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TMI Blog2019 (10) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the appellant had been operating under the name of Club Factory India Pvt. Ltd. since May 2017 and upto 31.10.2018. As per the agreement, the appellant was to pay a fee for Know How to the tune of 6% on the net sales or as mutually decided, in case of a loss as provided under clause 1.1.11 of the said Agreement. As per clause 2.1.1, respondent had given exclusive rights to the appellant to use the Brand and provide multiple Know How for which the appellant had agreed to pay a hefty sum towards the fees. 4. It is the case of the appellant that the purchase for the products was to be made from the respondent directly at prices stipulated by the respondent. The payments towards all purchases have been made to the respondent and as per the appellant no dispute with respect to the same can be raised by the respondent. 5. It is pleaded that the respondent unilaterally terminated the agreement vide a Termination Deed dated 04.12.2018 giving it a retrospective effect from 31.10.2018. Appellant was forced to sign the said Deed in the light of the fact that there was a GST investigation and the appellant required some documents to provide the same to the GST Authorities, which were in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent that it shall at all times maintain an amount of Rs. 30 Crores in its Bank Accounts till the arbitral award is rendered. The Interim Order passed earlier in this regard stands modified to the aforesaid extent." 12. It is this order which has been challenged by the appellant in the present petition. 13. Learned senior counsel for the appellant contends that the impugned order is totally without jurisdiction. It does not give any reasonable finding/conclusion and is based on conjectures and surmises. The Arbitral Tribunal has not given any reasons as to how the respondent had established a prima facie case in its favour, entitling it to an order under Section 17 of the Act. 14. It is contended that it is beyond reasonable comprehension as to how the Arbitral Tribunal has decided the amount with which the appellant would conduct his business and there is no plausible reasoning to reach at a figure of Rs. 30 Crores, which has been directed to be maintained by the appellant at all times, in its accounts. 15. It is next contended that the Arbitral Tribunal has passed an order against a third party Bank Account which is neither under the control of nor operated by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its various Bank accounts, including Account No. 3211920501, Account No. 3212847180 and Account No. 0313025561 maintained at Kotak Mahindra Bank, Preet Vihar Branch, New Delhi, IFSC-KKBK0000183; Account no. 629505502421 maintained at ICICI Bank, Sardar Bazar Branch, New Delhi IFSC-ICIC0006295, and/or any other Bank Accounts being owned and operated by appellant so as to maintain the said minimum amount, is having serious repercussions on its business transactions and is unprecedented in commercial matters. 20. Per contra, learned senior counsel for the respondent submits that while filing the claim, the respondent had relied on the e-mail dated 30.10.2018 sent by the appellant itself, wherein it had clearly and categorically admitted the outstanding payment of license fee to the respondent and had further stated that the amount would be processed once the invoice was issued. Though under the agreement there was no requirement to issue the invoice, yet the invoice was also given to the appellant, but the outstanding payments were never released. 21. Learned senior counsel further submits that it is completely wrong for the appellant to contend that the Termination Deed was signed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... senior counsels for the parties and examined their rival contentions. 26. The Arbitral Tribunal, after hearing the parties at length, formulated the following questions to decide the application under Section 17 of the Act. "(1) Whether Tribunal can direct a party to furnish security at the interlocutory stage as an interim measure of protection under Section 17 of the Act, 1996 and; (2) Whether Claimant has established a Prima Facie case in its favour?" 27. The Tribunal extracted Section 17 of the Act and examined the powers of the Tribunal to pass interlocutory orders under the said provision. Reliance was placed on several judgments on this aspect. 28. Having examined the various judgments, the Tribunal came to a conclusion that even in the case of claims involving monetary reliefs, the Tribunal is vested with powers to secure the claim of the party subject to the party establishing a prima facie case and the opposite party can be directed to furnish adequate security. The Tribunal observed that the paramount consideration in granting an interim relief should be that the party having its claims adjudicated should be in a position to reap the benefits of the Award by bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal by way of interim measures on an application under Section 17 of the Act, filed by the respondent. 32. This Court in the case of Intertole ICS (Cecons) O & M Company Pvt. Ltd. v. NHAI, (2013) ILR 2 Delhi 1018 has laid down the scope and powers of the Arbitral Tribunal under Section 17 of the Act relying upon the judgment of the Apex Court in MD, Army Welfare Housing Organisation v. Sumangal Services (P) Ltd (2004) 9 SCC 619. Relevant part of the judgment is as under: "... 