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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD
T.V. Nalawade, J.
Aurangabad City Water Utility Co. Ltd. – Appellant
Versus
Aurangabad Municipal Corporation – Respondent
Arbitration Appeal Nos. 12, 13 of 2016 with Civil Application Nos. 12942, 14220, 14221, 14155, 14156 of 2016
Decided On : 24-10-2016
The application filed under Section 11 of the Act by the contractor today itself. After making such order, two arbitrators will be available and they can appoint the third arbitrator for constitution of Board of Arbitrators. Thus, there is no possibility of interference in the first order made by the District Court by which relief was refused in favour of the contractor. However, there is need to interfere in the second order made by the District Court in favour of the contractor by which the employer is virtually prevented from doing anything even when the contract is terminated. That order was immediately stayed by this Court. It is already observed that it is only the Arbitral Tribunal, the Board of Arbitrators, who can decide as to who was at fault and as to who is entitled to get compensation.
Arbitration & Conciliation Act, 1996 - Section 9-Grant of relief of injunction.-Though the employer committed breach of contract, yet employer cannot be prevented from invoking Bank guarantee.
Courts are not expected to lightly interfere in the right given to a party under the contract to invoke the bank guarantee. Court should be very slow in granting injunction to prevent the invoking of bank guarantee. In such cases, even if the dispute is raised about the liability of the contractor and it is the case of contractor that it is the employer who has committed the breach of contract, the right of the employer to invoke the bank guarantee remains unaffected. AIR 2007 SC 2716 and AIR 1997 SC 1644-Referred.
T.V. Nalawade, J.
1. Both the appeals are admitted. Notice after admission is made returnable forthwith. By consent, heard both the sides for final disposal.
2. Arbitration Appeal No. 12/2016 is filed against the decision given by the learned District Judge of the District Court, Aurangabad in MARJI No. 214/2016, which was filed under section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short). The application was filed by Aurangabad City Water Utility Company Limited (hereinafter referred as 'contractor' for short) against Aurangabad Municipal Corporation (hereinafter referred to as 'employer' for short). In the application, no relief, as such was given by the District Court in favour of the contractor and so, Arbitration Appeal No. 12/2016 is filed by the contractor. When Arbitration Appeal No. 12/2016 was pending before this Court, the contractor filed another application under section 9 of the Act bearing MARJI No. 326/2016 in District Court and in this application, interim relief is granted by the District Court in favour of the contractor. The same relief was claimed in the previous application which was rejected in the past. So, the decision given in MARJI No. 326/2016 is challenged by the employer by filing Arbitration Appeal No. 13/2016. In both the appeals the same agreement between employer and contractor is involved and the dispute involved is also the same.
Considering the reliefs claimed in both the applications, which were filed under section 9 of the Act, this Court has heard both these appeals together.
3. In MARJI No. 214/2016, which was filed in the District Court following reliefs were claimed by the contractor.
"(a) That pending the Arbitration Proceeding, this Hon'ble Court may be pleased to restrain the Respondent, their servants, agents, and subordinate officers by an Order and Injunction of this Hon'ble Court in any manner from taking any coercive action against the petitioner in respect of the Water Supply Project without following the due process as provided under the Concession Agreement dated 22.09.2011;
(b) That pending the hearing and final disposal of the above Petition and pending the Arbitration Proceeding, it is just, necessary and convenient that this Hon'ble Court may be pleased to restrain the Respondent, their servants, agents and subordinate officers by an Order and Injunction of this Hon'ble Court in any manner in taking over the Project from the petitioner without following the due process as provided under the Concession Agreement dated 22.09.2011;
(c) That pending the hearing and final disposal of the above petition and pending the Arbitration Proceeding, it is just, necessary and convenient that this Hon'ble court may be pleased to restrain the respondent, their servants, agents and subordinate officers by an Order and Injunction of this Hon'ble Court from invoking and/or encashing the Bank Guarantee for Rs. 79.22 crores given by the petitioner through Ratnakar Bank Limited dated 30.08.2014;
(d) That pending the hearing and final disposal of the above petition, and pending the Arbitration Proceeding, it is just, necessary and convenient that this Hon'ble Court may be pleased to restrain the Respondent, their servants, agents and subordinate offices by an Order Injunction of this Hon'ble Court in any manner from obstructing, preventing and carrying out the Project of Water Supply to Aurangabad city;
(e) For ad-interim relief in terms of prayer clauses (b), (c) and (d) herein above;
(f) For cost of this petition;
(g) For such other or further reliefs as this Hon'ble Tribunal may deem fit and proper in the circumstances of the case."
The District Judge made following order while disposing of the aforesaid application :-
"1. The application is partly allowed.
2. Pending the arbitration proceeding, the respondent, their servants, agents and subordinate officers are restrained from taking any action against the petitioner in respect of water supply
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