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2023 Supreme(UK) 565
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
VIPIN SANGHI, RAKESH THAPLIYAL, JJ.
Nathi Singh Negi - Appellant
Versus
Garhwal Mandal Vikas Nigam Ltd. - Respondent
Appeal from Order No. 411 of 2023
Decided On : 16-10-2023
For the Appellant : Mr. V.K. Kaparawn.
For the Respondents: Mr. Sandeep Kothari.
The court emphasized the importance of establishing a prima facie case and balance of convenience when seeking an interim injunction in arbitration cases, and highlighted the significance of arbitration agreements in settling claims.
Headnote:
Arbitration - Interim Injunction - Arbitration and Conciliation Act, 1996, Section 37
Fact of the Case:
The appellant sought an interim injunction in an arbitration case after the respondent belatedly issued a work order with enhanced royalty amount and threatened termination of lease and blacklisting. The Commercial Court rejected the interim injunction application based on the appellant's failure to establish a prima facie case and balance of convenience.
Finding of the Court:
The Commercial Court found that the appellant failed to provide necessary evidence to prove the allegations and did not establish the balance of convenience in their favor. The court also noted the existence of an arbitration agreement and concluded that the claim could be settled by the Arbitral Tribunal, thus rejecting the claim of irreparable loss.
Issues: Prima facie case, Balance of convenience, Irreparable loss
Ratio Decidendi: The court's decision was based on the appellant's failure to establish a prima facie case and balance of convenience, as well as the existence of an arbitration agreement for settling the claim.
Final Decision: The appeal was dismissed as the court found no merit in challenging the Commercial Court's order rejecting the interim injunction application.
ORDER :
(Rakesh Thapliyal, J.)
1. The present appeal from order has been preferred under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the order dated 09.10.2023, passed by the learned Addl. District Judge/Commercial Court, Dehradun in Arbitration Case No. 58 of 2023, Nathi Singh Negi vs. Garhwal Mandal Vikas Nigam Limited & Others whereby an application seeking interim injunction has been rejected.
2. The case of the appellant was that a mining contract was awarded to the appellant, however, the work order was issued belatedly and the appellant could not execute mining contract for a period of three months. A demand was raised by the Garhwal Mandal Vikas Nigam (hereinafter referred to as GMVN) for an amount of Rs. 41,68,000/- from the appellant which was assailed in a Writ Petition (M/S) No. 1345 of 2022 with the following relief:–
“(i) A writ order or direction in the nature of certiorari quashing the letter dated 24.05.2022 issued by the GMVN being against the law.
(ii) A writ, order or direction in the nature of mandamus directing the respondent authorities to decide the representation dated 19.05.2022 of the petitioner (Annexure-8) in accordance with law.
The Division Bench of this Court vide judgment and order dated 26.04.2023 disposed of the writ petition and refused to entertain the writ petition on the ground that petitioner to approach the Arbitral Tribunal. It was further observed in the order that even if the arbitrator has not been appointed despite invocation of the arbitration agreement by the petitioner, it does not prevent the petitioner from invoking Section 11 of the Arbitration and Conciliation Act.
Earlier to this writ petition, two more writ petitions being WPMS No. 722 of 2022 and WPMs No. 346 of 2022 were preferred, and both the petitions were dismissed by the Co-ordinate Bench of this Court vide order dated 11.05.2022 with a liberty to invoke arbitration agreement, since, arbitration clause exists between the parties.
3. Thereafter, the petitioner preferred arbitration case before the learned Addl. District Judge/Commercial Court, Dehradun which was registered as Arbitration Case No. 58 of 2023 under section 9 of the Arbitration and Conciliation Act. In the said arbitration case, it is pleaded that the respondent belatedly issued work order with enhanced monthly amount of royalty and arbitrarily increased the amount of royalty from Rs. 12,29,100/- to Rs. 16,38,800/-. It is further pleaded in the application that the applicant moved an application on 19.01.2022 before the respondent for invoking arbitration clause, instead of that respondent/department illegally issued a letter on 24.01.2022 whereby the appellant was asked to deposit the enhanced amount of royalty which the applicant disputed. It is further contended in the arbitration application that the respondent is threatening the appellant by terminating his lease as well as by blacklisting the appellant and to issue recovery citation as per the Land Revenue Act to recover the amount. By moving the said arbitration application it is submitted that balance of convenience lies in favour of the applicant as no prejudice would be caused to the respondent if injunction is granted to the appellant, and on the other hand if the injunction is not granted a serious prejudice would be caused to the appellant. In the said application it is further submitted that the dispute as raised has not been resolved till date.
4. By moving arbitration application, an interim injunction was sought by the present appellant to stop further proceedings pursuant to the letter dated 18.05.2023 and 23.06.2023 including orders/letters relating to the termination of lease as well as blacklisting the appellant and recovery of amount due by issuing recovery citation as per the provisions of Land Revenue Act.
5. The interim injunction application was considered by the learned Addl. District Judge/Commercial Court, and while deciding the said application three
