Interim measures under the Arbitration and Conciliation Act allow arbitration tribunals to secure claims, especially under concerns of insolvency, as long as the actions align with just and convenient standards.

JUDGMENT

Vibhu Bakhru, J. (Oral)--The appellant has filed the present appeal under Section 37 (2)(b) of the Arbitration and Conciliation Act, 1996 (hereafter `the A&C Act') impugning the order dated 16.11.2021 passed by the Arbitral Tribunal under Section 17 of the A&C Act. The respondent had filed an application, inter alia, praying that directions be issued to the respondent to secure the appellant to the extent of Rs.3,40,66,948/-. The Arbitral Tribunal has allowed the same in terms of the impugned order and had directed the appellant to furnish a Bank Guarantee in the sum of Rs.1,51,40,981/- for securing the respondent.

Factual Context

2. The appellant was awarded a contract by the Bhavnagar Irrigation Project Division, Government of Gujarat (BIPD). The said contract was referred to as "Sauni Yojna, Link 2, Package 3". The appellant, in turn, engaged the respondent as a sub-contractor to perform the following works under the EPC contract:

"(i) design, engineering, supply, shifting, transportation, erection, commissioning and testing storage, loading and unloading of turnkey package with 30 days of trial run of electrical equipment pertaining to switchyard and substation in pumping station including cabling, earthing, lighting and other ancillary work (the "Electrical Work"); and

(ii) design, engineering, supply, shifting, transportation, erection, commissioning and testing storage, loading and unloading of turnkey package including supply of mandatory spares with 30 days of trial run of PLC SCADA and instrumentation package (the "C&I Work")."

3. It is the respondent's case that it had diligently performed its part of the work, however, could not continue the same beyond a particular point as the appellant was not clearing the invoices raised by it in terms of their agreement.

4. It is also the respondent's claim that a meeting was held in the month of July, 2018 and the appellant had agreed that it would pay a sum of Rs.1,50,00,000/- to the respondent but the appellant failed to pay the entire amount. In addition, the respondent had also relied on the Minutes of the Meeting held between the representatives of the parties in the month of October, 2018. According to the respondent, the appellant had admitted that a sum of Rs.1,70,00,000/- was due and payable and had agreed to pay the same subject to confirmation.

5. There is no dispute that the appellant had raised invoices, which have remained unpaid. The Arbitral Tribunal examined the disputes and found that, prima facie, a sum of Rs.1,51,40,981/- was admittedly outstanding and payable by the appellant in respect of the unpaid invoices for the Electrical Work. In addition, the Arbitral Tribunal also examined the Minutes of the Meeting and found that the said outstanding amount was also confirmed by the appellant.

6. The respondent has serious apprehension that the entire exercise of proceeding against the appellant in arbitration would be rendered futile as the appellant is being pursued by several creditors as well and it may be put in liquidation. It is also alleged that the appellant had defaulted in making payments to other creditors, who have since sought recourse by filing petitions under Section 7 of the Insolvency & Bankruptcy Code, 2016.

7. In the aforesaid context, the appellant contended that the award that may ultimately be made in favour of the respondent would in fact be a paper award with little hope for the respondent to enforce the same.

8. Considering the rival contentions and after briefly surveying the disputes between the parties, the Arbitral Tribunal con