Three applications have been filed by the petitioner against the respondent under Section 9 of The Arbitration and Conciliation Act, 1996, (the Act), for inter alia, orders directing the respondent to secure the amounts awarded under an Arbitral Award dated 11th December, 2017. By the said Award, the following direction was passed against the respondent :
"30. The respondent should pay the said total sum of Rs. 60,09,18,356/- (Rs.50,89,40,274+ Rs.9,19,78,082) to the claimant within a period of 30 days from the date of publishing this award, in default, the respondent should remain liable to pay interest at the rate of 16 % per annum until such liability is fully discharged.
31. I also award and direct that SREI, the respondent should pay a further sum of Rs.50,00,000/- (Rupees Fifty Lakh) only towards the costs in favour of UDPL, the claimant.
32. I make and publish this award today, 11th December, 2017 in Kolkata."
The petitioner states that the period of 30 days expired on 12th January, 2018 and no payment has been made by the respondent to the petitioner in terms of the Award. Hence, this application.
Mr. S. K. Kapur, learned Senior Counsel appearing for the petitioner, submits that a letter of demand was issued on the respondent in February, 2018 for payment of INR 225,55,72,875 along with interest at the rate of 16 percent per annum to the petitioner on the basis of the Award. The break up of the aforesaid amount was given by way of a tabulated statement in the said letter of demand. In the said letter it was clearly stated that the respondent was liable to make the payments within 30 days from the date of publishing of the Arbitral Award but had failed to do so. The petitioner was thereafter constrained to file the instant three applications in March, 2018.
The starting point of the petitioner's claim made on the respondent arise from three Inter-corporate Deposit (ICD) agreements under which the petitioner agreed to provide financial assistance to the respondent for Rs.40 crores, 60 crores and 50 crores upon the terms and conditions under the said three agreements. These agreements were dated 16th January, 2012, 27th January, 2012 and 29th March, 2012 and contained, inter alia, the term that the principal amount advanced by the petitioner to the respondent would be repayable on the expiry of 364 days from the date of advance. Since the respondent failed to make the payment within the stipulated time, two extensions were granted by the petitioner on 31st December, 2012 and 12th October, 2013 and the time for repayment was extended till 15th July, 2014. It is the petitioner's case that despite such extensions, the respondent failed to make the payments as agreed by them under the ICD agreements.
The arbitration clauses in the agreements were invoked; a sole Arbitrator was appointed by the Court culminating in the common Award dated 11th December, 2017. Since the Award did not grant any interest pendente lite, the petitioner was constrained to make an application under Section 31 and 33 of the Act. The prayer of the petitioner for interest pendente lite was disallowed which was communicated to the parties by way of an additional Award which was published on 5th March, 2018.
Learned Counsel for the petitioner submits that by reason of the Award dated 11th December, 2017 and the direction contained therein, the amount payable by the respondent has fructified into a decree in favour of the petitioner and the petitioner is entitled to enforce the same under Section 36 of the Act as in a money decree under the Code of Civil Procedure, 1908. It is submitted that upon publishing of the Award, the rights of the petitioner have crystallised and the petitioner is entitled to take recourse to the interim protection provided for under Section 9 of the Act. Counsel relies specifically on Section 9(b) which provides for securing the amount in dispute in the Arbitration. According to Counsel, it is immaterial whether any application under Section 34 of the Act for setting aside of the Award has been filed by the respondent, since the liberty given to the petitioner under Section 9 is independent of whether an application has been made for challenging the Award. He relies on Section 36 of the Act in relation to finality and enforcement of Arbitral Awards, particularly the proviso to sub Section (3) of Section 36; where the Court can follow the same principles provided under the Code of Civil Procedure, 1908 in relation to grant of stay of a money decree.
Counsel relies on 2014-1-LW. 888 L & T Finance Vs. JKS Constructions for the proposition that an application under Section 9 of the Act is maintainable both at the pre-reference stage as well as post award stage. In that case, the defence taken that such an application cannot be permitted to be converted into a step in aid of execution was rejected by the Court.
