Avatar Singh Narang (Ex-Director of M/S. Sterling Kalks and Bricks Ltd.) v. Suresh Sharma and Ors.

Bombay HC15 Jan 2025IA/14877/2024

Case brief

AI extract

What is this about?

stay of execution; money decree; deposit and security; Order XLI Rule 1(3) CPC; Order XLI Rule 5(5) CPC; Bombay Amendment; sufficient cause; discretion to waive deposit; arbitral award enforceable as decree; Section 11 Arbitration and Conciliation Act 1996; Section 34; Section 37; Section 8; cross decree-holders; Suit No. 8136 of 1999; First Appeal No. 320 of 2025; City Civil Court Bombay; Avatar Singh Narang; Suresh Sharma; Sharmila U. Deshmukh

What did the court decide?

Stay of execution and implementation of the impugned judgment and decree dated 16.03.2022 passed by the City Civil Court at Bombay, qua the Applicant, without requiring deposit or security of the decreetal amount. ¶¶34

Avatar Singh Narang (Ex-Director of M/S. Sterling Kalks and… — Arbitration | Bombay HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether stay of execution of the money decree dated 16.03.2022 (Suit No. 8136 of 1999) should be granted pending the First Appeal, and if so, by directing deposit of the decreetal amount. +1 more

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Court's answer

The award of 19th June, 2006 is enforceable as a decree for Rs. 25,00,000/- against the original plaintiff (challenge under Sections 34 and 37 dismissed, SLP pending, no stay), while the plaintiff is a decree-holder against the Applicant for Rs. 23,50,000/-; both being decree-holders against each other in almost equivalent sums, there is no necessity of securing the payment due under the decree.

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Ratio / Principle

By the Bombay Amendment to Order XLI Rule 1 CPC, a proviso permits the Court to dispense with deposit or security where it deems fit for sufficient cause; discretion is vested in the Court to waive the deposit for sufficient cause.

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Key takeaways

This is a fit case for exercise of discretion: the decree is stayed qua the present Applicant without requiring him to secure the amount under the decree, and the Interim Application is allowed in terms of prayer clause (a).ratio¶¶33

Detailed headnote1 paragraphs

Bombay High Court (Sharmila U. Deshmukh, J.) allowed an Interim Application seeking stay of a money decree. The City Civil Court, by judgment and decree dated 16.03.2022 in Suit No. 8136 of 1999, declared the Agreement dated 18.04.1995 (MOU executed 19.04.1995) between the Plaintiff and Defendants Nos. 2 to 4 illegal and void ab initio and directed the Applicant (Defendant No. 3) to pay Rs. 23,50,000/- with 9% interest; First Appeal No. 320 of 2025 stood admitted on 12.02.2025. Under Order XLI Rules 1(3) and 5(5) CPC, with the Bombay Amendment proviso, the Court may dispense with deposit/security for sufficient cause. The Applicant held an arbitral award dated 19.06.2006 for Rs. 25,00,000/- enforceable as a decree (Sections 34/37 challenges dismissed; SLP pending, no stay), while the plaintiff held the Rs. 23,50,000/- decree. Cross-decrees being almost equivalent, securing the decreetal amount was unnecessary; execution was stayed qua the Applicant without deposit or security.

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51 Ia-14877-2024.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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INTERIM APPLICATION NO. 14877 OF 2024 IN

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FIRST APPEAL NO. 320 OF 2025

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Avatar Singh Narang ...Applicant In the matter between : Avatar Singh Narang ...Appellant Versus Suresh Sharma and Others ...Respondents

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Mr. Gautam Ankhad, Senior Advocate a/w Ms. Krupali Rajani, Hiral Thakkar, Aafreen S. Shaikh, Ms. Dipti Jadhav, Ms. Nikita Bhosale for the Applicant. Mr. Ashok Singh, Mr. Pravin Singh and Mr. Sameer Bothre for Respondent No. 1.

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——————

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Coram : Sharmila U. Deshmukh, J. Date : 26^th March, 2025.

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P. C. :

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1. Interim Application has been preferred seeking stay of the impugned judgment and decree dated 16^th March, 2022 passed by the City Civil Court in Suit No. 8136 of 1999.

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2. The First Appeal has been preferred challenging the judgment and decree of the Trial Court by which the present Applicant who was Defendant No. 3 was directed to pay sum of Rs. 23,50,000/- along with interest at the rate of 9% per annum by declaring that the Agreement dated 18^th April, 1995 executed between the Plaintiff and Defendant

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1 of 5

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Sairaj

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51 Ia-14877-2024.doc

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Nos. 2 to 4 is illegal and void ab initio. The First Appeal has already been admitted on 12^th February, 2025 and the issue before the Court today is whether the stay is required to be granted by directing the deposit of the amount considering the decree is money decree.

