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TMI Blog2016 (8) TMI 1606X X X X Extracts X X X X X X X X Extracts X X X X ..... thing 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. 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. There is no execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced financial facilities to Appellant No.1. One of the directors of Appellant No.1 had furnished a personal guarantee for repayment of the outstanding dues of the Respondent. Appellant Nos.3, 4 and 5 executed corporate guarantees in favour of the Respondent as also had executed a mortgage of their properties in favour of the Respondent. The Respondent had come across a circular issued by Appellant No.1 for its shareholders whereby it was proposed to pass a resolution for approval of sale and transfer of Appellant no.1's Windmill located at Dhule (Maharashtra) with some other assets. The Respondent therefore filed Arbitration Petition No.707 of 2012 under Section 9 of the Arbitration and Conciliation Act,1996 (for short the Arbitration Act ) interalia praying for appointment of Court Receiver, injunction and deposit of Rs.25,30,32,482.69 in this Court. By an order dated 19 June 2012 Arbitration Petition No. 707 of 2012 was disposed of on the basis of consent minutes, duly signed by the Advocates for the parties. The dispute between the parties was referred to arbitration. The parties consented for appointment of a private receiver in respect of the properties which were de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidering various decisions of the Apex Court on the issue in paragraphs 35 and 38 of the order observed as under: 35. The consent terms filed by both parties in Application filed under Section 9 under Arbitration Act,1996 indicates that both parties had agreed to refer the dispute to the arbitration and had appointed the sole arbitrator. During the pendency of the arbitration proceedings, by consent of both parties, private receiver was appointed with power of sale of such arbitration proceedings and steps were taken by the private receiver by consent of parties to sell the properties during the pendency of the arbitration proceedings. In my view coercive steps can be stayed and not execution of the consent orders. In my view consent terms filed in Court by parties was an agreement and steps taken under such agreement cannot be stayed. It is clear that there is apparent distinguishment between the expression proceedings and suit used in section 22(1) of SICA. In my view, steps taken to enforce the consent order passed under Section 9 of the Arbitration and the Conciliation Act,1996 would not be barred by Section 22(1) of the SICA. 38. Perusal of Section 22 (1) and more particularly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insofar as it confirms the sale, is upheld subject however, to the appellants obtaining an offer of more than Rs.4.10 crores together with all costs, charges and expenses incurred upto date in connection with the sale of the property on or before 15.04.2014. In the event of such an offer being brought on or before 15.04.2014, liberty to the appellants to apply for modification of this order. The respondents shall also be entitled to increase their bid. If such an offer is not obtained by 15.04.2014, the sale in favour of the respondents shall stand confirmed on 16.04.2014. (ii) The impugned order insofar as it permits the amount of Rs.4.00 crores to be appropriated by the respondents is set aside. (iii) The parties agree as under :- (a) In the event of the sale being confirmed in favour of the respondents, the respondents shall furnish a bank guarantee in the sum, in which the sale is confirmed in their favour of a nationalized bank which shall remain valid pending the arbitration proceedings and for a period of eight weeks after the award is made and published. (b) In the event of the sale being confirmed in favour of any other party and the sale proceeds being deposited in this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rakesh Madan v. Rajasthan Financial Corporation dated 13 January 2009 ( IA no.14090/2008 in C.S.(OS) No.513 of 2008.) 12. According to the Appellants, in Armada (Singapore) Pte. Ltd.. , it was held that in view of the pendency of the proceedings before the BIFR no steps ought to be taken in execution of the Award without the permission of the BIFR. The decision in Rakesh Madan (supra) was relied to contend that the Appellants notwithstanding the orders of the Division Bench dated 17 February 2014 (supra), as confirmed by the Apex Court, were entitled to re-approach the Court in view of the above changed circumstances. 13. The learned Single Judge by the impugned order has rejected these contentions of the Appellants and dismissed the Chamber Summons No.1690 of 2015. The learned Single Judge in the impugned order has observed that in the order dated 13 February 2013 (supra) the issue as regards the pendency of the BIFR reference was specifically dealt and considering the position in law the plea of the Appellants came to be rejected. The contention of the Appellants on the decision of the learned Single Judge in Armada (Singapore) Pte Ltd. (supra) also did not find favour by the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order dated 19 June 2012 a reference as filed by Appellant No.1-company was 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 Respondent's 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 learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt 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 state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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