India Media Services Pvt. Ltd. vs SBPL Infrastructure Ltd

The Court :- AP No. 78 of 2012 (SBPL Infrastructure Ltd.â€"Vs. â€" India Media Pvt. Ltd.) was filed by the appellant herein. In the said arbitration

petition an application was filed under Section 9 of the Arbitration and Conciliation Act, (hereinafter to be called as the ‘said Act’), for interim

relief by the appellant in view of the arbitration clause contained in the agreement dated 5th December, 2005 (nomination agreement). The appellant

made the following prayers in the arbitration petition at page 60 of the application being G.A. 2524/2016.

“Your petitioner therefore most humbly pray Your Lordships for following orders-

a) Injunction restraining the respondent from acting in a manner inconsistent with the agreement dated 5th December, 2005 by transferring the said

property and more fully described at paragraph 58 in any form whatsoever including by way of transfer of shares of the respondent Company.

b) A receiver/special officer be appointed and submit a report as to the nature character and occupancy of the property and therefore taken symbolic

possession of thereof.

c) Ad-interim order in terms of prayers above;

d) Such further or other order or orders be made and/or directions be given as this Hon’ble Court may deem fit and proper.â€​

The said application under Section 9 filed by the appellant was dismissed by the learned Single Judge holding inter alia that the scope of Section 9 of

the 1996 Act is in pari materia with the provisions of Order 39 of the Code of Civil Procedure and Section 36 of the Specific Relief Act, 1963 and any

relief granted thereunder is discretionary in nature. In view of the averments made in paragraph 55 of the application an undertaking was given by the

petitioner to relinquish the claim for possession. Therefore, having regard to such claim for possession over the property made in the arbitration

proceeding relief could not be granted in the application on the question of jurisdiction inasmuch as the subject property is situated outside the territorial

jurisdiction of the Court. Learned Trial Court held that in the instant case the property is situated outside the territorial jurisdiction of this Court and

since protection of such property was sought, this Court would not have jurisdiction to entertain a suit or any proceeding in which possession of such

immovable property was sought. In case no possession is sought and the relief claimed is simply for enforcement of the agreement of sale, then the

suit can be entertained even if the property situates outside the territorial jurisdiction of this Court but according to the learned Single Judge this was

not the case in the arbitration petition. Therefore, Section 9 application was not entertained and dismissed without any relief.

From the decision rendered by the learned Single Judge it appears that prayer under Section 9 has been altogether rejected only on the question of

jurisdiction.

The said order passed by the learned Single Judge on 3rd May, 2013 was assailed in an appeal being APS 178 of 2013 and the Hon’ble Appellate

Court by an order dated 14th November, 2014 set aside the order passed by the learned Single Judge and remanded the same back to the trial Court

for hearing on merit and for passing an order in accordance with law. While disposing of the appeal the Hon’ble Division Bench recorded that

undertaking given by Mr. Mukherjee recorded in the order dated 14.05.2013 shall continue until the application is finally disposed of by the learned

Trial Judge.

According to the order passed by the Hon’ble Appellate Court, application under Section 9 was taken up for consideration by the Hon’ble

Single Judge and the Hon’ble single Judge disposed of the same finally by a judgment and order dated 20.07.2016. This order has been challenged

by India Media Services Pvt. Ltd. in the present appeal.

Learned Single Judge passed an order to the effect that the immovable property being a subject matter to the arbitral reference shall be kept available

to the parties for the satisfaction of any award that may be passed in the arbitration proceeding and therefore, directed that the undertaking given by

the respondent and as continued by the trial Court on 14th November, 2014 shall continue for a period of four months from the date of award to be

passed in the reference.