He next relies on a judgment reported in 2016-2-L.W.342 M/s. Samson Maritime Ltd. Vs M/s. Hardy Exploration & Production (India) Inc., on the point that once a decree is made by a Court, the decree itself imposes a mandate on the judgment-debtor to honour the decree and that the decree-holder is entitled to call upon the judgment- debtor to furnish security and attach the properties of the judgment- debtor. He relies on a judgment reported in 2011 SCC OnLine Del 3689 : (2011) 3 Arb LR 502 (Steel Authority of India Ltd. Vs AMCI PTY Ltd. & Anr.) for the proposition that there is no bar to seeking interim protection subsequent to making of the Award even if such rights had not been pressed by a petitioner before publishing of the Award in a Court. In that case, the respondent was directed to furnish security within a certain time frame in a post-Award scenario on the basis of a prima facie case made out that there was every likelihood of the enforcement proceeding being rendered infractuous unless such security was furnished.
Mr. Kapur submits that the respondent is in involved circumstances and has become commercially insolvent. He relies on statements made in the petition corroborated by financial reports that the present liabilities of the respondent are almost twice its assets and a substantial part of the respondent's assets have been charged in favour of various third parties; the charges created for exceeding the assets of the respondent. But most interesting is that the respondent is apparently using the judicial process to delay its obligations under various contracts to investors. He relies on certain observations made by the Learned Arbitrator in relation to the evidence given by the sole witness of the respondent to show that the Learned Arbitrator had serious reservation about the credibility of not only the evidence given but the entire defence taken by the respondent in the arbitration proceedings. In essence, Counsel submits that there is an immediate need for appropriate orders to be passed since the respondent may not have sufficient assets remaining in its possession to pay the amounts awarded by the Learned Arbitrator. Counsel relies on the recent amendments made to the 1996 Act, to stress on the need to put a decree-holder of a money decree passed in an Arbitral Award on a separate footing particularly to Section 36 of the Act.
The first point taken by Mr. Swatarup Banerjee, Counsel for the respondent is that the statutory time limit for filing an application for setting aside of the Arbitral Award under Section 34 of the Act has not been exhausted. According to him the three month ceiling from the date of publishing the Additional Award, being 5th March, 2018, would end on 6th June, 2018. He submits that the effect of the instant application is to deprive the respondent of its statutory right of challenging the Award. He relies upon a few dates to show that the three applications were affirmed some time in March, 2018 but were served on the respondent only on 4th May, 2018 and mentioned before this Court on 10th May, 2018. In short, Counsel believes that there is no urgency in the matter since the petitioner could have taken steps after 17th March, 2018 immediately after filing the applications. He further submits that by the Award dated 11th December, 2017 and the direction contained therein, the petitioner has been given sufficient protection in terms of payment of interest at the rate of 16 per cent per annum in the event of default on the part of the respondent to make the payment within thirty days from the date of publishing of the Award. He also takes the point that under Section 9(b) of the Act the only amount that can be secured in an application of this nature is the "amount in dispute in the Arbitration", which excludes the amount awarded in terms of the final Award published by the Learned Arbitrator. According to him, Rs.225 crores (approx) awarded to the petitioner is not the amount in dispute in the Arbitration but part and parcel of the final Award granted in favour of the petitioner, which cannot be the subject-matter of interim protection under Section 9 of the Act.
