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Judgment
,,,,,
NAVIN CHAWLA, J",,,,,
I.A. No.14375/2018 (Delay),,,,,
This is an application seeking condonation of ten days delay in re-filing of the petition.,,,,,
For the reason stated in the application, the delay is condoned and the application stands allowed.",,,,,
I.A. No.14376/2018 (Exemption),,,,,
Allowed, subject to all just exceptions.",,,,,
OMP(COMM) 438/2018 & I.A. No.14374/2018 (Stay),,,,,
This petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “Actâ€) has been",,,,,
filed by the petitioner challenging the Arbitral Award dated 17.05.2018 passed by the Sole Arbitrator adjudicating the disputes that had arisen between,,,,,
the parties in relation to the Agreement dated 26.06.1991 executed between the parties. The disputes between the parties are in a narrow canvas as,,,,,
to whether the Sole Arbitrator has erred in awarding interest in favour of the respondent from 31.12.2008 and also as to the principal amount on which,,,,,
such interest is payable.,,,,,
Counsel for the petitioner submits that the petitioner had been declared “Sick†under the erstwhile Sick Industrial Companies Act, 1985 and a",,,,,
scheme had been sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) wherein, the respondent being an unsecured creditor,",,,,,
was to be paid only principal sum without interest. The principal amount owed to the respondent was only Rs.1,81,21,870.28 and therefore, the",,,,,
Arbitrator has erred in awarding the principal amount of Rs.442.06 lacs in favour of the respondent. It is further submitted that as per the scheme,,,,,
sanctioned by the BIFR no further interest on this principal amount was payable to any unsecured creditor including the respondent. The Arbitrator,,,,,
has therefore, erred in granting interest in favour of the respondent in the Impugned Award.",,,,,
I have considered the submissions made by the counsel for the petitioner, however, I find no merit in the same.",,,,,
A perusal of the scheme sanctioned by the BIFR shows that payment to the creditors, including the financial institutions and the respondent herein,",,,,,
was to be made in two Phases. While Phase-I was to be funded by the Government of India, Phase-II was to be funded by sale of seven non-",,,,,
operating units of the petitioner. Equally, while the creditors included in Phase-I were not to get any interest and their dues were to be settled only on",,,,,
the principal sum, the creditors in Phase-II, including Goa Shipyard and ONGC, were entitled to claim interest from the petitioner. In this regard a",,,,,
few paragraphs from the scheme would be relevant and are reproduced hereinbelow:,,,,,
“7. SANCTIONED SCHEME (SS),,,,,
The SS inter alia envisaging expansion/modernisation of three operating units vis Rajban, Tandur and Bokajan and closure and sale of 7 non-operating",,,,,
units vis. Mandhar, Kurkunta, Akaltara, Charkhi Dadri, Delhi Grinding Unit/Bhatinda Grinding Unit, Naya Gaon and Adilabad is envisaged to be",,,,,
implemented in two phases:,,,,,
The 1st phase to be implemented during 2005-06 is to be entirely funded by GoI and envisages settlement of dues of secured and unsecured creditors,",,,,,
payment of 25% of wages/salary arrears or account of implementation of IDA pay scales and revision of pending Wage Settlements/ Awards for,,,,,
wage Board governed employees, VSS of employees and Retrechment of Contract/ Adhoc workers of 7 non operating units, Expansion of Rajban",,,,,
Unit, partial Expansions of Bokajan Unit and partial Upgradation of Tandur Unit. VSS of the employees shall be as per the policy of the Government",,,,,
and retrenchment of adhoc contract workers of 7 closed units would be governed by the Industrial Disputes Act.,,,,,
The 2nd Phase to be implemented during 2006-07 and 2007-08 is to be funded out of the sale proceeds of the 7 non operating units and envisages.,,,,,
i) Balance Technology upgradation of Tandur unit and expansion of Bokajan unit by 100% with two split grinding units at Silchar and Banderdeva;,,,,,
ii) Settlement of dues of two unsecured creditors (PSUs) on OTS basis;,,,,,
iii) Settlement of balance employees arrears;,,,,,
iv) Settlement of liabilities of 7 non-operating units.,,,,,
v) Payment to Walchanagar Industries Limited (WIL). WIL held a decree dated 16.05.2002 in suit no.1519-A/95 under which Rs.5:53 crores with,,,,,
interest@ 12% w.e.f. 30.01.1989 was payable to them. BIFR had permitted them to continue the suit vide order dated 21.01.2004. On 26.04.2004, the",,,,,
Delhi High Court directed CCI to deposit the amount within four weeks. The decree was executed by attaching the corporate office and another,,,,,
office of CCI by the High Court. Subsequently CCI has since deposited the arbitral award of Rs.5.53 crores with Delhi High Court. The Scheme,,,,,
provides payment of interest in the Phase II of the Scheme. However as the case is sub judice, claims of WIL would be settled as per order of the",,,,,
Hon’ble Delhi High Court.,,,,,
vi) Settlement of pending liabilities of erstwhile Yerraguntla Unit, and",,,,,
v) Repayment of Government Loans (including Non-Plan Loan received in 1st Phase).,,,,,
7.1 Settlement of dues of secured and unsecured creditors.,,,,,
The settlement of dues of FIs envisages payment of balance OTS dues as per the DRS circulated on 12.06.1998 without interest for the delayed,,,,,
period. Settlement of dues of Banks and Army Group Insurance Directorate (AGID), a secured creditor envisages payment of outstanding principal",,,,,
as at 31.3.1998 and waiver of balance dues. The dues of unsecured creditors will be also be settled at their outstanding principal.,,,,,
In a case filed by ... not legible ... of India, Indian Red Cross Society and Saint John Ambulance against CCI, the Company Law Board, vide order",,,,,
dated 16.01.2004 directed CCI to settle the principal alongwith maturity interest and 5% simple interest for the delayed period which is being contested,,,,,
COSTÂ Â OF THE
SCHEME
Repayment of OTS
dues of
secured/unsecured
creditors",,"1st
Phase",2nd Phase,,Total
,,,"1st
year
(2006-
07)","2nd
Year
(2007-
08)",
xxx,,xxx,xxx,,xxx
11,"Pressing
creditors-
Liabilities of 7
Non operating
units (As per
Annexure 12)",-,76.37,48.67,125.04