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2023 Supreme(Megh) 13

IN THE HIGH COURT OF MEGHALAYA AT SHILLONG
W. Diengdoh, J.
M/s Hindustan Construction Co. Ltd. - Appellant
Versus
North Eastern Electric Power Corporation Ltd. (NEEPCO) - Respondent
CRP No. 9 of 2023
Decided On : 05-07-2023

Advocates appeared:
Mr. T.T. Diengdoh, Sr. Advocate, with Mr. J. Shylla, Advocate, Mr. C.C.T. Sangma, Advocate, for the Petitioner; Mr. S. Jindal, Advocate, for the Respondent.

The NEEPCO, while recognized as a 'State' under Article 12, does not equate to 'Government' for Section 82 CPC applicability, requiring careful judicial interpretation of its execution context.

Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 34 - Code of Civil Procedure, 1908 - Section 82 and Order XXI Rule 26 - Execution of arbitral award - Court upheld stay on execution of award pending appeal to Supreme Court, finding NEEPCO is a 'State' under Article 12 - Provisions of Section 82 CPC applicable to execution against NEEPCO were debated, concluding that the execution could be stayed for a valid reason - The impugned order modified regarding Section 82 applicability. (Paras 10, 14, 20, 41)

Facts of the case:
The petitioner challenged an order of the learned Commercial Court allowing the respondent's stay application regarding an arbitral award of ₹23,12,10,513/- plus interest due to disputes in execution proceedings. The Commercial Court deemed NEEPCO a State under CPC provisions.

Findings of Court:
The High Court found the stay of execution valid under CPC due to NEEPCO's status and the nature of its governmental functions, but modified the application of Section 82 CPC.

Issues: The main issues included the interpretation of 'Government' under Section 82 CPC and the execution implications of Arbitral Awards.

Ratio Decidendi: The court interpreted the definitions ensuring that while NEEPCO is a State in terms of Article 12, its execution under Section 82 CPC should more directly align with state government principles, leading to a modified understanding of NEEPCO's governmental role.

Result: Petition disposed of with modification on Section 82 applicability.

Table of Content
1. overview of arbitration and court proceedings (Para 2)
2. arguments on definition of 'government' and 'state' (Para 3 , 4 , 5)
3. impacts of impugned order on award realization (Para 6 , 7 , 8)
4. respondent's preliminary objection regarding jurisdiction (Para 9 , 10 , 11)
5. discussion on various legal cases relevant to government's status (Para 12 , 13 , 14 , 15)
6. arguments on stay of execution provisions (Para 16 , 17 , 18)
7. counter arguments on applicability of code of civil procedure (Para 19 , 20 , 21)
8. court's consideration under article 227 concerning jurisdiction (Para 22 , 23 , 24)
9. execution court's authority and stay application details (Para 25 , 26 , 27)
10. controversy around definitions of state and government (Para 28 , 29 , 30)
11. final court rationale on section 82 application (Para 31 , 32 , 33 , 34)
12. legal standards for automatic stays of awards (Para 35 , 36 , 37)
13. application of provisions of the code of civil procedure (Para 38 , 39 , 40)
14. conclusion affirming execution court's decision (Para 41 , 42)

JUDGMENT

W. Diengdoh, J. - On order dated 26.05.2023 passed by the learned Commercial Court, East Khasi Hills, Shillong in Commercial Arbitration Execution Case No. 4 of 2018 is under scrutiny in these proceedings brought about by the filing of an application under Article 227 by the petitioner herein.

2. Heard Mr. T.T. Diengdoh, learned Sr. counsel for the petitioner, who has led this Court to the background of the case leading to the passing of the impugned order aforesaid, which runs as follows:

2.1. That on 25.03.2009, the respondent/NEEPCO had invited bids for the Pare Hydro-electric Project located at Papumpare District in the State of Arunachal Pradesh. The petitioner/Company having submitted its bid for the same, a Letter of Intent (LOI) was issued by NEEPCO Ltd. for a contract between the parties for the said project said to be for a period of 36 months. Accordingly, the Work Order was issued to the petitioner who has accepted the same.

2.2. In course of the work on the said project, dispute arose between the parties and the same not being able to be solved amicably, the arbitration clause was invoked and the matter was then referred a sole Arbitrator, Mr. N.N. Singhal.

2.3. After the Arbitrator had concluded the arbitral proceedings, an award dated 15.09.2015 was passed in favour of the petitioner/Company for a sum of ? 23,12,10,513/- along with interest @ 13.5% pa (pre Award) and a further 15% pa (post Award) till the date of the actual payment.

2.4. The respondent/NEEPCO, being aggrieved by the said Award, has then approached the competent court of jurisdiction under Section 34 of the Arbitration and Conciliation Act, 1996, the same was eventually numbered as Commercial Arbitration Case No. 4 of 2018.

2.5. In the meantime, the petitioner filed Execution Petition for execution of the said Award. The application was filed under Order XXI Rule 11 of the Code of Civil Procedure read with Section 36 of the Arbitration and Conciliation Act, 1996.

2.6. Again, the petition under Section 34 of the said Arbitration Act was dismissed by the Commercial Court which led to the filing of an appeal before this Court under Section 37 of the said Act by the respondent/NEEPCO.

2.7. The appeal registered as Arbitration Appeal No. 1 of 2022 was disposed of by a Division Bench of this Court vide order dated 26.04.2023, whereby the prayer of the respondent/NEEPCO was rejected and the original Award was left untouched, except for the fact that the pre-award interest has not been allowed.

2.8. The petitioner filed an appropriate application before the Execution Court for satisfaction of the Award in terms of the judgment and order passed by this Court on 26.04.2023.

2.9. The respondent/NEEPCO then filed an application/petition under Section 151 CPC with a prayer for grant of time to approach the Hon'ble Supreme Court with a Special Leave Petition against the said judgment and order dated 26.04.2023 an

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