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TMI Blog1999 (11) TMI 891X X X X Extracts X X X X X X X X Extracts X X X X ..... ef otherwise is being claimed by the petitioner from respondent No. 2, except for restraining it from making any payment to respondent No.1 arising out of the Contract dated 22.9.1993 with the petitioner in relation to Kandla Bhatinda pipeline. 3. It is mentioned in the agreement that the laws of Switzerland be applicable in the event of any dispute. In November, 1993 the petitioner commenced work on the Kandla Bhatinda Pipeline and, upon execution of the sub-contract, detailed and exhaustive works were carried out by the petitioner for and on behalf of respondent No. 1. During the course of works, the petitioner learnt that respondents No.1 and 2 entered into an agreement in November, 1995 pursuant to which respondent No. 1 agreed to hand over the work of Kandla Bhatinda Pipeline to respondent No. 2 in four separate phases and to allow respondent No. 2 unrestricted use of the pipeline following the hand over of each phase. For its part, respondent No. 2, amongst other things, granted to respondent No. 1 the commencement of its defect liability period for installed equipment for each phase was handed over to respondent No. 2 Respondent No. 1 did not advise or seek the cooperation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has prima facie found that the monies are due and payable by Skoda export to Olex Group of Companies and a reference has been made to the judgments delivered by the Arbitral Tribunal. The Australian Court has also found that the conduct of Skoda export in invoking the Bank Guarantees of Olex was unconscionable. In these circumstances, the petitioner has filed this petition in this Court with the prayer that respondent No. 2, their agents, employees, etc., be restrained from taking any steps to release any payments to respondent No. 1 to the extent the amount which is payable by respondent No. 2 to respondent No. 1. 10. The petitioner submitted that this Court has the power to grant interim relief. The learned counsel for the petitioner has referred to Article 8.5 of the ICC rules which reads as under : "Before the file is transmitted to the arbitrator, and in exceptional circumstances even thereafter, the parties shall be at liberty to apply to any competent judicial authority for interim or conservatory measures, and they shall not by so doing be held to infringe the agreement to arbitrate or to affect the relevant powers reserved to the arbitrator." 11. The ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Clauses of this section, i.e., Sections 2(3) , 2(4), 2(5). The relevant clauses of the section are reproduced hereinbelow for the sake of convenience : "2(2) This part shall apply where the place of arbitration is in India. 2(3) This part shall not affect any other law for the time being in force by virtue of which certain disputes may not be submitted to arbitration. 2(4) This part except sub-section (1) of Section 40, Sections 41 and 43 shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration agreement as if that other enactment were an arbitration/agreement, except insofar as the provisions of this part are inconsistent with that other enactment or with any rules made thereunder. 2(5) Subject the provisions of sub-section (4), and save insofar as is otherwise provided by any law for the time being in force or in any agreement in force between India and any other country or countries, this pare shall apply to all arbitrations and to all proceedings relating thereto." 16. Section 2(5) clearly mentions that this part shall apply to all the arbitrations and proceedings relating thereto, Therefore, on close scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of Foreign Arbitral Awards as also to define the law relating to conciliation and for matters connected herewith or incidental thereto. 18. Section '9' of the arbitration is a replica of Section '9' of the UNCITRAL Model Law on International Commercial Arbitration. Article '9' of UNCITRAL Model Law on International Commercial Arbitration reads as under : "It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant the protection." 19. The intention of the legislators in enacting or incorporating Section '9' is clear and explicit, that the party before arbitral proceedings or at any time after making of the award but before enforcement can apply to the Court for interim relief under Section '9' which reads as under : "9. Interim measures 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 Section 36, apply to a Court :- (i) for the appointment of a guardian for a minor or a person of uns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owers to grant interim relief under the Arbitration Act. 23. The Supreme Court in the judgment Rajni Bai (Smt.) Alias Mannubai Vs . Kamla Devi (Smt.) & Others : AIR1996SC1946 observed as under : "Admittedly, the appellant is in possession of the property, In view of his apprehension that there is a threat to his possessions, his only remedy would be whether he will be entitled to the declaration sought for. When the seeks to protect his possession, if he is otherwise entitled according to law, necessarily the Court has to consider whether protection is to be given to him pending the suit. Merely, because there is no dispute as regards the corporeal right to the property, it does not necessarily follow that he is not entitled to avail of the remedy under Order 39, Rules 1 and 2 CPC. Even otherwise also, it is settled law that under Section 151 CPC, the court has got inherent power to protect the rights of the parties pending the suit. Under these circumstances, the view expressed by the High Court that application itself is not maintainable is clearly illegal and erroneous. The application under Order 39, Rules 1 and 2 is maintainable." 