@JUDGMENTTAG-ORDER
S.J. Kathawalla, J.@mdashBy this Arbitration Petition, the Petitioner is inter alia seeking appointment of Court Receiver, High Court, Bombay, in relation to the properties as more particularly described as "mortgaged properties" in paragraph 6 of the Arbitration Petition. The Petitioner has also prayed for an order and direction against the Respondents for disclosure of their movable as well as immovable properties/assets.
2. The Respondents had approached the Petitioner for availing loan facilities for business purpose to the extent of Rs. 26,42,50,000/-which were sanctioned by the Petitioner vide its sanction letter dated 5th December, 2012. Admittedly, the Respondents executed a Business Loan Agreement dated 4th December, 2012, and also created a mortgage by deposit of original title deeds in respect of the three immovable properties in relation thereto. The Respondents committed default in relation to the aforesaid credit facilities. Since the Respondents failed and neglected to make payments despite being called upon to do so by the Petitioner, the Petitioner by its letter dated 15th July, 2013, invoked arbitration.
3. During the pendency of the arbitral proceedings, the Petitioner initially filed Arbitration Petition No. 887 of 2013 before this Court seeking various interim reliefs including appointment of Receiver in relation to the mortgaged properties. An ad-interim order dated 8th October, 2013, was passed in the said Petition and the Court Receiver, High court, Bombay, was appointed as Receiver in respect of the mortgaged properties. The Respondents were also directed to file their affidavits disclosing their movable and immovable assets. Since the Respondents approached the Petitioner for settlement, the Petitioner for a period of 9 months did not approach the Receiver for implementation of the order dated 8th October, 2013. It is only when the said Arbitration Petition No. 887 of 2013 came up for final hearing that the Court was informed that the settlement had failed. The Court therefore passed an order dated 10th July, 2014, directing the Court Receiver to implement the ad-interim order by taking symbolic possession of the mortgaged properties on 18th July, 2014. Thereafter again the parties held settlement talks and a consent award dated 17th July, 2014, was obtained in terms of the consent terms filed by both the parties before the learned Arbitrator. However, the cheques issued by the Respondents to the Petitioner were dishonoured upon presentment and returned with the remark "insufficient funds".
4. The Petitioner therefore filed the above Petition seeking the aforestated reliefs against the Respondent post passing of the Award, and mentioned the same before this Court for circulation on 1st September, 2014. The matter was directed to be listed on 3rd September, 2014.
5. An adjournment was sought on 3rd September, 2014. On 4th September, 2014, this Court passed an ad-interim order directing the Court Receiver to take symbolic possession of the properties mortgaged to the Petitioner with an option to the Respondents to use the said properties as agents of Court Receiver upon payment of royalty. The Respondents were directed to inform the Court Receiver on or before 18th September, 2014, whether they would be interested in using the premises as agents of the Court Receiver upon payment of royalty. The Respondents were directed to disclose the information/particulars sought in prayer clause (f) of the Petition. Thereafter the Court Receiver took possession of only two of the mortgaged properties since one of the residential mortgaged property of Respondent No. 4 was found locked. The Court Receiver was therefore directed to take possession of the residential mortgaged premises from Respondent No. 4 on 25th September, 2014 which he did. On 19th September, 2014, the Respondents also made a statement that they are interested in continuing to remain in possession of the properties as agent of the Court Receiver. The Petition was therefore adjourned to 29th September, 2014, to secure implementation of the said order.
6. On 29th September, 2014, the above Petition was adjourned to enable the Respondents to file their affidavit in reply. On 8th October, 2014, the Respondents once again sought time to file their affidavit in reply. At that time the Respondents were directed to comply with the earlier order passed by the Court namely to make disclosures in relation to their movable and immovable properties which was not done despite several orders. Since the affidavits filed by the Respondents qua the disclosures were not satisfactory, the above Petition was taken up for final hearing only on 29th October, 2014.
