Supreme Court Refuses to Recall Order on Deposit in Arbitration Case: Dharmesh S. Jain vs. Urban Infrastructure Real Estate Fund (25 January 2022)

Introduction

Date of the Judgment: 25 January 2022

Citation: Not Available

Judges: Justice M.R. Shah and Justice Sanjiv Khanna

Can the Supreme Court recall an order passed in a miscellaneous application, especially when the matter in which the application was filed was already disposed of? The Supreme Court of India recently addressed this question in a case concerning an arbitration dispute where the applicants sought a recall of an earlier order directing them to deposit a certain amount. The core issue revolved around whether the Court should reconsider its previous direction, given the applicants’ arguments about the maintainability of the miscellaneous application and lack of proper notice. This judgment was delivered by a bench of Justice M.R. Shah and Justice Sanjiv Khanna.

Case Background

The case originated from an order by the High Court of Judicature at Bombay dated 08.08.2019 in a commercial arbitration matter. The High Court had directed the applicants to deposit 50% of the awarded sum within twelve weeks. The applicants sought and received multiple extensions to comply with this order, but they failed to deposit the amount. Subsequently, the applicants filed a Special Leave Petition (SLP) before the Supreme Court, which was delayed. The Supreme Court condoned the delay and granted a further eight weeks to comply with the High Court’s order. The respondent then filed a miscellaneous application seeking recall of the Supreme Court’s order granting the extension, arguing that the applicants were merely delaying the matter. The Supreme Court then passed an order on 28.10.2021 directing the applicants to deposit the amount. The applicants then filed a miscellaneous application to recall the order dated 28.10.2021.

Timeline:

Arguments

The applicants, represented by Shri Shyam Divan, made the following submissions:

• The Miscellaneous Application No. 1668/2021 was not maintainable because it was filed in a matter that had already been disposed of.
• No notice was issued to the applicants in Miscellaneous Application No. 1668/2021, and they did not file a reply.
• The Supreme Court could not have issued a direction to deposit the amount in a special leave petition. The applicants argued that the only consequence of not complying with the High Court’s order would be that the stay on the arbitral award would be lifted, and execution proceedings would continue.

The applicants contended that the direction to deposit the amount, with the threat of serious consequences for non-compliance, was unwarranted. They argued that the order of the High Court was regarding the stay of the arbitral award and not for deposit of the amount. The only consequence of non-deposit would be that the stay would be vacated.

Submissions

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues but addressed the following points:

• Whether the miscellaneous application to recall the order dated 28.10.2021 was maintainable.
• Whether the order dated 28.10.2021 directing the applicants to deposit the amount needed to be recalled.

Treatment of the Issue by the Court

Authorities

The Supreme Court did not rely on any specific authorities or legal provisions other than the orders passed by the High Court of Judicature at Bombay and the Supreme Court itself in the course of the proceedings.

Judgment

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• The applicants’ conduct in repeatedly seeking extensions without complying with the High Court’s order.
• The fact that the applicants’ counsel had appeared and was heard before the order dated 28.10.2021 was passed.
• The need to prevent further delays in the arbitration proceedings.
• The apprehension of the respondent that the applicants were only trying to delay the proceedings.

Logical Reasoning

Key Takeaways

• Parties must comply with court orders within the stipulated time.
• Repeatedly seeking extensions without compliance can lead to adverse consequences.
• The Supreme Court will not entertain applications to recall orders when the applicants had the opportunity to raise objections earlier.
• Delaying tactics in arbitration proceedings will not be tolerated by the courts.

Directions

The Supreme Court did not give any specific directions other than dismissing the application to recall the order dated 28.10.2021.

Specific Amendments Analysis

Not Applicable

Development of Law

The ratio decidendi of this case is that the Supreme Court will not recall an order passed after hearing the parties, especially when the applicant has not complied with the orders of the High Court and is attempting to delay the proceedings. There is no change in the previous position of law.

Conclusion

The Supreme Court dismissed the application to recall its order dated 28.10.2021, which had directed the applicants to deposit the amount as per the High Court’s order. The Court held that the applicants’ arguments were not valid, as they had been heard before the order was passed and were attempting to delay the proceedings. This case underscores the importance of complying with court orders and the consequences of delaying tactics in arbitration matters.