Back
2025 Supreme(Online)(Bom) 3895
IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION COMMERCIAL ARBITRATION APPEAL NO.10 OF 2024 ALONG WITH INTERIM APPLICATION NO.8120 OF 2024 INTERIM APPLICATION NO.313 OF 2025 Ashoka Buildcon Ltd., ] Having Registered Office at : ] S.No.861, Ashoka House, ]
Ashoka Marg, Vadala, Nashik-422011 ] .. Appellant/Applicant Versus
1. Maha Active Engineers India Pvt. Ltd., ]
Having Registered Office at : ] F-108, Eastern Business District, ] Lal Bahadur Shastri Marg, Bhandup (West), ] Mumbai – 400 078. ] Through its Director – Mr. Sunil V. Vidolkar ]
2. Maharashtra State Electricity Distribution ]
Company Ltd., ] Having Registered Office at : ] Prakashgad, G-9, Anant Kanekar Marg, ] Bandra (East), Mumbai – 400 051. ]
Through its Chief Engineer (Project) ] .. Respondents Mr. Nikhil Sakhardande, Senior Advocate, with Mr. Hrishikesh Chitale, Mrs. Shubra Swami, i/by Mr. Hitesh B. Sangle and Mr. Abhinav Vyas, Advocates for the Appellant-Applicant.
Mr. Sharan Jagtiani, Senior Advocate, with Mr. Vishal Kanade, Ms. Bindi Dave, Mr. Aayesh Gandhi and Mr. Gaurang Samel, i/by Wadia Ghandy &
Co., Advocates for Respondent No.1.
Mr. Rahul Sinha, Advocate, i/by DSK Legal, for Respondent No.2-MSEDCL.
CORAM : A.S. CHANDURKAR & RAJESH PATIL, JJ The date on which the arguments were concluded : 21 ST FEBRUARY, 2025.
The date on which the Judgment is pronounced : 30TH APRIL, 2025.
The appeal highlighted that for interim relief under Section 9, the applicant must establish a prima facie case, balance of convenience, and likelihood of irreparable harm, with the court emphasizing the necessity of procedural fairness.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 9 - Commercial Courts Act, 2015 - Appeal against an order allowing an application for interim relief - The appellant was directed to deposit a substantial amount in Court and was restrained from dealing with its assets pending arbitration - A dispute arose regarding payments under a contract, with contentions over delays and the valuation of claims - The appellant contested the interim relief granted, arguing failure to meet the triple test required under Section 9 and lack of clarity on the amount directed to be secured - The arguments highlighted the need for evidence of urgency and privity in relation to obligations under the contract. (Paras 2, 3, 5, 7.1, 7.3)
(B) Procedure - The court laid down that while exercising discretion in interim applications, the principles of fair hearing and the requirement for a prima facie case must be assessed to determine the necessity for interim relief, emphasizing the limited scope of appellate review over such discretionary orders. (Paras 7.1, 7.2)
Facts of the case:
The parties entered into a contract regarding sub-transmission and distribution works, yet disputes arose when one party failed to make payments, leading to the invocation of an arbitration clause and subsequent interim application under Section 9.
Findings of Court:
The court partly modified the lower court's decision to require a reduced amount to be deposited while maintaining certain restrictions on the appellant's dealings, noting the need for security of the applicant's interest.
Issues: Whether the applicant’s claim for interim relief was made timely, the adequacy of the claimed amount, and the conditions under which such relief could be granted.
Ratio Decidendi: The court reiterated the necessity of establishing a prima facie case, balance of convenience, and likelihood of irreparable loss when seeking interim relief, guiding the determination of the appropriate amount to be secured in light of contractual obligations and conduct continuous throughout the dispute.
Result: Appeal partly allowed.
JUDGMENT :
[ Per A.S. Chandurkar, J. ]
1. Admit. The Commercial Arbitration Appeal is taken up for final disposal with consent of learned counsel for the parties.
2. In this Commercial Arbitration Appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short, “Act of 1996”), a common order dated 15th March 2024 passed by the learned District Judge – 2, Nashik below Exhibits 1, 5 and 25 in Commercial Arbitration Application No.1 of 2024 is under challenge. By the said order, the Arbitration Application preferred by the 1st respondent – Maha Active Engineers India Private Limited (“MAEIPL” for short) under Section 9 of the Act of 1996, read with Section 10 of the Commercial Courts Act, 2015 , came to be allowed. A direction was issued to the appellant – Ashoka Buildcon Limited (“ABL” for short) to deposit a sum of Rs.63,27,46,890/- in Court within a period of six weeks with an alternative to furnish a bank guarantee of a nationalized bank of the said amount within a period of six weeks. ABL was also restrained from disposing of, selling, encumbering, alienating, transferring, parting with possession of, creating any third- party rights or otherwise dealing with its assets and properties, movable and/or immovable till the commencement of the arbitration proceedings. It was also directed to deposit 20% amount as received by it from the 2nd respondent – Maharashtra State Electricity Distribution Company Limited (“MSEDCL” for short) within a period of six weeks and further to disclose on oath all its assets, movable and immovable, tangible and intangible with encumbrances and furnish necessary details within a period of six weeks. ABL was also directed not to enter into any compromise with MSEDCL which would have the effect of prejudicing the rights of MAEIPL without its consent. By the said order the application preferred by MSEDCL below Exhibit-25 for deleting its name from the proceedings was rejected. ABL being aggrieved by the aforesaid order, as passed below Exhibits 1 and 5, has filed the present Commercial Arbitration Appeal raising a challenge to the same.
3. Facts in brief that are relevant for considering the challenge as raised are that on 3rd October 2008, a Form of Contract Agreement came to be executed between MSEDCL and ABL pursuant to Tender No.8 floated by MSEDCL for various works of erection, testing and commissioning of sub-transmission lines, distribution lines with allied works to be carried out at the Jalna Circle, Aurangabad Rural of MSEDCL. Thereafter a Contract Agreement was entered into between ABL and MAEIPL with regard to works that were sub-contracted to MAEIPL by ABL. It is the case of MAEIPL that the work under the Contract Agreement was completed on 31st March 2011, after which ABL received some amounts from MSEDCL in that regard. MAEIPL made its demand from the aforesaid amount received by ABL and part payment thereof came to be made. After exchange of communications between ABL and MAEIPL in the matter of making of payments, MAEIPL on 19th September 2016 issued a communication to ABL seeking resolution of certain issues between them. ABL on 7th December 2016 issued a communication to MAEIPL stating therein that only an amount of Rs.2.44 crores was due and payable by it. MAEIPL on the same day pointed out the difference in the amounts and pursued its claim with ABL. After further exchange of communications, MAEIPL on 12th December 2019 raised further claims while seeking settlement of its outstanding dues. On 13th December 2019, MAEIPL demanded an amount of Rs.1.94 crores from the admitted liability of Rs.2.44 crores from ABL. Thereafter on 16th December 2019, MAEIPL invoked the arbitration clause and nominated its Arbitrator based on the cause of action dated 7th December 2016. In reply, ABL on 28th December 2019 stated that no discussions had taken place between the representatives of the parties in the light of the Dispute Resolution clause in the Contract Agreement. On 13t
