Dismissed

Vishal Infractructure Limited v. Paulose George Construction Company Pvt.Ltd

Kerala HC2 Jun 2014Arb.A/22/2014

Case brief

AI extract

What is this about?

This court dismissed two arbitration appeals challenging interim measures granted under Section 9 of the Arbitration Act, 1996. It upheld the lower court's directions for security and an injunction, noting no perverse exercise of discretion but granting one week's extension for furnishing security.

What did the court decide?

Appeal dismissed with one week extension for furnishing security; no interference with interim injunction.

Vishal Infractructure Limited Vs Paulose George Construction… — Arbitration | Kerala HC (2014)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT:

¶3

THE HONOURABLE MR.JUSTICE HARUN-UL-RASHID & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN

¶4

MONDAY, THE 2ND DAY OF JUNE 2014/12TH JYAISHTA, 1936

¶5

Arb.A.No. 22 of 2014 ()

¶6

-----------------------ORDER DT.11/4/2014 OF THE V^TH ADDL.DISTRICT JUDGE, ERNAKULAM, IN I.A.NO.342/2014 IN O.P.(ARB.)NO.78/2014

¶7

APPELLANT/RESPONDENT:

¶8

VISHAL INFRACTRUCTURE LIMITED HEAD OFFICE AT # 52, R.V.ROAD, BASAVANAGUDI BANGALORE-560 004 REPRESENTED BY ITS JOINT MANAGING DIRECTOR MR.B.K.KRISHNA MURTHY.

¶9

BY ADVS.SRI.N.D.PREMACHANDRAN SRI.M.S.UNNIKRISHNAN

¶10

RESPONDENT/PETITIONER:

¶11

PAULOSE GEORGE CONSTRUCTION COMPANY PVT.LTD ENGINEERS & CONTRACTORS HAVING ITS REGISTERED OFFICE AT AISWARYA TOWERS PUTHENCRUZH ROAD, KARIMUGAL P.O. KOCHI-682303 AND PROJECT OFFICE AT AISWARYA TOWERS HOC JUNCTION AMBALAMUGAL P.O., KOCHI-682302 REPRESENTED BY ITS MANAGING DIRECTOR MR.P.V.PAULOSE S/O.T.P.VARGHESE, AGED 59 YEARS.

¶12

BY ADV. SRI. VIVEK VARGHESE P.J .FOR CAVEATOR. BY ADV. SRI.P.JACOB VARGHESE (SR.) BY ADV. SRI.VARUGHESE M EASO BY ADV. SRI.B.JITHU

¶13

THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 02-06-2014, ALONG WITH ARBA. 23/2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶14

HARUN-UL-RASHID & ANIL K.NARENDRAN, JJ.

¶15

--------------------------------------------------

¶16

Arb.Appeal Nos. 22/2014 & 23/2014

¶17

------------------------------------------------DATED THIS THE 2^ND DAY OF JUNE, 2014

¶18

JUDGMENT

¶19

ANIL K.NARENDRAN, J.

¶20

Arb.Appeal No.22/2014 arises out of an order dated 11/4/2014 of the V^th Addl.District Judge, Ernakulam, in I.A.No.342/2014 in O.P.(Arb.)No.78/2014 and Arb. Appeal No.23/2014 arises out of an order dated 29/1/2014 of the 1^st Addl. District Judge (In charge of District Judge), Ernakulam, in I.A.No.339/2014 in O.P.(Arb.)No.78/2014.

¶21

The respondent herein filed O.P.(Arb.)No.78/2014 before the District Court, Ernakulam, against the appellant herein, under Section 9 of the Arbitration and Conciliation Act, 1996. The subject matter of the said case is a dispute arising out of termination of a sub-contract dated 19/12/2012 entered into between the appellant and the respondent in relation to the contract awarded to the appellant by the Cochin International Airport Ltd. (CIAL), for widening of existing approach road from Athani Junction to Cochin International Airport at Nedumbasserry.

