The main legal point established in the judgment is that the power to strike off a defence should be exercised for adequate reasons, only in cases of wilful default or contumacious conduct causing substantial prejudice to the other party.

D.Y. CHANDRACHUD, J.

1. This Appeal arises from a judgment of a learned Single Judge dated 4 October 2012 by which a motion seeking a direction under Order 39 Rule 11 of the Code of Civil Procedure, 1908 striking off the defence of the Appellant to a Petition for enforcing a foreign award was allowed. The learned Single Judge has directed that the defence filed by the Appellant to the Petition instituted by the Respondent under Section 47 of the Arbitration and Conciliation Act, 1996 be struck off.

2. The facts before the Court lie in a narrow compass. On 25 October 2007 a contract of affreightment was entered into between the Appellant and the Respondent for shipment of a certain consignment of Bauxite from the west coast of India to China. One of the ports of dispatch was Okha which, the Court is informed, falls within the territorial jurisdiction of the District Court of Jamkhambhalia in the District of Jamnagar. The Respondent lodged a claim against the Appellant in arbitration in pursuance of an arbitration agreement between the parties before an Arbitral Tribunal consisting of a sole arbitrator, Mr. Alan Oakley in London. The reference to arbitration was in pursuance of Clause 28 of the contract of affreightment. The Arbitrator made and declared his Award on 8 July 2009 in favour of the Respondent, directing the Appellant to forthwith pay a sum of US Dollars 24,157,442 together with interest.

3. The Appellant has filed a Petition under Section 34 of the Arbitration and Conciliation Act, 1996 in the Court of the District Judge at Jamkhambhalia. In November 2009, the Respondent filed two Petitions before this Court under Sections 47 and 9 respectively, the former seeking a declaration of enforceability of the arbitral Award as a decree of this court and the latter, interim reliefs. On 20 December 2010 a learned Single Judge of this Court passed orders on the Arbitration Petitions. The learned Single Judge was of the view that the question as to whether the Court at Jamkhambhalia did or did not have jurisdiction to entertain the Petition under Section 34 was not a matter which could be addressed before this Court. The Appellant had sought an adjournment of the Petition seeking enforcement of the foreign arbitral Award pending the disposal of the challenge preferred by the Appellant to the Award in the District Court at Jamkhambhalia. The learned Single Judge adjourned the hearing of the two Arbitration Petition Nos. 24 and 25 of 2010 arbitration Petitions and issued the following directions :-

(1) The hearing of Petition Nos. 24 of 2010 and 25 of 2010 is adjourned till the disposal of the petition filed by the respondents under section 34 of the Arbitration Act in the District Court of Jamkhambhaliya but on the condition that they furnish security in the sum of sterling pounds 24,157,442.00 and 5,000.00 respectively within a period of twelve (12) weeks from today.

4. The direction for furnishing security by the Appellant was issued by the learned Single Judge in terms of Section 48 (3). The Appellant challenged the order of the learned Single Judge in Appeal. On 17 March 2011, a Division Bench of this Court while adjourning the hearing of the Appeal stayed the operation of the direction requiring the Appellant to furnish security subject to the condition that the Appellant not alienate its assets and make a disclosure on affidavit of its assets and investments. On 5 July 2011, the Appeal was disposed of by the Division Bench of this Court holding that the learned Single Judge acted within jurisdiction in passing an order for furnishing of security under Section 48 (3). In a Special Leave Petition filed by the Appellant against the order of the Division Bench2 the Supreme Court issued notice but specifically made it clear that this will not operate as a stay of the order of the High Court directing the Appellant to furnish security.

5. The Appellant filed a reference to the BIFR under the Sick Industrial Companies (Spe