The court upheld the rejection of an interim injunction under the Arbitration Act due to the appellant's failure to establish a prima facie case and balance of convenience.

1. The short question that arises for consideration in this appeal is, whether the learned arbitration court is justified in refusing interim injunction to the appellant herein filed under S.9 of the Arbitration and Conciliation Act , 1996, finding no merit in the said application.

2. Brief facts shorn of superfluities, essential to adjudicate the point brought before this Court are as under:

2.1. The respondent Union of India (Railways) had floated a tender for manufacture and supply of Pre - stressed Mono Block Concrete Line Sleepers (Pre - tensioned Type) for Broad Gauge (1673 mm) from existing RDSO Certified Concrete Sleeper Plants in which the appellant also participated and tender was opened on 22-4-2013 and ultimately, the contract in question was awarded to the appellant and purchase order was issued in its favour on 17-10-2013 for manufacture and supply of Pre - stressed Mono Block Concrete Line Sleepers. The quantity to be supplied was 1,40,750 numbers of Sleepers within a period of 2 years 30 days from 28-9-2013. Thereafter, the Sleepers so supplied were said to be passed and accepted by the respondents and payments were said to have been made to the appellant, thereafter finding the Sleepers substandard, termination notice was issued by the respondents and contract was terminated on 18-11-2014 and thereafter, notice dated 21-11-2014 was issued by the respondent South East Central Railway (SECR) to the State Bank of India (SBI) for encashment of bank guarantee to the extent of Rs.20 lakhs and memo dated 24-11-2014 was also issued to redeposit the paid amount i.e. Rs.8,55,78,821/- and by memo dated 29-12-2014, an information was sent by the respondent SECR to the other Railways to hold the amount payable to the appellant. Lastly, on 29-12-2014, a memo was issued to the appellant to deposit Rs.79,01,773/-. Thereafter, the appellant filed an application under S.11(6) of the Arbitration and Conciliation Act , 1996 (for short, 'the Act of 1996') for appointment of arbitrator. The said application is said to have been allowed by this Court and the arbitral proceeding is said to have been commenced before the sole arbitrator.

2.2. The appellant then filed application under S.9 of the Act of 1996 for grant of interim injunction under S.9(1)(ii)(d) of the said Act for staying the operation of orders dated 18-11-2014, 21-11-2014, 24-11-2014 and 29-12-2014 (two orders), by way of interim injunction. The arbitration court dealing with the application under S.9 of the Act of 1996 did not find any prima facie case in favour of the appellant nor found any balance of convenience in its favour, likewise, no incalculable loss in non - grant of temporary injunction in its favour and thereby rejected the application under S.9 leading to filing of this appeal under S.37(1)(b) of the Act of 1996.

3. Mr. Kishore Shrivastava, learned Senior Counsel appearing on behalf of the appellant, would vehemently submit that the order passed by the arbitration court declining to grant interim injunction in favour of the appellant under S.9(1)(ii)(d) of the Act of 1996, is clearly unsustainable and bad in law. He would further submit that the Sleepers were inspected, admitted and payments were made and without affording an opportunity of hearing, such an order of termination of contract was passed. He would also submit that the learned arbitration court grossly erred in proceeding on the basis that there is threat to public safety and therefore the appellant is not entitled for relief of interim injunction. He would also submit that unless and until the claim or dues payable or penalty is adjudicated by the competent court of law or by the arbitral tribunal, the Union of In