On December 13, 2018, a division Bench of the Hon’ble Calcutta High Court passed a judgment in the matter of PAM Development Pvt Ltd. v. State of West Bengal & Ors, [(GA No. 3232 of 2018) in (EC No. 745 of 2014)]. The judgment delves into the authority available to an executing Court.

Issues:

i. Whether the executing Court has the discretion to grant adjournment to enable the judgment debtor to apply before the appropriate court for stay of operation?

ii. Whether the executing Court could change the form of attachment or security in a manner not beneficial to the award holder?

iii. Whether the ground for seeking a stay of operation of a decree or execution, is a power which lies with the executing Court?

Facts in brief:

PAM Development Pvt. Ltd. (“Appellant”) had obtained a favourable award at the end of the arbitral reference. The award was challenged by the State of West Bengal (“award debtor”). The execution petition was adjourned in 2014 once the award debtor brought it to the notice of the executing Court that a proceeding for setting aside the award under Section 34 of Arbitration Act was pending. On application to the executing Court on July 31, 2018 for implementation of Arbitral Award of 2014, the executing Court passed an adjournment order for six weeks. On the next occasion, when it was found that the award debtor had not obtained a stay of operation of the arbitral award, the court instead of implementing the award by ensuring the payment, attached a sum which was equivalent to the Award. When the matter was listed again, the form of attachment or security was changed without releasing any amount to the award holder.

Ruling & Analysis:

It was held that the executing Court had only limited authority to ward off immediate implementation of a decree or order and therefore, the order passed by the executing Court was outside the bounds of its authority as no special circumstances were cited. Execution proceedings were meant to be beneficial for the award holder therefore the change of form of security was nor permissible.The order of the executing court was set aside and the award debtor was given a deadline to pay the amount, failing which the funds lying to the credit of the award debtor will be appropriated towards payment of the decree.

It was also held that the ground for seeking a stay of the operation of a decree or the execution therefore should be before the appellate Court and not the executing Court.