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1999 Supreme(Cal) 14
High Court Of Calcutta
Vinod Kumar Gupta
ALPIC FINANCE LTD. - Appellant
Versus
ALLIED RESINS AND CHEMICALS LTD. - Respondent
A. P. 286 Of 1998
Decided On : 01/25/1999
The existence of a dispute is not a condition precedent for invoking Section 9 of the Arbitration and Conciliation Act, 1996. The mere existence of an arbitration agreement between the parties is sufficient to enable a party to approach the court under Section 9.
Headnote:
{'KEYWORD': 'Arbitration and Conciliation Act, 1996', 'SUBJECT': 'Maintainability of petition under Section 9 of the Arbitration and Conciliation Act, 1996', 'ACT SECTION LIST': ['Section 9', 'Section 22'], 'SUMMARY': 'The Calcutta High Court held that the existence of a dispute is not a condition precedent for invoking Section 9 of the Arbitration and Conciliation Act, 1996. The mere existence of an arbitration agreement between the parties is sufficient to enable a party to approach the court under Section 9. The court also held that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, which bars proceedings for the appointment of a receiver in respect of the property of an industrial company, does not apply to property that belongs to a third party, even if the industrial company is a hirer of the property.'}
Fact of the Case:
The petitioner, a financier, entered into a hire purchase agreement with the respondent for the hiring/financing of an AC Transformer. The respondent defaulted in paying the hire moneys and the petitioner invoked the arbitration agreement and lodged its claims before the sole arbitrator. The petitioner also filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an interim order for securing protection of the amount in dispute.
Finding of the Court:
The court held that the petition under Section 9 of the Arbitration and Conciliation Act, 1996, was maintainable as the existence of a dispute is not a condition precedent for invoking Section 9. The court also held that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, did not apply to the property in question as it belonged to the petitioner and not to the respondent.
Issues: 1. Whether the petition under Section 9 of the Arbitration and Conciliation Act, 1996, was maintainable in the absence of a dispute between the parties? 2. Whether Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, barred the appointment of a receiver in respect of the property in question?
Ratio Decidendi: 1. The court held that the existence of a dispute is not a condition precedent for invoking Section 9 of the Arbitration and Conciliation Act, 1996. The mere existence of an arbitration agreement between the parties is sufficient to enable a party to approach the court under Section 9. 2. The court held that Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, does not apply to property that belongs to a third party, even if the industrial company is a hirer of the property.
Final Decision: The court allowed the petition under Section 9 of the Arbitration and Conciliation Act, 1996, and revived the order appointing a receiver. The court also modified the order to extend the date for deposit of Rs. 24,00,000 from August 6, 1998, to February 28, 1999.
( 1 ) BY this common order and judgment, I propose to dispose of the main petition under Section 9 of the Arbitration and Conciliation Act, 1996, and the application filed by the respondents for vacating the ad interim order dated July 16, 1998.
( 2 ) THE facts lie in a very narrow compass. The petitioner, Alpic Finance Limited, being a company incorporated under the Companies Act, 1956, carries on the business of financing. As a financier it entered into a hire purchase agreement with respect to the hiring/financing of an AC Transformer (Siemens Make UPS (IOKVA, Model 4110 51. 1950905) ; IOKVA, 220/110v AC Transformer ). This agreement was executed on November 19, 1996. The total hire purchase value of the aforesaid machine was Rs. 1,17,94,755 and it was payable by the respondents within three years by 12 equal quarterly instalments. The possession of the machine was made over by the petitioner to respondent No. 1 in terms of the aforesaid hire purchase agreement. It is the admitted case of the parties that respondent No. 1 received the machine after the execution of the agreement and has been using the same ever since. The allegation of the petitioner is that respondent No. 1 has paid to the petitioner only an amount of Rs. 28,83,246. Thereafter he defaulted in paying the hire moneys. Some post-dated cheques issued by respondent No. 1 in favour of the petitioner on being presented by the petitioner to the banker were dishonoured. Ultimately, the petitioner invoked the arbitration agreement existing between the parties and lodged its claims worth Rs. 1,24,33,287 before the sole arbitrator, Pulin Behari Das. The statement of claims was, accordingly, filed by the petitioner before the sole arbitrator. It is also admitted that the respondents have filed their objections to the aforesaid statement of claims before the sole arbitrator. On July 16, 1998, when this petition came up before this court for consideration, an ad interim order was passed appointing Subhas Dey, barrister-at-law, as the receiver for the purpose of making an inventory of the aforesaid machinery and for taking symbolical possession of the same. It was also directed that if the respondents deposited with the receiver an amount of Rs. 24,00,000, the receiver was not to take any further action. But if such deposit was not made, the receiver was to take actual physical possession of the machinery and remove the same to a safe place to be provided for by the petitioner. On August 5, 1998, at the instance of the respondents, the court directed that the receiver would not take any further steps, as stipulated in the order
dated July 16, 1998.
( 3 ) IN the application for vacating the order dated July 16, 1998, and in the affidavit-in-opposition filed by the respondents to the petition under Section 9 of the Act, two points have been urged in support of the contention that the petition under Section 9 of the Act is not maintainable. The first point relates to the very maintainability of the petition at its very threshold under Section 9 of the Act. The second point arises out of the interpretation to be put upon Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.
( 4 ) THE learned advocate appearing for the respondents in support of the first point regarding maintainability of the petition urged that the existence of a dispute between the contesting parties is a condition precedent for the petitioner to invoke Section 9 of the Act to enable it to come to the court for a prayer in respect of an order in the nature of an interim measure for securing protection of the amount in dispute. The learned advocate for the respondents argued that if there was no arbitrable dispute existing between the parties, Section 9 of the Act had no applicability and, therefore, any application filed deserved to be dismissed. In elaboration of his point, he submitted that even though in the present case the petitioner had, by invoking the a
