TECNIMONT PRIVATE LIMITED (formerly TECNIMONT ICB PRIVATE LIMITED) v. M/S BHARAT PETROLEUM CORPORATION LIMITED

## `IN THE HIGH COURT OF KERALA AT ERNAKULAM` ## `PRESENT` ## `THE HONOURABLE MR.JUSTICE C.S.DIAS` ``` MONDAY, THE 7[TH] DAY OF AUGUST 2023 / 16TH SRAVANA, 1945 ``` ## `OP(C) NO. 1353 OF 2023` ``` IN AOP 45/2022 OF THE COMMERCIAL COURT, ERNAKULAM ``` ## `PETITIONER:` ``` TECNIMONT PRIVATE LIMITED, FORMERLY KNOWN AS TECNIMONT ICB PRIVATE LIMITED HAVING ITS REGISTERED OFFICE AT TECNIMONT HOUSE, CHINCHOLI BUNDER, 504, LINK ROAD, MALAD WEST, MUMBAI - REPRESENTED BY ITS AUTHORIZED SIGNATORY MR. BRIJESH SHAH, AGED 45, S/O SHRI MANMOHAN SHAH, PIN – 400064 ``` ``` BY ADVS.P.MARTIN JOSE THOMAS P.KURUVILLA P.PRIJITH R.GITHESH AJAY BEN JOSE MANJUNATH MENON SACHIN JACOB AMBAT HARIKRISHNAN S. S.SREEKUMAR (SR.) ``` ## `RESPONDENT:` ``` M/S BHARAT PETROLEUM CORPORATION LIMITED HAVING ITS REGISTERED OFFICE AT: BHARAT BHAVAN, 4 AND 6, CURRIMBHOY ROAD, BALLARD ESTATE, P.B. NO. 688, MUMBAI REPRESENTED BY ITS CHIEF GENERAL MANAGER (REFINERIES PROJECTS ORGANIZATION) - MR. SURESH JOHN, PIN – 400001 ``` ``` BY ADVS.M.GOPIKRISHNAN NAMBIAR E.K.NANDAKUMAR (SR.)(N-23) K.JOHN MATHAI(K/413/1984) JOSON MANAVALAN(J-526) KURYAN THOMAS(K/131/2003) PAULOSE C. ABRAHAM(MAH/58/2006) RAJA KANNAN(K/356/2008) ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 07.08.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` O.P.(C)No.1353/2023 ``` ``` -:2:- ``` Dated this the 7[th] day of August,2023 ## **J U D G M E N T** The original petition is filed assailing Ext P1 order passed by the Commercial Court-I, Ernakulam (court below), in I.A.No.6/2023 in Arbitration Original Petition No.45/2022. 2. The relevant factual matrix for the determination of the original petition is: (i) The petitioner had filed a claim petition against the respondent under the Arbitration and Conciliation Act, 1996(in short, Act’), before the Sole Arbitrator appointed by this Court in A.R.No.32/2020, to adjudicate the disputes that arose between the parties pursuant to the two contracts executed between them. By Ext P3 award dated 26.12.2021, the learned Arbitrator allowed the claim petition ordering the respondent to pay the petitioner an amount of Rs.58,56,67,725/- with interest and costs. (ii)Aggrieved by Ext P3 award, the respondent has ``` O.P.(C)No.1353/2023 ``` ``` -:3:- ``` filed Arbitration Original Petition No.45/2022 (AOP) under Section 34 of the Act before the court below. - (iii) Along with the AOP, the respondent also filed I.A.No.1/2022 under Section 36 (2) of the Act, to stay the enforcement of Ext P3 award. - (iv) The court below, by Ext P2 order, has stayed the operation of Ext P3 award, on condition the respondent deposits an amount Rs.58,56,67,725/- before the court below. - (v) In compliance with Ext P2 order, the respondent had deposited the above-ordered amount by way of seven cheques drawn in favour of the court below. - (vi) Consequent to the deposit, the petitioner filed I.A.No.6/2023(Ext P5), seeking leave to withdraw the amount deposited by the respondent on furnishing appropriate undertaking and security. - (vii) After seeking multiple adjournments, the ``` O.P.(C)No.1353/2023 ``` ``` -:4:- ``` respondent filed Ext P6 objection to Ext P5 application. - (viii) The petitioner had submitted a plethora of judgments of the Hon'ble Supreme Court and various High Courts on the point that the deposited amount can be released to the claimant on furnishing sufficient security. - (ix)The court below, by the impugned Ext P1 order, has rejected Ext P5 application. - (x) Ext P1 is ex facie illegal and wrong. Hence, the original petition. 3. Heard; Sri. S. Sreekumar, the learned Senior Counsel appearing for the petitioner and Sri. Joson Manavalan, the learned counsel appearing for the respondent `.` 4. Sri. S. Sreekumar assailed Ext P1 order by strenuously arguing that the court below has gone wrong in rejecting Ext P5 application in total disregard ``` O.P.