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2007 Supreme(Guj) 38
Gujarat High Court
Judgename :P.B.Majmudar
ADIYA FUELS LTD. - Appellant
Versus
BILT CHEMICALS LTD. - Respondent
First Appeal 17 Of 2006
Decided On : 01/23/2007
Headnote:Point in Issue :
Whether in the facts of the case stay order is sustainable?
Head Note :
Arbitration and Conciliation Act, 1996 (Central Act 26 of 1996) - Sections 34, 36, 37(1)(b) - Civil Procedure Code, 1908 (Central Act 5 of 1908) - Orders 7, 41 Rule 5, Section 96 - Arbitrator award - First appeal - Stay - Grant of - Sustainability - Finding as to - The trial Court in the case has recorded a specific finding that it has no jurisdiction and that appeal is under consideration of the Court in the first appeal - Though award under Arbitration Act by legal fiction can be termed as a decree yet when the entire question is to be thrashed out in the first appeal Court held that interim relief granted in the first appeal is required to be continued till the disposal of the first appeal - Court observed that this is not a case, where the applicant should be directed to deposit the entire amount specially when the trial Court while deciding application under Section 34 of the Act has held that it has no territorial jurisdiction to decide the same - Considering scheme of the Act of 1996, Court held, that interim relief as prayed by applicant and which is prevalent since more than one year is required to be continued - Court however directed applicant to give solvent surety in the specific amount indicated by the appointed date and on his failure it would be open to respondent to move the Court for vacating interim relief.
Held :
The trial Court has recorded a specific finding that it has no jurisdiction. Considering the aforesaid aspect and considering the fact that appeal under Section 34 is under consideration of this Court in the First Appeal, and considering the fact that the award under the Arbitration Act by legal fiction can be termed as a decree, yet, when the entire question is to be thrashed out in the First Appeal, Court is of the view that interim relief granted in the First Appeal is required to be continued till the disposal of the First Appeal and this is not a case where the applicant herein should be directed to deposit the entire amount especially when the trial Court, while deciding application under Section 34 of the Arbitration Act, has specifically found that it has no territorial jurisdiction to decide the same. [Para 25]
Considering the scheme of the Arbitration Act, 1996, the interim relief as prayed for by the applicant, which is prevalent since last more than one year, is required to be continued.
[Para 26]
However, the applicant is directed to give solvent surety of marketable property in the sum of Rs. 2,50,00,000/- latest by 20.02.2007 before the Registry of this Court. Mr. Thakore submitted that the Managing Director and another Director of the applicant firm would give solvent surety of their personal properties having marketable title in the aggregate sum of Rs. 2,50,00,000/-. It is, therefore, directed that Managing Director and another Director of the applicant firm shall file an undertaking before this Court on or before 01.02.2007 to the effect that they will furnish solvent surety of their personal properties having marketable title to the Registry of this Court latest by 20.02.2007. In case the undertaking is not filed on or before 01.02.2007, and after filing the undertaking if solvent security is not furnished on or before 20.02.2007, it would be open to the respondent to move the Court for vacating the interim relief. [Para 27]
Law Laid Down :
An award is not a decree because it does not satisfy any of the requirements of decree.
Conclusion :
Considering the scheme of the Arbitration Act, 1996 the interim relief as prayed by the applicant which is prevalent since more than one year is required to be continued.
Cases Referred :
Atma Ram Properties (P) Ltd. vs. Federal Motors (P) Ltd., 2005 (1) SCC 705;; Dhunjibhoy Gowasji Umrigar vs. Lisboa¸ ILR 13 BBY 241;; Paramjeet Singh Patheja vs. ICDS Ltd., 2006 AIR SCW 5718.
Decided in Favour of :
Appellant
Application Allowed
( 1 ) RULE, returnable today. Mr. A. R. Thacker waives service of rule on behalf of respondent. With the consent of parties, this application is taken up for final hearing today.
( 2 ) THE applicant of this Civil Application has filed First Appeal No. 17 of 2006 under Sec. 37 (i) (b) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Arbitration Act ) which is admitted by this Court and pending for final hearing. By this Civil Application, it is prayed that during the pendency of the said First Appeal, the order passed by the trial Court i. e. by learned Additional District Judge, Gandhidham, Kutch in C. M. A. No. 215 of 2005 may be stayed during the pendency of the appeal.
( 3 ) THE Civil Application has been opposed by the respondents on the ground that the award given by the Arbitrator should be treated as a money decree, and therefore, absolute stay cannot be granted and the applicant may be directed to deposit the amount awarded by the Arbitrator.
( 4 ) SINCE, the Civil Application is hotly contested by the respondents, the same is required to be decided by giving appropriate reasons and by dealing with factual aspects of the case in detail as well as by considering the provisions of the Arbitration Act as well as case-laws cited by both sides in this behalf.
( 5 ) THE opponent herein, formerly know as Bellarpur Industries Limited and now known as BILT Chemicals Limited, is a Company incorporated under the Companies Act and having its registered office at Binaga, Karnataka State. The applicant, was at the relevant time, engaged in the business of importing furnace Oil from foreign countries and selling the same to its customers all over the country. It is the case of the applicant that in the year 1998, the applicant and opponent entered into negotiations for sale/purchase of Furnace oil. The applicant made a formal offer for selling furnace oil and there was a counter-offer made by the opponent. It is not necessary to go into the minute details about the contract entered into between the parties as this Court is required to consider only whether another interim relief is required to be granted during the pendency of the appeal or not. However, suffice it to say that after some discussions between the parties, a contract was finalized and the applicant arranged for import of furnace oil from Bahrain Petroleum Company, which was to be sold to the opponent. It is the case of the applicant that the applicant has never agreed to the condition regarding arbitration clause which was suggested by the respondent in its letter dated 14-4-1998. Thereafter, a High seas Sale Agreement dated 19-5-1998 was entered into between the applicant and the opponent and the terms and conditions and specification of cargo as well as jurisdiction of the Court were stated and incorporated in the writing. The case of the applicant is that there is no arbitration clause at all in the agreement entered into between the parties, and the agrement did not contain any cause for appointment of arbitrator for settlement of disputes, if any, between the parties.
( 6 ) SUBSEQUENTLY, a dispute arose between the parties as the opponent refused to uplift the cargo and refused to honour its commitment in respect of payments. The case of the applicant is that the applicant suffered massive loss, and therefore, the applicant has filed a suit being Special Civil Suit No. 24 of 2000 in the Court of Civil Judge, Senior Division. Gandhidham for recovery of Rs. 1,53,82,594/- with interest. The said suit is pending in the trial Court.
( 7 ) THE opponent however referred the dispute and its claim against the applicant for arbitration, and requested its General Manager, one P. Ganpati rao, to conduct arbitral proceedings in the matter. The case of the applicant is that though there is no arbitration agreement between the parties, the arbitrator has wrongly assumed jurisdiction and proceeded to conduct the arbitral proceedings.
