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TMI Blog2012 (10) TMI 1147X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 545 of 2003 filed by the Judgment Creditors, challenging the aforesaid rejection against the Judgment Debtors. On 6 January 2004, Arbitration Petition under Section 34 of the Arbitration and Conciliation Act, 1996 (for short, the Arbitration Act) was admitted. ( 4. ) On 2 May 2005, the Court modified the Award, by allowing Arbitration Petition No. 545 of 2003, and the Judgment Debtors were directed to pay Rs. 3,72,78,897 plus interest thereon @ 15 % p.a. from 1 December 2002 till payment and further directed to pay costs of Rs. 66,150/ also. On 7 July 2005, Judgment Debtor Nos. 1, 3 and 4 preferred Appeal No. 625 of 2005 under the Arbitration Act and challenged the modified award. On 30 July 2005, Judgment Debtor Nos. 1,3 and 4 took out Notice of Motion No. 2121 of 2005 in the Appeal for stay of execution of the Award/Decree. On 8 August 2005, the Division Bench of this Court admitted the Appeal. On 3 March 2010, the Notice of Motion was dismissed. ( 5. ) On 29 June 2012, Insolvency Notice No. N/19 of 2012 was issued. The same was served on the Judgment Debtor on 26 July 2012. On 14 August 2012, Judgment Debtors filed affidavit in support of Notice of Motion No. 47 of 2012, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitration Act was not considered. The facts and circumstances were distinct and distinguishable. ( 9. ) The relevant Sections 9 (2) and (5) of the Insolvency Act, are as under: "9 (2) Without prejudice to the provisions of sub section (1), a debtor commits an act of insolvency if a creditor, who has obtained a decree or order against him for the payment of money (being a decree or order which has become final and the execution whereof has not been stayed), has served on him a notice (hereafter in this section referred to as the insolvency notice) as provided in subsection (3 ) and the debtor does not comply with that notice within the period specified therein: provided that where a debtor makes an application under subsection (5) for setting aside an insolvency notice (a) in a case where such application is allowed by the Court, he shall not be deemed to have committed an act of insolvency under this subsection; and (b) in a case where such application is rejected by the Court, he shall be deemed to have committed an act of insolvency under this subsection on the date of rejection of the application or the expiry of the period specified in the insolvency notice for its com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judge of this Court has modified the order and held that all the Directors of the Company are also liable to pay the awarded amount. Some of the Directors preferred the Appeal under Section 37 of the Arbitration Act. The Appeal was admitted on 8 August 2005 and the same is pending for final hearing since then. By order dated 3 March 2010, the Motion taken out by the Directors in the Appeal, was dismissed by observing that "In our opinion, with the passage of time, this Motion has become infructious." ( 12. ) In this background, therefore, we have to consider the scheme of the Arbitration Act also. Once the award is passed, an Application for setting aside the Arbitral Award is filed in the Court under Section 34 of the Arbitration Act unless it is decided finally, it is not enforceable. The relevant portion of Sections 35, 36 and 37 of the Arbitration Act are as under: "35. Finality of arbitral awards. Subject to this Part an arbitral award shall be final and binding on the parties and persons claiming under them respectively. 36. Enforcement. Where the time for making an application to set aside the arbitral award under section 34 has expired, or such application having been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case, admittedly, the Appeal against the order is pending. The effect and the power of the Appellate Court, under Section 37 is quite settled. The order passed under Section 34, may be set aside or modified. The modified award in no way can be stated to be the final decree and/or final order. The transaction in question is a commercial transaction. The stake, the parties name and fame cannot be overlooked. Merely because there is award passed against one party, that itself is not sufficient to invoke the provisions of Insolvency Act in such fashion at this stage, basically when, the award /order has not attained finality. ( 15. ) The submission that the Appellate Court rejected the Motion for stay in 2010, that itself cannot be the reason to accept the case of the Creditors that the modified award has attained finality. Considering the scheme and purpose of Arbitration Act, there is no express provisions for stay of the award and the order passed by the Single Judge, while confirming the award, therefore, merely because the Motion was dismissed as recorded above, that situation itself cannot falls within the ambit of "the execution whereof has not been stayed". I am of the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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