Case: Ramsarup Industries Limited &amp; Others Vs. Tata Capital Financial Services Limited

Sick Industrial Companies (Special Provisions) Act, 1985 without permission of the BIFR.The facts in the case in hand are completely different. In the present case the Arbitration proceedings are pending. As observed by the Division Bench in the order dated 17 February 2014 the parties are sufficiently protected in view of the pending arbitration proceedings. Further, as noted above and significantly we cannot be unmindful that there is a consent order dated 19 June 2012 in pursuance of which a private receiver was appointed to sell the mortgaged properties. We also cannot overlook the further orders dated 13 February 2013 (Supra) of the learned Single Judge whereby the very issue of the pendency of the BIFR proceedings came to be adjudicated which interse between the parties, remains undisturbed till date . Things do not stop at this as by further orders dated 17 February 2014 of the Division Bench (supra) as confirmed by the Apex Court by the order dated 2 May 2014 (supra), the sale stands confirmed in favour of the Respondent. The learned Single Judge is right in his conclusion that the cumulative effect of these orders is that there is no escape from the fact that the Appellants cannot reopen the issues and obstruct the execution of the conveyance which is a only ministerial act to be undertaken by raising a sole plea on the decision of the learned Single Judge in the Armada (Singapore) Pte Ltd. (supra). We are of the clear view that the issue as regards BIFR proceedings undoubtedly stood concluded between the parties (the respondent and the guarantors) in view of the decision of the learned Single Judge dated 13 February 2013 (supra) in the such circumstances of the case in hand.19. In our opinion the reliance of the Appellants on the decision of Delhi High Court in Ankur Drugs and Pharma Ltd. (supra) would also not assist the Appellants. This was the case in which the Appellant was in liquidation as also a reference under the SICA was pending and in view of this position the Appellant had prayed for stay of the arbitration proceedings as also a plea was taken that the arbitration proceedings cannot taken against the guarantors.. The learned Arbitrator had rejected the objection of the Appellants. In this context the learned Single Judge of Delhi High Court considering the position in law, stayed the arbitral proceedings till such time a leave of the BIFR is obtained. As can be seen from these facts Ankur Drugs and Pharma Ltd.(supra) was not a case where there was any consent order between the parties. It was also not a case where the issue on the plea of pendency of BIFR proceedings in the context of a consent order of sale of the mortgaged properties was adjudicated as in the present case. It was also not a case where under the orders of the Division Bench in the light of the consent terms, the sale came to be confirmed in favour of the present respondent. Admittedly the order of the Division Bench dated 17 February 2014 was confirmed by the Apex Court. In view of this clear position we do not agree to the reliance by the Appellants on the decision of the learned Single Judge of the Delhi High Court in Ankur Drugs and Pharma Ltd. (Supra)20. There is no bar that the financial institution and the guarantor cannot enter into a compromise in a Section 9 application. The parties filed consent terms and had proceeded accordingly. The sale has been confirmed upto the Supreme Court. Therefore, the further consequential steps and proceedings in the present case, cannot be halted, at the instance of the appellants, who have themselves filed the consent terms and the parties having proceeded accordingly. There was nothing wrong when the consent terms were recorded and modified further by agreement. The rights have been crystalised, at least between the Respondent and the guarantor (whose property is in question) much before the filing of BIFR application by Respondent No.1. The impugned order is in consequent to it.21. We are considering the scope and purpose of Section 9 of the Arbitration Act, 1996, in the peculiar present fact and circumstances. So also the scope of inquiry under section 22 is somewhat different as the consent terms were between Respondent/financial institution and the guarantor, prior to the invocation of the BIFR proceedings by the Respondent-Industry. A statement is also made by the learned Counsel for the Appellants that the property involved in the present proceedings is not the property owned by the company/undertaking but of the guarantor only and that the same is not subject matter of the proceedings before the BIFR. Thus the sale of property and the consequential ministerial act of its execution of conveyance in the background in the facts of the case cannot be halted at the instance of Appellant even though it arose out of Section 9 proceedings, pending arbitration before the Arbitral Tribunal and/or even the BIFR proceedings in question. All are the distinct and separable proceedings.22. The judgments cited on law on the scope of Section 22 of the SICA need no discussion as the law is settled. As noted above the same was subject matter of order dated 13 February 2013 and as recorded by the learned Single Judge has admittedly attained finality. We have to deal with the case in hand on the facts as they stand which we have recorded above. We are concerned with the implementation/execution inter-alia application based upon the consent terms between financial institution and the guarantor. The industrial/companys (Respondents) arbitration is pending before the Arbitral Tribunal. There is no executable order passed under Section 9 application against the company and/or its property. There is no coercive steps taken in this proceeding against the Respondent Industry/Company or its property pending BIFR proceedings. Therefore, in view of the consent terms finality so attained, we see no reason to interfere with the order so passed by the learned Judge.