The Single Judge dismissed an appeal challenging an Arbitrator's order directing the appellant to furnish a bank guarantee. The court held that the Arbitrator possessed powers under Section 17 to secure a counter-claim for license fees and found the direction legally valid.
The appeal is dismissed; no order as to costs.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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* *IN THE HIGH COURT OF DELHI AT NEW DELHI*
+ ARB.A.(COMM) 46/2017
Date of decision: 9th November, 2017
NAVEEN KUMAR ..... Appellant Through: Mr.Pratap Chandra Rana, Ms.Upasana Kang, Advs.
versus
DDA ..... Respondent Through: Mr.Pawan Mathur, Standing counsel for DDA
CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA
NAVIN CHAWLA, J. (Oral)
ARB.A.(COMM) 46/2017
Page 1
guarantee for an amount of Rs.42,26,860/- of Nationalized Bank to secure the respondent. On an application filed by the Appellant, the Arbitral Tribunal recalled the above directions vide his order dated 8th September, 2016. This was challenged by the respondent before this Court by way of Arbitration Appeal (Comm) no.2/2017. This Court by way of a detailed order passed on 18th August, 2017 allowed the said appeal quashing the order dated 8th September, 2016 passed by the Arbitrator. Paragraphs-9 to 11 of the said order record that no cogent reasons were discernible as to why the order dated 29th April, 2016 needed review /modification/recall. The same are quoted herein below:-
“9) Hence, the arbitral tribunal has no powers of review unless there is some procedural lacunae. A perusal of the impugned order would show that in effect the learned Arbitrator has re-written the order dated 29.4.2016 and has changed its conclusions. In the said order dated 29.04.2016 conclusions are recorded about various factors that compel the Arbitrator to pass appropriate directions to furnish security including non-compliance of orders by the respondent and existence of admitted facts. It also records that the petitioner has been successful in establishing the ingredients for grant an interim order and that a prima facie case is made out that the petitioner would suffer irreparable loss and injury if the amount claimed is not secured. The said order records a finding as follows:
ARB.A.(COMM) 46/2017
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“.... The respondent /applicant has been successful in establishing all the ingredients for the grant of interim order to secure the counter claimed amount. The respondent/applicant has a prima facie case in its favour. The respondent/applicant shall suffer an irreparable loss and injury if the counter - claimed amount is not secured at the earliest. Balance of convenience also lies in favour of the respondent-applicant and in favour of securing the counter claimed amount ....”
10) However, in the impugned order the learned arbitrator takes a completely different stand. He goes through various Judgments on the issue as to when an interim relief under Section 17 of the Act is required to be passed, and concludes that passing of an interim measure is based on a prima facie facts. It notes that the respondent has sought exemption from paying licence fee. It also notes that the petitioner has filed the application after delay. In fact, no cogent reasons are discernible as to why the order dated 29.04.2016 needs review/modification/recall. Relevant para giving reasons reads as follows:
"7) The Order dated 29.4.2016 requires modification/rectification as it was supposed to be an order for Interim Measures and not Interim Award. For deciding the above said Applications, I had to consider the principles governed under sections 9, 17 read with section 33 of the
ARB.A.(COMM) 46/2017
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Arbitration and Conciliation Act, 1996 rather than going into the merits of the case at this interim stage. This, cannot be a case for passing an interim Award but interim Measures are to be made based on prima facie facts. Admittedly, evidence by way of affidavit has been filed by the Claimant in the present case to proceed with trial. I need not dwell upon past history but should look into the aspect of undue hardship and prima facie case. The Claimant had sought for exemption from paying the license fee till the disposal of the present arbitration petition and had referred to the order dated 20.11.2013 passed by the Hon’ble Delhi High Court in OMP No.349/2013 wherein there is a direction to move to Arbitrator regarding the relief. In the present case, the Counter Claimant had filed the application on 27.6.2015 and Claimant had moved application on 22.9.2015. I have observed that the Claimant did not move for almost 2 years regarding the exemption for the interim measures, even the Counter Claimant has moved almost simultaneously. The reason given for modification/clarification is legally well founded as from pleadings nothing comes on record for granting any interim measures to secure the Counter Claimant. There are claims of the Claimant also, which are standing on the same footing except for the reason that public funds are involved vis-a-vis the Counter-Claimant. The matter is at the evidence stage and it would be appropriate if the order is suitably modified and clarified that the parties will proceed with the trial
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in the arbitration proceedings and conclude the same at the earliest."
11) Essentially, the learned Arbitrator has re-written the order and has exercised powers which are more akin to powers of an appellate court.”
Page 5
ARB.A.(COMM) 46/2017
NAVIN CHAWLA, J
NOVEMBER 09, 2017 RN
ARB.A.(COMM) 46/2017
Page 6
2 issues framed by the court
Whether the Arbitrator was beyond jurisdiction under Section 17 of the Arbitration and Conciliation Act, 1996 by directing the appellant to furnish a bank guarantee under the interim order dated 29th
Whether the impugned order dated 11th October, 2017 passed by the Sole Arbitrator challenging the dismissal of the bank guarantee application was sustainable.
Colour shows how this judgement treated each authority
BPL Ltd. Vs. Morgan Securities and Credits Pvt. Ltd.Distinguished¶31
BPL Ltd. Vs. Morgan Securities and Credits Pvt. Ltd. 2008 Vol. II RAJ 660 (Del)
2 provisions across 1 enactments
NAVEEN KUMAR
DDA
NAVIN CHAWLA
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
NAVIN CHAWLA
Parties & counsel
