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2013 Supreme(Online)(KER) 34305
HIGH COURT OF KERALA
K.HEMA, P.S.GOPINATHAN, JJ
M/S.PODDAR UDYOG LIMITED – Appellant
Versus
LIFETIME REALTY PVT.LTD & ANOTHER – Respondent
Arb.A 54 2011
SRI.BECHU KURIAN THOMAS, SMT.NISHA JOHN, SRI.ENOCH DAVID SIMON JOEL, SRI.P.B.KRISHNAN, SRI.M.P.RAMNATH
The court established that interim relief under Section 9 of the Arbitration and Conciliation Act is contingent upon ongoing arbitrability, extinguished when a request for arbitration is rejected.
Headnote:
Interim Relief - Arbitration - Arbitration and Conciliation Act, 1996 - Sections 9, 11 - The court interpreted Sections 9 and 11 of the Arbitration and Conciliation Act to determine the maintainability of requests for interim measures of protection and the need for ongoing arbitral proceedings, ultimately ruling that the interim relief sought was unsustainable due to the rejection of the arbitration request.
Fact of the Case:
The petitioner sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 against the respondents for non-performance of an agreement regarding the sale of properties amidst arbitration proceedings. The respondents contended they were ready to perform but cited the petitioner's financial issues as the cause of non-performance.
Finding of the Court:
The court supported the petitioner's view, initially granting an injunction and later rejecting the respondents' claims. However, after the respondents' Section 11 request for arbitration was rejected, the court found the interim order under Section 9 no longer sustainable.
Issues: Whether the interim relief granted under Section 9 of the Arbitration and Conciliation Act remains valid after the rejection of the arbitration request under Section 11.
Ratio Decidendi: The court held that the maintainability of interim measures under Section 9 hinges on the existence of arbitral proceedings, which were rendered void following the rejection under Section 11.
Final Decision: Both appeals were disposed of as infructuous since the order impugned had already expired.
COMMON JUDGMENT
Gopinathan, J.
These appeals and cross objection are preferred against the common order in O.P.(Arb.)No.24/2011 and I.A.No.778/2011 on the file of the District Judge, Thodupuzha. The 1st respondent in both the appeals and the cross objectioner is the petitioner before the lower court. The appellant in Arb.A.No.54/2011 is the 1st respondent. The appellant in the other appeal is the 2nd respondent, who was subsequently impleaded in the original petition before the lower court. Hereinafter the parties are referred to as they are arrayed before the court below.
2. In contemplation of the arbitration proceedings, the petitioner instituted the above original petition before the court below under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act') seeking interim relief against the 1st respondent with a contention that the petitioner and the 1st respondent entered into an agreement, a : 2:
copy of which was marked as Ext.P2 dated 18.5.2008, in respect of Hope Plantations consisting of three tea estates, namely Glenmary, Koduvakaranam and Landrum comprising plantations, buildings, factories, other erections, fixtures, other movable and immovable properties. In pursuance to the agreement entered into, it is reported that, more than 19 crores of rupees were parted to the 1st respondent by various occasions. At that time, there was a proposal for demerger between the 1st respondent and the 2nd respondent. It is submitted that the agreement was for sale of the estate, factory and other items belonging to the 1st respondent to the petitioner in the event the proposal for demerger had not been materialized. If the process of demerger was materialized as proposed, the agreement would be treated as one for sale of the shares of the 2nd respondent. Though the demerger had taken effect, the respondents had been avoiding the performance of the agreement. The petitioner would contend that it is only because of the laches on the side of the respondents the performance of the agreement could not be effected and following that there arose dispute between : 3:
the parties. Contending that in the event there arose any dispute, the matter is to be referred to arbitration and that the petitioner had been taking steps for appointment of arbitrator and that in the meanwhile, the 1st respondent had been attempting to commit waste and to alienate the properties and the shares, the petitioner approached the court below as against the 1st respondent alone seeking interim relief to protect the subject matter of the agreement till the dispute is settled in arbitration. Along with the original petition, an interlocutory application was filed seeking an order of ad interim injunction. Having satisfied with a prima facie case, an order of ad interim injunction was ordered against the 1st respondent. Contending that despite the order of ad interim injunction, the respondents had been committing waste and had been attempting to alienate the scheduled properties and the shares, the 2nd respondent was also impleaded. A petition as I.A.No.778/2011 was filed for prosecuting the respondents for violation of the interim injunction. The petitioner also sought for appointing a receiver for the : 4:
management of the properties.
3. The respondents contended before the court below that the respondents were ready and willing to perform their part and the agreement could not be performed only because of the laches on the side of the petitioner and that the petitioner was not in a financial position to pay the balance consideration and that alone is the reason for non-performance of the agreement and that, in the event there arose a dispute, the first attempt as agreed upon is to settle the dispute between the parties and only if the attempt to settle the dispute between the parties fails, the reference to the arbitration would arise and that there was no attempt to commit any act of waste and that there is no justification f
