Allowed

Vitthal Sahakari Sakhar Karkhana Ltd. through It S Managing Director v. Rajlaxmi Petrochem Pvt. Ltd. through It S Director, Dineshkumar Murlidhar Innani

Bombay HC20 Apr 2017ARBA/2/2017

Case brief

AI extract

What is this about?

The sole judge allowed the arbitration appeal and modified the lower court order. While permitting the appellant to sell molasses for safety reasons, the court directed that sale proceeds be deposited in the District Court pending further steps for appointment of an arbitrator under Section 9 of the Arbitration Act.

What did the court decide?

Appeal allowed; order modified to allow sale of molasses with direction to deposit proceeds in District Court; connected civil application disposed of.

Vitthal Sahakari Sakhar Karkhana Ltd. through It S Managing… — Arbitration | Bombay HC (2017)

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arbap2.17

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD

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ARBITRATION APPEAL NO. 02 OF 2017 WITH CIVIL APPLICATION NO. 3452 OF 2017

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Shri Vitthal Sahakari Sakhar Karkhana Ltd...Appellant
Through its Managing Directors,
R/o. Venu Nagar, at post Gursale,
Taluka Pandharpur,
Dist. Solapur.

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Versus

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Rajlaxmi Petrochem Pvt. Ltd...Respondent
Private Limited Company
Through its Director
Dineshkumar s/o. Murlidhar Innani,
Age. 45 years, Occ. Business,
R/o. Main Road, Beside Latur General
Stores, Latur.

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Mr.N.B. Khandare, Advocate for the appellant.
Mr.Swapnil S. Rathi, Advocate for sole respondent.

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CORAM : T.V. NALAWADE,J.
DATED :20.04.2017

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ORAL JUDGMENT :-

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1.Heard both the sides.

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2. Admit.

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3.This Arbitration Appeal is filed against the

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order made below Exh.15 dated 13.01.2017 in Civil M.A.
(Arb.) No.245 of 2016 by the learned Principal District
Judge, Latur. The application was filed under section 9

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of the Arbitration and Conciliation Act, 1996. The
present appellant has filed written statement, though the
learned Principal District Judge, Latur, has observed

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that no separate reply is filed to the interim
application. After hearing both the sides, the learned
Principal District Judge, Latur, has restrained the
appellant/Co-operative Sugar Factory from selling the
molasses.

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4.There is agreement between the appellant and the
respondent and under the agreement the appellant has
agreed to supply 100 lakh liters Special Denatured Spirit
(SDS) to the respondent. Though there was initially
agreement of supply of 100 lakh liters, some amount was
withdrawn. But the learned Counsel for the respondent
submitted that under the agreement, still the appellant

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will be required to supply 100 lakh liters of aforesaid
material and as on today quantity of around 48 lakh
liters is supplied. The distillery was not working with
full capacity due to shortage of supply of sugarcane and

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so as per the agreement expected quantity is not
supplied. The submission is made that in this year the
distillery unit came to be closed in the month of January

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2017 due to shortage of supply of sugarcane. The
submissions made show that around 150 MT of molasses is
lying in the factory premises and value of molasses is
around Rs.56 lakh. It is grievance of the respondent
that this molasses could have been utilized for producing

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SDS, but it was not done intentionally and the sugar
factory wants to sell the molasses to make money by
committing breach of contract. There is clear

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probability that it was not practicable to keep
functioning the unit with such small quantity of
molasses.

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5.The submissions made show that due to short

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supply of SDS, in the past in the year 2016, notice was

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given as per the agreement by the respondent and
intention was expressed to appoint the Arbitrator. This
notice was not replied by other side. No steps were

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taken by the respondent for appointment of the
Arbitrator. The application under section 9 was filed in
the District Court in the year 2016 and the interim order

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came to be made on 13.01.2017. In view of provisions of
section 9 (2) of the Arbitration Act, the respondent

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needs to take further steps to go for the appointment of
Arbitrator. Learned Counsel for the respondent submitted
that respondent is going to take steps immediately, but
till then the interest of the respondent is required to
be protected.

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6.The learned Counsel for the sugar factory

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submitted that during this season when temperature has

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crossed 40oC, it will be hazardous to keep such quantity
of molasses in the factory premises and any untoward

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incident may happen. This Court holds that this

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( 5 ) arbap2.17

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possibility cannot be ruled out. However, the interest
of the respondent also needs to be protected. The learned
Counsel for the respondent submits that at least an
amount of more than Rs.5 Crore of the respondent is with
the present appellant, so to that extent interest of the
respondent needs to be protected. It is not disputed that
the amount of the respondent is with the appellant. In

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view of these circumstances, this Court holds that in the
present matter some alternate way can be chosen and sale
proceeds of molasses can be directed to be deposited in
the District Court, where proceeding under section 9 of
the Act is still pending.

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7.In the result, the order made by the learned

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Principal District Judge is hereby modified by following
order :-

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.Present appellant – Shri Vitthal

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Sahakari Sakhar Karkhana Ltd., is hereby allowed

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to sell the molasses as per law and the amount

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is to be deposited immediately with the record

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of sale in the District Court. If there is
breach of order, action will be taken against
the appellant. Such undertaking also to be
given in the District Court by the applicant
before proceeding with the sale.

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8.With the above directions the arbitration appeal
is allowed and disposed of.

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9.In view of disposal of the Arbitration Appeal,
connected Civil Application for stay does not survive and
stands disposed of.

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snk/2017/APR17/ arbap2.17

Vitthal Sahakari Sakhar Karkhana Ltd. through It S Managing Director v. Rajlaxmi Petrochem Pvt. Ltd. through It S Director, Dineshkumar Murlidhar Innani

Case brief

What is this about?

What did the court decide?

Vitthal Sahakari Sakhar Karkhana Ltd. through It S Managing Director v. Rajlaxmi Petrochem Pvt. Ltd. through It S Director, Dineshkumar Murlidhar Innani

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

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