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1988 DIGILAW 813 (ALL)

Radhey Shyam Katiyar v. Snehlata Agarwal

1988-09-06

A.M.BANERJEE, A.N.VARMA

body1988
JUDGMENT A.N. Varma, J. -Having heard learned counsel for the parties, we find no merit in this appeal. 2. Learned counsel for the appellant confined his submissions only to that part of the order challenged in appeal whereby the court below has directed that the restraint order dated May 28, 1987 shall remain in force till the submission of the award by the Arbitrator. The contention of the learned counsel for the appellant was that in the first place the court below had no jurisdiction to issue injunction restraining the appellant from withdrawing the amount which is lying to his credit with the I.I.T. Kanpur, as according to the learned counsel that amount does not relate to the dispute which has been referred for arbitration. And, secondly, there was no valid jurisdiction for continuing the order of injunction issued earlier by the court below. 3. Before we consider these submissions we may dispose of a preliminary objection raised by the learned counsel for the plaintiff-respondent as to the maintainability of the appeal. By the order dated December 16, 1987 against which the appeal has been filed the court below allowed the application filed by the plaintiff respondent under Section 20 of the Arbitration Act and directed that the disputes be referred to the arbitrator to be named by the parties by December 22, 1987. It will thus be seen that till the passing of the impugned order the arbitrator had neither been named by the parties nor appointed by the court as contemplated by Section 20 (4) (as amended in Uttar Pradesh). That an order merely deciding to refer the dispute to arbitrator who has yet to be named is not appealable under Section 39 stands settled by a Division Bench of this Court reported in State of Uttar Pradesh v. Hindustan Construction Co. Ltd. Bombay, 1978 ALJ 1178 (DB). The Division Bench has ruled that an appeal under Section 39 can be filed only after the court has determined the person to whom the reference is to be made and has actually made an order referring the same to such a person. The section docs not contemplate filing of an appeal at any earlier stage. 4. With respect we entirely agree. In the instant case the arbitrator was named and appointed by the court below only on April 18, 1988, i.e., subsequent to the passing of the impugned order. The section docs not contemplate filing of an appeal at any earlier stage. 4. With respect we entirely agree. In the instant case the arbitrator was named and appointed by the court below only on April 18, 1988, i.e., subsequent to the passing of the impugned order. The appeal is thus liable to be dismissed on this ground alone. We will, however, no like to rest our decision only on this preliminary point, as the appellant has no case even on merits. 5. Coming to the question whether the court below had jurisdiction to issue injunction in regard to the amount lying with the I.I.T., we find that the matter is governed by II Schedule to the Arbitration Act which lays down the powers of the court in regard to the grant of interim orders. Under clause 2 of the Schedule the court has been empowered to pass orders for securing the amount in difference in the reference. Clause 3, on the other hand, authorises the court to pass orders, inter alia, for preservation of any properly or thing which is the subject of the reference. 6. In the present case, from perusal of the application under Section 20 in particular, paragraph no. 3 thereof, it is clear that the plaintiff-respondent was also lying claim to the amount which is payable by the IIT to the appellant in respect of the contract entered into by the appellant with the IIT. The basis of the claim is that the appellant has used in the construction works of the IIT undertaken by him a large quantity of bricks manufactured at the brick kiln which was at the relevant time run in partnership between the plaintiff and the defendant. In the claim which has been submitted before the arbitrator also we find that the plaintiff-respondent is demanding a sum of Rs. 5,25,000/- as the price of his share in the bricks alleged to have been used by the appellant in the aforesaid constructions. The injunction issued by the court below, therefore, restraining the appellant from withdrawing the amount lying to his credit with the IIT until the submission of the award is thus clearly covered by clauses 2 and 3 of the Second Schedule mentioned above. The injunction issued by the court below, therefore, restraining the appellant from withdrawing the amount lying to his credit with the IIT until the submission of the award is thus clearly covered by clauses 2 and 3 of the Second Schedule mentioned above. The injunction has been issued for securing the amount in difference in the reference as also for preservation of property or thing which is the subject of the reference. 7. The second submission regarding the propriety of the order of injunction is equally devoid of merit. Along with the application under Section 20 of the Arbitration Act the plaintiff-respondent had also filed an application for a direction to the appellant to furnish security and on his failure to do so for the attachment of the property described in Schedule B to the application. Upon that the court passed an order on February 26, 1986 issuing notice to the appellant and restraining him, inter alia, from withdrawing the amount (mentioned in Schedule B) due from the IIT. After that the defendant appeared and he was given opportunity to furnish security before his prayer for vacating the order dated February 26, 1986 could be considered. The defendant failed to furnish security. The appellant was given another opportunity by the court below by its order dated May 28, 1986 to furnish a bank guarantee of Rs. 1,50,000/-. The court specifically observed in its order dated May 28, 1986 that his request for modification of the injunction older shall not be considered until he furnished bank guarantee. The appellant again defaulted whereupon the court passed an order dated May 28, 1987 whereby the injunction orders issued on February 26, 1986 were confirmed. 8. It is this order which has been directed by the court below to continue in operation till the submission of the award. 9. We are firmly convinced that the court below was left with no option but to restrain the appellant from withdrawing the amount until the submission of the award. It has come in the affidavits filed on behalf of the plaintiff that the appellant is not possessed of any other property or assets which might constitute a proper security for the amount which may ultimately be awarded against him by the arbitrator. It has come in the affidavits filed on behalf of the plaintiff that the appellant is not possessed of any other property or assets which might constitute a proper security for the amount which may ultimately be awarded against him by the arbitrator. The appellant has by his series of acts and omissions committed in regard to the injunction orders issued by the court below left the court with no opinion but to restrain him from withdrawing the amount lying with the IIT. The order dated April 18, 1988 by which the dispute has been referred to the sole arbitrator provides that the arbitrator shall submit his award within four months from the date of entering upon the reference. Within these four months the appellant has not even filed his objection or written statement against the claim of the plaintiff-respondent. In these circumstances, we are not inclined to interfere with the order of restraint passed by the Court below. 10. In the result, the appeal fails and is dismissed.