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TMI Blog2004 (1) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... nd amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards inter alia to define the law relating to conciliation of the matters connected therewith or incidental thereto. Section 2 (e) defines the Court which means the principal Civil Court of original jurisdiction in a district and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject matter of the arbitration if the same had been the subject matter of a suit but does not include any civil court of a grade inferior to such principal civil Court or any Court of Small Causes. A party under Section 2 (h) means a party to an arbitration agreement. Section 9 empowers the Court to order interim measures before or during arbitral proceedings or any time after the making of the arbitral award but before it is enforced in accordance with section 36. Section 9 of the Act of 1996 reads thus 9. Interim measures, etc. by Court A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not available in the act of 1996. There is no specific provision in the Act of 1996 making provisions of the code of Civil Procedure applicable to the proceedings before the Court. Having noticed the aforesaid statutory provisions, we shall survey few decisions cited at bar. ( 6. ) The single Judge of Delhi High Court in M/s Global Company v. M/s National Fertilizers Ltd. AIR 1998 Del 397 while considering the application for interim measures under Section 9 (ii) (b) of the Act of 1996 in paragraph 11 of the report held thus 11. It is true that the said Arbitration act. 1940 stands repealed by the Act of 1996 and the provisions contained in the Code of civil Procedure are not applicable to the proceedings under the Act, still, in my opinion, in the absence of guidelines how the power for grant of relief under Section 9 (ii) (b)is to be exercised by the Court, the principles underlying the aforesaid Sections are to be applied. It is only on adequate material being supplied by the petitioner that the court can form opinion that unless the jurisdiction is exercised under the said Section 9 (ii) there is real danger of the respondent defeating, delaying or obstructing the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the 1996 Act a self-contained selfoperative Code with regard to the subject-matter of arbitration and conciliation. If the intention was to apply the provisions of the Code of Civil Procedure to arbitration under the 1996 Act, then there was no reason for the Legislature to specially enact Section 9 in the 1996 Act dealing with the interim measures for all the said powers would have been available in the different orders in the schedule to the Civil Procedure Code. I am thus fortified in my opinion that the 1996 act is enacted to make the law a selfcontained Code and that the provisions of the civil Procedure Code are not applicable, unless specifically made applicable. ( 8. ) In Delta Construction Systems Ltd. , hyderabad v. Narmada Cement Company ltd. , 2002 (Supp) Bom CR 318, in dealing with the question whether procedural provisions of Civil Procedure Code were applicable while considering the application for interim relief under Section 9, the learned single Judge of this Court held that substantive provision of Civil Procedure Code for granting interim relief would not be applicable while dealing an application under Section 9 (ii) of the Act of 1996 though procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... islature considering that the petition lies to the Civil Court could have provided that Court can exercise all the powers it has under the Civil Procedure Code for granting interim relief. On the contrary only procedural provisions to give effect to the power under Section 9 have been conferred. Considering that, to my mind, the observation of the learned Judge of the Delhi High court in M/s. Global (AIR 1998 Delhi 397) (supra) when it noted that the principles of the Code of Civil Procedure will have to be borne in mind would only restrict the exercise of powers under Section 9. The power under Section 9 cannot be fettered by reading into it the requirements for granting interim reliefs which are not provided. To that extent, I am unable to agree with the view expressed by the Delhi High Court. the view of the learned single Judge of delhi High Court in M/s. Global Company (supra) did not favour with the learned single Judge of this Court in Delta Construction (supra ). ( 9. ) The Supreme Court in ITI Ltd. v. Siemens Public Communications Network Ltd. , (2002) 5 SCC 510 : (AIR 2002 SC 2308) was seized with the question whether the revision petition under Section 115 of Civil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not applicable. ( 10. ) Section 9 in the Act of 1996 is a substantive provision which empowers the Court to pass an interim order before or during arbitral proceedings or any time after the making of the arbitral award but before it is executed under Section 36. Since we are concerned with Section 9 (ii) (b), it may be noticed that it provides for an interim measure of protection for securing the amount in dispute in the arbitration. Sort of clarification it also provides that 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. Such provision as enacted in Section 9 is a provision that enables a party to apply for interim protection if action of the other party to the agreement