7. The Learned Counsel appearing for the Petitioner has relied on Section 9 of the Arbitration and Conciliation Act ("the Act") and submitted that Section 9 of the Act does not in any way bar any application at the instance of a party seeking appropriate reliefs at any time after making of the arbitral award, but before it is enforced in accordance with Section 36 of the Act. It is submitted that the word "enforced" is consciously used by the Legislature to mean that the application for interim measures would lie before a Court until such time an execution application is filed. It is submitted that if the Legislature intended to mean that an application under Section 9 of the Act was not maintainable after the passing of the Award, then the words "but before it is enforced in accordance with Section 36" would not have found place in the statute book. Relying on the decision of the Division Bench of this Court in
8. The Learned Advocate appearing for the Petitioner has submitted that even otherwise the Arbitration Petition had been filed by the Petitioner much prior to the expiry of three months (and 30 days grace period) as is contemplated under sub-section (3) of Section 34 of the Act. The roznama as also the orders passed by this Court would sufficiently indicate that the delay which occurred in hearing of the present arbitration petition was solely attributable to the Respondents. It is submitted that therefore the Respondents cannot be permitted to take advantage of their own wrong by contending that the consent award has now become enforceable as if it were a decree under Code of Civil Procedure, 1908 as per Section 36 of the Act and therefore the Arbitration Petition is not maintainable. In the alternative it is submitted that the argument of the Respondent that the consent award dated 17th July, 2014, has become enforceable is unfounded because the proviso to sub-section (3) of Section 34 of the Act contemplates a further grace period of 30 days after elapse of the period of three months and therefore the expression "the time for making an application to set aside the arbitral award under Section 34 has expired" referred to in Section 36 of the Act would have to mean the entire period as is contemplated under the relevant provisions within which an application for setting aside the arbitral award is permissible.
9. It is next contended on behalf of the Petitioner that after the passing of the order dated 4th September , 2014, which specifically contemplated that "the Respondents to use the properties as agent upon payment of royalty", the Advocate for the Respondents on 19th september, 2014, specifically accepted the earlier order dated 4th September, 2014, and made a statement that the Respondents are interested in continuing to remain in possession of the properties as agents of the Court Receiver. As such, the Respondents now are not entitled to challenge the appointment of the Court Receiver or the direction of this Court that the Respondents may continue to use the said mortgaged properties as agents of the Court Receiver subject to payment of royalty. It is submitted that the Court Receiver, High Court, Bombay, has already fixed an ad-hoc royalty in relation to the mortgaged properties and the Respondents are incorrect in their argument that no reliefs in a Petition under Section 9 can be sought in relation to the mortgaged properties which are not the subject matter of arbitral proceedings since the same has been considered and rejected by this Court in the case of
10. The Learned Counsel appearing for the Respondents has submitted that a plain and literal meaning of Section 9 read with Section 36 of the Act is that an Application under Section 9 of the Act will not lie after the award becomes enforceable under Section 36 of the Act and that all remedies in respect of enforcement of the Award are now under the Civil Procedure Code, 1908 (CPC). Without prejudice to the above contention it is submitted that even if the purposive interpretation is to be given to the provisions of Section 9 of the Act, such an interpretation should favour the view that no application under Section 9 of the Act is maintainable once Section 36 of the Act stands attracted. This interpretation would further the object of the Act to expeditiously bring the arbitration process to a conclusive end. The learned Advocate for the Respondent has in support of his submissions also relied on the decision of this Court in Dirk India Pvt. Ltd. vs. Maharashtra State Electricity Generation Company Ltd. (supra).
11. The Learned Advocate for the Respondents has submitted that in view of the aforesaid submissions no further orders with regard to fixation of the royalty with regard to Court Receiver can now be passed. Without prejudice to the said contention, it is submitted that in any event the fixation of royalty after the passing of the Award dated 17th July, 2014, would effectively amount to a step in the execution of the Award, which the mandate of Section 36 of the Act prescribes can only be done under the CPC.
12. The Learned Advocate appearing for the Respondents has also submitted that the scope of Section 9 of the Act is to protect the subject matter of the arbitration and not the Award. In support of his contention he has relied on the decision of Afcons Infrastructure Ltd. vs. Board of Trustees of the Port of Mumbai 3 Order dated 4th September, 2013 in Arbitration Petition (L) No. 752 of 2013. Referring to the decision relied upon by the Petitioner in the case of Tata Capital Financial Services Ltd. vs. Deccan Chronicle Holdings Ltd. (supra), it is submitted that the issue in this context is that the arbitration and the Award is only for money and there is in fact no other subject matter that can be protected under Section 9 of the Act.
13. It is therefore submitted on behalf of the Respondents that the above Petition be dismissed.
14. I have considered the submissions advanced by the learned Counsel appearing for the parties.
15. The consent award was passed in the present case on 17th July, 2014 which was received by the Respondents on 25th July, 2014. The Petition under Section 9 of the Act was filed by the Petitioner on 27th August, 2014. Section 34(3) of the Act reads as under:
" An application for setting aside may not be made after three months have elapsed from the date on which the party making that application had received the arbitral award or, if a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal.
Provided that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."
The three months period available to the Respondents for challenging the Award expired some time on 24th October, 2014.