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]17. Admittedly, the properties in question belong to Appellant Nos.3 to 5 who are the guarantors and these properties are mortgaged properties and not owned by theThere is no dispute that the sale of these properties was agreed between the parties in view of the consent order dated 19 June 2012 passed in Arbitration Petition No.707 of 2012. The Appellants in Chamber Summons No.60 of 2013 (supra) had attempted to nullify the effect of the consent order by raising a plea that subsequent to the consent order dated 19 June 2012 a reference as filed by Appellantwas registered with the BIFR on 21 November 2012 and thus, in view of the provisions of Section 22(1) of SICA, further proceedings to sell the said properties ought to be stayed. These prayers of the Appellants were rejected by a detailed order of the learned Single Judge dated 13 February 2013, which was passed taking into consideration the principles of law on the issue as laid down by the Apex Court, including the conduct of the parties. As noted above, the private receiver proceeded to sell the properties, the Respondents offer for an amount of Rs.4 crore was accepted. By order dated 17 February 2014 of the Division Bench (supra), the sale is confirmed in favour of the Respondent. Significantly this order of the Division Bench was confirmed by the Apex Court by its order dated 2 May 2014 in SLP Civil no.9997 of 2014. If this be the position we are unable to appreciate as to how only on the decision in the case of Armada (Singapore) Pte Ltd. (supra) the Appellants could approach the learned Single Judge seeking a stay on the execution of the conveyance.18. Upon considering the decision of the learned Single Judge in Armada (Singapore) Pte Ltd. (supra), we are in complete agreement with the observations of the learned Single Judge that this decision in no manner would assist the Appellants. In Armada (Singapore) Pte Ltd. (supra) a reference under Section 22 of the SICA was pending against the company against whom a foreign award was passed by the learned Arbitrator who came to be appointed under the English Arbitration Act,1996. In the facts of the case and before the foreign award could be held to be enforceable as per the provisions of the Arbitration Act, it was held that there was no bar under Section 22 of the SICA to declare that the foreign award rendered in favour of the petitioner therein being enforceable as decree of the Court. In this context, the learned Single Judge made the following observations in paragraphs 37 and 42:37. As and when any application for execution of the said award as a decree is pressed by the petitioner and if any coercive orders are proposed to be passed which are prohibited under Section 22 of SICA, the executing Court can consider the effect thereof. Be that as it may, the petitioner has already applied for appropriate direction before the BIFR and thus I am inclined to accept the submission of the learned senior counsel for the respondent that no coercive orders can be passed by this Court for execution of the said foreign award as a decree of this Court at this stage.42. This Court in the case of Pol India Projects Limited (supra) has also adverted to the judgment of the Delhi High Court in the case of Penn Racquet Sports Vs. Mayor International Limited, reported in ILR (2011) Delhi 181 has held that the award should be contrary to fundamental policy of Indian law for the Court of India for recognition and enforcement of the foreign award. The judgment in the case of Shri Lal Mahal Ltd. (supra) and the judgment of this Court in the case of Pol India Projects Limited (supra) squarely apply to the facts of this case. In my view, scope of objection under Section 48 to the enforcement of the foreign award is very limited. None of the objections raised by the Respondent fall under any of the grounds permissible under Section 48 of the Arbitration Act. In my view, the respondent has not furnished any proof before this Court as to why the enforcement of the foreign award may be refused. Both the foreign awards are thus enforceable under Part II of the Arbitration Act and are binding for all the purposes on the parties under Section 34 of the Arbitration Act. I am therefore of the view that the foreign awards are already stamped as decrees. However, in view of the pendency of the proceedings before the BIFR, the petitioner would not be entitled to take steps in execution of the award and seek any relief which would be in violation of Section 22 of Sick Industrial Companies (Special Provisions) Act, 1985 without permission of the BIFR.The facts in the case in hand are completely different. In the present case the Arbitration proceedings are pending. As observed by the Division Bench in the order dated 17 February 2014 the parties are sufficiently protected in view of the pending arbitration proceedings. Further, as noted above and significantly we cannot be