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1999 Supreme(Del) 1021

High Court Of Delhi
ALFA LAVAL INDIA LIMITED - Appellant
Versus
J.K.CORP.LIMITED - Respondent
ORIGINAL MISCELLANEOUS PETITION 331 of 1999
Decided On : 11/25/1999

Advocates Appeared:
A.S.CHANDHIOK, D.S.Narula, T.K.GANJU

A party is not entitled to interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, where the contract makes a specific provision for repairs and rectification being carried out by another agency and the petitioner is not entitled to injunction under the provisions of the Specific Relief Act.

Headnote:

ARBITRATION AND CONCILIATION ACT, 1996 - SECTION 9 - INTERIM PROTECTION - CONTRACT FOR SUPPLY OF BLACK LIQUOR EVAPORATOR PLANT - PLANT NOT PERFORMING AS PER CONTRACT - PETITIONER SEEKING INTERIM INJUNCTION TO RESTRAIN RESPONDENT FROM ENGAGING ANOTHER AGENCY TO RECTIFY THE PLANT - COURT HELD THAT PETITIONER DID NOT HAVE A PRIMA FACIE CASE FOR GRANT OF INTERIM PROTECTION.

Fact of the Case:

Petitioner entered into a contract with the respondent for the supply of Black Liquor Evaporator Plant used in the manufacture of paper. The plant was supplied, delivered, installed, and commissioned on 13.11.1997. The respondent complained of underperformance of the plant and did not provide adequate opportunity to the petitioner to improve its performance. The petitioner nominated an arbitrator, and the respondent agreed to nominate theirs within the stipulated time.

Finding of the Court:

The court held that the merits and demerits of the respective contentions of the parties could be gone into by the arbitrators during the arbitration proceedings. The question before the Court was of grant of interim protection. The contract made a specific provision for rectification and repairs by the petitioner, which the petitioner did not claim to have carried out. The factum of low performance was also not in dispute. Whether it was on account of denial of opportunity to repair or on account of failure of the petitioner to change the system from tubular to plate were questions to be gone into during arbitration.

Issues: Whether the petitioner had a prima facie case for grant of interim protection under Section 9 of the Arbitration and Conciliation Act, 1996.

Ratio Decidendi: The court held that the petitioner did not have a prima facie case for grant of interim protection. The contract made a specific provision for repairs and rectification being carried out by another agency, and the petitioner was not entitled to injunction under the provisions of the Specific Relief Act. There was no irreparable injury to the petitioner, which could not be compensated by damages at a later stage if petitioner’s stand was vindicated.

Final Decision: The petition was dismissed. The observations made in the order were on a prima facie view of the matter and would not affect the proceedings or decision of the arbitrators.

Manmohan Sarin, J. (Oral ).

( 1 ) THIS is a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996. Notice of the petition was issued to respondent on 19. 11. 1999 for today. The petition is taken up for disposal with the consent of the counsel for the parties, who have been heard.

( 2 ) PETITIONER had entered into a contract with the respondent for the supply of Black Liquor Evaporator Plant used in the manufacture of paper. The contract was entered into on 19. 1. 1996. The plant has been supplied and as per the petitioner it has been delivered, installed and commissioned on 13. 11. 1997. Petitioner s grievance is that the respondents who are complaining of under performance of the plant have not provided adequate opportunity to the petitioner to improve the performance of the plant by taking appropriate measures. Petitioner is stated to be ready and willing to improve the performance of the plant and rectify the defects, if any. Learned counsel for the petitioner submits that petitioner had suggested measures, as late as on 30. 10. 1999, for improvement in the performance of the plant. It is stated that arbitration clause of the contract has been invoked by the petitioner and an arbitrator has been nominated by them. The respondents are also agreed on reference of disputes to the arbitration and would nominate their arbitrator within the stipulated time.

( 3 ) LEARNED counsel for the petitioner has urged before me that petitioner ought not to be deprived of the opportunity to improve the performance of the plant. It is submitted that respondent itself had problems at its works in as much as there was a strike and certain other internal problems and the petitioner never had the opportunity to undertake appropriate measures for improving the performance of the plant or establishing that the plant was functioning normally. He also submits that during the entire year of 1998 there was no complaint from the respondent.

( 4 ) LEARNED counsel for the petitioner submits that respondents are intending to engage another agency for improving the performance of the plant and if they are permitted to do so petitioners may never be in a position, in future, to take appropriate measures and carry out necessary repairs to improve the performance of the plant. Petitioner also apprehends that the other agency may not be able to suitably carry out the rectification and may even further damage the plant. In these circumstances, learned counsel for the petitioner submits that, as in interim measure, the respondents be restrained from engaging any other agency to rectify the plant to improve its performance or in the alternative an independent agency or experts be appointed to examine the plant and suggest corrective measures.

( 5 ) ANOTHER point on which the parties are at issue is the necessity to convert the plant from the tubular type to the plate type. While the petitioner maintains that with the tubular type it can improve the performance of the plant, the respondents are of the view that it would be necessary to switch over from the tubular to plate type for improving the performance.

( 6 ) LEARNED counsel for the respondent refutes the claims made by the petitioner submits that they have, in fact, out of the total cost of Rs. 10 crores, already paid approximately Rs 9. 50 crores. He submits that the correspondence placed on record is replete with the number of opportunities and requests being made to the petitioner to improve the performance, rectify the defects and, in particular, to change the system from tubular to plate but to no avail. He submits that, in these circumstances, respondent has already engaged a new agency for improving the performance of the plant and orders for necessary spares have also been placed.

( 7 ) LEARNED counsel for the respondent has drawn my attention to Article 14 of the Contract between the parties, where the obligation of the petitioner for repairing and rectifying the defects is








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