M/s. Kris Heavy Engineering and Construction SDN BHD vs PNHB-LANCO-KHEC-JV

Vinod K. Sharma, J.—M/s. Kris Heavy Engineering and Construction Sdn. Bhd., has invoked Section 9 of the Arbitration and Conciliation

Act before commencement of arbitration proceedings with the prayer for interim measure in granting interim pro-order prohibiting the 2nd

respondent / Garnishee from releasing the amount due and payable to the 1st respondent as on the date of this order under the contract No.

CNT/WSS/CWSAP-I/MWB/03/2001-Package III dated 31.10.2012. The application as framed is not competent. The order against Garnishee

can be passed by invoking the underlying principles of Order XXI Rule 46-A, 46-B and 46-B of the Code of Civil Procedure. The reading of the

provisions of CPC shows, that the amount payable by the Garnishee can be attached only to enforce the decree against the judgment debtor. The

provisions with regard to security pending proceedings are governed by the underlying principles of Order 38 Rule 5 of CPC, therefore the

provisions under Order XXI Rule 46-A, 46-B and 46-B of CPC cannot be invoked in exercise of equitable jurisdiction u/s 9 of the Arbitration

and Conciliation Act. is judgment debtor.

The Hon''ble Supreme Court in the case of Adhunik Steels Ltd. Vs. Orissa Manganese and Minerals Pvt. Ltd., was pleased to lay down as

under:

It is true that Section 9 of the Act speaks of the court by way of an interim measure passing an order for protection, for the preservation,

interim custody or sale of any goods, which are the subject matter of the arbitration agreement and such interim measure of protection as may

appear to the court to be just and convenient. The grant of an interim prohibitory injunction or an interim mandatory injunction are governed by

well known rules and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was de

hors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the

Section itself brings in, the concept of ''just and convenient'' while speaking of passing any interim measure of protection. The concluding words of

the Section, ""and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it"" also

suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision. Moreover, when a

party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the

ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out

the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures

u/s 9 of the Act.

In view of the observation of the Hon''ble Supreme Court, the jurisdiction u/s 9 can only be exercised as per the settled principle of law, laid

down by the Court, while invoking the provisions for grant of interim injunction, appointment of receiver, ordering securities, etc.

This Court in exercise of power u/s 9 cannot pass orders contrary to provisions of CPC with regard to security etc., when the dispute is yet to

be determined, and the stand of opposite party is not even known.

Section 9 of the Arbitration and Conciliation Act, though gives power to the Court to pass order for interim measure either before, during or

after the arbitration proceedings, but at the same time, it is also well settled, that this power has to be used in exceptional cases to settle the equities

between the parties and cannot be used to stop the business of the opposite party as an interim measure with some ulterior motives.

Furthermore, the provisions of Order XXI Rule 46-A, 46-B & 46-C of CPC apply to the enforcement of decrees and can be invoked before

decree only in exceptional circumstances, i.e., when there is no dispute with regard to the claim, whereas arbitration proceedings presuppose the

valid dispute, which requires determination by the arbitral Tribunal.

This case however is a classic example for misuse of the process of Court, as the applicant obtained ex-parte interim order against respondent

no. 2 from making payment of Rs. One Crore pending arbitral proceedings.

This order was based on facts, which have been found to be wrong, as the award is finally passed by the Arbitral Tribunal against the applicant,

and in favour of the respondents. Inspite of the fact, that it was applicant, who was to pay to respondent as determined in award, still the amount

payable to respondent no. 1 was withheld by invoking Section 9 of the Arbitration and Conciliation Act. Therefore, this application is ordered to

be dismissed with cost, which are assessed at Rs. 25,000/- (Rupees Twenty Five Thousand only).