Disposed

M/S. Mcees Trading v. Johnson Stephen

Kerala HC29 Mar 2021Con.Case(C)/629/2021

Case brief

AI extract

What is this about?

The court disposed of a contempt petition filed against bank officials who refused to unfreeze a loan account, believing a status quo interim order was still valid. After examining the 10th March 2021 final arbitral award order, the court clarified that prior interim orders had ceased to exist upon the final judgment.

What did the court decide?

Contempt case disposed without punishment; judgment dated 05.03.2021 corrected to clarify relief granted was partial.

M/S. Mcees Trading Vs Johnson Stephen — Arbitration | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MRS. JUSTICE MARY JOSEPH

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MONDAY, THE 29TH DAY OF MARCH 2021 / 8TH CHAITHRA, 1943

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Con.Case(C).No.629 OF 2021 IN Arb.A. 54/2020

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AGAINST THE ORDER/JUDGMENT IN Arb.A 54/2020 OF HIGH COURT OF KERALA

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PETITIONERS/respondents 1 to 3:

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1 M/S. MCEES TRADING DOOR NO.34/767 A, GESIMA, KRRA-78, KANNANTHODATH ROAD, EDAPALLY P.O., KOCHI-682 024.

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2 ANOOP UNNIKRISHNAN, THE PARTNER, M/S.MCEES TRADING, DOOR NO.34/767 A, GESIMA, KRRA-78, KANNANTHODATH ROAD, EDAPALLY P.O., KOCHI-682 024.

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3 SUNIL KUMAR T.K., THE PARTNER, M/S.MCESS TRADING, DOOR NO.34/767 A, GESIMA, KRRA-78, KANNANTHODATH ROAD, EDAPALLY P.O., KOCHI-682 024.

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BY ADVS. SRI.VIZZY GEORGE KOKKAT SRI.C.HARIKUMAR SRI.RENJITH RAJAPPAN SMT.SRUTI RAVINDRANATHAN SHRI.ABHIRAM T.K.

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RESPONDENTS/APPELLANT AND 4TH RESPONDENT:

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1 JOHNSON STEPHEN AGED 50 YEARS S/O.STEPHEN, PALLICKA HOUSE, KOTTAMAM, KALABATAPURAM ROAD, KALADY, ERNAKULAM-683 574.

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2 SEEMA YADAV, AGED 42 YEARS D/O.UMA SHANKAR YADAV, SENIOR MANAGER AND BRANCH HEAD, THE AXIS BANK, EDAPPALLY BRANCH, VITHAYATHIL BUILDING, NELSON MANDELA ROAD, EDAPALLY, ERNAKULAM-682 024.

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THIS CONTEMPT OF COURT CASE (CIVIL) HAVING BEEN FINALLY HEARD ON 23-03-2021, THE COURT ON 29-03-2021 DELIVERED THE FOLLOWING:

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Con.Case(C).No.629 OF 2021

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JUDGMENT

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Dated this the 29^th day of March, 2021

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Petitioners are respondents 1 to 3 and the respondents are the appellant and 4^th respondent in Arb. Appeal No.54 of 2020. This Court by judgment dated 05.03.2021 partly allowed the Arbitration Appeal and issued an ad-interim injunction restraining the 1^st respondent, its partners and agents or persons acting under them from alienating, encumbering and dealing with the assets of it in any manner prejudicial to the interest of the appellant till the arbitration proceedings are initiated before an Arbitrator, who may be appointed in an application filed under Section 11 of the Act, pending consideration of this Court as Arbitration Request No.111 of 2020. This Court has granted the above relief only.