The next point submitted by Counsel is that the three applications are premature as the petitioner is seeking to entirely by-pass the execution process as provided for under Section 36 of the Act. He relies on a Delhi High Court decision reported in 2009 SCC OnLine Del 1268 : (2009) 159 DLT 634 (Sterling &Wilson Electricals Pvt. Ltd. Vs. Silicon Graphics Systems (India) Pvt. Ltd.) wherein it was held that an Award become inexecutable once a challenge to the same has been filed under Section 34 of the Act. In the decision, the Delhi High Court refused to direct the respondent to deposit the awarded amount in Court in view of an application for setting aside of the Award having been filed. It is also submitted by Counsel that the reliance placed by Mr.Kapur on Section 36 or the proviso under Sub-Section (3) is misplaced since the proviso would only apply in the case of an application filed under sub- Section (2) of Section 36 for stay of operation of the Arbitral Award. The proviso therefore, would only apply if the respondent had made an application for stay of the Award. However, the main point urged by Counsel in defence of the applications is that the respondent still has time to challenge the Awards and if reliefs as prayed for in the applications are granted, nothing would remain to be decided in the Section 34 application. Mr. Banerjee submits that the respondent is financially viable and has obtained good commercial ratings in terms of its business efficacy.
I have considered the submissions of Counsel appearing for the parties. The short question in these applications is whether the Award passed in favour of the petitioner and the direction contained therein can be the subject matter of a petition under Section 9 of the Act particularly when the time for making an application for setting aside of the Award has not expired. There is no doubt that the Award contains a clear and unambiguous direction on the respondent to pay a total sum of Rs.225 crores within a period of thirty days from the date of publishing of the Award that is, within 11th December, 2017. Today we are in the middle of May, 2018 and no amount has yet been paid by the respondent in compliance with the aforesaid direction contained in the Award. It is true that the respondent has not exhausted its time for filing an application challenging the Award, but on a realistic consideration of the factual situation, it is also true that the respondent has failed to honour its financial commitments to the petitioner from 15th January, 2013 when the money first became due; and has continued to default in its repayment obligations despite two extensions granted by the petitioner thereafter. Although the observations of the Learned Arbitrator with regard to the credibility of the respondent's defence in the Arbitration point to the conduct of the respondent, this Court should not dwell on the merits of the matter in an application contemplated under Section 9 of the Act. What the Court cannot ignore, however, is that the respondent has singularly failed to raise any believable defence to the claims of the petitioner under agreements it voluntarily entered into and has not made any effort to repay even a fraction of the total outstanding dues to the petitioner. The fact that the Learned Arbitrator upon consideration of the entire factual matrix has allowed the entire claim made by the petitioner including the principal, the interest and the costs reflects the merits of petitioner's claim. The allegations made in the petition with regard to the present financial condition of the respondent, though controverted, are really the only factual situation which is before this Court today. If Counsel for the respondent is to be believed that the respondent is in such good financial health, it would then invite the question; why is the respondent so resistant to paying the petitioner ?
While considering whether this Court is empowered to grant the reliefs as prayed for in the instant applications, it is useful to set out the language used in Section 9:
"9. 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, apply to a Court -
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it."
From the above it is clear that an application for interim measures can be made by a petitioner any time either before, during or after publishing of an Arbitral Award. But more important is that such an application can be made even before execution proceeding under Section 36 are filed by a petitioner in a post-Award scenario. The wording of the Section leaves no doubt that a petitioner is entitled to move a Court for protection and preservation of its assets even before it sets the process of execution of an Award in motion. What the section also entails is that the amount awarded in an arbitration can be secured if a petitioner foresees a real likelihood that the amount awarded will be disposed of or is at general risk akin to a scenario contemplated under Order XXXVIII Rule 5 of the CPC. The judgement-debtor under an award certainly has the right to challenge the award within a maximum period of three (3) months from the date on which the party making that application had received the arbitral award or within a further period of thirty (30) days after the three (3) months have elapsed, provided the Court is satisfied that the applicant was prevented by sufficient cause from making the application within the time provided under Section 34(3) of the Act. If the date of publishing of the Additional Award, being 5th March, 2018 is taken as the date from which the three months would start, even then the respondent has really not come up with any satisfactory answer to explain the curious lethargy in initiating the process of challenge to the Award.
