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2009 Supreme(Bom) 570

High Court of Judicature at Bombay
THE HONOURABLE MR. JUSTICE S.C. DHARMADHIKARI
Vascon Engineers Limited
Versus
Sansara Hotels India Pvt. Ltd. & Others
ARBITRATION APPEAL NO. 13 OF 2009
Decided on : 24-04-2009

Advocates appeared:
For the Appellant:Fredun Devitre, Sr. Counsel with Faran Dubhash i/b. M/s. Sonal Doshi & Co., Advocate. For the Respondents:R1, J.J. Bhatt i/b. M/s. Wadia Gandy & Co., Advocates.

The main legal point established in the judgment is that the obligations and requirements of Order 39 Rule 3 of C.P.C. must be read into the wide power granted by Section 9 of the Arbitration Act, and the proviso to Order 39 Rule 3 is not penal in nature and must be complied with.

Headnote:

Arbitration Act - Challenge to ex-parte and interim order u/s. 9 - [Arbitration Act, 1996, Section 37] - The judgment discusses the application of Order 39 Rule 3 of C.P.C. to the grant of ex-parte orders in exercise of the jurisdiction conferred by Section 9 of the Arbitration and Conciliation Act, 1996. The court analyzes the obligations and requirements of Order 39 Rule 3 proviso and its applicability to the grant of ex-parte orders under Section 9. The judgment highlights the interpretation of the legal provisions and their influence on the court's decision to maintain the ad-interim order.

Fact of the Case:

The First Respondent filed a Petition under Section 9 of the Arbitration and Conciliation Act, seeking interim measures including an ex-parte injunction against the Appellants. The Court below granted the ex-parte injunction without notice to the Appellants. The Appellants filed an application to vacate the ex-parte order solely on the ground of non-compliance with the obligations of Order 39 Rule 3 of C.P.C.

Finding of the Court:

The Court found that the general principles governing the grant of interim relief under Order 39 Rule 3 of C.P.C. are applicable to the grant of ex-parte orders under Section 9 of the Arbitration Act. The Court held that the proviso to Order 39 Rule 3 is not penal in nature and must be read into the wide power granted by Section 9. The Court concluded that the ex-parte order need not be vacated solely on the ground of non-compliance with the proviso.

Issues: The issues revolved around the applicability of Order 39 Rule 3 of C.P.C. to the grant of ex-parte orders under Section 9 of the Arbitration Act, and whether the ex-parte order should be vacated solely on the ground of non-compliance with the proviso.

Ratio Decidendi: The Court held that the requirements of Order 39 Rule 3 must be read into the wide power granted by Section 9 of the Arbitration Act. The proviso to Order 39 Rule 3 is not penal in nature and must be complied with. The Court concluded that the ex-parte order need not be vacated solely on the ground of non-compliance with the proviso.

Final Decision: The Court maintained the ad-interim order but for different reasons, and expedited the hearing and disposal of the Arbitration Petition.

Judgment :

Admit. Respondent No.1 waives service. By consent of parties, taken up for hearing forthwith.

2. Mr. Devitre, learned Senior Counsel appearing for the Appellants states that other Respondents are duly served. However, for the limited purposes of this Appeal, I do not see that their presence is necessary. There would be no prejudice caused to them if the Appeal is decided in their absence as the contesting parties are before the Court.

3. This Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 challenges an order passed by the learned District Judge, Pune dated 1st April 2009 on an Application (Exhibit 30) in Arbitration Petition No. 215 of 2009.

4. Counsel appearing for parties are agreed that the effect of the order is that an ad-interim relief prayed by the First Respondent has been granted by the Court below and that is how the instant Appeal is maintainable. The Appeal questions continuation of an ex-parte and interim order made u/s. 9 of the Arbitration Act and refusal of the Trial Court to vacate it on the ground that the same is in breach of the principles enshrined under Order 39 Rule 3 of C.P.C. For the purposes of this Appeal, I need not go into the larger issue as to whether an Appeal would lie under this provision against the order of the present nature otherwise. That is a matter left upon for being considered in an appropriate case.

5. It is not in dispute in the present Appeal that the First Respondent had moved the Court below by filing a Petition under Section 9 of the Arbitration and Conciliation Act, the First Respondent applied for interim measures and more particularly that pending the arbitration proceedings and till the making and implementation of the award therein, the First Respondent - Appellant before me be directed to deposit a sum of Rs.48.50 crores being the aggregate payments made alongwith interest calculated at 15% p.a. as more particularly stated in prayers a(i) to a(iv). It was prayed inter-alia that pending the arbitration proceedings and till the making and implementation of the award, the Court below be pleased to pass an order of injunction restraining the Respondents to the Arbitration Petition (which include the Appellant before me) from dealing with, disposing off, alienating, encumbering, constructing and/or creating any third party right in any manner whatsoever in respect of the Suit property or any part thereof. This application/petition was made on 19th February 2009. Therein, a distinct application for interim reliefs was made and the same interim measures have been prayed for.

6. Upon this application, the First Respondent applied for an ex-parte injunction against the Appellants and others restraining them from creating any third party interest or dealing with or disposing off the Suit property in any manner whatsoever.

7. It is not in dispute that the application was moved for ad-interim ex-parte injunction. Admittedly, no notice of this application was served on the Appellants and other Respondents to the main Petition. The learned Judge heard the Advocate appearing for the First Respondent and by an order dated 6th March 2009 granted the following relief:-

"The Respondents are hereby restrained of creating any 3rd party interest in the suit property and also from inducting any 3rd person in the suit property.

Issue show cause notice to the Respondents as to why the ad-interim relief granted to the petitioner should not be confirmed. The notice R/o. 23.3.2009."

8. The reasoning based upon which the learned Judge concluded that if notice is given to the Respondent that is the Appellant before me prior to passing off the order of injunction, is of the possibility is that the parties may create third party rights and then the loss that would be caused cannot be compensated in terms of money. The order to the extent of this reasoning reads thus:-

"Considering the prima facie material on record the Petitioner has made out the case that the Respond


























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