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TMI Blog2024 (8) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Arbitral Tribunals are prohibited to pass any order under Section 17 of the Arbitration Conciliation Act, 1996 against IL FS or any of its Group Companies. Award passed, if any was to be kept in sealed cover till final decision of the petition under Section 241 and 242 of the Companies Act, 2013 pending before the NCLT. It was further observed that after the Award is given in favour of the IL FS or any of its Group Companies, in such case, the Award need not be kept in sealed cover, even during the pendency of the Company Petition. An IA No.2114 of 2021 was filed by Respondent - Sadbhav Engineering Ltd. This Tribunal in the order has observed that the order dated 26.05.2022 clearly indicate that Tribunal did not enter into the issues raised by the respective parties. It was further observed that the observations made in the order dated 26.05.2022 cannot be read to mean that it has in any manner varied the order dated 15.10.2018 passed in the Appeal, which was operating till date. It is reiterated that order dated 26.05.2022 neither vary, nor modified the order dated 15.10.2018 or the entire order dated 11.01.2019. The only modification was made in paragraph 2 of the order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has been claimed from IL FS Group. NCLT passed order on 01.10.2018 superseding the existing Board of Directors of IL Fs with a Board appointed on the recommendation of the Central Government. NCLT, however, did not grant any interim order. An appeal was filed by the Union of India against the order dated 01.10.2018 in this Tribunal and this Tribunal on 15.10.2018 passed an interim order. Relevant paragraphs of which are as follows: Taking into consideration the nature of the case, larger public interest and economy of the nation and interest of the Company and 348 group companies, there shall be stay of (i) The institution or continuation of suits or any other proceedings by any party or person or Bank or Company, etc. against 'L FS' and its 348 group companies in any Court of Law Tribunal / Arbitration Panel or Arbitration Authority; and (ii) Any action by any party or person or Bank or Company, etc. to foreclose, recover or enforce any security interest created over the assets of 'IL FS' and its 348 group companies including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (iii) The acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal may proceed with to determine the claim and counter claim, if any, made by the parties and may pass the award, and keep it in a seal cover. The Arbitral Tribunal are also prohibited to pass any order under Section 17 of the Arbitration Conciliation Act, 1996 against 'ILFS' or any of its Group Companies. Sealed cover will be kept till the final decision of the petition under Sections 241 242 of the Companies Act, 2013 pending before the National Company Law Tribunal, Mumbai Bench. However, if the award is given in favour of the 'ILFS' or any of its Group Companies, in such case, the award need not be kept in a sealed cover, even during the pendency of the Company Petition. (iv) Pursuant to the order dated 11.01.2019, arbitration proceedings in the JRPICL resumed and resulted in concluding the Award dated 06.08.2020 being passed in favour of Sadbhav Engineering Ltd. and the GPL second arbitration concluding with an Award dated 28.03.2023 being in favour of GPL. However, in terms of order dated 11.01.2019, the Awards were kept in the sealed cover. Sadbhav Engineering Ltd. filed an Application being IA No.2114 of 2021. (v) Application, IA No.2114 of 2021 came for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of interest to its related Entities. The Respondent has referred to Audited Financial Report of JRPICL for Financial years 2017-18 to 2022- 23, which clearly shows that Applicant No.2 has been making payment of substantial funds towards interest and principal repayment to IL FS Transportation Ltd. ( ITNL ) against an unsecured loan, who also happens to be the majority shareholder of Applicant No.2. It is pleaded by the Respondent that when JRPICL is Green Entity and is able to meet all its obligation both financial and operation, there was no impediment in making payment to Respondent as per Arbitral Award in favour of the Respondent. It is further pleaded that Applicant No.2 has been earning annuity to the tune of Rs.163.64 crores, annually in respect of two projects, which were completed by Respondent herein. Applicant No.2, although received annuity from the State of Jharkhand because of completion of project by the Respondent, but the amounts which are due to the Respondent from the Arbitral Award is not being discharged by the Applicant. 6. Shri Ramji Srinivasan, learned Senior Counsel for the Applicant in rejoinder submitted that JRPICL is Red Entity and an IA has already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bitral Award against IL FS and its group entities and the Respondent be permanently restrained from taking further action to enforce or execute the Arbitral Award dated 06.08.2020 and 28.03.2023. 