16. Section 9 of the Act provides as under:
"Interim measures etc. by Court.-A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36 of the Act apply to a Court.... ."
17. Section 36 of the Act reads thus:
"Enforcement.-Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the Court".
18. The Division Bench of this Court in Dirk India Pvt. Ltd. (supra) has in paragraph 12 of its decision observed as under:
"The arbitral award can be enforced where the time for making an application to set aside the arbitral award under Section 34 has expired or in the event of such an application having been made, it has been refused. The enforcement of an award enures to the benefit of the party who has secured an award in the arbitral proceedings. That is why the enforceability of an award under Section 36 is juxtaposed in the context of two time frames, the first being where an application for setting aside an arbitral award has expired and the second where an application for setting aside an arbitral award was made but was refused. The enforceability of an award, in other words, is defined with reference to the failure of the other side to file an application for setting aside the award within the stipulated time limit or having filed such an application has failed to establish a case for setting aside the arbitral award.
Once a challenge to the arbitral award has either failed under Section 34 having been made within the stipulated period or when no application for setting aside the arbitral award has been made within time, the arbitral award becomes enforceable at the behest of the party for whose benefit the award enures.
Contextually, therefore, the scheme of Section 9 postulates an application for the grant of an interim measure of protection after the making of an arbitral award and before it is enforced for the benefit of the party which seeks enforcement of the award. An interim measure of protection within the meaning of Section 9(ii) is to protect through the measure, the fruits of a successful conclusion of the arbitral proceedings. A party whose claim has been rejected in the course of the arbitral proceedings cannot obviously have an arbitral award enforced in accordance with Section 36. The object and purpose of an interim measure after the passing of the arbitral award but before it is enforced is to secure the property, goods or amount for the benefit of the party which seeks enforcement"
19. Therefore, a party cannot enforce an award under the Civil Procedure Code, 1908, as if it were a decree of the Court until the time for making an application to set aside the arbitral award under Section 34 of the Act has expired or such application having been made is refused. The Respondent having admittedly received the Award dated 17th July, 2014, on 25th July, 2014, Petitioner was therefore entitled to interim measures of protection after passing of the Award dated 17th July, 2014, which could be enforced only after 24th October, 2014. In view thereof, the Award dated 17th July, 2014, could not be enforced upto 24th October, 2014, and this Court had granted ad-interim relief to the Petitioner on 5th September, 2014, viz. appointment of Court Receiver in respect of the mortgaged properties with a direction to the Respondents to inform the Court Receiver if they were willing to use the said properties as agents of the Court Receiver upon payment of royalty. On 19th September, 2014, the Respondents did make a statement that they are willing to use the mortgaged properties as agents of the Court Receiver.
20. By the time the Petition is taken up for final hearing today, three months have admittedly elapsed from the date on which the parties have received a copy of the Arbitral award. The Respondents have neither filed any appeal nor is it their case that they are desirous of filing an appeal under Section 34 of the Act after seeking condonation of delay in filing the Appeal. The Petitioner is therefore free to now enforce the Award under the Code of Civil Procedure, 1908 (5 of 1908) in the same manner as it were a decree of the Court. Section 9 of the Act by providing that a party may at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court for interim measures of protection, does acknowledge the authority of the Court to grant interim measures of protection till the award is actually enforced by execution under the Code of Civil Procedure. That, however does not mean that even after the award has become enforceable, the successful party can go on seeking measures of protection for an indefinite period of time without taking steps for enforcement of the Award. A party has to enforce the Award within a reasonable period after the same has become enforceable. Award holders cannot indefinitely delay execution under the Civil Procedure Code by preferring repeated applications under Section 9 of the Act for getting reliefs which can appropriately be granted in execution and thereby defeat the object of the Act to expeditiously bring the arbitration process to a conclusive end. In the facts of the present case, ends of justice can be fully met if the Court Receiver appointed at the ad-interim stage in respect of the mortgaged properties by this Court is directed to continue upto 23rd February, 2015, to enable the Petitioner to take out execution proceedings under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court and obtain appropriate relief from the executing Court. Therefore, the question of directing the Respondents to pay any amount of royalty at this stage is in my view not necessary to be considered in the present Application. The Petitioner may seek appropriate relief in that behalf in an execution application under the Civil Procedure Code. In that view of the matter, I am of the opinion that it is not necessary to decide the issue as to whether the immovable property and/or the mortgage in respect of such immovable property was or was not the subject matter of the arbitration and whether or not any interim measure in respect of immovable property and/or the mortgaged property could be granted.
The above Petition is accordingly disposed of.
