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M/s. Cygnus Investments & Finance Pvt. Ltd. v/s Kamala Ranjan Chakraborty & Others

    GA No. 971 of 2017 with RVWO No. 13 of 2017 (Original Side)

    Decided On, 30 August 2017

    At, High Court of Judicature at Calcutta


    For the Appearing Parties: S.N. Mitra, Sr. Advocate, A. Ray, Susanta Dutta, Debraj De, Advocates.

Judgment Text

The Court:

This is an application for review of an order passed on 17th February, 2017. In this application the Court was reminded that as an executing Court, the Court cannot go behind the decree and make an enquiry to find out whether the Arbitrator has properly exercised his jurisdiction. It is strenuously argued in support of the review application that there is an error apparent on the face of the record since the quoted portion of the report appearing from the impugned order, it would not appear that Deepak Traders was in any manner linked or related to the petitioner.

In order to appreciate the grounds on which the review was filed, it is necessary to refer to the order passed by this Court under review. The order reads:

'An egregious fraud has been committed on the Tribunal and also sought to be perpetrated on this Court by giving a complete misleading picture that the loan forming the subject matter of the arbitration proceeding was granted to the award- debtors which they had failed to repay. Learned Counsel appearing on behalf of the award-debtors submitted on an earlier occasion that this loan was never given to the award-debtors and in fact the beneficiary of the loan was M/s. Deepak Traders.

On the basis of the said submission an order was passed on 2nd December, 2016 which reads:

'The General Manager, State Bank of India, Teghoria Branch is directed to file a report in a sealed envelop with regard to the transaction details in relation to cheque nos.517402 and 517406 of account no.10261690285 for Rs.10 lakh and Rs.18.50 lakh which appear to have been credited to account no.10916351525 of Deepak Traders on 11th June, 2009 and 12th June, 2009. The said authorities shall also disclose the particulars of Deepak Traders including the account opening form and the person/s who is/are the authorised signatory/ies of Deepak Traders. The said report shall be filed within a week from the date of communication of this order, with the Registrar, Original Side, High Court. The parties are directed to communicate this order to the general manager immediately.'

Apparently, the bank was reluctant to comply with the said order unless the General Manager was threatened with an action including securing his presence in Court for non-compliance of the earlier order. The Bank Manager in compliance with the said order has filed a report which says:

'With reference to R.No:1985 dated 20th December, 2016 on the above subject, this is our humble submission that M/S KAMALA RANJAN CHAKRABORTY, MR BIKRAM CHAKRABORTY maintain SB A/c 10261690285 at our Teghoria Raghunathpur Branch. But the concerned debit transaction Rs.10,00,000/- & Rs.18,50,000/- were done at our Baghajatin Bazar (Kolkata) Branch code No:6789 on 11th June 2009 & 12th June 2009, therefore the concerned instrument also held by that branch. The A/c of M/S Deepak Traders (10916351525) was maintained at our Alipore, Kolkata Branch (Branch code: 0004). These things were already informed to M/s Kamala Ranjan Chakraborty vide there RTI dated 08/07/2016.'

Under such circumstances, this execution application is dismissed with costs assessed at Rs.1 lakh to be paid to the respondents within a week from date, failing which it would be open for the respondents to execute this order as a decree of Court.

The original envelope and the original letter dated 26th December, 2016 issued by the State Bank of India, Tegharia Raghunathpur Branch (8735), VIP Road, Kolkata- 700 059, is taken on record and shall be kept in the safe custody of the learned Registrar, High Court, Original Side. The parties are at liberty to obtain copies of the said letter from the learned Registrar.'

There cannot be any doubt that a person aggrieved by an award is required to file an application for setting aside of an award and an application in the nature of Section 47 of the Code of Civil Procedure shall not be entertained on grounds on which the award can be challenged.

However, the fact remains that the executing Court if in the course of hearing finds that a fraud was perpetrated on the tribunal and it shocks the conscience of the Court to allow execution of such award.

The loan itself is in dispute. There are serious doubts raised by the judgment-debtor in this proceeding with regard to the nature of transactions and it is not unknown that this kind of transactions are engineered for the benefit of other through a modicum of a personality and by a stratagem seemingly to give legality to such transactions. In the affidavit of asset filed on behalf of the judgment-debtor no.1 in paragraph 10 the judgment-debtor no.1 has stated : 'the alleged loan amount was transferred by the award-holder from the our account being no.10261690285 to the account of Deepak Traders in their account no.10916351525 with State Bank of India by using two separate cheque being no.517402 and 517406 which was taken over by the award holder in blank for payment of installments of loan. The cheque being no.517402 was used to transfer Rs.10,00,000/- and the cheque being no.517406 was used to transfer amounting Rs.18,50,000/- on 11.06.2009 and 12.06.2009 respectively. It is pertinent to state here that neither we had nor has any business or other relation with Deepak Traders. Deepak Traders is an organization of award-holders. We have never issued the said cheques to Deepak Traders. The award-holders have cheated us and practiced fraud upon us through the account of Deepak Traders. The loan amount was taken away by the award-holders by using the aforesaid two cheques in the year 2009. We have noticed the said fact much later and obtained the aforesaid information from bank by way of an application under Right to information Act. A copy of the letter dated 20-09-2016 evidencing such transfer is annexed hereto and marked with letter 'A'.'