Mr. Thakkar appearing in support of the application prays before this Court that the order of the learned Single Judge should be stayed. We are told

that arbitration proceeding has already commenced but the proceeding could not come to an end because of the recusal of the arbitrator appointed by

the Court after 125 sittings. However, we are shown an order passed by the High Court appointing one of the retired Judges of this Court as an

Arbitrator in place of the former one. We are also told that an Hon’ble Retired Judge who has been appointed arbitrator is in seisin of the matter

and there is a direction upon such arbitrator to pass final order before August, 2020.

We have also noticed that the present application for stay filed by Mr. Thakkar’s client was affirmed on 20th August, 2016. Learned advocate

also showed us that despite the application had been mentioned and brought in the list, the same could not be heard because the matter was released

by the Bench or for some other technical grounds as is evident from the list of dates placed before us during hearing of the application.

In support of the prayer for stay Mr. Thakkar submits that the order which has been passed by the learned Single Judge is not a speaking order and no

reason has been assigned as to why the undertaking which was directed by the Appellate Court to continue till disposal of the application under

Section 9 of the Arbitration Act, has been carried forward for another period of four months after the date of award to be passed in reference.

According to Mr. Thakkar the principles underlying consideration of an application under Section 9 is in pari materia with the principles for grant of

injunction under Order 39 of the Code of Civil Procedure and therefore, the learned Single Judge ought to have considered the prima facie case,

balance of convenience and inconvenience as also irreparable loss and injury.

Interim prayers of injunction are made in aid of the final relief in the suit or proceeding. Indisputably here the final relief is pending before the

arbitrator and the arbitral reference is in progress. At the end of the reference either award will be passed or claim will be rejected. If an award is

passed then the same is to be satisfied through the subject matter of reference which is an agreement dated 5th December, 2005.

The only grievance of Mr. Thakkar against the order passed by the learned Single Judge is that no reason has been assigned in granting the interim

injunction. The learned Single Judge has not assigned the reasons in so many words but it is implicit from his judgment itself that after considering the

prayer made in the application under Section 9 vis-Ã -vis the case made out in the original reference made out in the arbitration proceeding the learned

Judge has come to a conclusion that the property being the subject matter of the reference which has been described in the agreement dated 5th

December, 2005 as the property known has Indian Express building bearing Municipal nos. 1-2-528 to 1-2-591 Lower Tank Bund Road, Damalguda

Hyderabad â€" 500029 fully described under the head ‘schedule property’ at page 55 of AP 78 of 2012, should not be dealt with by the

petitioner for a period of four weeks after the award is passed. Arbitration petition was filed in 2012; Section 9 application was rejected on 3rd May,

2013; appeal preferred there from and disposed of in November 14, 2014. In the meantime new arbitrator has been appointed for the reference and

the same is in progress. Mr. Thakkar in support of the application contends that condition under Order 39 of the Code is to be considered while

granting or rejecting relief under Section 9 of the Arbitration Act and he has relied on a decision in Adhunik Steels Ltd .Vs. â€" Orissa Manganese

And Minerals (P) Ltd. reported in (2007) 7 SCC 125. There is no dispute about the proposition laid down by the Hon’ble Apex Court. The said

decision cited by Mr. Thakkar elucidates the well known principles of law that while granting an order of injunction the Court must weigh the balance

of convenience and inconvenience of the parties. We do not, however, agree with Mr. Thakkar that Court is always to look into the prima facie case

while considering the scope of temporary injunction. Initially Section 9 application was dismissed against which appeal was preferred and the same

was disposed of clarifying the order of Single Judge recording certain undertaking so as to remove the jurisdictional shortfall with a direction that the

undertaking should continue till disposal of the application. The Appeal Court set aside the order of the Single Bench and directed the matter to be

heard on merit on remand. Such order has been accepted by both the parties and has reached finality as now challenged the same. It is now not

justified to hold that the Single Judge has not considered the prima facie case, balance of convenience and inconvenience or injury with regard to the

merits of the arbitration proceedings. The prima facie case as Mr. Thakkar has pointed out strikes at the very root of the case whether reference is

maintainable or not. This cannot be the subject matter of the decision here while an application under Section 9 has been filed in a pending arbitration

reference.