24. In Mohd. Ikram Hussain Vs . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad balance of practical advantage over the alternative of bringing proceedings in the national courts and because, having agreed to take their com plaints to experts and if necessary arbitrators, they should be required to their chosen tribunal to settle their commercial differences." "Where the Court made an order staying an action pending a foreign arbitration it had no power under Section 12(6) of the 1950 Act to grant an interim injunction since none of the powers conferred on the court by that Act applied to arbitrations conducted abroad under a law other than English Law. Accordingly, the chosen curial law of the arbitration being Belgian law the court had no power under Section 12(6) to grant an interim injunction requiring the respondents to continue work on the cooling system pending the decision of the penal or the arbitrators. (3) The court had power to grant an interlocutory injunction under Section 37 of the Supreme Court Act, 1981 in support of a cause of action which the parties had agreed should be the subject of a foreign arbitration, notwithstanding that proceedings in England had been stayed under Section 1 of the 1975 Act so that the agreed method o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 331 of the Act has been the subject of series of pronouncements of the High Court as to the circumstances and the nature of the suits in which its exclusionary effect operates. Distinction was sought to be drawn between the class of cases where the binding effect of a deed had to be got rid of by an appropriate adjudication on the one hand and the class of cases in which a transaction could be said to be void in law where what the law holds to be void, there is nothing to cancel or set aside on the other. In the former case, it was held, a suit was cognisable by the civil court while in the latter. It was not, it being open to the statutory authority to take note of the legal incidents of what was non est." 31. In Dhulabhai etc. Vs . State of Madhya Pradesh & Another; [1968]3SCR662 the Supreme Court observed that : "(1) Where the statute gives a finality to the orders of the special tribunals the civil court's jurisdiction must be held to be excluded if there is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular. Act have not been complied with or the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enunciating the first proposition in Dhulabhai case it is clear that even where the statute has given finality to the orders of the special tribunal the Civil Court's jurisdiction can be regarded as having been excluded if there is adequate remedy to do what the Civil Court would normally do in a suit. In other words, even where finality is accorded to the orders passed by the special tribunal one will have to see whether such special tribunal has powers to grant reliefs which Civil Court would normally grant in a suit and if the answer is in the negative it would be difficult to imply or infer exclusion of Civil Court's jurisdiction." 33. Mr. Nigam also placed reliance on the Supreme Court Judgment reported as ABC Laminarts Private Ltd & Another Vs. A.P. Agencies, Salem (AIR 1989 SC 1279). Their Lordships of the Supreme Court observed that when the legislature want to exclude the jurisdiction they use the words "exclusive", "alone" and "only" and the like and when no such words have been used, then it can be assumed that under provision of the 1996 Act the Courts have jurisdiction to grant interim relief. 34. It is also mentioned that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial years should not lead to the conclusion that the respondent No. 1 shall not be in a position to pay the petitioner in, case the award goes in its favour. 38. Mr. Sethi and Mr. Advani further submitted that there is no merit in the submission that if injunction is not continued during the interregnum period, then the award would be rendered only a paper award because the petitioner will not be able to realise any amount from respondent No. 1. 39. Mr. Sethi and Mr. Advani also submitted that arbitration proceedings cannot go on until the proceedings in this Court are adjudicated. Learned counsel for respondent No. 1 relied on the Judgment of J. B. Goel. J. of this Court in Punj Lloyd Ltd. Vs. Skoda export Co. Ltd. & Ors. (OMP No. 92/96 decided on 19.5.1998) to strengthen their submission that there is no provision for the grant of any interim relief according to the scheme of the Act. 40. In reply it is submitted by respondent No. 1 that the dispute between the petitioner and the respondents are pending adjudication before the International Chambers of Commerce on a unilateral reference made by the petitioner in terms of the contract. The claim respondent against the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not Therefore, have the jurisdiction to entertain this petition. The petitioner is estopped by conduct from invoking the jurisdiction of this Court. 