In my view, Section 36 or the proviso contained therein, is not relevant since that would only apply in the backdrop of an application being filed by a judgment-debtor for stay of the arbitral award. The only relevant provision in these facts is Section 9 itself under which a petitioner clearly does not have to wait till the stage of execution of the Award. What needs to be seen is whether the petitioner can be compelled to wait for executing the Award and run the risk of losing that chance altogether, particularly when there is an unambiguous and unequivocal direction given for payment of the amount in question by the respondent to the petitioner and that too within a very specific time frame. The direction in the Award which this Court has to considered today should also have jolted the respondent into some sort of constructive action instead of sitting by and waiting for the petitioner to approach the Court. The least that the respondent could have done is to use an affidavit to bring its defence on record if the respondent had really been interested in stopping the Court in its tracks in securing the amount awarded. A formal direction for affidavits is not necessary for a party to take its defence seriously and a Court would generally tilt in favour of a litigant who shows promptness in defending itself against a claim which is as enormous as the one in the present facts.
This Court finds no merit in the submission that the petitioner has been adequately protected by the interest awarded at 16% per annum in the event of default on the part of the respondent in making the payment as contained in the award. The final paragraph of the Award can be construed to mean that the interest awarded is only part of the debt which fructified into a decree on 12th January, 2018 in favour of the petitioner. The argument of counsel appearing for the respondent that clause (b) of Section 9 would apply only to the "amount in dispute" in the arbitration and would not encompass the total amount awarded is untenable both in facts and in law. As stated above, the amounts which were directed to be paid by the Learned Arbitrator is a sum total of the principal, the interest as well as the costs claimed by the petitioner and the Award was made on that basis. Giving an unnatural spin to clause (b) of Section 9 would in my view defeat the very purpose of this Section which takes into account the plight of a decree-holder who faces the prospect of the Award being rendered ineffective. In the case of a money decree, the necessity for interim protection is even more crucial.
Since there have been several amendments to the 1996 Act, particularly to Sections 34 and 36; and as recent as on 23rd October, 2015; the decisions relied on by the counsel will have to be seen in the light of such amendments. Of relevance are the changes brought in Section 34 where before amendment, any challenge meant an automatic stay of the Arbitral Award. The decision
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relied on by the respondent must be construed on the aforesaid basis. The decision of the Madras High Court in L & T Finance Vs. JKS Constructions is relevant since in that case although a Section 34 had been filed, the conduct of the party in not pursuing it was frowned upon by the Court but the Court nevertheless rejected the objections taken that a Section 9 application cannot be converted into a step in aid of execution of an Award. The petitioner has prayed for an order directing the respondent to secure the amount awarded under the Arbitral Award and not for a direction upon the respondent to repay the said amount to the petitioner pending execution proceedings. The distinction is important since the respondent will only have to take steps to ensure that the amount awarded is secured so that the petitioner succeeds in its execution under Section 36, the petitioner will have the security of knowing that the Award will not be rendered infructuous. In view of the reasons as stated above, AP 242 of 2018, AP 243 of 2018 and AP 245 of 2018 are disposed of with the following directions. There will be an order directing the respondent to secure half of the total amount of Rs.225,55,72,875/- that is Rs.1,127,786,437.50p in favour of the petitioner. The petitioner will be entitled to seek interim protection with regard to securing the other half of the total amount awarded, in the event no challenge is made to the Award within 6th June, 2018. If the respondent continues to be as reckless as it has been in failing to take steps against the Award till date, the petitioner can proceed in terms of prayer (f) of the three Arbitration Petitions for securing the other half of Rs.225,55,72,875/-. I should make it clear that the only reason this Court did not allow prayer (f) of all the three applications is because 6th June, 2018 is just around the corner and the respondent should not be deprived of its statutory right to challenge the Award. The security shall be in cash in terms of prayer (f) of the three applications, to be deposited with the Registrar, Original Side within 28th May, 2018.