(C)No.1353/2023 ``` ``` -:5:- ``` to the law laid down by the Hon'ble Supreme Court and the Calcutta High Court. He placed reliance on the interim orders of the Hon'ble Supreme Court in **Aviation Travels Pvt. Ltd. v. Bhavesha Suresh Goradia & Ors.** [SLP(C)Nos.5374-5375/2019], **Manish v. Godawari Marathawada Irrigation Development** [SLP(C)No.11760-11761/2018] and **Steel Authority of India Ltd. v. Seaspray Shipping Co. Ltd.** [SLP(C)No.5116/2020], and the judgment in **Baburao and another v. State of Maharashtra** [(2017) 11 SCC 333]. He also relied on the decision of the Calcutta High Court in **State of West Bengal & Ors. v. M/s. BBM Enterprise** [AP No.808/2022] to canvass the position that the Courts are conferred with the discretionary power to order the release of the security amount to the opposite party/claimant in arbitration/commercial matters. He contended that, as ``` O.P.(C)No.1353/2023 ``` ``` -:6:- ``` there is a likelihood of the final determination of the AOP getting delayed, the petitioner will be put to severe hardship if the amount is not released. On the other hand, if the amount is released, the same can be utilised for the petitioner’s business purposes, that too on the petitioner furnishing security for the amount. The above course will not cause any hardship to the respondent. Hence, the original petition may be allowed. 5. Sri. Joson Manavalan vehemently opposed the original petition by arguing that there is absolutely no error or illegality in Ext P1 order passed by the court below warranting interference by this Court under Article 227 of the Constitution of India. By Ext P1 order, the court below has rightly declined to exercise its discretionary powers in favour of the petitioner. He further contended that Section 36 of the Act permits ``` O.P.(C)No.1353/2023 ``` ``` -:7:- ``` the petitioner to furnish security as provided under Order 41 Rule 5 of the Code of Civil Procedure, 1908 (in short, ‘Code’). Just because the respondent has furnished cash security does not give the petitioner any right to get the money released. The respondent has filed AOP well within the statutory time period. The original petition is meritless and may be dismissed. 6. The question is whether there is any illegality in Ext P1 order. 7. Challenging Ext P3 award, the respondent has filed the AOP before the court below under Section 34 of the Act. 8. To stay the operation of the award, the respondent filed I.A.No.1/2022 in the AOP under Section 36 of the Act. 9. It is apposite to extract Section 36 of the Act, which reads as follows: ``` O.P.(C)No.1353/2023 ``` ``` -:8:- ``` “36. Enforcement -(1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the Code of Civil Procedure, 1908, in the same manner as if it were a decree of the court. (2)Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose. **(3)Upon filing of an application under subsection (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:** **[PROVIDED that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908.]** (emphasis given) 10. The proviso to Sub-Section (3) of Section 36 of the Act, explicitly confers power on the court dealing with an application under Section 34 of the Act, to stay an arbitral award, which is for payment of money, by ``` O.P.(C)No.1353/2023 ``` ``` -:9:- ``` following the procedure contemplated under the Code. 11. The relevant provision of the Code to stay the execution of the money decree in an appeal is provided under Order 41 Rule 5 of the Code, which reads thus: **“Stay by Appellate Court.