In course of hearing on the basis of the directions passed from time to time various banking documents were produced which, prima facie, shows the involvement of Deepak Traders. There are contemporaneous transactions between the award-holder and the Deepak Traders which needs to be re-looked and re-examined. The Arbitrator did not have the occasion to consider such objections and it appears that the judgment-debtors were unrepresented. The judgment-debtors say that an Advocate-on-Record was engaged in the matter but he did not participate in the said proceeding. The concerned banks have produced documents to show that the plaintiff has a close nexus with Deepak Traders. The Branch Manager of the State Bank of India, Alipore Branch in its report filed in this proceeding made following disclosure:

* 'One Sri Deepak Kumar Singh was maintaining his S.B. Account bearing No.10916460476 with State Bank of India, Alipore Branch. The following documents in connection with the said S.B. Account are annexed hereto:

* Account Opening Form of the S.B. A/c No.01190022668 (Old) & 10916960476 (New).

Specimen signature of Sri Deepak Kumar Singh is appearing thereon. His recorded residential address is 1/1, Sahapur Colony, New Alipore, Kolkata – 700 053 and his place of work is Shantiniketan (9th Floor), Room No.6, 8 Camac Street, Kolkata – 700 024 as would be evident from the said account opening form. Nomination form and information sheet are part of the said account opening form.

* Copy of Driving Licence dated 04-02-2010.

* Copy of Voter ID.

* Copy of PAN Card No. AVDPS9883P

* Statement of Account

The said S.B. Account was opened on 19th August, 2006 and was operated singly by said Deepak Kumar Singh. There was no operation in the account since 19th December, 2007 and is now in 'Inoperative' status and has present balance of Rs.10451/=.

* In the said Branch, there was an Overdraft Account No.10916351525 (New Account) and 01050060079 (Old Account) being operated singly by Sri Deepak Kumar Singh since 19th September, 2006. The said Overdraft facility was secured by Fixed Deposit of Rs.5,40,000/=. The recorded address in the account was 8, Camac Street, Shantiniketan Building, 9th Floor, Room No.6, Kolkata – 700 013. The said account was inoperative since 12th June, 2009 and the Bank closed the said account on 13th July, 2016. A statement of account from 19th September, 2006 to 13th July, 2016 is enclosed.

In the said Overdraft account, a sum of Rs.10,00,000/= and Rs.18,50,000/= were credited on 11th June, 2009 and 12th June, 2009 respectively. The transactions took place at State Bank of India, Bagha Jatin Bazasr Ganguli Bagan Branch. A copy of the specimen signature as appearing in the Bank computer system is enclosed hereto. The account was opened on 19th September, 2006. The account opening form of this overdraft account is not immediately traceable in the branch. We are still putting our best effort to trace out the form. However, particulars of the account opening form retained in the system (computer) maintained in the branch are annexed hereto.

* Sri Deepak Kumar Singh was also having Fixed Deposit Account bearing No.01292022658 (new account no. 10916524114) in his name since 29th August, 2006. The said STDR was kept as security for the said Overdraft Account No.01916351525 of M/s. Deepak Traders. The said Fixed Deposit Account has been closed on 16/11/2007 and the proceeds thereof was credited to the overdraft account 10916351525 of M/s. Deepak Traders.

* Sri Deepak Kumar Singh was also sanctioned a Term Loan of Rs.18,00,000/= on 29th April, 2006 bearing Account No.10916538762 (New number) & 10593022668 (Old number). The outstanding balance in the account of Rs.17,91,918=68p was assigned in favour of Asset Reconstruction Company (India) Ltd. on 15th July, 2014. The account statement is enclosed hereto.

* The account opening form of the Fixed Deposit (Item No.3) and the Term Loan (Item No.4) are immediately not traceable.'

