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Judgment
Mukul Mudgal, J.
C.M. No. 17485 (Exemption)
Allowed, Subjection to all just exceptions.
Application stands disposed of accordingly.
FAO (OS) 601/2009 and C.M. No. 1784/2009 (stay)
This appeal challenges the judgment of the learned single Judge dated 3rd November, 2009. By the impugned judgment, the learned Single Judge has dismissed the Section 9 Application in the pending OMP filed by the respondent, challenging the Award dated 31st January, 2009 u/s 34 of the Arbitration & Conciliation Act, 1996. The learned Single Judge in essence has held that in view of the law laid down by the Hon''ble Supreme Court in the case of Bhatia International Vs. Bulk Trading S.A. and Another, , the application such as the present one filed by the appellant can not be entertained u/s 9 of the Arbitration and Conciliation Act and the appellant cannot seek of stay of further proceedings. The relevant paragraph of the judgment of Bhatia International (supra) reads as follows:-
We see no substance in the submission that there would be unnecessary interference by courts in arbitral proceedings. Section 5 provides that not permit any or all applications. It only permits applications for interim measures in clauses (i) and (ii) thereof. Thus there cannot be applications u/s 9 for stay of arbitral proceedings or to challenge the existence or validity of arbitration agreements or the jurisdiction of the arbitral tribunal. All such challenges would have to be made before the arbitral tribunal under the said Act.
The learned counsel for the appellant has also raised other pleas about the efficacy of the arbitration award and whether or not existence of the arbitration award has any legal effect. In our view we need not to go into other issues as the submissions of the counsel for the appellant cannot be sustained on the basis of the view taken by the learned Single Judge on the maintainability of the prayers in the application u/s 9 sought to be filed in the pending OMP u/s 34 by the appellant. The above judgment of the Supreme Court squarely applies to the facts of thee present case and the appeal consequently deserves dismissal.
Section 9 of the Act reads as follows:-
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 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 authorizing for any of the aforesaid purpose any person to enter upon any land or building in the possession of any party, or authorizing 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 appointment of a receiver;
(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.
The learned counsel for the appellant has sought to place reliance on the sub-clauses (d) and (e) of Section 9 to contend that such other interim measures of protection as may appear to the court to be just and convenient are available in terms of the said sub sections in his application u/s 9. In our view subsections (d) and (e) have to be construed in the light of the measures indicated in sub para ii (a), ii (b) and ii (c). The proceedings u/s 9 cannot be used to deter any other proceedings in the arbitral proceedings sought to be challenged. Besides, we have noticed that in paragraphs 6 & 7 of the impugned judgment, the learned Single Judge has not shut out the rights of the appellant to raise legally tenable pleas in respect of the proceedings sought to be injuncted. Paragraphs 6 & 7 of the impugned judgment are reproduced as under:-
The point which was strenuously and very vehemently urged by the counsel for the appellant is that since the matter in issue in the second arbitration proceedings will be the same as in the first arbitration proceeding viz. of challenge to the termination under clause 63.1 of the contract, the second arbitration proceedings cannot continue. In this regard, I am not making any observation on merits as to whether the second arbitration proceeding can or cannot go on, but, the present application seeking stay of the arbitration proceedings in an earlier petition u/s 34 of the Act, is clearly misconceived. If, I understand rightly, the issue which is urged by the counsel for the applicant would be u/s 10 of the CPC whereby there cannot take place a second proceeding between the same parties when the first proceeding on the same issue between the same parties when the first proceeding on the same issue between the same parties is already pending. No doubt, Section 10 of the CPC can apply if a subsequent proceeding has started but, would have to pay means of an application in a first substantive earlier proceeding whereby an award has been challenged u/s 34 of the Act.
The second argument as urged of violation of public policy on the ground that a second proceeding cannot be initiated after the decision on a first completed proceeding can also be said to be effectively one under Order 2 Rule 2 of the CPC that on the same cause of action additional claims cannot be preferred and it was incumbent on the petitioner to have made such claims in the first proceedings. Again, I do not say anything on the merits with respect to this issue on whether there was an existing cause of action in an earlier proceeding for the present petitioner/non-applicant to have filed its claim in those arbitration proceedings, because not only the same will have to be decided in an appropriate proceeding and not the present but also prima facie the risk and cost purchase tender is a subsequent event and would be a fresh cause of action and it is only when the risk and cost tender is finalized would amounts as claimed to be due be said to be crystallized for an alleged aggrieved party to file a claim with respect to the same against the other party.
Even otherwise, in our view in the light of Section 41(b) of the Specific Relief Act, the proceedings u/s 9 of the Arbitration and Conciliation Act by the appellant are not maintainable Section 41(b) of the Specific Relief Act by reads as follows:-
41 Injunction when refused. - An injunction cannot be granted-
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(b) to restrain any person from instituting or prosecuting any proceeding in a court not subordinate to that from which the injunction is sought;
The counsel for the appellant has sought to place reliance on the judgment of M/s. Uttam Singh Duggal & Company Vs. UOI, Civil Appeal No. 162 of 1962 to contend that it is well settled that as a general rule all claims which are the subject matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after the award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award and in reality an award possesses all the elements of finality even though it has not been formally enforced and it may be relied upon in a litigation between the parties relating matter. In our view firstly the above judgment is a judgment of the year 1962 and is obviously based on the interpretation of the Arbitration Act of 1940 which does not contain a provision analogous to Section 9 of the 1996 Act. Secondly, even otherwise the learned Single Judge has preserved the rights of the appellant.
Accordingly, we are of the view that the above judgment cited by the counsel for the appellant has no applicability to the facts of the present case. We, therefore, uphold the reasoning of the learned Single Judge that Section 9 proceedings cannot be resorted to by the appellant to seek to injunct the continuation of the other arbitral proceedings. With the above observations and findings, we dismiss the appeal filed by the appellant in limine with no order as to costs.
FAO (OS) 601/2009 and C.M. No. 1784/2009 are accordingly disposed of.