Important Point – Order passed by Court under Section 9 of Arbitration Act falls in realm of discretionary relief.

1. The appellant, a company incorporated under the provisions of Companies Act, 1956 having its corporate office in Gaziabad (U.P.), is in appeal against the order dated 25.11.2017 passed by the Principal District Judge, Srinagar (hereinafter referred to as “the Court below”) in an application filed by respondent No.1 under Section 9 of the Jammu & Kashmir Arbitration and Conciliation Act, 1997 (hereinafter referred to as “the Act”).

2. The factual antecedents leading upto the filing of this appeal, as are necessary for the disposal of this appeal, may be summed up in the following manner:-

The Chief Engineer, 31 Zone C/o 56 APO vide his letter No. 180869/142-E8 dated 24.12.2010 bearing Contract No.CESZ-06/2010-11 awarded a contract to the appellant-Company for construction of dwelling units and allied services for married accommodation project map phase-II at LSRC Leh. The appellant entered into a Memorandum of Understanding with one firm, namely, M/S G.R.Nagvi and Co. for carrying out the work aforesaid. The firm M/s G.R.Nagvi and Co. amalgamated with respondent No.1-Company, as a result whereof all assets and liabilities of M/S G.R.Nagvi and Co. were taken over by the respondents. As per the terms and conditions of the MOU, the appellant-Company was entitled to 3% of the amount of the work and the rest of the amount was to go to respondent No.1. The MOU was to remain valid till the successful completion of the work.

It was the case of the respondent No.1 before the Court below that both the parties acted upon the terms and conditions and executed the work after adhering to the payment arrangement as decided by the parties. Thereafter, a supplementary agreement too was executed between the parties containing new terms and conditions. It is claimed that the firm M/s G.R.Nagvi and Co. which later on amalgamated with respondent No.1 had executed a considerable quantity of work by the end of year 2013. However, during the year 2014-15 the appellant had some issues with the employer and because of that the payments for the work executed by M/S G.R.Nagvi and Co. were not made. A sum of Rs.9,50,00,000/- was the amount that was payable by the appellant for the work executed including the rental amount of installation of plant and machinery. The respondent No.1 claimed that the appellant did not discharge its liability nor did it permit the respondent No.1 to go ahead with the execution of the balance work. Series of requests and reminders issued b respondent No.1 too could not evoke any response from the appellant. Lastly, before the Court below the respondent No.1 submitted that the liability which is admitted by the appellant towards respondent No.1 be directed to be discharged and also the accounts maintained by the appellant with the bank be frozen. The application under Section 9 of the Act was filed before the Court below in the context of aforesaid factual backdrop.

The application was contested by the appellant on numerous grounds. The maintainability of the application was disputed by the appellant on the ground that there was no arbitration agreement between the parties which is sine qua non for filing an application under Section 9 of the Act. The appellant even challenged the territorial jurisdiction of the Court below to entertain the application. It was also the submission of the appellant before the Court below that in the absence of respondent No.1 having demonstrated prima facie case in its favour along with balance of convenience and irreparable injury in the application, interim relief as prayed for was not maintainable. The Court below after considering the rival contentions disposed of the application finally vide its order dated 25.11.2017 directing the Chief Engineer/Garrison Engineer to make payment of Rs.9,36,38351/- in favour of respondent No.1 with further condition that respondent No.1 shall submit an undertaking that in case the arbitral tribunal makes any direction for reimbursing the appellant, t