2021 Supreme(Del) 1799
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Asha Menon, JJ.
Mewa Mishri Enterprises Private Limited - Appellant
Versus
Ast. Enterprises Inc - Respondent
Fao (Os) (Comm) No. 28 of 2021; C.M. Appls No. 6425 of 2021, 6456 of 2021, 6427 of 2021, 6845 of 2021
Decided On : 23-02-2021
Asutosh Lohia, Advocate, Rohan Dewan, Advocate, Anushree Kapadia, Advocate
The court's jurisdiction under Section 9 is to support arbitration and ensure executability of the award. Section 9 grants wide powers to the courts in granting an appropriate interim order based on the relevant facts of the case.
Headnote:
Section 9 Jurisdiction - Arbitration Act - 1996 Arbitration Act
Fact of the Case:
The court heard an appeal challenging a judgment and order passed in OMP(I) COMM No. 255/2020. The respondent failed to make payment for Lot A of cashew nuts and disposed of the entire lot without informing the petitioner. The court found a prima facie case in favor of the petitioner regarding the alleged illegality of the respondent's actions.
Finding of the Court:
The court found that it had jurisdiction to entertain the respondent's application under Section 9 of the Arbitration and Conciliation Act, 1996. It also held that the appellant's actions were unconscionable and directed the appellant to deposit the amount payable to the petitioner against Lot A.
Issues: Territorial jurisdiction, admissibility of WhatsApp messages, and application of Order XXXVIII Rule 5 CPC.
Ratio Decidendi: The court's jurisdiction to entertain Section 9 application was reinforced by the absence of an ouster clause in the agreement. The court also found that the issue of admissibility of WhatsApp messages should be examined by the designated Arbitration Resolution Mechanism. Additionally, the court held that Section 9 grants wide powers to the courts in granting an appropriate interim order based on the relevant facts of the case.
Final Decision: The court allowed the petition in terms of prayer (e) and directed the respondent to deposit the amount payable to the petitioner against Lot A. The impugned order was modified to balance the equities.
JUDGMENT
Manmohan, J. - The appeal has been heard by way of video conferencing.
2. Present appeal has been filed challenging the judgment and order dated 01stDecember, 2020 passed in OMP(I) COMM No. 255/2020. The learned Single Judge in the impugned judgment and order has held as under:-
"36. While exercising Section 9 jurisdiction, therefore, it is not for this Court to examine, in detail, the disputes between the petitioner and the respondent regarding the alleged shortfall in quality or quantity of the cashew nuts. The issue is highly debatable. The respondent contends that the imported cashew nuts were sub-standard, as their out-turn was less than the minimum prescribed out-turn of 48 lbs. The petitioner contends, per contra, that the difference in the outturn was minimal i.e. merely 3 lbs whereas, on the other hand, the nut count of the imported cashew nuts was much lower than the maximum prescribed 190 Nos. per kg, which indicated that the cashew nuts were superior, rather than inferior, in quality. This is a dispute which this Court, in exercise of its Section 9 jurisdiction, cannot possibly adjudicate. It would have to be examined by the learned Arbitral Tribunal, duly constituted in accordance with the contract between the parties.
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44 In other words, the respondent took possession of Lot A of the cashew nuts, did not make any payment to the petitioner thereagainst and went on to dispose of the entire Lot A of cashew nuts without either seeking the permission of the petitioner, prior thereto, or even, for that matter, informing the petitioner, after disposing of the cashew nuts, that it had done so. Ms. Kapadia is correct in her submissions that it is for the first time, in its response to the present petition, that the respondent informed the petitioner that it had disposed of the cashew nuts in Lot A.
45. Clearly, therefore, a prima facie, case is made out, in favour of the petitioner, as regards the alleged illegality, on the part of the respondent, in failing to make any payment, to the petitioner, for Lot A and in disposing of the entire Lot, without even informing the petitioner.
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48. Ordinarily, no doubt, this proposition, as advanced by Mr. Lohia, is correct. Where there is a disputed claim, interim protection, by way of securing the amount in dispute, at a prearbitral stage, would be justified only where there is a danger of the arbitral proceedings, being frustrated, were such deposit not directed. There are, however, no absolutes in law, and the Court is, on occasion, required to tailor the relief to the facts which appear before it. In my prima facie view, the facts in the present case are glaring. Mr. Lohia has not been able to show me any provision, in the Sales Contract between the petitioner and the respondent, which entitled the respondent to withhold the payment against the cashew nuts covered by Lot A. Prima facie, I am constrained to observe that the respondent appears to have treated itself as the self-professed arbiter of the law, so far as the payment qua the said Lot of cashew nuts was concerned. Not only did the respondent take possession of the cashew nuts without making any payment, it has chosen not to make any payment to the petitioner for the said Lot of cashew nuts till date, and went on to dispose of the cashew nuts, without ever communicating, to the petitioner, any adverse test report in respect thereof, or even informing the petitioner to the fact that it was intending to dispose of the cashew nuts.
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50. Even apropos Lot B, RBS had tested the said Lot prior to their being cleared from the customs area and it was after having seen the said test report and having made payment against the said Lot, that the respondent chose to clear the goods from the customs area and remove the cashew nuts to its godown. No doubt, the respondent sought to aver, thereafter, that the cashew nuts were found to be defective. The petitioner has, on the other h