45. It is mentioned that the petitioner and respondent No. 1 are the foreign companies who are registered in their respective countries of origin, having assets outside the territorial boundaries of India and outside the jurisdiction of this Court. The petitioner who has elected to seek redressal of their disputes/claims outside the jurisdiction of this Court are entitled to seek all reliefs- interim or otherwise from the jurisdiction which they have invoked. The said tribunal has jurisdiction to entertain any prayer for interim relief - which the petitioner has not invoked. 46. The petitioner has invoked a special jurisdiction for deciding its claim, i.e., the I.C.C. The said claims are pending adjudication. The claims are essentially by way of damages. They are to be decided in accordance with the applicable laws - i.e., the rules of the ICC and the New York Convention and the Swiss Laws. The Arbitral Tribunal which is seized of the matter is yet to decide the disputes. The exercise of jurisdiction of any other court/tribunal sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium. It is mentioned that the petitioner who has in earlier proceedings objected to the invocation of the jurisdiction of the Court cannot now itself invoke the jurisdiction of this Court. The petitioner cannot be permitted to approbate and reprobate. 52. It is mentioned that in order to fulfill the obligations cast upon the respondent in terms of the agreements between the petitioner and the respondent the respondent is required to perform its tasks in several countries of the world. The cable to be laid is manufactured in Australia, the SCADA equipment is manufactured in Italy and the pipeline is being laid in India. It is thus entirely appropriate that the ICC Rules agreed to be applied for resolution of dispute be maintained. The petitioner and respondent No. 1 are both bodies corporate incorporated in countries other than India. Each of the countries, namely, Australia, Czech Republic, India and Switzerland are parties to the United Nations Conventions of the Recognition of relevant Arbitration Agreements and Arbitral Awards and the Enforcement of Foreign Awards. 53. Respondent No. 1 submitted that the contention of the petitioner that ICC Award rendered in Switzerland in pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion clause in the principal contract between Skoda export and Indian Oil) that the said Tribunal cannot pass any orders on the restitution of any sums to the Consortium led by Skoda exports till the present injunction remains in force. It is submitted that the present injunction/stay order is being used in other forums to cause serious prejudice to this respondent No. 1. 59. The counsel for respondent No. 1 has strongly relied on the judgment of this Court on Kitechnology NV & Another Vs. Unicor GmbH Rahn Plastmaschinen & Another; reported in 1999 (2) AD (DELHI) 537 =1999 (1) Arb. LR 452. In this judgment, J. B. Goel, J. has taken the view that under Section 9 of the Arbitration and Conciliation Act, 1996 where both parties are foreign groups and both parties are governed by German Law place of arbitration is not in India, then provisions of part I of the Act are not applicable. 60. I have considered the rival contentions advanced by the learned counsel for the parties. I have also considered the cases which have cited at the bar. A careful reading and scrutiny of the provisions of 1996 Act leads to the clear conclusion that sub-section (2) of Section 2 is an inclusive definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and power to grant interim relief in appropriate cases. The Court's power to grant interim relief even strengthen the arbitration proceedings, otherwise in some cases the award may in fact be reduced to only a paper award. 66. I am of the considered view that according to the provisions of the 1996 Act, this Court is clearly vested with the jurisdiction and powers of granting interim relief in appropriate cases. I am in respectful agreement with the reasonings given by M. K. Sharma, J. while interpreting the provisions of the 1996 Act in the case of Dominant Offset Private Ltd. Vs. Adamovake Strojirny A. S. (supra). 67. The question which now arises for consideration is whether the petitioner is entitled to get the relief on the strength of the facts and circumstances of this case? In my view, though the Court is vested with the powers to grant interim relief, but the Court's discretion must be exercised sparingly and only in appropriate cases. The Courts should be extremely cautious in granting interim relief in cases of this nature. The Court's discretion ought to be exercised in those exceptional cases when there is adequate material on record, leading to a de ..... 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