** -(1) An appeal shall not operate as a stay of proceedings under a decree or order appealed from except so far as the Appellate Court may order, nor shall execution of a decree be stayed by reason only of an appeal having been preferred from the decree; but the Appellate Court may for sufficient cause order stay of execution of such decree. (2)Stay by Court which passed the decree- Where an application is made for stay of execution of an appealable decree before the expiration of the time allowed for appealing therefrom, the Court which passed the decree may on sufficient cause being shown order the execution to be stayed. - ( **3) No order for stay of execution shall be made** - **under sub-rule (1) or sub-rule (2) unless the Court making it is satisfied(a) that substantial loss may result to the party applying for stay of execution unless the order is made;** - **(b) that the application has been made without unreasonable delay; and** - **(c) that security has been given by the applicant for the due performance of such decree or order as may ultimately be binding upon him.** (4) [Subject to the provisions of sub-rule (3)], the Court may make an ex parte order for stay of execution pending the hearing ``` O.P.(C)No.1353/2023 ``` ``` -:10:- ``` of the application. (5) Notwithstanding anything contained in the foregoing sub-rules, where the appellant fails to make the deposit or furnish the security specified in sub-rule (3) of rule 1, the Court shall not make an order staying the execution of the decree.” (emphasis supplied) 12. A reading of clauses (a) to (c) of Order 41 Rule 5 (3) demonstrates that the court has the power to stay the execution of a money decree on the appellant satisfying the trinity conditions extracted above. 13. A co-joint reading of Section 36 of the Act and Order 41 Rule 5 of the Code undoubtedly shows that it is for the Court to decide whether its discretionary powers have to be exercised to stay the enforcement of an award. 14. In the case on hand, the court below, after appreciating the averments in support of I.A.No.1/2022, has passed Ext P2 order, directing the ``` O.P.(C)No.1353/2023 ``` ``` -:11:- ``` respondent to deposit Rs.58,56,67,725/- before the court below to stay the operation of the award. 15. Admittedly, the respondent has complied with the condition in the order and deposited the ordered amount, whereby the operation of Ext P3 award stand stayed. 16. It is rudimentary that at the stage of considering an application filed under Section 36 of the Act, the court is not expected to go into the merits and demerits of the AOP filed under Section 34 of the Act. 17. It is after the amount was deposited, the petitioner filed Ext P5 application, seeking leave to get the amount withdrawn on the petitioner furnishing security for the amount to be released. The respondent resisted the application through Ext P6 counter affidavit. 18. The court below, after appreciating the rival ``` O.P.(C)No.1353/2023 ``` ``` -:12:- ``` pleading, has concluded that, since the AOP is pending consideration and that the award has not attained finality, it is not a fit case to permit the petitioner to withdraw the security amount. 19. It is this discretionary order that the petitioner has assailed under Article 227 of the Constitution of India. 20. The decisions relied on by the learned Senior Counsel in **Aviation Travels, Manish** and **Steel Authority** (supra) are all interim orders passed by the Hon'ble Supreme Court, wherein the facts and circumstances of the cases cannot be deciphered. Probably, it may be in the peculiar facts and circumstances of those cases that the Hon'ble Supreme Court has permitted the amounts to be withdrawn. Whereas the decision in **Baburao** (supra) has been passed in a land acquisition matter. Likewise, the ``` O.P.(C)No.1353/2023 ``` ``` -:13:- ``` decision of the Calcutta High Court has been rendered in the peculiar facts and circumstances of that case. 21. The AOP is filed under Section 34 of the Act, challenging Ext P3 award on the ground of patent illegality and other grounds. In compliance with the order of the court below, to stay the enforcement of the award, the respondent choose to furnish cash security instead of other forms of security permissible under law. Immediately, the petitioner filed the application to get the cash security released in its favour. 