providing for arbitration is either in breach of the terms of the agreement or is inequitable, unfair or in breach of natural justice. The order under section 9 (ii) (b) is in the nature of interim protection order. In a special provision of the nature like Section 9 (ii) (b), we are afraid, exercise of power cannot be restricted by importing the provisions of Order 38, Rule 5 of the Code of Civil Procedure as it is. The legis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the award. While dealing with the application for direction to the other party to deposit the security of the amount in dispute in the arbitration, the Court also has to keep in mind the drastic nature of such order and unless a clear case not only on the merits of the claim is made out but also the aspect that denial of such order would result in grave injustice to the party seeking such protection order inasmuch as in the absence of such order, the applicant party succeeding before the arbitral tribunal may not be able to execute the award. The obstructive conduct of the opposite party may be one of the relevant considerations for the Court to consider the application under Section 9 (ii) (b ). The party seeking protection order under section 9 (ii) (b) ordinarily must place some material before the Court, besides the merits of the claim that order under Section 9 (ii) (b) is eminently needed to be passed as there is likelihood or an attempt to defeat the award, though as indicated above, the provisions of Order 38, Rule 5, C. P. C. are not required to be satisfied. The statutory discretion given to the Court under Section 9 (ii) (b) must be exercised judicially in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to dishonest acts in fiduciary capacity. Specifically, the security is sought to be deposited from the respondent in the sum of ₹ 1,75,56,374/- which is said to have been received by the respondent from the shippers under the agency agreement towards the freight charges but not deposited in the account. We may observe that in the petition the specific details are not given but in paragraph 38 of the rejoinder, the averment is thus 38. With reference to para 24, I say that the accounts submitted by the respondents along with their letter dated 5th April, 2002 itself would make it clear that the respondents continued to show that the freight from jindal Strips and Zenith were outstanding when in fact they had collected the same in the year 2001 itself. I say that Zenith Ltd. , in response to my fax dated 3rd April, 2002, by their reply dated 9th April, 2002 have confirmed that sum of ₹ 69,52,234/- have been paid between 9th December, 2001 and 8th january, 2002 to the respondents. Hereto annexed and marked as Exhibit-20 and Ex-hibit-21 are the fax dated 3rd April, 2002 addressed by me to Zenith and their reply dated 9th April, 2002. Similarly the respondents have re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 9{ii) (b ). ( 13. ) Mr . Virendra Tulzapurkar, the learned senior counsel appearing for the respondent vehemently opposed the submissions of the learned counsel for the appellant. The learned senior counsel contended that the factual position about the recovery of amount by the respondent by way of freight allegedly not paid over to the appellant is seriously disputed. He submitted that the relationship between the appellant and the respondent is of principal and agent and there are claims and counter-claims made by one against the other. According to the learned senior counsel till final position as to who is the debtor and who is the creditor is ascertained, neither party can lay claim on any item of money which is a part of the general accounts which would be ascertained by the arbitral tribunal. He contended that the appellants have not been able to show that the amount in respect of which security is sought, is available in specie in any bank account. The learned senior counsel, thus, contended that no case for deposit of security is made out. ( 14. ) We reflected over the matter thoughtfully and in our considered view the learned single Judge was not right in holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be considered by the arbitral tribunal. Incidentally we may observe that no material has been placed by the appellant to indicate even remotely that respondent by its acts is intending to defeat the claim of the appellant and if no interim protection order is passed by the Court, in the event of appellant succeeding before arbitral tribunal, it would not be possible for the appellant to derive fruits of the award. We are afraid, in a case like this, when the claim of the appellant is based under Section 218 of the Indian Contract Act and there is counterclaim by the respondent in the facts and circumstances of the case, it does not seem to us in the interest of justice to direct the respondent to deposit the amount of ₹ 1,75,56,374/ -. No circumstance Justifying such order has been established by the appellant. Taking overall facts and circumstances of the case, we are satisfied that the appellant has failed to make out a case for direction to respondent to deposit the security in the sum of ₹ 1,75,56,374/- as in our view, no case for such protection by way of interim order under Section 9 (ii) (b) has been made out. We, accordingly, dismiss the appeal with no order a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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