unmindful that there is a consent order dated 19 June 2012 in pursuance of which a private receiver was appointed to sell the mortgaged properties. We also cannot overlook the further orders dated 13 February 2013 (Supra) of the learned Single Judge whereby the very issue of the pendency of the BIFR proceedings came to be adjudicated which interse between the parties, remains undisturbed till date . Things do not stop at this as by further orders dated 17 February 2014 of the Division Bench (supra) as confirmed by the Apex Court by the order dated 2 May 2014 (supra), the sale stands confirmed in favour of the Respondent. The learned Single Judge is right in his conclusion that the cumulative effect of these orders is that there is no escape from the fact that the Appellants cannot reopen the issues and obstruct the execution of the conveyance which is a only ministerial act to be undertaken by raising a sole plea on the decision of the learned Single Judge in the Armada (Singapore) Pte Ltd. (supra). We are of the clear view that the issue as regards BIFR proceedings undoubtedly stood concluded between the parties (the respondent and the guarantors) in view of the decision of the learned Single Judge dated 13 February 2013 (supra) in the such circumstances of the case in hand.19. In our opinion the reliance of the Appellants on the decision of Delhi High Court in Ankur Drugs and Pharma Ltd. (supra) would also not assist the Appellants. This was the case in which the Appellant was in liquidation as also a reference under the SICA was pending and in view of this position the Appellant had prayed for stay of the arbitration proceedings as also a plea was taken that the arbitration proceedings cannot taken against the guarantors.. The learned Arbitrator had rejected the objection of the Appellants. In this context the learned Single Judge of Delhi High Court considering the position in law, stayed the arbitral proceedings till such time a leave of the BIFR is obtained. As can be seen from these facts Ankur Drugs and Pharma Ltd.(supra) was not a case where there was any consent order between the parties. It was also not a case where the issue on the plea of pendency of BIFR proceedings in the context of a consent order of sale of the mortgaged properties was adjudicated as in the present case. It was also not a case where under the orders of the Division Bench in the light of the consent terms, the sale came to be confirmed in favour of the present respondent. Admittedly the order of the Division Bench dated 17 February 2014 was confirmed by the Apex Court. In view of this clear position we do not agree to the reliance by the Appellants on the decision of the learned Single Judge of the Delhi High Court in Ankur Drugs and Pharma Ltd. (Supra)20. There is no bar that the financial institution and the guarantor cannot enter into a compromise in a Section 9 application. The parties filed consent terms and had proceeded accordingly. The sale has been confirmed upto the Supreme Court. Therefore, the further consequential steps and proceedings in the present case, cannot be halted, at the instance of the appellants, who have themselves filed the consent terms and the parties having proceeded accordingly. There was nothing wrong when the consent terms were recorded and modified further by agreement. The rights have been crystalised, at least between the Respondent and the guarantor (whose property is in question) much before the filing of BIFR application by Respondent No.1. The impugned order is in consequent to it.21. We are considering the scope and purpose of Section 9 of the Arbitration Act, 1996, in the peculiar present fact and circumstances. So also the scope of inquiry under section 22 is somewhat different as the consent terms were between Respondent/financial institution and the guarantor, prior to the invocation of the BIFR proceedings by theA statement is also made by the learned Counsel for the Appellants that the property involved in the present proceedings is not the property owned by the company/undertaking but of the guarantor only and that the same is not subject matter of the proceedings before the BIFR. Thus the sale of property and the consequential ministerial act of its execution of conveyance in the background in the facts of the case cannot be halted at the instance of Appellant even though it arose out of Section 9 proceedings, pending arbitration before the Arbitral Tribunal and/or even the BIFR proceedings in question. All are the distinct and separable proceedings.22. The judgments cited on law on the scope of Section 22 of the SICA need no discussion as the law is settled. As noted above the same was subject matter of order dated 13 February 2013 and as recorded by the learned Single Judge has admittedly attained finality. We have to deal with the case in hand on the facts as they stand which we have recorded above. We are concerned with the implementation/executionapplication based upon the consent terms between financial institution and the guarantor. The industrial/companys (Respondents) arbitration is pending before the Arbitral Tribunal. There is no executable order passed under Section 9 application against the company and/or its property. There is no coercive steps taken in this proceeding against the Respondent Industry/Company or its property pending BIFR proceedings. Therefore, in view of the consent terms finality so attained, we see no reason to interfere with the order so passed by the learned Judge.