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High Court Of Madhya Pradesh
D. M. DHARMADHIKARI
NEPA LIMITED - Appellant
Versus
MANOJ KUMAR AGRAWAL - Respondents
Misc. Appeal 26 Of 1998
Decided On : 05/14/1998
ARBITRATION - INTERIM MEASURES - JURISDICTION - COURT - SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - SPECIFIC RELIEF ACT, 1963 - SECTION 14 (C) AND 41 (C) - APPLICATION - SCOPE OF INTERIM MEASURES UNDER SECTION 9 - COURT'S DISCRETION - INTERFERENCE BY APPELLATE COURT.
Fact of the Case:
A dispute arose between the appellant company (Nepa Limited) and the respondent contractor (Manoj Agrawal) regarding the sale and purchase of coal ash. The contractor filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (the Act of 1996) seeking interim measures, including injunctions and preservation of the subject matter in dispute. The Civil Court passed two orders, one directing the company to preserve the contracted quantity of coal ash and the other rejecting the contractor's subsequent application for appointment of an expert for measurement of the coal ash and for keeping the security deposit intact. The company challenged these orders in two appeals.
Finding of the Court:
The Court held that the Civil Court had jurisdiction to entertain the application under Section 9 of the Act of 1996, as the definition of "court" in Section 2(e) of the Act includes the principal Civil Court of original jurisdiction in a district, but excludes any Civil Court of a grade inferior to such principal Civil Court or any Court of Small Causes. The Court further held that the provisions of the Specific Relief Act, 1963, which prohibit the specific enforcement of contracts for the sale and purchase of movable property, are not applicable to interim measures taken by the Court under Section 9 of the Act of 1996. The Court also held that the Civil Court did not err in directing the company to preserve the contracted quantity of coal ash and to keep the security amount of the contractor in a nationalised bank, as these measures were necessary to safeguard and preserve the subject matter of the contract and the security amount furnished by the contractor.
Issues: 1. Whether the Civil Court had jurisdiction to entertain the application under Section 9 of the Act of 1996? 2. Whether the provisions of the Specific Relief Act, 1963, are applicable to interim measures taken by the Court under Section 9 of the Act of 1996? 3. Whether the Civil Court erred in directing the company to preserve the contracted quantity of coal ash and to keep the security amount of the contractor in a nationalised bank?
Ratio Decidendi: 1. The definition of "court" in Section 2(e) of the Act of 1996 includes the principal Civil Court of original jurisdiction in a district, but excludes any Civil Court of a grade inferior to such principal Civil Court or any Court of Small Causes. Therefore, the Civil Court had jurisdiction to entertain the application under Section 9 of the Act of 1996. 2. The provisions of the Specific Relief Act, 1963, which prohibit the specific enforcement of contracts for the sale and purchase of movable property, are not applicable to interim measures taken by the Court under Section 9 of the Act of 1996. Section 9 empowers the Court to take interim measures for preservation and safe custody of the subject matter in arbitration agreement and for that purpose issue interim injunctions. The aforesaid measures by the Civil Court are of interim nature only to enable the parties to effectively get their disputes adjudicated through the forum of arbitration agreed to by them under the terms of the agreement. 3. The Civil Court did not err in directing the company to preserve the contracted quantity of coal ash and to keep the security amount of the contractor in a nationalised bank, as these measures were necessary to safeguard and preserve the subject matter of the contract and the security amount furnished by the contractor.
Final Decision: The appeals were dismissed.
( 1 ) A common order is being passed in this appeal and the connected appeal between the same parties registered as M. A. No. 37/98.
( 2 ) BOTH the appeals arise out of two orders passed on 3-5-1997 and 24-2-1997 by Additional District Judge, Burhanpur in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter shortly referred to as 'the Act of 1996' ).
( 3 ) THE facts leading to raising of an arbitration dispute and institution of proceedings under Section 9 of the Act of 1996 are as under :the Nepa Limited invited tenders in April 1996 for sale of coal ash. The respondent Manoj Agrawal submitted his tender. The offer was accepted and agreement was executed between the parties on 25-10-96.
( 4 ) ACCORDING to the case of the respondent Manoj Agrawal (hereinafter referred to as 'the contractor'), contrary to Clause 4. 1 of the contract, the company sent a letter on 28-2-1997 to the contractor compelling him to lift straightway lump sum quantity of 10,000 M. Ts. on payment of full price. It was also threatened that if the quantity was not lifted, it would be disposed of to third parties. The action of the company led to exchange of legal notices between the parties. Ultimately, on 17-4-97, the contractor approached the Civil Court under Section 9 of the Act of 1996 seeking directions in the nature of injunctions and for preservation of the subject-matter in dispute. Section 9 of the Act of 1996 empowers the Court to take interim measure including, if necessary, of issuing orders of injunction and appointment of receiver for preservation, interim custody or sale of any goods which are subject-matter of the arbitration agreement. The provisions also empower the Court to secure any amount in dispute in the arbitration. Section 9 of the Act deserves to be quoted :"9. Interim measures by Court :-A party may, before or during arbitral award but before it is enforced in accordance with Section 36, apply to a Court - (i) for the appointment of a guardian for a minor or a person of unsound mind for the purpose of arbitral proceedings; or (ii) for an interim measure of protection in respect of any of the following matters, namely - (a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement; (b) securing the amount in dispute in the arbitration; (c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence; (d) interim injunction or the appointment of a receiver; (e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceeding before it. "
( 5 ) ON the application under Section 9 filed by the contractor, the Court by the impugned order dated 3-5-97 directed the company to preserve the contracted quantity of coal ash and for the purpose directed the representatives of the parties to measure quantity at the spot. The above order of the Court is under challenge at the instance of the company in M. A. No. 26/98. According to the contractor's case, no proper measurement of the quantity of coal ash was made by the company and, therefore, the contractor requested for taking up conciliation proceedings for settlement of disputes. The company rejected that prayer. The contractor, therefore, made a request for referring the disputes between the parties to arbitration. The contractor made the second application under Section 9 of the Act of 1996 on 26-6-1997 seek
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