Ernst and Young LLP v. Medeor Hospitals Ltd

1. This petition under Section 36 of the Arbitration and Conciliation Act, 1996 (‘Act of 1996’, hereinafter) has been filed seeking enforcement of the majority award dated August 17, 2021 passed by the Arbitral Tribunal.

2. Mr. Jayant Mehta, learned senior counsel for the petitioner has submitted that by way of the award, the Tribunal has awarded a sum of ₹10 crore towards success fee to the petitioner after adjusting the retainer fee already paid to it by the respondent, interest on the said amount at the rate of 9% per annum from the date of the claim petition. i.e., November 15, 2016 till the date of the actual payment and a lump sum amount of ₹5 lakh towards the cost of the proceedings. According to him, as on April 12, 2022, the total amount of ₹14,95,43,836/- (including post award interest and costs) and also the retainer fee under the Letter of Engagement has not been paid by the respondent.

3. He submitted that vide order dated March 04, 2022 in OMP(COMM) 116/2022, the respondent was directed to deposit the awarded amount within four weeks thereafter. However, the said direction has not been complied with, and as such, as on date, there is no stay on the award. On the proposition that 100% pre-deposit has to be made in money awards, reliance has been placed on the judgments of the Supreme Court in Toyo Engineering Corporation & Anr. v. Indian Oil Corporation Limited CA Nos 4549-4550 of 2021; Manish v. Godawari Marathawada Irrigation Development Corporation, S.L.P (C) No(S). 11760-11761/2018; of this Court in Power Mech Projects Ltd. v. Sepco Electric Power O.M.P. (I) (Comm.) 523/2017; and of the High Court of Calcutta in Srei Infrastructure Finance Limited v. Candor Gurgaon Two Developers and Projects Pvt. Ltd 2019 SCC OnLine Cal 3846.

4. Further, even the order of this Court dated April 25, 2022 directing respondent to file an affidavit of its assets, has not been complied with, despite extensions granted vide orders dated May 26, 2022 and August 08, 2022.

5. It is his submission that a company is juristic entity different from its shareholders, and as such a change in shareholding of the respondent would not affect its liabilities. In support of this submission, he has relied upon the judgments in Bacha F. Guzdar v. CIT, (1955) 1 SCR 876,; Hindustan Lever Employees' Union v. Hindustan Lever Ltd., 1995 Supp (1) SCC 499 and Vodafone International Holdings BV v. Union of India, (2012) 6 SCC 613.

6. That apart, it is contended that the petitioner is not a party to any arrangement conditioning the discharge of liability of the respondent in any manner. Any arrangement inter se the erstwhile shareholders and present shareholders of the respondent has no bearing on the rights of the petitioner or the liability of the respondent. Reference in this regard is made to the decision of the High Court of Calcutta in Starlight Real Estate (Ascot) Mauritius Limited & Anr. v. Jagrati Trade Services Private Limited & Ors., G.A. No.2437 of 2014.

7. He has sought enforcement of the arbitral award dated August 17, 2021.

8. As I have already dismissed the challenge of the respondent to the award dated August 17, 2021 vide order in OMP (COMM) 116/2022 (decided today), the awarded amount has become payable by the judgment debtor. I agree with the submissions made by Mr. Mehta that any arrangement inter se between the respondent and its erstwhile promoters has no bearing on the rights of the petitioner herein as the petitioner was not a party to any such arrangement.

9. Accordingly it is directed that the judgment debtor shall deposit the awarded amount computed as of today within a period of six weeks with the Registrar General of this Court. On such deposit, the amount shall be invested in an interest bearing FDR till further orders. The respondent shall also file the affidavit as directed by the Court in the order dated April 25, 2022. Till the deposit is made, paragraph 3 of the order dated April 25, 2022 shall continue. List this enforcement petition and CCP (O) 40/2022 before the Roster Bench on July 11, 2023. EX.Appls.(OS) 2802/2022 & 3323/2022 in OMP (ENF.) (COMM.) 81/2022 In view of my above conclusion, the applications are dismissed as infructuous. O.M.P.(I) (COMM.) 75/2022

10. This petition has been filed with the following prayers:- “ (a)Direct the Respondent to furnish a security deposit or bank guarantee, with this Hon'ble Court, proportionate to the awarded amount of Rs.[1] 0,00,00,000/- (Rupees Ten Crores Only) along with interest at 9% p.a., computed from the date of claim petition till realisation, and costs awarded to the Petitioner amounting to Rupees 5,00,000/(Rupees Five Lakhs only); (b) Pass an order restraining the Respondent, its agents and / or representatives from disposing of/alienating / creating third party interest(s) in any of its assets, in any manner whatsoever, and to ensure the preservation of the awarded sums including interest and costs, as per the terms of the Award;

(c) Award the cost of the present Petition, in favour of the Petitioner and against the Respondent; (d)Pass any other order(s) as this Hon'ble Court may deem fit in the facts of the case and in the interest of justice.”

11. As I have already directed the awarded amount to be deposited with this Court, till which time the order dated April 25, 2022 shall continue, and also the affidavit as directed in the order dated April 25, 2022 be filed, this petition under Section 9 of the Act of 1996 has become infructuous and is closed as such.

V. KAMESWAR RAO, J