Arbitration Award Enforcement: Supreme Court Dismisses Recall Plea Against Deposit Order
The Supreme Court of India recently addressed a contentious dispute regarding compliance with an arbitral award in the case of Dharmesh S. Jain & another vs. Urban Infrastructure Real Estate Fund. The judgment revolves around the petitioners’ failure to deposit 50% of the awarded sum, as directed by the Bombay High Court, and their subsequent attempts to recall the order through miscellaneous applications.
Background of the Case
The dispute originated from an arbitral award in favor of Urban Infrastructure Real Estate Fund. The Bombay High Court, in its order dated August 8, 2019, directed the petitioners to deposit 50% of the awarded sum within twelve weeks to maintain their appeal rights.
However, the petitioners continuously sought extensions and failed to comply with the High Court’s directive. Even after multiple extensions, the petitioners did not deposit the required amount, leading to the respondent’s apprehension that the delay was intentional.
Petitioner’s Arguments
The petitioners, represented by Senior Advocate Shyam Divan, challenged the maintainability of the Miscellaneous Application (M.A.) No. 1668/2021, arguing that:
- The application was filed in a disposed-of matter and hence not maintainable.
- No notice was issued to them before passing the order in M.A. No. 1668/2021.
- The Supreme Court’s directive requiring compliance with the High Court’s order should not have been issued in a Special Leave Petition (SLP).
Respondent’s Arguments
The respondent, represented by Senior Advocate Jayant Bhushan, contended that the petitioners were deliberately evading compliance with the High Court’s order and delaying the execution of the arbitral award. The respondent pointed out that:
- The petitioners had received multiple extensions but failed to deposit the amount.
- The petitioners’ delay tactics were evident as they had filed a recall petition only after contempt proceedings were initiated against them.
- The Supreme Court had previously granted them an eight-week extension on September 17, 2021, which they failed to comply with.
Supreme Court’s Observations
The Supreme Court, comprising Justices M.R. Shah and Sanjiv Khanna, dismissed the recall application, highlighting the petitioners’ continued non-compliance and deliberate delay tactics.
The Court made the following observations:
“The present application is nothing but an afterthought and only with a view to get out of the contempt proceedings initiated by the respondent by way of Contempt Petition No. 940/2021.”
“The order dated 28.10.2021 was passed in the presence of the learned counsel appearing on behalf of the applicants. The counsel was heard, and no request was made to adjourn the matter or file a reply. Therefore, it is not open for the applicants to challenge the maintainability of M.A. No. 1668/2021 at this stage.”
Final Judgment
The Supreme Court ruled against the petitioners, concluding that they had been given sufficient indulgence and extensions, but their lack of compliance demonstrated an intent to delay execution.
The Court dismissed the recall application, stating:
“Even after order dated 17.09.2021, by which a further eight weeks’ time was granted, the petitioners have not complied with the order passed by the High Court for which they sought an extension. This shows the conduct on the part of the petitioners.”
Legal Implications
This ruling reinforces the principle that parties cannot indefinitely delay compliance with court orders under the guise of seeking extensions. Key takeaways from the judgment include:
- Delays in executing arbitral awards can have serious consequences, including contempt proceedings.
- Courts will not entertain recall applications when filed as an afterthought to avoid compliance.
- Orders passed after hearing both parties cannot be challenged later on procedural grounds.
Conclusion
The Supreme Court’s decision upholds judicial efficiency and prevents abuse of legal procedures to delay compliance. By dismissing the recall plea, the Court has sent a strong message that parties must adhere to their legal obligations without attempting to evade accountability.
Petitioner Name: Dharmesh S. Jain & another.
Respondent Name: Urban Infrastructure Real Estate Fund.
Judgment By: Justice M.R. Shah, Justice Sanjiv Khanna.
Place Of Incident: Bombay High Court.
Judgment Date: 25-01-2022.
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