It is absolutely within the domain of the learned Arbitrator to decide whether claim can be entertained or not. This Court cannot make that exercise. It

is important to take note of Section of the said Act.

Section 9 of the Arbitration and Conciliation Act is set out below:

“9. Interim measures, etc. by Court.â€"[1] 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:â€

(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:â€

(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.

[2] Where, before the commencement of the arbitral proceedings, a court passes an order for any interim measure of protection under sub-section (1),

the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the court may

determine.

 [3] Once the arbitral tribunal has been constituted, the court shall not entertain an application under sub-section (1), unless the court finds that

circumstances exist which may not render the remedy provided under Section 17 efficacious.] Sub-paragraph (1)(ii)(a) is very relevant for our

purpose and this part confers jurisdiction on the Court to protect and preserve the subject matter in reference which the learned Single Judge has done

and we approve the same.

Therefore, we are not inclined to hold that because of the lack of finding with regard to the prima facie case, the learned Single Judge has committed

any error for which the order is either to be set aside or to be stayed at this stage. So far the balance of convenience and inconvenience is concerned

it is true that the learned Single Judge has not made it clear in his judgment why the undertaking which was directed to be continued by the Appellate

Court till disposal of the application should be further extended for substantial period after the award is passed. We clarify that undisputedly the

subject matter of reference is the property described under the nomination agreement mentioned under the schedule in the arbitration petition and if

award is passed and the property which is the subject matter of reference cannot be made available to satisfy the award it will not only lead to

multiplicity of proceedings but may also frustrate the claim of the beneficiaries under the agreement and the award will be an award on paper only and

this is the whole and sole of the balance of convenience and inconvenience in this matter which is very much in favour of respondent herein.

Admittedly, Appeal Court remanded the matter on 14th November, 2014 and on remand the learned Single Judge passed the judgment on 20th July,

2016 and immediately thereafter, the appeal was filed by Mr. Thakkar’s client but he could not get any order of stay for over last three years

without making any case that for this delay he suffered severe loss and injury. He now feels and agitates before the Court that there should not be any

injunction on the subject matter during the arbitration reference. We cannot accept such contention raised by the respondent. Ratio in Adhunik Steels

Ltd. altogether is applicable but does not support grant of stay at such a belated stage. We have also to consider the urgency involved in the matter

with regard to the grant or refusal of interim order of injunction and/or stay. The urgency should be so much so that, if interim order is refused, the

main relief may not be available or the entire proceeding may become infructuous. Such is not the case here. When the appellant after filing the

appeal in 2016 can wait till 2020 we find no reason to grant stay of the order passed by the learned Single Judge after over a period of three years.

Rather, if we accede to the prayer made in the application for stay it may cause such injury to the respondent as might turn to be an irreparable loss

which cannot be compensated by money. The application is being contested by filing affidavits and by oral submissions too by the respective learned

Advocates. It is the settled principles of law that relief of temporary injunction and/or stay can be refused where there has been delay and the party

applying for relief has not pleaded to have suffered by the order under challenge.

Although, we are not inclined to allow application for stay but we, make one observation that the learned Single Judge ought not to have said that the

interim order would continue till four weeks after the ‘award’ is passed. Before the arbitral reference no one can anticipate whether claim will

mature into an award or not. We only modify this that the word ‘award’ in the operative part of impugned order shall stand deleted. We also

direct that interim order passed by the learned Single Judge shall remain operative only for a period of two weeks after the reference comes to an

end.

The application for stay (GA 2524 of 2016) stands modified and disposed of. The other application being GA 3285 of 2018 shall be considered with the

appeal.

Since the learned Advocate appearing for the appellant insists for hearing of the appeal.

Let informal paper-books be filed within a period of four weeks from date and a copy thereof shall be served upon the respondent within two weeks

thereafter.

Let the appeal be listed for hearing eight weeks hence.