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TMI Blog2022 (12) TMI 1526X X X X Extracts X X X X X X X X Extracts X X X X ..... adistinction to the rate given in the contract. The Court held that arbitrator cannot go beyond the contract. Firstly, the Apex Court was dealing with a setting aside application of a final award. The scope of power under Section 17 is completely different. Secondly, even if the principle, that directions cannot be given dehors the agreement, can be adopted, the facts before the Court were such that the portion of the award was in complete defiance to the explicit rate given in the award. Both do not seem to be case in the circumstances before us, as will be discussed later. There are no restrictions that require the Tribunal to only constrain itself to the contract while granting interim reliefs. The objective behind the wide powers granted under Section 17 of the Act is to preclude the arbitral proceedings from becoming infructuous, as long as the relief does not explicitly stand contrary to the contract. The Impugned Order elaborately discusses the history of the dispute without assigning any liability. In the portion where it discusses the payment of 50% of the basic contract value plus 100% of taxes and duties payable on the HWM System, the Tribunal has mentioned the apprehens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sansol. d) 50% of the basic contract value plus 100% of the taxes and duties to be paid against despatch of the HWM System. e) Remaining amount of contract to be paid against acceptance of the HWM System. 6. A sum of Rs. 24,00,00,000/- (approximately) was received by the Petitioner without prejudice to its contention that these were delayed payments made by the Respondent. 7. The respondent filed an application on June 26, 2021 under Section 17 of the Act and prayed before the Tribunal for an independent third party/technical person/representative of Caterpillar Inc. in whose presence inspection and testing of HWM System and cutter module would be carried out. 8. The Tribunal vide order dated December 22, 2021 directed for depositing the entire balance price of the EWM System in an Escrow Account to be opened in the joint names of the advocates of the parties, who would act as escrow agents. It also directed that pre-despatch testing would be carried out in the presence of a special officer. It further ordered that in case the EWM System performs satisfactorily for a continuous period of 96 hours as per Exhibit C of the Agreement, the escrow agents would release the monies to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on April 7, 2022. The petitioner made another application under Section 17 of the Act on May 13, 2022 with the primary prayer for (a) a direction upon Mr. Nand Gopal Khaitan to encash the fixed deposit for an amount of Rs. 40,88,79,240/- and to hand over the same to the petitioner. The said application was heard on July 10, 2022 and July 13, 2022. 14. An application under Section 17 of the Act was made by the respondent on July 13, 2022 praying primarily for (a) restraining the petitioner from obtaining any amount from Mr. Nand Gopal Khaitan, (b) restraining Mr. Nand Gopal Khaitan from encashing the fixed deposit and (c) a direction to carry out the reassembly and testing of the HWM System with immediate effect. The Tribunal indicated in its order dated July 13, 2022 that the applications dated May 13, 2022 and July 13, 2022 were to be decided by a common order by the Tribunal. 15. The Tribunal vide the Impugned Order directed Mr. Nand Gopal Khaitan to release 50% of the basic contract value plus 100% of taxes and duties payable upon furnishing of a bank guarantee by the petitioners of the said amount. The balance amount, being the interest accrued on the fixed deposit amount, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent has already received the machine and is enjoying non-payment of the entire amount which has become due and payable. 18. Mr. Ranjan Bachawat, learned senior advocate, appearing on behalf of the respondent made the following submissions: a. The delivery of the machine has been delayed and there is a chequered history with regard to its authenticity. There are apprehensions that it does not match the contractual specifications and certain parts are of cheap, inferior and duplicate characteristics. b. The instant application is merely an attempt to stall the hearing of the arbitration proceedings and to refuse inspection, testing, reassembly and commissioning of the HWM System. The petitioner will merely appropriate the amount deposited with Mr. Nand Gopal Khaitan. c. The Impugned Order was not passed only on the basis of the application dated July 13, 2022 and it is denied that the senior advocate appearing on behalf of the petitioner did not have an opportunity to controvert the same. d. Both the parties had consented to the Tribunal's order dated December 22, 2021 and March 7, 2021 vide which the respondent had to part with sums of money even before