13. The interim measure of protection under section 17 of the Act has to be understood with reference to the "subject-matter of the dispute". A plain reading of the provision shows that an arbitral Tribunal can in exercise of its powers there under direct a party "to take any interim measure of protection" "in respect of the subject-matter of the dispute". The words "take" and "protection" give an indication as to the legislative intent behind the words "subject-matter of the dispute." The protection envisaged is in relation to some tangible property and not an indeterminate monetary claim. 14.. The scope of the powers of an arbitral Tribunal under section 17 of the Act has been explained by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of KG. Rathish Kumar v. N.P.R. Finance Ltd. MANU/KE/2379/2012 has held that an interim measure of protection can be granted by the Arbitral Tribunal which may include providing appropriate security. Relevant para of the judgment is as under: "3. We are satisfied that the impugned order is a non-speaking one and hence it is unsustainable. Further, learned counsel for respondent submitted that even if the said order is set aside, the order of attachment may be allowed to continue for a particular or until respondent gets an order from the arbitrator. Admittedly, arbitration proceedings are initiated. Therefore, going by Section 17 of the Arbitration and Conciliation Act, 1996 any interim measure of protection can be afforded to a party by Arbitral Tribunal. The Tribunal may also require the party to provide appropriate security in connection with the measure ordered under Section 17(1) of the Arbitration and Conciliation Act, 1996. Therefore, having initiated arbitral proceedings it is possible to obtain an order from the Arbitral Tribunal itself." 34. It is thus a settled law that once the party makes out a prima facie case in its favour, the Arbitral Tribunal can grant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers to the Arbitral Tribunal to make orders of interim protections on a wider canvass. The High Court of Bombay in the case of Shakti International Private Limited v. Excel Metal Processors 2017 SCC OnLine Bom 321 has summed up the scope of power under Section 17 of the Act as under: "48. Even after the enactment of the 1996 Act, as pointed out by Mr. Jagtiani, different Courts took different views and approaches on the scope of the arbitral tribunals' power to grant interim reliefs or 'interim measures of protection' under Section 17 of the 1996 Act. For instance, in the case of Intertoll ICS Cecons O & M Co. Pvt. Ltd. v. National Highways Authority of India (supra), the Delhi High Court at paragraphs 15-18 on pages 1026-1027 dealt with the scope of powers under Sections 9 and 17 of the Act. In brief, the Court expressed the view that the powers of an arbitral tribunal under Section 17 of the 1996 Act are much narrower than that of a Court under Section 9 of the Act, although there may be some overlap. The Court in Intertoll (supra), held that an arbitral tribunal can only protect the subject matter of the dispute, which must be tangible property, and therefore it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constituted. 55. It is in this background that Section 17 of the Amended Act obviously came to be enacted. Section 17 of the Amended Act is now in parI materia or very similar in content to the provisions of Section 9 of the Amended Act. The powers to make different types of interim orders of protection are now enumerated in Section 17 of the Amended Act, as they are under Section 9 of the Amended Act. 56. The powers, of an arbitral tribunal, to make orders is put on par with that of a court. The language appearing after Section 17(1)(ii)(e) of the Amended Act makes this clear. It states "and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceeding before it." 57. The issue of enforceability of such orders is now expressly addressed by Section 17(2) of the Amended Act, which provides that such orders of the arbitral tribunal, "… shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of the Court." 58. In light of the enhanced powers and efficacy of recourse under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed today, is clearly, that findings, of fact as well as of law, of the Arbitrator/Arbitral Tribunal are ordinarily not amenable to interference either under Section 34 or Section 37 of the Act. It is only where the finding is either contrary to the terms of the contract between the parties, or, ex facie, perverse, that interference, by the Court, is necessary. The Arbitrator/Arbitral Tribunal is the final arbiter on facts as well as in law, and even errors, factual or legal, which stop short of perversity do not merit interference under Sections 34 or 37 of the Act. Paragraph 66 of this decision culls out the aforesaid proposition and reads thus:-- "66. We have already highlighted, herein above, the limited arena of the jurisdiction of this Court, in the matter of interference with arbitral awards, under Sections 34 and 37 of the Act. The position that emerges from the law, as it stands crystallized today, is, clearly, that findings, of fact as well as of law, of the arbitrator/Arbitral Tribunal are ordinarily not amenable to interference either under Sections 34 or Section 37 of the Act. It is only where the finding is either contrary to the terms of the contract between the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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