2020 (1) TMI 1704 - HC - Indian Laws

Permission to Applicant to withdraw the amount of Rs. 8, 00, 00, 000 deposited with the Prothonotary and Senior Master along with the interest accrued thereon to the extent payable under the Award up to the date of withdrawal - HELD THAT - It is true that an execution against HDIL is presently stayed but this is not an application for execution nor is it within the meaning of Section 14(1)(d) an application for the recovery of any property by an owner or lessor where such property is occupied by or is in the possession of corporate debtor . To read only the words recovery of any property as Ms Patil does but not to read the rest of clause (d) is materially incorrect. The provisions regarding a moratorium cannot possibly apply to such cash deposits made in this Court. As Mr Dwarkadas for Nahar Builders put it money has no colour. Once it is deposited in Court no party can automatically claim any right to it without an adjudication by a Court. There is no dispute that there is an unchallenged and unsatisfed award in favour of Nahar Builders against HDIL. There is also no dispute that an amount of Rs. 8 crores is available with this Court. There is no bar to this application for withdrawal. The application for withdrawal cannot be conceivably be considered a suit proceeding or execution within the meaning of Section 14(1)(a). Application disposed off.

Summary

Issues:
Interpretation of an order for furnishing security, compliance with arbitration award, entitlement to withdrawn amount, application of moratorium under Insolvency and Bankruptcy Code, 2016.

Analysis:
The judgment pertains to a dispute between two parties, Nahar Builders and HDIL, arising from a Memorandum of Understanding (MoU) with an arbitration clause. The court ordered HDIL to provide security in the form of a bank guarantee or deposit a specified sum, which HDIL failed to comply with initially. Subsequently, HDIL made a deposit, and the matter proceeded to arbitration resulting in an award in favor of Nahar Builders. The issue at hand was Nahar Builders' application to withdraw the deposited amount of Rs. 8 crores along with accrued interest, in light of the arbitration award.

The main contention raised by HDIL was the applicability of a moratorium due to ongoing insolvency proceedings under the Insolvency and Bankruptcy Code, 2016, claiming that the deposited amount was their property. However, the court rejected this argument, stating that once an amount is deposited in court, it is under the court's jurisdiction and not the property of either party until entitlement is adjudicated. The court emphasized that the deposit was subject to the arbitration award, which had been unchallenged and unsatisfied, in favor of Nahar Builders.

Regarding the moratorium, the court clarified that it does not apply to cash deposits made in court and that the application for withdrawal did not constitute an action for recovery of property by an owner or lessor within the meaning of the Code. The court highlighted that the deposited amount was not automatically claimable by either party without a court order, emphasizing the need for adjudication.

Ultimately, the court allowed Nahar Builders' application for withdrawal of the deposited amount, as it was in partial or complete satisfaction of the arbitration award. The court directed the Prothonotary & Senior Master to transfer the amount to Nahar Builders' designated bank account. The judgment concluded by stating that there would be no order as to costs, affirming Nahar Builders' entitlement to the withdrawn sum based on the arbitration award.