JUDGMENT

Vikramajit Sen, J. The Petitioner-MMTC Limited, has filed this petition under Section 9 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as `the Arbitration Act') praying that the Respondent be directed to deposit in Court a sum of Rs.2,43,45,389.52 along with interest at the rate of 15 per cent per annum from 1.2.2004 till the date of such deposit as security of the amount in dispute in the arbitration. It has further been prayed that an ex-parte ad-interim injunction be issued restraining the Respondent from in any manner selling, mortgaging, creating a lien or in any other manner disposing off or creating third party interests in its assets till the disposal of the arbitration proceedings and payment in terms of the Award. A retired Judge of this Court already stands appointed as the Sole Arbitrator over the disputes that have arisen between the parties.

2. Mr. Navin Chawla, learned counsel appearing for MMTC has vehemently stressed that the Respondent has illegally and surreptitiously sold approximately 10,000 MT of rice owned by MMTC while it was in the custody of Respondent No.1 (hereinafter referred to as `PRIYANKA'). In short it is contended that this unlawful action manifests a breach of trust committed by PRIYANKA and Justifies the passing of the interim orders prayed for in the petition. Mr. G.L. Rawal, learned counsel for the Respondents, submits that the contract between the parties was in the nature of a finance agreement whereby MMTC was entitled to payment of 1 per cent of the capital made available for the purchase of subject Rice. It has further been contended that since the subject Rice was to be procured from the Food Corporation of India (FCI) it was necessary for PRIYANKA to effect exports through the aegis of MMTC since both of them are Public Sector Undertakings. It has further been contended that the Rice remained the property of PRIYANKA entitling it to sell it at its discretion. Without prejudice to these contentions Mr. Rawal has further argued that the subject Rice was stored in Kandla and the officials of MMTC at Kandla had been informed of PRIYANKA's intention to sell the Subject Rice in the market. It has also been submitted by Mr. Rawal that PRIYANKA had furnished a Bank Guarantee in the sum of Rs. 1.5 crores which had been encashed by MMTC thereby leaving no hurdle before MMTC to claim ownership of the subject Rice. On a consideration of the following Statement of Accounts, it is asserted on behalf of PRIYANKA that a sum of Rs.50 lacs is due and payable by MMTC to PRIYANKA.

3. A preliminary objection has been taken to the effect that this Court ought not to exercise jurisdiction under Section 9 of the Arbitration Act since the Sole Arbitrator is already functional, before whom hearings are underway, and Section 17 sufficiently empowers the Arbitrator to pass appropriate orders in respect of the prayers made in this peti