P.Sathasivam, J.: Aggrieved by the order of the Additional District Judge, Salem dated 22.10.2003, made in Arbitration O.P.No.46 of 2003, Techmo Car SPA, Italy has filed the above appeal under Sec.37 of the Arbitration and Conciliation Act, 1996.

2. The respondent herein, The Madras Aluminium Company Limited, Mettur Dam filed the above Arbitration O.P., (O.P.No.46 of 2003) on 12.3.2003 under Sec.9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) praying for an order directing the Techmo Car to furnish security by depositing into Court to the credit of the said petition, a sum namely US $.5,757,565 equivalent to Rs.27,40,60,111 or in the alternative to furnish security to the said value in the form acceptable to the petitioner which could be enforced for recovering the aforesaid amount pending disposal of the arbitral proceedings and also an order of interim injunction restraining the said company from removing any records, papers and documents from the petitioner’s factory premises situated in Mettur Dam, Salem District, Tamil Nadu, pending disposal of the arbitral proceedings.

3. For convenience, we shall refer the parties as referred to before the District Court. The case of the petitioner is as follows:

The petitioner, Madras Aluminium Company Limited carries on business in the manufacture and sale of aluminium rods and ingots at its plant in Mettur. In 1998 in view of steep competition, the petitioner intended to modernise its plant. The respondent who is based in Italy, promised to bring about an overall improvement in the performance of the petitioner’s plant, including increase in out-put and favourable environmental impact. On inspecting the petitioner’s plant, the respondent submitted a proposal. The said proposal was accepted by the petitioner. An Agreement was entered into between the petitioner and the respondent on 16.2.1999. Thereafter, on 8.6.2000 an Addendum to the said Agreement was also entered into by the parties herein. In terms of the said agreement dated 16.2.1999, the respondent was required to achieve the following key performance parameters:

(a) Improve current efficiencies to a level of 88.5%

(b) Achieve specific DC power consumption of 15,525 kwh/tonne of Aluminium, inclusive of contribution of the Compensation loop energy losses; and

(c) Achieve yearly production of 35,200 tonnes of Aluminium on an average basis.

Though the respondent failed to achieve the guaranteed parameters, they (respondent) from time to time, caused the petitioner to pay to them (respondent) valuable consideration in all amounting to US $ 2,965,900 towards purchase of technology, services and equipment. The petitioner had also incurred expenses to the tune of Rs.1,25,09,903 towards payment of taxes and duties. Since the respondent failed to complete its obligation within the prescribed period of 2 years, time was extended by further period of 13 weeks so as to enable the respondent to achieve the parameters guaranteed by them. Even after the extension, the respondent found it impossible to achieve the parameters as guaranteed by them under the agreement. The respondent by its letter dated 29.1.2003 sought to rescind the said agreement on wholly frivolous and baseless grounds. Though the petitioner denied the allegations made, the agreement stood terminated owing to the respondent having admitted impossibility of performance. The petitioner presently confines its claim only to the monies paid by it. The respondent is a foreign party. It has no assets or security against which the petitioner can proceed in the event of any award being passed in its favour. If the respondent is not directed to furnish security, then even if the petitioner succeeds in the arbitral proceedings to be filed, the said award would become only a paper award which will be difficult to be enforced.

4. The respondent filed a counter statement wherein it is stated that the Court below has no jurisdiction in the matter. The pa

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