9. Learned Senior Counsel appearing for Respondent refuting the submissions, contends that order passed by this Tribunal on 26.05.2022, while directing the opening of the Award from sealed cover has further directed that all contentions and the course of action shall be open to the parties to be taken in accordance with law. When this Tribunal observed that all course of action shall be open for the parties to be taken in accordance with law, the Respondent is fully entitled to file an Application for execution of enforcement of petition for execution of the Award. It is submitted that the Applicant has already in pursuance of the order dated 26.05.2022 has challenged the award before the Delhi High Court under Section 34 of the Arbitration of Conciliation of Act, in which no interim order has been passed in favour of the Applicant by Delhi High Court. Rather, the Delhi High Court has observed that the question of enforcement has to be gone into before the Court, where enforcement petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of pending proceedings before Arbitral Tribunals, which was with a caveat that Arbitral Tribunals are prohibited to pass any order under Section 17 of the Arbitration Conciliation Act, 1996 against IL FS or any of its Group Companies. Award passed, if any was to be kept in sealed cover till final decision of the petition under Section 241 and 242 of the Companies Act, 2013 pending before the NCLT. It was further observed that after the Award is given in favour of the IL FS or any of its Group Companies, in such case, the Award need not be kept in sealed cover, even during the pendency of the Company Petition. An IA No.2114 of 2021 was filed by Respondent - Sadbhav Engineering Ltd. in which following prayers were made: In view of the aforesaid facts and circumstances, the Applicant most respectfully prays to this Hon'ble Tribunal to: (i) allow the present application; (ii) modify the order dated 11.01.2019 passed by this Hon'ble Tribunal and allow the Arbitral Tribunal and/or the member(s) of the Arbitral Tribunal to open the Signed Award dated 06.08.2020 from the sealed cover and deliver the same to the parties to the arbitration proceedings; (iii) direct one of the two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are more than two years ago. This Tribunal in order dated 26.05.2022, clearly observed We without entering into the issues and submissions raised by the parties regarding the future actions in consonance with the award, only observe that all contention and the course of action shall be open to the parties to be taken in accordance with law. . 15. The observation of this Tribunal was that all contention and course of action shall be open to the parties to be taken in accordance with law. The issue to be noticed is as to whether by order dated 26.05.2022, the injunction which was issued on 15.10.2018 stood modified, which entitled the Respondent to proceed for enforcement of Award. It is to be noted that when the Application IA 1288 of 2024 came for consideration on 06.03.2024, after noticing all IAs order in paragraph 12 to 14, this Tribunal observed as follows: 12. By order dated 11.01.2019, this Tribunal has directed with regard to pending arbitration proceedings, if the Arbitral Tribunal may pass an award, the award shall be kept in a sealed cover. It was further directed that the sealed cover shall be kept till the final decision of the petition under Sections 241-242 of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 26.05.2022 cannot be read to mean that any of the contention of the parties have been decided or this Tribunal has pronounced on the continuance of the interim order dated 15.10.2018 or restrained which was imposed by order dated 11.01.2019. 14. Learned Counsel for the Respondents having prayed time to file Reply, we allow one-week time to the Respondent to file Reply to the application. Application be listed on 19.03.2024 for consideration. by directing the matter be listed on 19.03.2024, we clarify the order dated 26.05.2022 as indicated above. 16. This Tribunal in the order has observed that the order dated 26.05.2022 clearly indicate that Tribunal did not enter into the issues raised by the respective parties. It was further observed that the observations made in the order dated 26.05.2022 cannot be read to mean that it has in any manner varied the order dated 15.10.2018 passed in the Appeal, which was operating till date. We reiterate that order dated 26.05.2022 neither vary, nor modified the order dated 15.10.2018 or the entire order dated 11.01.2019. The only modification was made in paragraph 2 of the order dated 11.01.2019 that sealed cover be opened, which was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corpus of the IL FS and its group entities for appropriate resolution. It was never intended that the order dated 15.10.2018 shall continue infinitely and there will be prohibition for all time to come against all persons to institute proceedings or suit against IL FS and its group companies. We are of the view that sufficient time has elapsed and sufficient time has been given to the Board of IL FS to take steps to resolve its group companies. It is true that several entities of IL FS has already been resolved and some are at the final stages of resolution, hence, the protection under order dated 15.10.2018 cannot be allowed to continue for all time to come. We, thus, for considering other prayers made in IA No.1288 of 2024 and IA No.3262 of 2024 deem it proper to put the IL FS and its group entitles on notice to show cause as to why the order dated 15.10.2018 be, not allowed to continue, after reasonable time, i.e. with effect from 15.10.2024. 21. In result, while granting prayer (a) in IA No.1288 of 2024, for consideration of other prayers, we direct this Application to be listed again on 14th October, 2024. 22. As directed above, the IL FS and its group entities may show cause, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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