The court highlighted the need for a clear case on the merits of the claim and the likelihood of grave injustice to the party seeking protection before granting interim measures under Section 9 of the Arbitration and Conciliation Act.

R.BANUMATHI,J

1. This appeal arises out of the order in A.No.2661 of 2011 [19.09.2011] directing the Appellant to furnish security for a sum of Rs.4,56,22,368/-.

2. Respondent is a Private Limited Company engaged in the business of providing interior design, project management and architectural consultancy services to its customers in India. Respondent had agreed to undertake interior works for Appellant as a contractor for the premises on the ground floor, 9th and 10th floors located at AMBIT IT PARK, Ambattur, Chennai. In this connection, Respondent had executed an agreement with the Appellant on 03.03.2010 detailing the terms of engagement, including the conditions for payment of the consideration. The project involved Interior Fit-outs, Finishes, MEP, Network and Allied Civil Works of the Project Site. Agreement dated 03.03.2010 states that it is a "Design and Build". Case of Respondent is that it was a "lump sum" agreement for consideration of Rs.13,10,97,371/-. Further case of Respondent is that the total agreed value for the services rendered under the said agreement is Rs.13,98,82,821/-. Out of the said amount, an amount of Rs.4,56,22,368/-is outstanding in respect of the work done by the Respondent. Inspite of several reminders, Appellant had deliberately neglected and pay the payments to the Respondent. Alleging that Appellant is enjoying the fruits of the labour done by the Respondent and that Appellant has been unjustly denying the payment and further alleging that the balance of convenience is infavour of the Respondent, Respondent has filed application [A.No.2661 of 2011] under Section 9 of Arbitration and Conciliation Act to direct the Appellant to deposit a sum of Rs.4,56,22,368/-, failing which to furnish security for the said amount to the satisfaction of the Court.

3. Appellant who was Respondent in Section 9 application has filed the counter contending that the contract price agreed by the Appellant was based on "rate per sq. ft." which includes the entire scope of work as detailed in Clause 4.1 of the agreement. It was never the intention of parties that the consideration of the project was on the basis of "lump sum" contract. In Clause 29 of Part-II -Special Conditions of the Contract, it was clearly stated that payment to the Respondent should be approved by Quantity Surveyor - M/s.DAVIS LANGDON & SEAH CONSULTING INDIA PVT. LTD.,Chennai [DLS] and while so, the Respondents claim of Rs.13,98,82,821/-is totally misconceived. Case of Appellant is that the contract is not a "lump sum" contract, but subject to variations, changes to the specifications and payments itself are subject to the Quantity Surveyor - DLS approving the actual work executed by the Respondent. Appellant has further averred that as per Clause 18.1 of the agreement, the disputes between the parties touching the contract/agreement, interpretation or rights, duties or liabilities under the contract ought to have first been attempted to be reconciled and only after 30 days from the commencement of such informal negotiations, the parties can proceed to arbitration. In this case, neither any dispute has yet arisen between the parties nor is there any necessity for securing the amounts under the dispute that have to be properly claimed. Hence, Appellant prayed for dismissal of the application [A.No.2661 of 2011] filed under Section 9 of Arbitration and Conciliation Act.

4. Upon consideration of the contentions of both sides, learned Judge held that Respondent has made out a prima facie case and the balance of convenience is infavour of the Respondent and Respondent is entitled to get the interim protection. Learned Judge allowed the application [A.No.2661 of 2011] filed under Section 9 of the Act directing the Appellant to furnish security for Rs.4,56,22,368/-, failing which ordered attachment. Being aggrieved by the direction to furnish security, Appellant has preferred this appeal.

5. Mr.P.S.Raman, learned Senior Counsel for App