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3. Briefly stated, the facts of the case are that, the Plaintiff and the Defendants were directors of Defendant No. 1-Company. There were certain loans which were obtained from the financial institutions by the Defendant Nos. 2 to 4 and Memorandum of Understanding came to be executed on 19^th April, 1995 in which the plaintiff agreed to purchase the shares and Defendant Nos. 2 to 4 which includes the present Applicant agreed to sell the shares of Defendant No. 1-Company and part payment was made. The said Agreement contained an Arbitration clause. Subsequently, dispute arose between the parties pursuant to which the plaintiff filed Suit No. 8136 of 1999 against the Defendants which included the present Applicant for declaration that the Agreement is bad in law and for recovery of the amount which was paid.

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4. Learned counsel appearing for the Applicant submits that the Arbitration clause contained in the Memorandum of Understanding was invoked by the present Applicant and Application under Section 11 of the Arbitration and Conciliation Act, 1996 was filed before the Madhya Pradesh High Court in which the Arbitrator came to be

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2 of 5

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Sairaj

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51 Ia-14877-2024.doc

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appointed. He submits that on 19^th June, 2006, award came to be passed in favor of the present Applicant for sum of Rs. 25,00,000/along with interest. He submits that award came to be challenged under Section 34 and then under Section 37 of the Arbitration and Conciliation Act, 1996, which came to be dismissed. He submits that before the Apex Court, notice has been issued however, the Award has not been stayed. He submits that the Award is enforceable as decree and in that terms, he is a decree-holder as against the plaintiff.

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5. Per contra, learned counsel appearing for Respondents submits that the Arbitration clause was considered by the Trial Court while decreeing the suit. He submits that though the Defendants were made party to the proceedings before the Trial Court, no Application under Section 8 of the Arbitration and Conciliation Act was filed, though Written Statement was filed. He submits that despite thereof proceedings were initiated under Arbitration and Conciliation Act. He submits that the Trial Court after considering the Arbitration proceedings have declared the Agreement to be null and void and have directed the present Applicant and other Defendants to make the payment. He submits that thus, the same is a money decree and deposit is the rule. He would further submit that under the Memorandum of Understanding executed, the shares of the company were sold to the plaintiff, which were within the lock-in period and

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3 of 5

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Sairaj

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51 Ia-14877-2024.doc

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there was certain loans taken from the financial institutions. He submits that in the proceedings before the Debt Recovery Tribunal, the present plaintiff has not been considered as a Director for the purpose of payment of loans. He submits that all these aspects were considered by the Trial Court while decreeing the suit.

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6. I have considered the submissions and perused the record.

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7. The present Appeal has been filed under the provisions of Order XLI, Rule 1 of Code of Civil Procedure, 1908 and Order XLI, Rule 1 (3) of CPC provides that where the Appeal is against a decree for payment of money, the Appellant shall within such time as the Appellate Court may allow, deposit the amount disputed in the Appeal or furnish such security in respect thereof as the Court may think fit. Rule 5 of Order XLI deals with ‘Stay by Appellate Court’. Sub-rule (5) of Rule 5 provides that 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. However, by the Bombay Amendment to Rule 1 of Order XLI, proviso has been added that the Court may dispense with deposit or security where it deems fit for sufficient cause. Thus, there is discretion vested in the Court to waive the deposit for sufficient cause.

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8. Against the background of the statutory provision, if the facts of

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Sairaj

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51 Ia-14877-2024.doc

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the present case are seen, without going into the merits of the matter, the position which exists today is that the present Applicant is having an Award in his favor as against which the challenge under Sections 34 and 37 has been dismissed and Special Leave Petition is pending before the Apex Court. The order of 1^st September, 2022 passed by the Apex Court records the statement made by the learned Advocate for the Plaintiff that he will not alienate his properties. It is also not disputed that there is no stay granted by the Hon’ble Apex Court to the Arbitral Award of 19^th June, 2006. The award is thus, enforceable as a decree for payment of Rs. 25,00,000/- against the original plaintiff. Similarly, the plaintiff is a decree-holder against the present Applicant for a sum of Rs. 23,50,000/-. Considering that both are decree-holders as against each other in a sum which is almost equivalent, there is no necessity of securing the payment due under the decree. This is a fit case where discretion is to be exercised and the decree be stayed qua the present Applicant without requiring to secure the amount under the decree.

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9. In light of the above, Interim Application is allowed in terms of prayer clause ‘a’ which reads thus:

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“a. This Hon’ble Court be pleased to stay the execution and implementation of impugned order dated 16.03.2022 passed by the City Civil Court at Bombay.”

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[Sharmila U. Deshmukh, J.]

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5 of 5

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Sairaj

Avatar Singh Narang (Ex-Director of M/S. Sterling Kalks and Bricks Ltd.) v. Suresh Sharma and Ors.

Case brief

What is this about?

What did the court decide?

Avatar Singh Narang (Ex-Director of M/S. Sterling Kalks and Bricks Ltd.) v. Suresh Sharma and Ors.

Case brief

What is this about?

What did the court decide?

Why is it important?

What the court decided

Issues for consideration

Statutes considered

Procedural history

Parties & counsel

Coram

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