Dismissed

East Coast Railway v. M/S. Vaishnodevi Construction

Orissa HC12 Dec 2023WP(C)/40510/2023

Case brief

AI extract

What is this about?

This High Court dismissed the writ petition challenging an order imposing conditions on the Railway Authority for staying an arbitral award. The Court held that recorded reasons were not required as the petitioner undertook to deposit the full amount and cost of release, and the attached items did not fall under restricted Railway assets.

What did the court decide?

The writ petition was dismissed. Registry directed to communicate the order to the Court below.

East Coast Railway Vs M/S. Vaishnodevi Construction — Arbitration | Orissa HC (2023)

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IN THE HIGH COURT OF ORISSA, CUTTACK

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W.P.(C) No.40510 of 2023

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East Coast Railways, Khorda
& ors. ....... Petitioners
-Versus-
M/s. Vaishnodevi Construction
Cuttack. ....... Opposite Party
For Petitioner : Mr. S.S. Kashyap,
CGC
For Opposite Party :
...................
CORAM: JUSTICE SANJAY KUMAR MISHRA

Date of Hearing and Judgment: 12.12.2023

S.K. MISHRA, J.
1. This Writ Petition has been preferred challenging the order dated

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05.09.2023 passed in ARBP No.19 of 2017, vide which though the Court below allowed the petition dated 12.07.2023 filed by the Petitioner under Section-36 of the Arbitration & Conciliation Act, 1996, but imposed the following conditions:

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“In view of the above discussions, the petition dtd. 12.07.2023 filed by the petitioner u/s 36(2) of the Arbitration and Conciliation Act for stay of

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operation of award dtd. 30.05.2017 and stay of further proceedings in ARBP Execution Case No.198/2018 is allowed subject to deposit of the entire award amount along with the accrued interest from the date of award till the date of filing of this case by the petitioner . The aforesaid amount shall be deposited before the Registrar, Civil Courts, Cuttack, who in turn shall keep the same in fixed deposit with any nationalized bank, renewable at regular intervals and shall not release the same without the order of this Court. Most importantly, the petitioner is also allowed and directed to move for release of attached property after deposit of above amount. Put up on 31.10.2023 for bearing of the main case.”

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(Emphasis Supplied)

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2. As is ascertained from the documents appended to the Writ

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Petition, the arbitral award was passed way back on 30.05.2017. Though the present petitioner i.e. East Coast Railway, preferred an application under Section 34 of the Act, 1996, challenging the said award, did not move any application for stay of the operation of the impugned award in ARBP No.19 of 2017.

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3. However, warrant of attachment dated 17.07.2023 being issued

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to attach movable properties of Railway Authority in Execution Case No.198 of 2018 and properties being attached, the Petitioner/Railway Authority moved an application under Section 36 of the Act, 1996, on 12.07.2023. The seizure list discloses that Xerox Machine, Sofa, Computer, CPU, Voltas A.C. etc. 13 articles, were seized by the

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Executing Court. The application was dealt with by the Court below and disposed of on 05.09.2023 imposing the conditions to stay operation of the arbitral award dated 30.05.2017 so also stay of further proceeding in ARBP Execution No.198 of 2018, as has been extracted above.

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4. Mr. Kashyap, learned CGC drawing attention of this Court to Section 36 of the Act, 1996, submits, though the Court below has discretion to impose condition to stay the arbitral award, while doing

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so, it has to assign reasons to be record in writing. But the Court below

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has failed to do so while passing the impugned order.

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5. Mr. Kashyap further draws attention of this Court to Section 187

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of the Railways Act, 1989 and submits, in view of such restriction imposed under the said Section, the attachment cannot be without previous sanction of the Central Government.

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6. In view of such submission made by Mr. Kashyap, it is apt to reproduce below Section 36 of the Arbitration & Conciliation Act, 1996 so also Section 187 of the Railways Act, 1989.

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“Section 36. Enforcement - (1) Where the time for making an application to set aside the arbitral award under section 34 has expired, then, subject to the provisions of sub-section (2), such award shall be enforced in accordance with the provisions of the

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Page 3 of 8

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Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were a decree of the court.

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(2) Where an application to set aside the arbitral award has been filed in the Court under section 34, the filing of such an application shall not by itself render that award unenforceable, unless the Court grants an order of stay of the operation of the said arbitral award in accordance with the provisions of sub-section (3), on a separate application made for that purpose.

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(3) Upon filing of an application under sub-section (2) for stay of the operation of the arbitral award, the Court may, subject to such conditions as it may deem fit, grant stay of the operation of such award for reasons to be recorded in writing:

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Provided that the Court shall, while considering the application for grant of stay in the case of an arbitral award for payment of money, have due regard to the provisions for grant of stay of a money decree under the provisions of the Code of Civil Procedure, 1908 (5 of 1908)]

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[Provided further that where the Court is satisfied that a prima facie case is made out that, -

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(a) the arbitration agreement or contract which is the basis of the award; or

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(b) the making of the award,

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was induced or effected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under section 34 to the award.

