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2005 Supreme(Mad) 779

High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P. SATHASIVAM & THE HONOURABLE MR. JUSTICE S.K. KRISHNAN
M/s.Gammon India Ltd. - Appellant
Versus
M/s.IVRCL Infrastructures and Projects Ltd.& Another - Respondents
O.S.A.No.81 of 2005 and CMP.No.7415 of 2005
Decided On : 29 April 2005

Advocates Appeared: For The Appellant:Arvind P. Datar, Sr.counsel for Aiyar & Dolia. For The Respondents:R1, R.Murari, Advocate, R2, V. Raghupathy, Government Pleader.

The court's decision emphasized the importance of parties being permitted to raise all contentions including legal aspects before the learned Judge, and the court's authority to modify orders based on details furnished in counter affidavits.

Headnote:

Arbitration - Interim Order - Arbitration and Conciliation Act, 1996, Section 9 - [Arbitration] - [Arbitration and Conciliation Act, 1996, Section 9] - The court modified the order of the learned Judge and directed the first respondent to furnish a bank guarantee for a sum of Rs.5 crores to the satisfaction of the second respondent CMWSSB and on compliance of the said condition, the second respondent CMWSSB is directed to make payment of a sum of Rs.10 crores to the first respondent within a period of one week thereafter.

Fact of the Case:

The first respondent filed an application under section 9 of the Arbitration and Conciliation Act, 1996, seeking an order directing the second respondent to effect payment directly to the applicant. The learned Judge directed the second respondent to make payment of a sum of Rs.10 crores to the applicant. The appellant challenged the order.

Finding of the Court:

The court modified the order and directed the first respondent to furnish a bank guarantee for a sum of Rs.5 crores to the satisfaction of the second respondent CMWSSB and on compliance of the said condition, the second respondent CMWSSB is directed to make payment of a sum of Rs.10 crores to the first respondent within a period of one week thereafter.

Issues: Interim order under section 9 of the Arbitration and Conciliation Act, 1996, and the sufficiency of reasons provided by the learned Judge.

Ratio Decidendi: The court held that the parties are permitted to raise all contentions including legal aspects before the learned Judge, and considering the details furnished by CMWSSB in its counter affidavit, the court modified the order of the learned Judge.

Final Decision: The Original Side Appeal is disposed of with the direction for the first respondent to furnish a bank guarantee for a sum of Rs.5 crores to the satisfaction of the second respondent CMWSSB and on compliance of the said condition, the second respondent CMWSSB is directed to make payment of a sum of Rs.10 crores to the first respondent within a period of one week thereafter. No costs. Consequently, connected CMP is closed.

Judgment :-

P. Sathasivam, J.

By consent of both the parties, the main appeal itself is taken up for disposal.

2. The above Original Side Appeal has been filed against the interim order of the learned Single Judge dated 18.4.2005 made in Application No.1440 of 2005 in O.A.No.309 of 2005 on the file of this Court.

3. The first respondent/plaintiff, namely, IVRCL Infrastructures and Project Ltd. filed Application No.1440 of 2005 under section 9 of the Arbitration and Conciliation Act, 1996 (in short, ‘the Act’) before the Original Side of this Court praying for an order directing the second respondent therein, namely, Chennai Metropolitan Water Supply and Sewerage Board (in short, ‘CMWSSB’) to effect payment directly to the applicant of a sum of Rs.21,77,07,845/- being the final bill amount. The applicant has filed an affidavit in support of the above application highlighting its case. It is unnecessary for this Court to refer to all the details at this stage. Though the applicant has also prayed for interim injunction in O.A.No.309 of 2005 and for a direction to the first respondent/appellant herein to effect payment of a sum of Rs.20.05 crores being the amount unjustifiably withheld by the first respondent/ appellant in Appln.No.1441 of 2005, the impugned order was passed on 18.4.2005 in Application No.1440 of 2005. A reading of the impugned order shows that after considering the claims of both the parties and the submissions made, the learned Judge directed the second respondent therein, namely, CMWSSB to make payment of a sum of Rs.10 crores forthwith from and out of the sum payable by it to the first respondent therein, namely, M/s.Gammon India Ltd. to the applicant, namely, IVRCL Infrastructures and Projects Ltd. Challenging the same, the first respondent therein has filed the present appeal.

4. Mr.Arvind P.Datar, learned senior counsel for the appellant, after taking us through the relevant materials and the impugned order of the learned Single Judge, has raised several contentions, namely, (i) there is no prima facie case for passing the impugned order; (ii) the subsequent letter of CMWSSB shows that it was the appellant/first respondent therein who obtained the contract; (iii) after the first respondent herein obtained interim order on 19.3.2005, no effective steps have been taken for arbitration proceedings; (iv) learned Judge has not considered sales-tax liability while issuing direction for payment of Rs.10 crores; (v) there is no evidence of financial crunch to the first respondent herein inasmuch as the application has been filed under section 9 of the Act and the Court has no power to issue interim direction for payment and even Order 39 Rule 10 CPC applies only to money suit and not to the proceedings of this nature; (vi) the order of learned Judge does not show any reason and the appellant/first respondent was not given time to file counter; and (vii) the learned Judge failed to consider the question relating to hardship.

5. On the other hand, Mr.R.Murari, learned counsel for the first respondent, at the outset, pointed out that since the impugned order is only an interim order and the learned Judge has posted the application on 14.6.2005 for further hearing, it is unnecessary for this Court to go into the contentions raised by the learned senior counsel for the appellant.

6. Though before the learned Single Judge, CMWSSB was not represented and it did not project its case, before us the Chief Engineer of CMWSSB has filed a counter affidavit highlighting its stand.

7. We have gone through the materials placed and contentions raised by both parties. As rightly pointed out by the learned counsel for the first respondent, first of all, the learned Judge has not disposed of Appln.No.1440 of 2005. As observed earlier, after issuing direction for payment of Rs.10 crores in favour of the first respondent herein, the learned Judge posted the said application on 14.6.2005 for further hearing. In such a circumstance, we are of

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