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2003 Supreme(Del) 299
High Court Of Delhi
ATUL LIMITED - Appellant
Versus
PRAKASH INDUSTRIES LIMITED - Respondent
ORIGINAL MISCELLANEOUS PETITION 118 of 2001
Decided On : 03/26/2003
ALOK SINGH, KAVITA DAHIYA, Parul Goel, PUJA SHARMA
Headnote:Arbitration - Receiver — Appointment — Leased properties in possession of a company which has invoked the Sick industrial Companies (Special Provision) Act, 1985 — Appointment of a Receiver is also imperative for the reason that there appears to be numerous petitions filed against respondent-company, and the assets and leased machinery are, thereforee, almost certainly likely to be dissipated — Receiver appointed.
Held :
Where the Respondent has already invoked the directions of the Sick Industrial Companies (Special Provision) Act, 1985 it is imperative for the Court to intervene since otherwise not only would the Installments be unrecoverable but there would be a danger of the equipments being damaged or becoming non-functional by careless handling of the Lessee/bailee. There may be an exception where the Defendant is legitimately carrying on business and is in a position to honour the decree or orders passed by the Court. This is not so once the Sick Industrial Companies (Special Provision) Act, 1985 comes into operation.
Arbitration and Conciliation Act, 1996 - Section 9 — Interim relief — Whether the court should exercise jurisdiction under Section 9 of Arbitration and Conciliation Act, where the parties are before an Arbitral Tribunal which possess power to pass similar orders under Section 17 of the said Act — Court has powers to pass appropriate orders under Section 9 of the Act notwithstanding the pendency of arbitral proceedings.
Counsel for the Respondent has relied on a decision of a learned Single Judge of this Court in Arun Kapur v. Vikram Kapur and Ors., In paragraph 56 of that decision the learned Judge has opined that " if the party invokes preliminary alternatee remedy before the Arbitral Tnbunal, it is debarred from invoking the jurisdiction of the Court under Section 9 of the Act. Ordinarily if the Arbitrator is seized of the matter the interim relief should not be entertained and the parlies should be advised to approach the Arbitrator for interim relief unless and until the nature of relief intended to be sought falls outside the jurisdiction of the Arbitrator or beyond terms of the agreement or reference of disputes. Otherwise the very object of adjudication of disputes by arbitration would stand frustrated." Reliance has also been placed on paragraph 44 of that judgment but I fail to find any justification, for reference thereto. The learned Judge merely draws a distinction between Section 9 and Section 17 of the Act. He does not state that if Section 17 is available Section 9 cannot be invoked. A Division Bench of this Court has decided in Escorts Finance Ltd. v. Mohd. Hanit D. Khan, 2001 V AD (Delhi) 392 that it is not proper for the Court to decline to exercise jurisdiction under Section 9 of said the Act merely because arbitral proceedings are pending. The Division Bench had applied the pronouncements in Sundaram Finance Ltd. v. NEPC India Ltd., AIR 1999 SC 56. My attention has also been drawn to a decision of another Single Judge of this Court in S.R.F. Finance Ltd. v. Prakash Industries Ltd. and Anr., OMP No. 184/1997 decided on 23.8.2002. In this judgment it was observed that recourse under Section 17 is an enabling additional recourse and is not in substitution of Section 9 of the Act and that the former Section cannot operate as an ouster of jurisdiction of the Court granted under the latter Section. In view of the opinion of the Honble Supreme Court as well as of the Division Bench of this Court the decision rendered in Arun Kapurs case (supra) may not be correct. In any event the learned Judge has really done no more than express the salutary practice of not rushing to Court where relief from an alternate forum is conveniently available. The learned Judge does not in terms state that the Court cannot exercise the powers given to it by virtue of Section 9 of the Act. I am of the view that the Court has powers to pass appropriate orders under Section 9 of the Act notwithstanding the pendency of arbitral proceedings.
( 1 ) TWO questions fall for determination in this petition. The first whether this Court should exercise jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996, in circumstances where admittedly the parties are before an Arbitral Tribunal which possess powers to pass similar orders under Section 17 of the said Act. The second is whether a Receiver can be appointed in respect of leased properties which are presently in the possession of a company which has invoked the Sick Industrial Companies (Special Provision) Act, 1985.
( 2 ) COUNSEL for the Respondent has relied on a decision of a learned Single Judge of this Court in Arun Kapur Vs. Vikram Kapur and Ors. , 95 (2002) DLT 42. In paragraph 56 of that decision the learned Judge has opined that " if the party invokes preliminary alternative remedy before the Arbitral Tribunal, it is debarred from invoking the jurisdiction of the Court under Section 9 of the Act. Ordinarily if the Arbitrator is seized of the matter the interim relief should not be entertained and the parties should be advised to approach the Arbitrator for interim relief unless and until the nature of relief intended to be sought falls outside the jurisdiction of the Arbitrator or beyond terms of the agreement or reference of disputes. Otherwise the very object of adjudication of disputes by arbitration would stand frustrated. " Reliance has also been placed on paragraph 44 of that judgement but I fail to find any justification for reference thereto. The learned Judge merely draws a distinction between Section 9 and Section 17 of the Act. He does not state that if Section 17 is available Section 9 cannot be invoked. A Division Bench of this Court has decided in Escorts Finance Ltd. Vs. Mohd. Hanif D. Khan, 2001 V AD (Delhi) 392 that it is not proper for the Court to decline to exercise jurisdiction under Section 9 of said the Act merely because arbitral proceedings are pending. The Division Bench had applied the pronouncements in M/s Sundaram Finance Ltd. Vs. M/s NEPC India Ltd AIR 1999 SC 56. My attention has also been drawn to a decision of another Single Judge of this Court in S. R. F. Finance Ltd. Vs. Prakash Industries Ltd. and Anr. , OMP No. 184/1997 decided on 23. 8. 2002. In this judgment it was observed that recourse under Section 17 is an enabling additional recourse and is not in substitution of Section 9 of the Act and that the former Section cannot operate as an ouster of jurisdiction of the Court granted under the latter Section. In view of the opinion of the Hon ble Supreme Court as well as of the Division Bench of this Court the decision rendered in Arun Kapur s case (supra) may not be correct. In any event the learned Judge has really done no more than express the salutory practice of not rushing to Court where relief from an alternate forum is conveniently available. The learned Judge does not in terms state that the Court cannot exercise the powers given to it by virtue of Section 9 of the Act. I am of the view that the Court has powers to pass appropriate orders under Section 9 of the Act notwithstanding the pendency of arbitral proceedings.
( 3 ) ON the second question also the contention of learned counsel for the Respondent does not have merit. It is his submission that there is a dispute pending on the question of who is the owner of leased equipments. It is in very few cases that such defences are not raised by the Respondent. The attempt is only to protract the litigation and thereby delay the grant of appropriate relief, and in some cases defeat it. The latter position is likely to occur in the present case since the Sick Industrial Companies (Special Provision) Act, 1985 has been invoked. What the Court must look into is the documents exchanged between the parties. My attention has been drawn to Clauses 2. 5, 4. 2, 4. 15, 6. 6, 8. 1. These are reproduced below since they clearly illustrate that the leased equipment was ubiquitously agreed by the part