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Even after passing of the final judgment as above, the 2^nd respondent, who is the Branch Manager of Axis Bank, Edappally Branch in collusion with the 1^st respondent

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Con.Case(C).No.629 OF 2021

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refused to transact with loan Over Draft Account No. 919030046197357 of the firm under the guise that the order freezing it is in force as specific mention is not made in judgment dated 05.03.2021 that the reliefs other than injunction are declined. She is still performing as if the order freezing the account was maintained, by a wrong interpretation of the judgment passed by this Court on 05.03.2021 in Arb. Appeal No.54 of 2020. In the above circumstances that this Contempt Case is filed by the petitioners.

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It is contended by the respondent that on the

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strength of the interim orders passed by this Court on 29.12.2020 and 22.01.2021, they are performing as averred. It is also contended that contempt will not lie, since this Court has mentioned in the impugned judgment that the appeal as well as C.M.A.(Arb) No.766 of 2020 are allowed. The learned counsel has pointed out that at the time of admission of the appeal, a Single Bench of this Court has issued a direction to respondents 4,5 and 6 by order passed on 29.12.2020 to maintain status quo in all

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Con.Case(C).No.629 OF 2021

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respects in respect of the accounts maintained by the 1^st respondent in their respective Banks for a period of four weeks.

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Attention is also invited to an interim order passed by another Single Bench of this Court on 22.01.2021 in I.A. No.2 of 2020 in Arb. Appeal No.54 of 2020, permitting the 4^th respondent bank to receive/permit credits from the 1^st respondent firm by maintaining the status quo order issued on the basis of an undertaking made before it by the 4^th respondent that they will not transfer or disburse any amount from the aforesaid account unless and until directed by this Court. It is further directed that the said order is equally applicable to respondents 1 to 3 and they are at liberty to make payment by maintaining status quo. It was clarified that there shall not be any disbursement of the amount unless and until the interim order is decided on merits. Since the original order directing to maintain status quo was passed for four weeks from 29.12.2020, the order modified on 22.01.2021 will also be in force for four weeks. Whatever it may be, the orders passed on 29.12.2020 and

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Con.Case(C).No.629 OF 2021

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22.01.2021 are only interim orders passed in Arb. Appeal No.54 of 2020 and those would have effect only till the said appeal is disposed of by a final judgment. Arb. Appeal is disposed of by this court by judgment passed on 05.03.2021.

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Vide judgment dated 05.03.2021, this Court has granted only an ad-interim order of injunction which was the third relief sought in C.M.A.(Arb) No.766 of 2020 and from the discussion made in paragraphs 26, 27 and the last portion of the judgment, what is intended by this Court is clear. But, due to oversight, the Arbitration Appeal was mentioned in the judgment as allowed and the impugned order as set aside. CMA(Arb.) No.766/2020 was also mentioned as allowed. When only one relief among several sought by the appellant was allowed, the reference in the judgment ought to have been “Arbitration Appeal is allowed in part”, “the impugned order to the extent it disallowed the third relief is set aside” and “CMA(Arb.) No.766/2020 stands allowed in part”. The decretal portion of the judgment is extracted hereunder :

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Con.Case(C).No.629 OF 2021

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“In the result, Arbitration Appeal stands allowed. The impugned order is set aside. CMA(Arb.) No.766/2020 stands allowed and an ad-interim order of injunction is passed under Section 9(1)(III)(b) of the Act restraining the 1^st respondent, it's partners and agents from alienating, encumbering and from dealing with the assets of it in any manner prejudicial to the interest of the appellant till the arbitration proceedings are initiated before an Arbitrator to be appointed by this Court in an application filed under Section 11 of the Act as Arbitration Request No.111 of 2020 and pending consideration.”

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It is clear from the above that what was intended

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to be granted and was granted is only the third relief sought by the appellant. Though it was not mentioned that the other reliefs are declined, specific mention being made to the effect that only an ad-interim injunction is granted, there cannot be any scope to entertain a doubt about the relief granted. True that, this Court has omitted to state in the impugned judgment that reliefs other than the one granted were declined. But a reading of the judgment in its entirety gives a clear indication on what was actually granted.

