to direct the petitioner to furnish security on the full arbitral award and the impact of the Arbitration and Conciliat....
Scope to stay execution proceeding by Executing Court is limited – It is only an interim arrangement enabling the party to obtain stay order from appropriate Court, including Appellate Court.
Point of Law : Since the award was a money decree there should be 100% deposit with respondent being entitled to withdraw amount deposited and furnish solvent security to the satisfaction of High Cou....
The main legal point established in the judgment is that the unamended Section 36 of the Arbitration and Conciliation Act does not provide for automatic stay of the award pending the application unde....
Arbitration awards, lacking jurisdiction, do not equate to money decrees; interim relief granted during appeal pending jurisdictional determinations.
The court clarified that award debtors must deposit the full awarded sum as a condition for staying enforcement, emphasizing that both public and private parties are subject to the same requirements ....
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