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2014 DIGILAW 699 (RAJ)

Vipul Sulz Fab Private Limited v. RIICO

2014-03-12

ARUN BHANSALI

body2014
JUDGMENT 1. - Heard learned counsel for the parties.This appeal is directed against the order dated 28.09.2013 passed by Additional District Judge No.2, Bhilwara, whereby, the application filed by the appellants under Section 9 of the arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') has been rejected on an application filed by the respondents under Order 7, Rule 11 CPC. 2. The facts which are relevant for the purpose of present case are that : the appellants filed a Civil Suit being C.O. No.132/2013 (262/2013) before the Court of District Judge, Bhilwara for permanent injunction along-with an application under Order 39, Rule 1 and 2 CPC. The suit was opposed by the respondents by filing application under Order 7, Rule 11 CPC. After hearing the parties, the District Judge, Bhilwara by order dated 11.09.2013 allowed the application under Order 7, Rule 11 CPC and referred the parties to arbitration in terms of Clause 3(h) in the lease agreement, which was subject matter of the suit. 3. Where after, the present application under Section 9 of the Act was filed by the appellants seeking 'interim measure' regarding the subject matter of the arbitration agreement. 4. The respondents filed an application under Order 7, Rule 11 CPC alleging that the earlier suit, which was filed by the parties was based on the similar allegations and was rejected by the court and, therefore, the present proceedings under Section 9 of the Act were not maintainable. It was also alleged that the arbitration proceedings in terms of Clause 3(h) had not been initiated and, therefore, also the application was not maintainable. 5. The trial Court after hearing the parties, came to the conclusion that when the admitted case of the applicants was that it was in the process of initiating the arbitration proceedings, during pendency of the said proceedings, there was no reason to keep the proceedings pending and for the same dispute two proceedings before two separate forums cannot be maintained and may lead to legal complications in future and, consequently, allowed the application under Order 7, Rule 11 CPC filed by the respondents and rejected the application filed by the appellants under Section 9 of the Act. However, while parting with the said case, in the interest of justice, the Court directed that for a period of 10 days, the status quo be maintained. 6. However, while parting with the said case, in the interest of justice, the Court directed that for a period of 10 days, the status quo be maintained. 6. During pendency of this appeal, on 04.10.2013, a status quo order regarding the suit property was granted. 7. A detailed reply to the stay application has been filed by the respondent Nos.2, 3 and 5. It is, inter alia, indicated that the possession of the suit property has already been obtained by them and interim order was obtained from this Court by suppressing material facts as the possession had already been obtained on 17.07.2013. Apparently, no rejoinder to the said reply, which was filed on 07.01.2014 has been filed. 8. It is submitted by learned counsel for the appellants that the trial court was not justified in dismissing the application under Section 9 of the Act and has totally misconstrued the entire circumstance and has ignored the express language of Section 9 of the Act and, therefore, the order impugned deserves to be set aside. The facts alleged by the respondents in the reply to the stay application were sought to be disputed orally. 9. Learned counsel for the respondents submitted that looking to the overall facts and circumstances of the case, the trial court was justified in rejecting the application under Section 9 of the Act. It was also submitted that in fact the trial court has granted the 'interim measure' for 10 days, as such, it cannot be said that the power under Section 9 of the Act was not exercised and, therefore, the appeal deserves to be dismissed. 10. It was emphasised that the possession has already been delivered to the respondents and the appellants are not in possession of the subject matter of application under Section 9 of the Act and, therefore, even if the proceedings are remanded back to the trial court, the same would be an exercise in futility. 11. I have considered the rival submissions. Section 9 of the Act reads as under:- "9. Interim measures, etc. by Court. 11. I have considered the rival submissions. Section 9 of the Act reads as under:- "9. Interim measures, etc. by Court. - A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court (i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely:- (a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it." 12. A bare reading of the provision would reveal that pendency of arbitral proceedings is not a pre-condition for exercise of power by the Court and the Court may grant interim relief before, during arbitral proceedings and even after the award has been passed but before the award has been enforced in accordance with Section 36 of the Act. 13. The view taken by the trial court that as the appellants are to approach the named Arbitrator in pursuance to Clause 3(h), two proceedings cannot be maintained before two separate forums, appears to be a result of either not reading the express word of Section 9 of the Act and/or not understanding the implication of the said provision. 14. 13. The view taken by the trial court that as the appellants are to approach the named Arbitrator in pursuance to Clause 3(h), two proceedings cannot be maintained before two separate forums, appears to be a result of either not reading the express word of Section 9 of the Act and/or not understanding the implication of the said provision. 14. When the application under Section 9 of the Act was filed, the appellants were in the process of approaching the arbitrator and it is stated at the bar that claim has been filed before the arbitrator now. In view of the above discussion, the order passed by the trial court dated 28.09.2013 cannot be sustained. 15. The submission of learned counsel for the respondents that the trial court had in fact granted 'interim measure' by granting 10 days' relief and, therefore, the power has been exercised, has no substance. The operative portion of the impugned order reads as under:-" vkns'k 12& Qyr% foi{kh la[;k 02] 03 o 05 dh vksj ls izLrqr izkFkZuk i= vUrxZr vkns'k 07 fu;e 11 lifBr /kkjk 151] ( ;0iz0 ) la0 Lohdkj fd;k tkdj izkFkhZx.k dh vksj ls izLrqr izkFkZuk i= vUrxZr /kkjk 09] vkchZVs~'ku ,DV] 1996 [kkfjt fd;k tkrk gSA lkFk gh U;k;fgr esa izkFkhZx.k dks fooknr laifRr ls vkxkeh 10 fnol rd csn[ky ugha djus ,oa ;FkkfLFkfr cuk, j[kus ds fy, Hkh foi{khx.k dks ikcan fd;k tkrk gSA bl vof/k ds i'pkr~ foi{khx.k fu;ekuqlkj mfpr dne mBkus ds fy, Lora= gksaxsA " 16. The application under Section 9 of the Act has been expressly dismissed and, thereafter, 10 days' time has been granted for taking appropriate proceedings. The grant of 10 day's time and ordering status quo after expressly rejecting the application under Section 9 of the Act under Order 7, Rule 11 CPC i.e. holding the same to be not maintainable, cannot be said to be granting 'interim measure'. 17. So far as the submission of learned counsel for the respondent that in view of the developments which have taken place even prior to passing of the order dated 28.09.2013 and, subsequent thereto, the application under Section 9 of the Act even otherwise has been rendered infructuous, the said aspect needs to be examined by the trial court and this court is not inclined to enter into that controversy, so as to itself exercise jurisdiction under Section 9 of the Act. The trial court would take into consideration all the aspects brought before it. 18. In view of the above discussion, the appeal filed by the appellants is allowed. The order dated 28.09.2013 is set aside. Civil Case No. 4/2013 is restored to the file of Additional District Judge No. 2, Bhilwara for deciding the same in accordance with law. 19. The parties shall remain present before the said Court on 20.03.2014. The interim order of maintaining status quo passed by this Court shall remain in force till 20.03.2014, thereafter, it will be open for the trial court to pass appropriate orders. 20. The stay application also stands disposed of.Appeal Allowed - Order of Trial Court Set Aside - Case Restored to ADJ Concerned for Deciding Suit.Appeal Allowed. *******