the contractually sti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . I am in complete consonance with the above view. 21. We must now discuss the powers under Section 17 of the Act. The 2015 Amendment to the Act has amplified the powers granted to arbitral tribunals to provide interim relief under Section 17. The power is now almost pari passu the powers that a court exercises under Section 9 of the Act. Therefore, it would not be innocuous to pre-suppose that the principles guiding the exercise of the powers under both these sections must be similar. The Apex Court in Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited (2022 SCC OnLine 1219) delineated the guiding factors in the exercise of power under Section 9 of the Act. A few relevant paragraphs are extracted below: 39. In deciding a petition under Section 9 of the Arbitration Act, the Court cannot ignore the basic principles of the CPC. At the same time, the power Court to grant relief is not curtailed by the rigours of every procedural provision in the CPC. In exercise of its powers to grant interim relief under Section 9 of the Arbitration Act, the Court is not strictly bound by the provisions of the CPC. 40. While it is true that the power under Section 9 of the Arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable to the agreement in dispute. The Apex Court itself in Army Welfare (supra) acknowledges that under Section 17 of the unamended Arbitration and Conciliation Act, 1996, an interim order can relate of protection of the subject matter of the dispute. We have already discussed that the amplitude of the powers under Section 17 has been extended vide the Act's recent amendments. Therefore, this case is distinguishable. 24. In Shree Ganesh (supra), an arbitral award was partly set aside under Section 34 of the Act. The part, which was set aside, allowed for alteration of contractual terms by increasing the per-month rent, in complete contradistinction to the rate given in the contract. The Court held that arbitrator cannot go beyond the contract. Firstly, the Apex Court was dealing with a setting aside application of a final award. The scope of power under Section 17 is completely different. Secondly, even if the principle, that directions cannot be given dehors the agreement, can be adopted, the facts before the Court were such that the portion of the award was in complete defiance to the explicit rate given in the award. Both do not seem to be case in the circumstances befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... patch, which again was not rigidly as per the Agreement, but was accepted and acted upon. 28. The despatch was delayed. The Tribunal is yet to decide the party over which delay and/or breach of contract is attributable and has kept such deliberations open. The respondent contended before the Tribunal that defects were found during pre-despatch testing which were mentioned to the Special Officer. Furthermore, the Tribunal in its order dated February 14, 2022 records that the respondent's advocate mentioned that they were ready to take the said HWM System as the petitioner has stated on affidavit that these defects were cured. On this assurance, despatch was allowed by the Tribunal. 29. In the Impugned Order, the Tribunal considered that since despatch was complete, the 50% of the basic contract value plus 100% of taxes and duties payable on the HWM System must be paid to the petitioner. However, it noted that the claimant in its application dated July 13, 2022 had raised apprehensions on the basis of which certain protections must be granted. The Tribunal directed the petitioner to provide a bank guarantee to the extent of the Impugned Amount to N.G. Khaitan, on the furnishing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a 'common order' is suggestive of it also planning to deal with the application dated July 13, 2022 by the respondent wherein it prayed for restraint upon any payments to be made to the petitioner. Therefore, it is inconceivable that the Tribunal intended not to take up the application dated July 13, 2022 as such intention is also not evident from the Impugned Order. 33. The Impugned Order elaborately discusses the history of the dispute without assigning any liability. In the portion where it discusses the payment of 50% of the basic contract value plus 100% of taxes and duties payable on the HWM System, the Tribunal has mentioned the apprehensions of both sides. However, the apprehensions are recorded in brief for both the sides. This does not lead to the inference that an opportunity was not given to both. The Tribunal has been thorough with regards to facts and has done a commendable job in contractual facilitation while keeping disputes for future deliberation. This Court is not inclined to use its otherwise limited power under Section 37 of the Act to set aside the Impugned Order. 34. Issue (A.) is decided in the negative. Accordingly, Issue (B.) is also decided in ..... 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