A conditional order of attachment under Section 9 of the Arbitration and Conciliation Act does not constitute a final order, allowing the respondent to furnish security to lift the attachment.

ORDER :

(NJS, J.)

Assailing the order of the learned Single Judge dated 23.04.2024 passed in ICOMAOA No.5 of 2024, filed under Section 9 of the Arbitration and Conciliation Act, 1996 (for short “the Act”) granting conditional order of attachment, the present Appeal has been preferred. The appellant is the respondent No.1 in the said application.

2) For the sake of convenience, the parties are referred to as arrayed in ICOMAOA No.5 of 2024.

3) The case of the petitioner as set out in the application may briefly be stated thus:

4) The petitioner is a Hong Kong company engaged in the business of owning and chartering out vessels. The respondents 1 to 3 are engaged in the sale and export of agricultural commodities such as rice. On 12.03.2021 the petitioner and the respondents 1 to 3 executed a fixture note / charter party agreement under which, the petitioner chartered the vessel MV HAN THAR to respondents 1 to 3. The fixture note, inter alia, provides for various terms and conditions and the demurrage rate was fixed at USD 7500 per day. It also provides for settlement of disputes between the parties through arbitration in Singapore.

5) The petitioner in terms of the contract carried the cargo as required under the fixture note from Kakinada to Ho Chi Minh City, Vietnam. At the discharge port of Ho Chi Minh City, the vessel tendered its notice of readiness on 21.05.2021, the lay time got over on 26.05.2021 and discharging commenced only on 29.05.2021 and completed on 12.06.2021. As the time for discharge was only three days 16 hours, demurrages for 17 days 2 hours was to be paid and in view of the same, the petitioner sent statement of facts on 23.06.2021 to the 1^st respondent claiming demurrage of USD 128,409.74. An invoice dated 23.06.2021 for the said amount was also raised and as per the fixture note, the payment of demurrage was to be made within 15 days of submission of the documents i.e., by 07.07.2021. The payment was not made despite several reminders to the respondents 1 to 3 as also the legal notice dated 06.08.2021. The petitioner is entitled to the undisputed demurrage amount of USD 128,409.74 with interest at the rate of 24% p.a., the conduct of respondents 1 to 3 is that of a regular defaulter and there is a serious doubt about their financial health.

6) The petitioner, in view of the urgency and for the grounds stated in the petition, sought the reliefs pending resolution of the disputes through arbitration.

7) The learned single Judge while directing notice passed the following order dated 23.04.2024, the relevant portion which reads thus:

“Issue notice to R-1 to R-3 to furnish security for the amount of USD 296,326.74 within 24 hours from the time of receipt of notice and simultaneously attach the cargo of rice of 1600 metric tones being loaded on to the vessel MV BULK MANARA in 4^th respondent Port and if the security is furnished as directed, the order of attachment shall be raised and in case the security is not furnished as directed, the attachment shall continue until further orders.”

8) Heard the learned counsel for the appellant-1^st respondent Mr.Manojkhatri and the learned counsel for the respondent-petitioner. Perused the material on record.

9) The learned counsel for the appellant-1^st respondent, inter alia, contended that the order under challenge is not sustainable in as much as it is in the nature of a final order. It is his submission that the direction of the learned single Judge to furnish security for an amount of USD 296,326.74 within 24 hours from the date of receipt of the notice and simultaneously attaching the cargo of rice of 1600 Metric Tones, that too without hearing the 1^st respondent amounts to granting the final relief. Referring to Order 38 Rule 5 of CPC, he contended that the learned single Judge has passed the order under challenge in a mechanical manner without considering the parameters i.e., balance of convenience and irreparable loss for granting ex parte order of attachment.

10) Learned co