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Any relief if not granted is only declined. However, to have more clarity and to avoid further controversial interpretations in the matter, this Court is inclined to correct the error

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Con.Case(C).No.629 OF 2021

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apparent on the face of the record that has crept in the judgment, by adding the words 'in part' in the last portion of the judgment after, “Appeal is allowed” and “CMA(Arb.) No.766/2020 is allowed”. The sentence, “the impugned order is set aside”, shall also be substituted with “the impugned order to the extent it declined to grant relief No.3 is set aside.”

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It is clarified in the interim order passed on 22.01.2021, in modification of the original interim order passed on 29.12.2020 that the said order will be effective until the case is decided on merits. Therefore, there is scope for the modified order to remain in force only till Arb. Appeal No.54 of 2020 is decided finally on merits. A judgment having been passed by this Court in Arb. Appeal No.54 of 2020 on 05.03.2021, the interim order will stand vacated automatically with effect from that date.

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The contention of the petitioners was that under the guise of the status quo order passed by this Court, 4^th respondent is refusing to lift the order freezing the loan Over draft account No.919030046197357 of the firm and

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Con.Case(C).No.629 OF 2021

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thereby they are prejudiced. It is pertinent also to note that vide order passed on 29.12.2020 this Court has directed to maintain status quo in all respect of the accounts maintained by the 1^st respondent in their respective banks for a period of four weeks. The commercial court though has passed an interim order directing to freeze the accounts, at the time of passing of the final order in C.M.A. (Arb.) No.766 of 2020 and filing of Arb. Appeal No.54 of 2020, that was vacated. Therefore, at the time of admission of the appeal, an order freezing the loan account was not there. Above being the context, the impact of the order of status quo passed by this Court while admitting the appeal is only to maintain the situation that was existing at the time of filing of C.M.A. (Arb.) No.766 of 2020.

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Therefore, this Court is in darkness as to how the respondents had performed on the impression that the order freezing the accounts is maintained by the status quo order passed by this Court on 29.12.2020. This Court finds that the respondents had misconceived and misinterpreted the order to act accordingly.

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Con.Case(C).No.629 OF 2021

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In the above circumstances, this Court is inclined

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to clarify that the order of status quo and order of modification of it vide interim orders passed will no longer exist, as lives of those last only till the final order is passed on merits vide judgment dated 05.03.2021 in Arb. Appeal No.54 of 2020. Therefore, the respondents are bound only to act in terms of the direction issued by this Court in judgment dated 05.03.2021.

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In the above context, absolutely no reason is found to proceed against the respondents under the provisions of Contempt of Court Act, 1971 and to punish them. In B.S.N. Joshi and Sons Limited v. Ajoy Mehta and another [(2009) 3 SCC 458], in a context of non-compliance of the final order by misconstruing it with interim order, the Apex Court has held that after passing of final order/judgment, interim order could not have been considered and found to be continuing.

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In the result, the Contempt Case stands disposed of issuing directions to correct the last portion of the

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Con.Case(C).No.629 OF 2021

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judgment which has created all confusions about judgment

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dated 05.03.2021 accordingly.

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Sd/- MARY JOSEPH, JUDGE

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ttb

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Con.Case(C).No.629 OF 2021

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APPENDIX

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PETITIONERS' EXHIBITS:

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ANNEXURE A1 THE CERTIFIED COPY OF JUDGMENT IN ARB.A.NO.54 OF 2020 OF THIS HON'BLE COURT DATED 05.03.2021.

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ANNEXURE A2 THE TRUE COPY OF THE LEGAL NOTICE DATED 12.03.2021 ISSUED BY THE PETITIONERS COUNSEL TO THE 2ND RESPONDENT.

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//TRUE COPY//

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P.S. TO JUDGE

M/S. Mcees Trading v. Johnson Stephen

Case brief

What is this about?

What did the court decide?

M/S. Mcees Trading v. Johnson Stephen

Case brief

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