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Explanation. - For the removal of doubts, it is hereby clarified that the above proviso shall apply to all court cases arising out of or in relation to arbitral proceedings, irrespective of whether the arbitral or court proceedings were commenced prior to or after the commencement of the Arbitration and Conciliation (Amendment) Act, 2015 (3 of 2016).]”

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(Emphasis Supplied)

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“187. Restriction on execution against railway property . – (1) No rolling stock, machinery, plant, tools, fittings, materials or effects used or provided

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by a railway administration for the purpose of traffic on its railway, or of its stations or workshops, shall be liable to be taken in execution of any decree or order of any court or of any local authority or person having by law the power to attach or distrain property or otherwise to cause property to be taken in execution, without the pervious sanction of the Central Government.

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2) Nothing in sub-section (1) shall be construed to affect the authority of any court to attach the earnings of a railway in execution of a decree or order .”

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(Emphasis Supplied)

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7. Though the learned Counsel for the Petitioner submits that no

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reason has been assigned while passing the said order in terms of subSection 3 in Section 36 of the Act, 1996, as it seems from contents of the impugned order, the learned Counsel representing the present Petitioner, filed a memo before the Court below undertaking therein to deposit the entire amount as directed by the Court while allowing the application for stay and also undertook to bear the cost of release of the properties , which have already been attached in the execution proceeding. The relevant portion of the impugned order is extracted below:-

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“05.09.2023 xxxxxxx On the other hand, the learned counsel for the OP has as such not filed any written objection and only submitted that even if the petition is allowed, the same shall be allowed with a direction of depositing of 100% of amount along with interest awarded in favour of the OP and they have no objection if the attached property is released. It is

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forthcoming that the OP/ the decree holder has not received any money till date but attachment order passed in Arbitration Execution 198/2018 has already been executed. Furthermore, one memo has also been filed by the petitioner that he undertakes to deposit the amount as directed by the Court while allowing the present application and also the petitioner shall undertake to bear the cost of release of attached property. The present case has been filed on 06.09.2017. Therefore, the award amount would include the principal amount and the interest accrued thereon till the date of filing of the present case.”

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(Emphasis Supplied)

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8. Mr. Kashyap drawing attention of this Court the seizure list, at

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page 71, further submits, in view of the restriction under Section-187

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of The Railways Act, 1989, the Court below was not justified to attach the said movable properties of the Railway without previous sanction of the Central Government.

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9. A query being made, Mr. Kashyap fails to meet the said query as to whether such a stand was taken before the Court below. That apart, the petition dated 12.07.2023, which was allowed by the Court below vide order dated 05.09.2023, subject to fulfilling the conditions imposed by the said order, has also not been disclosed in the writ petition to ascertain as to what was the ground taken in the said petition

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to substantiate the prayer made before the Court below for stay. That apart, the seized articles, as has been detailed in the seizure list, do not

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include any of the articles, as has been detailed under Section-187 of the Railways Act, 1989.

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10. In view of the above so also the conduct of the Petitioner-

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Railways, this Court is of the view that there is no infirmity or illegality in the impugned order passed by the Court below to impose such condition, while staying the operation of the arbitral award so also execution proceeding.

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11. Accordingly, the Writ Petition stands dismissed.

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12. At this juncture, Mr. Kashyap, learned CGC, orally prays for a

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direction to the Court below to expedite the hearing of the 34 Application filed by the Petitioner and conclude the same within a stipulated time frame.

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13. Since no such prayer has been made to the said effect and the Writ Petition has been dismissed, this Court is not inclined to pass such an order at this stage.

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14. However, it is open for the Petitioner to move an application to

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the said effect before the Court below assigning reasons to pray so. If such an application is moved, the Court below shall do well to deal with and dispose of the same in accordance with law.

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15. Since this Writ Petition is dismissed at the stage of admission by passing a reasoned order, Registry is directed to communicate a copy of this order to the Court below.

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16. Urgent certified copy of this order be granted on proper application as per rules.

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…….……………………
S.K. MISHRA, J.
Orissa High Court, Cuttack.
Dated, 12 th December, 2023/ Banita

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Signature Not Verified

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Digitally Signed Signed by: BANITA PRIYADARSHINI PALEI Designation: JR. STENOGRAPHER Reason: AUTHENTICATION Location: HIGH COURT OF ORISSA, C UTT ACK Date: 15-Dec-2023 16:31:37

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East Coast Railway v. M/S. Vaishnodevi Construction

Case brief

What is this about?

What did the court decide?

East Coast Railway v. M/S. Vaishnodevi Construction

Case brief

What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Statutes considered

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Case details

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