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The recent judgment by a single-bench of Justice Moushumi Bhattacharya has clarified that an award-holder does not require statutory sanction or a separate application during the stay proceedings to withdraw the secured amount. The court ordered the State of West Bengal to provide a bank guarantee of an equivalent amount to the Registrar, Original Side, Calcutta High Court, before proceeding with the withdrawal. This decision was made to ensure that the award-debtor's rights are not prejudiced during the pendency of the setting-aside proceedings.
The application for withdrawing the security amount was filed by the award-holder following changes in circumstances since the court's earlier order in the setting-aside proceedings (AP 746 of 2022). In that order, the court had directed the award-holder to deposit a security amount of Rs. 9 crore in connection with the impugned award, which resulted in the stay of the award. However, with the passage of time, the circumstances changed, leading to the current application for withdrawal.
The court's ruling makes it clear that an award-holder is not obligated to file a separate application for releasing the secured amount during the stay proceedings initiated by the award-debtor. This decision highlights the rights and privileges granted to an award-holder and streamlines the process for securing the awarded sum.
Justice Moushumi Bhattacharya emphasized that allowing the award-holder to withdraw the amount upon providing a bank guarantee would not prejudice the rights of the award-debtor during the setting-aside proceedings. This decision aims to strike a balance between the interests of both parties and ensure fairness and justice in the arbitration process.
In light of the recent ruling, the award-holder, the State of West Bengal, is now permitted to retrieve the sum of Rs. 9 crore, subject to providing a bank guarantee to the Registrar, Original Side, Calcutta High Court. The bank guarantee is to be obtained from an RBI constituent bank, and the award-holder is given the liberty to take appropriate steps within a reasonable time frame. Simultaneously, the award-debtor is also granted the freedom to proceed with the application for setting aside the award.
The Calcutta High Court's decision to allow the award-holder to withdraw the security deposited by the award-debtor during the pendency of setting aside proceedings marks a significant legal development. The ruling clarifies the rights of award-holders and ensures fairness in the arbitration process. By permitting the State of West Bengal to retrieve the secured amount, subject to a bank guarantee, the court strikes a balance between the interests of both parties involved in the arbitration case. This landmark judgment sets a precedent for future cases and streamlines the process of award enforcement and withdrawal of security deposits.