22. On an overall appreciation of the pleadings and materials on record, particularly the fact that the AOP is pending consideration, I am not inclined to take a contrary view than that of the court below by exercising the power of superintendence of this Court and permit the petitioner to withdraw such an enormous amount on furnishing security. Instead, the ``` O.P.(C)No.1353/2023 ``` ``` -:14:- ``` interest of justice would be met by directing the court below to deposit the entire amount in a fixed deposit in a Nationalised Bank and expeditiously dispose of the AOP. I take the view because the learned Arbitrator has ordered post-award interest @ 10%. So, if the amount is deposited in a fixed deposit, the same will benefit either party when the award attains finality. 23. In **and another v. Waryam Singh Amarnath and another** [AIR 1954 SC 215], **Shalini Shyam Shetty and another v. Rajendra Shankar Patil** [ (2010) 8 SCC 329], **M/s.Garment Craft v. Prakash Chand Goel** [(2022) 4 SCC 181] and a host of judicial pronouncements by the Honourable Supreme Court, the powers of the High Courts under Article 227 of the Constitution of India have been delineated. It is well settled that the power under the Article is to keep the courts of the District Judicature/ ``` O.P.(C)No.1353/2023 ``` ``` -:15:- ``` tribunals within their bounds of authority and to see that they do their duty as legally expected of them. The power is restricted to the cases of serious dereliction of duty and flagrant violation of fundamental principles of law and justice, which, if left uncorrected, may cause grave injustice. But that does not mean that the said power is to be indiscriminately exercised to even correct discretionary orders. 24. In the above factual and legal conspectus, I am not inclined to interfere with Ext P1 order. Yet, I am inclined to direct the court below to transfer the amount deposited by the respondent to a Fixed Deposit in a Nationalised Bank so as to earn the maximum interest and expeditiously dispose of the AOP. Resultantly, I dispose of the original petition as follows: ## (i) Ext P1 order is confirmed. ``` O.P.(C)No.1353/2023 ``` ``` -:16:- ``` - (ii) The court below is directed to forthwith transfer the amount of Rs.58,56,67,725/-, deposited by the respondent, to a fixed deposit in a Nationalised Bank, till the determination of the Arbitration Original Petition No.45/2022. - (iii) The Commercial Court-I, Ernakulam, is directed to consider and dispose of Arbitration Original Petition No.45/2022 in accordance with law and as expeditiously as possible after affording both sides an opportunity of being heard. Sd/- ## **C.S.DIAS,JUDGE** DST/07.08.23 //True copy// P.A.To Judge ``` O.P.(C)No.1353/2023 ``` ``` -:17:- ``` ## `APPENDIX` ``` PETITIONER EXHIBITS EXHIBIT P1 ``` ``` TRUE COPY OF THE IMPUGNED ORDER DATED 08- 06-2023 IN I.A.NO.06/2023 IN ARBITRATION O.P.NO.45/2022 OF ADDITIONAL SUB JUDGE - I, COMMERCIAL COURT-I, ERNAKULAM ``` - `EXHIBIT P2 TRUE COPY OF ORDER DATED 21-01-2023 IN INTERIM APPLICATION NO.1 OF 2022 IN ARBITRATION O.P.NO.45 OF 2022 OF ADDITIONAL SUB JUDGE - I, COMMERCIAL COURT-I, ERNAKULAM` - `EXHIBIT P3 TRUE COPY OF AWARD DATED 26-12-2021 IN A.R.NO.32 OF 2020 AND A.R.NO.33 OF 2020 PASSED BY SOLE ARBITRATOR, MR.JUSTICE K.ABRAHAM MATHEW, FORMER JUDGE, HIGH COURT OF KERALA` - `EXHIBIT P4 TRUE COPY OF THE RECORD OF PROCEEDINGS HELD ON 13-04-2023 AS UPLOADED ON THE E-COURTS WEBSITE` - `EXHIBIT P5 TRUE COPY OF I.A NO.6 OF 2023 IN O.P.NO.45/2022 DATED 11-04-2023 FILED BY THE PETITIONER BEFORE THE ADDITIONAL SUB JUDGE - I, COMMERCIAL COURT-I, ERNAKULAM` - `EXHIBIT P6 TRUE COPY OF THE REPLY TO THE I.A NO.6 OF 2023 IN O.P.NO.45/2022 DATED 31-05- 2023 FILED BY THE RESPONDENT BEFORE THE ADDITIONAL SUB JUDGE - I, COMMERCIAL COURTI, ERNAKULAM` ``` RESPONDENT’S EXHIBITS: NIL ```