Similarly, the Branch Manager of the State Bank of India, Baghajatin Branch in a detailed report has made disclosures pertaining to Deepak Kumar Singh which reads:

'1. The Account No.10916351525 of M/s. Deepak Traders which is maintained at State Bank of India, Alipore Branch, was credited with sum of Rs.10,00,000/= and Rs.18,50,000/= on 11th June, 2009 and 12th June, 2009 respectively. The said transactions took place at our said Branch. The said payments were done vide Cheque No. 517402 and 517406 respectively. Cheque No. 517402 was signed jointly by Kamala Ranjan Chakraborty and Bikram Chakraborty for payment of Rs.10,00,000/= in favour of M/s. Deepak Traders. Accordingly, when the cheque was presented for payment at our said branch on 11th June, 2009, an amount of Rs.10,00,000/= was debited from account No. 10261690285 which was maintained at our State Bank of India, Tegharia, Raghunathpur Branch and stood in the name of Kamala Ranjan Chakraborty and Bikram Chakraborty, and account No. 10916351525 of M/s. Deepak Traders was credited by the said amount. In case of payment of Cheque No.517406, it was also signed jointly by Kamala Ranjan Chakraborty and Bikram Chakraborty and presented for payment of Rs.18,50,000/= in favour of M/s. Deepak Traders. The amount of Rs.18,50,000/= was debited from account No.1026190285 of Kamala Ranjan Chakraborty and Bikram Chakraborty on 12th June, 2009 and the said amount was credited to Account No.10916351525 of M/s. Deepak Traders.

Both the above mentioned cheques with credit vouchers are physically held by us and the copies of the same are enclosed hereto.

2. On 11th June, 2009, there was another transaction in the said account No. 10916351525 of M/s. Deepak Traders, which is maintained at our Alipore Branch in addition to credit transaction of Rs.10,00,000/= as mentioned in the earlier paragraphs. The transaction was for an amount of Rs.10,00,000/= which took place at our said branch vide Cheque No.226808 dated 10th June, 2009 which was drawn on the above mentioned account of M/s. Deepak Traders and signed by Mr. Deepak Kumar Singh for payment in favour of M/s. MFC Nirman (P) Ltd. Accordingly, Rs.10,00,000/= was debited from the account of M/s. Deepak Traders and the said amount was credited to Account No.10548712692 of MFC Nirman (P) Ltd which was maintained at State Bank of India, Lake Gardens Branch. The said cheque and credit voucher are held by us and copies of the same are annexed hereto.

3. M/s. Deepak Traders had opened another current No.30476219596 at out said branch on 2nd September, 2008. The account is inoperative and no transaction took place in the account since 2009. The statement of account is enclosed hereto. Copies of the specimen signature and account particulars appearing in the computer system are enclosed hereto. The account opening form for this Current account is yet to be traced.

4. Sri Deepak Kumar Singh had availed Demand Loan (Loan Account No.30448986272) for a limit of Rs.28,50,000/= from our said branch against the security of various bank’s fixed deposits for cumulative face value of Rs.30,00,000/=. The loan amount of Rs.28,50,000/= was sanctioned and disbursed on 6th August, 2008 through account No.10916351525 of M/s. Deepak Traders maintained at State Bank of India, Alipore Branch. The loan documents are held by our branch and copy of the same is annexed hereto. The loan was liquidated on 1st September, 2008 from the proceeds of the Bank Fixed Deposits held by this branch. The statement of loan account is enclosed hereto.

5. That one current account being A/c No.30240150458 was opened on 10th September, 2007 at our said branch in the name of M/s. Sailaja Construction (P) Ltd., in which Deepak Kumar Singh and Mrs. Pooja Singh, who had declared herself as wife of Mr. Deepak Kumar Singh, were the directors. The account opening form along with the KYC documents of the signatory and the company are held by us and copies thereof are annexed hereto. The said account is not alive in our books on account of no transaction in the account since 2008. Ledger extracts of the account obtained by us from Archive is annexed hereto. In fact, there was no significant

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transaction in the account. In our branch, we could not find out any account in the name of M/s. Deepak Commercial.' All these documents read together along with the award creates a genuine apprehension in the mind of the executing Court with regard to the manner in which the award was obtained. An opportunity was given to the parties to have a fresh reference. The award-debtors are agreeable. The award-holder, however, has put certain conditions which are not acceptable to this Court. The award-holder is already secured as the award-holder is in possession of the original title deeds of the property in question. The award-holder insists that the entire costs of the reference should be borne by the award-debtors and the award-debtors shall secure 50% of the claim amount before the commencement of the fresh proceeding. The award debtors are agreeable to share the expenses of arbitration. Having considered the nature of the disclosures made in this proceeding and the relative position of the parties in these transactions, I am not inclined to accept the preconditions put forth by the award-holder for commencement of a fresh reference. Under such circumstances, I am not inclined to review the order passed on 17th February, 2017. However, it is made clear that in case any fresh reference takes place, the Arbitrator in such proceeding shall not be influenced by the observation made in this order and shall decide such reference impartially. GA No.971 of 2017 and RVWO No.13 of 2017 are, accordingly, dismissed.