The court has the power to grant an injunction in a proceeding under S.20 of the Arbitration Act, 1940, subject to the conditions being satisfied. The power to issue an interim injunction pending an application for reference under S.20 of the Act is vested in the court.

1. A point of some importance in the law of arbitration arises for consideration in this Civil Revision. The point is: Whether a court exercising powers under S.20 of the Arbitration Act, 1940 has power to issue an injunction by virtue of the powers it has under S.41 of the Act and if so, what are the conditions to be satisfied? The petitioner is a railway contractor. According to the petitioner, the 2nd respondent-The Chief

Engineer, Southern Railway unilaterally terminated two of his contracts on the ground that he did not execute the work properly and for alleged amounts due as compensation for breach of contract as per the agreement, payments due to him, under other contracts be is executing, are going to be appropriated. The petitioner's case is that the contracts could not be completed because of the defaults caused and the breach of contract committed by the Railway and not due to his fault. The petitioner filed an application under S.20 of the Arbitration Act, 1940 for filing the arbitration agreement in court. Along with the application the petitioner also moved a petition for temporary injunction restraining the respondents from appropriating the amounts due to the petitioner under other contracts he was executing towards the compensation claimed in the contracts terminated.

2. The trial court dismissed the petition for injunction. In the order it is stated:

"The petition is filed under S.41 Schedule II R.4 of the Arbitration Act. It is clearly laid down by the Supreme Court in the decision reported in AIR 1978 Kerala 223 (Baby Paul v. Hindustan Paper Corporation Ltd.) that S 41 of the Arbitration Act cannot be invoked pending reference. Admittedly no reference is made in the suit for arbitration. Thus, the petitioner is not entitled to get any temporary injunction pending reference. Thus the question to be considered is as to whether the petitioner is entitled to get a temporary injunction under 0.39 R.1 of CPC. Admittedly the petitioner is the defaulter and hence he is not entitled to get any reliefs except by arbitration. Thus, the petitioner has failed to show a prima facie case to get a temporary injunction as prayed for. Further, the respondents are only appropriating 15% of the amounts due to the petitioner under other works. This will not cause any inconvenience to the petitioner in any manner. Thus the petitioner has failed to show that any irreparable injury will be caused to him. Further even if it is found after an arbitration that the petitioner is entitled to get amounts from the respondents he can get damages from them. Thus there is no necessity for granting a temporary injunction as prayed for. The balance of convenience is also in favour of the respondents and I do not find any necessity to grant a temporary injunction as prayed for."

3. S.41 of the Arbitration Act, 1940, for short the Act, reads: "41. Subject to the provisions of this Act and of rules made thereunder

(a) the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the Court, and to all appeals, under this Act, and

(b) the Court shall have, for the purpose of, and in relation to, arbitration proceedings, the same power of making orders in respect of any of the matters set out in the Second Schedule as it has for the purpose of, and in relation to, any proceedings before the Court:

Provided that nothing in clause (b) shall be taken to prejudice any power which may be vested in an arbitrator or umpire for making orders with respect to any of such matters."

S. 41 (a) of the Act makes applicable all provisions of the Code of Civil Procedure to all proceedings before the Court under the Act. In that case, the court will have all the powers a court has under the Code. Of course, this is subject to the provisions of the Act and the rules thereunder. There is no provision in the Act or the Rules which takes away the power of the Civil Court to grant an injunction or to appoint a receiver in proceedings und