Court clarified that orders merely issuing notice in arbitration proceedings do not equate to refusal of interim relief and should allow merits to be adjudicated.

COMMON ORDER

These revisions have been filed by the petitioner before the Commercial Court, Coimbatore in Applications under Section 9 of the Arbitration and Conciliation Act, 1996 (in short 'Act'). The reliefs that were sought for under of the Act are as follows:

(i) To restrain the respondent and its officers, employees and agents from giving effect to the notice of termination dated 04.04.2025

(ii) To restrain the respondents and its officers, employees and agents from encashing the bank guarantee bearing No.003420FBG25578 and amended BG. No.003424FBG38265 to the tune of Rs.5,43,95,000/- .

(iii) To restrain the respondents and its officers, employees and agents from encashing the bank guarantee bearing No.0003420FBG025577 and amended BG No.000342FBG031159 to the tune of Rs.6,23,31,250/-.

2. At the time of moving the Section 9 Applications, the learned Commercial Judge, was not inclined to grant any exparte interim order and had ordered only notice. Challenging the said orders of notice passed by the learned Commercial Judge, these revisions have been filed, invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India.

3. I have heard Mr.R.Parthasarathy, learned Senior Counsel for Mr.Abishek Jenasenan, the learned counsel for the petitioner and Mr.K.R.Samrat, the learned Senior Panel Counsel for the respondent/first respondent in the revisions.

4. The learned Senior Counsel Mr.R.Parthsarathy, would invite my attention to the bank guarantees which are subject matter of the reliefs in the two of the three Section 9 Applications and highlight that the said bank guarantees are subsisting and continue to remain in force and are valid up to 31.05.2026 and 22.04.2026 respectively. The learned Senior Counsel would also state that an application for appointment of Arbitrator had been filed before the Original Side of this Court and the same is pending in O.P. No.300 of 2025. Referring to the contract between the parties, learned Senior Counsel would state that the scope of work assigned to the revision petitioners was design and manufacture of Airworthy Diesel Engines for the Defence Research Development Authority (DRDO). Pointing out that the DRDO has two wings viz., Vehicle Research and Development Establishment (VRDE) being one of them and Aeronautical Development Establishment (ADE) being the other, he would state that ADE was the end user of the Engines.

5. Referring to the negotiations between the parties and also the stages of work, the learned Senior Counsel would state that the revision petitioner has substantially completed stage 4 and only stage 5 viz., Airworthiness was pending. Referring to the various correspondence between the parties, the learned Senior Counsel would state that despite ADE having granted extension of time and being the ultimate end user, the respondent has arbitrarily chosen to terminate the contract and is attempting to enforce the bank guarantees.

6. The learned Senior Counsel would further contend that the specialised engines have been specifically designed only for the respondent and cannot be put to any other use or sold to any other person also. When the petitioner has acted in a bonafide manner and has also duly obtained extension from ADE, which is only a wing of DRDO, admittedly, the respondent cannot take advantage of the two wings of DRDO not seeing eye to eye and in the process making the petitioner a scapegoat. The learned Senior Counsel would also mainly contend that the learned Commercial Judge ou