Criminal Proceedings Cannot Be Initiated For Recovery Of Amount Due Under The Arbitration Award: Calcutta High Court

The bench of Justice Tirthankar Ghosh held that a party aggrieved by non-payment of amount due under a post award settlement agreement should not resort to filing a criminal case by giving a civil dispute criminal colour as the same is an abuse of the process of law. The Court held that the correct recourse for the party would be putting the award into execution.

Facts

The parties entered into an agreement dated 07.04.2009 for installation of pipelines across rives Teesta. A dispute arose between the that was referred to arbitration. The arbitrator passed an award in favour of the respondent/complainant company.

Thereafter, the parties entered into a post award settlement agreement and the award was not put into execution. Accordingly, the respondent raised a tax invoice keeping the base amount as Rs. 7,18,87,644/-. As per mandatory amount of the Central Goods and Services Tax Act, 2017 and the West Bengal Goods and Services Tax Act, 2017, 9% was charged in the said tax invoice. In reply, the petitioners refused to pay the GST over and above the awarded amount and stated that the base amount would be inclusive of the GST costs as well. Due to the disagreement between the parties, the respondent intimated to the petitioners to consider the tax invoice as withdrawn.

However, on 10.01.2020, the petitioner deposited in the account of the respondent company an amount of Rs. 6,09,21,732.20 as base amount after deducting the GST amount of Rs. 1,09,65,912/-. Aggrieved by the deduction made by the petitioners, the respondent issued a legal notice for return of deducted amount along with penal interest. On failure of the petitioners to comply with the demand, the respondent filed a criminal complaint on which the Metropolitan Magistrate took cognizance and issued process against the petitioners under Sections 120B/406/420/465/468/471/477A of IPC.

Aggrieved with the issue of process, the petitioners filed the revision petition before the High Court.

Contention of the Parties

The petitioners made the following submissions for the quashing of the case:

• Accepting the allegations in the complaint as a whole along with the initial deposition and accepting the same to be true, no offence is disclosed.
• The non-payment of GST is to be taken up with the Statutory Authority and the complainant has got nothing to do with the same except to bring it to the notice of the Statutory Authority.
• If the petitioner is aggrieved by the non-payment of the amount, it contends that it is entitled to then it should have proceeded with the execution of the arbitral award.
• The petitioners cannot be booked under the above sections as the petitioner No.1 is a public sector undertaking and the remaining petitioners have not been personally benefited from the deducted money.

The respondent made the following submissions in support of its complaint:

• Tax invoice is a valuable security and by striking of the principal amount and inserting a new base amount, the petitioners have committed offences for which they are liable to be prosecuted.
• Mere part payment will not exonerate the petitioners from the charges or from their liability to make full payment.
• Due to the forgery and illegal acts committed by the petitioners, the respondent has been foisted with the liability to pay the taxes and the same has resulted in wrongful gains to the petitioners as it was their obligation to pay the taxes.
• The scope of inquiry under Section 482 CrPC is very limited as it is an extraordinary power to be exercised with extreme caution and circumspection.

Analysis by the Court

The Court held that there is no allegations coming forth that the accused persons have been personally benefited from the deductions made. The Court held that the fixation of principal amount is a policy decision of the accused company (petitioner no. 1) which the remaining petitioners cannot change in their individual capacities, therefore, they cannot be charged for a policy decision of their company.

The Court held that the accused company happens to be a public sector undertaking, as such none of the Officers which have been implicated in the case are presumed to have any personal benefit from the account of the company and that is not the case of the complainant also.

The Court held that if the respondent alleges any statutory violation then it was incumbent upon the complainant to approach the Statutory Authorities. Similarly, if the complaint is filed to recover the amount due under the arbitration award, then the correct recourse, on the failure of the post award settlement, is to put the award into execution.

The Court observed that from the facts of the case it emerges that the criminal complaint was filed to recover the amount deducted by the petitioners as the GST Cost on the tax invoice raised by the respondent. It held that the respondent has given criminal colours to a civil dispute, therefore, the complaint is an abuse of process.

Accordingly, the court allowed the revision petition.

Case Title: Oil India Limited v. Ashok Kumar Bajoria, CRR 1177 of 2021

Date: 12.12.2022

Counsel for the Petitioner: Mr. Sudhakar Prasad, Mr. Somopriya Chowdhury Mr. N. Banerjee

Counsel for the Respondent: Mr. Indrajit Adhikari Mr. Ayan Bhattacharya Mr. Suman Majumder

Citation: 2022 LiveLaw (Cal) 368 

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