¶22

Arb.Appeal Nos.22 & 23/14

¶23

-2-

¶24

According to the appellant, after the award of work, the appellant mobilised men and machinery for effective implementation and completion of the work. The appellant furnished initial security deposit, mobilisation advance and performance guarantee to the tune of Rs.2,12,85,675/- to CIAL. The appellant arranged necessary infrastructure for due implementation of the work as well as the materials required and the work was completed to the tune of Rs.59,64,944/-. While the matter stood thus, a sub-contract was entered into between the appellant and the respondent on 19/12/2012, which contains various conditions for effective implementation of the road widening work awarded by CIAL. As per Clause 6 of the said subcontract, the respondent has agreed to pay the appellant Rs.42,57,135/- in the form of term deposit receipt. Further, as per Clause 11, the respondent has agreed to pay the appellant hire charges for men, machinery and equipments belonging to the appellant, which were collected by the appellant, and also charges for the materials already collected by the appellant. The respondent did not show any interest to complete the work as

¶25

Arb.Appeal Nos.22 & 23/14 -3-

¶26

agreed upon. The road widening work awarded by CIAL is a prestigious work intended to have uninterrupted transportation to the airport from the National Highway. In spite of various letters issued by CIAL regarding the slow pace of work done by the respondent and communications issued to the respondent, there was no response from the respondent to complete the work as undertaken. In such circumstances, the appellant was constrained to terminate the sub-contract with the respondent, by issuing letter dated 21/1/2014, and to continue the work by themselves.

¶27

In view of the arbitration clause in the sub-contract, the respondent has approached the District Court, Ernakulam, seeking interim measures, under Section 9 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘the Act’), by filing O.P.(Arb.)No.78/2014, against the appellant. In the said petition, among other reliefs, the respondent prayed for appointment of an Advocate Commissioner to measure out and assess the details of the work executed by it in terms of the subcontract dated 19/12/2012 entered into with the appellant, with

¶28

Arb.Appeal Nos.22 & 23/14 -4-

¶29

the assistance of a technical expert and the officers of CIAL. The respondent contended that, it has carried out work till 21/1/2014 and encashed the 1^st and 2^nd RA bills. Though the 3^rd RA bill was due for the work carried out from 14/11/2013 till 21/1/2014, the same was not encashed as objected by the appellant. Substantial amounts are due to the respondent from the appellant, for the work already undertaken up to 3^rd RA bill coupled with the allied expenses, taxes, etc. It is submitted that the contract work awarded to the appellant is almost over and will be completed during the middle of May and in such an event, the appellant will encash the final bill after the work is over and therefore, the respondent will not get an opportunity to realise the amount due from the appellant.

¶30

The respondent has filed I.A.No.342/2014 in O.P. (Arb.)No.78/2014, under Section 9 of the Act, seeking an order to direct the appellant to furnish security for an amount of Rs.4 crores. The respondent has also filed I.A.No.339/2014 in O.P. (Arb.)No.78/2014, another application under Section 9 of the Act, seeking an order to restrain the appellant from collecting the

¶31

Arb.Appeal Nos.22 & 23/14 -5-

¶32

amounts due under the 3^rd RA bill and the amounts due to the respondent for the work executed till the handing over of the work site of the respondent to the appellant, under Work Order No.CIAL/Civil/400A dated 4/8/2012 of CIAL, till the disposal of the matter.

¶33

In I.A.No.339/2014, the court below by order dated 29/1/2014, which is under challenge in Arb. Appeal No.23/2014, granted an interim injunction against the appellant from collecting 3^rd RA bill amount as per Work Order No.CIAL/Civil/400A from CIAL till 31/1/2014.

¶34

In I.A.No.342/2014, the appellant filed counter opposing the prayer to furnish security for an amount of Rs.4 crores. The respondent has also filed an additional affidavit.

¶35

Based on the pleadings and the documents relied on by the parties, the court below by order dated 29/1/2014 in I.A.No.342/2014, which is under challenge in Arb.Appeal No.22/2014, directed the appellant to furnish security for Rs.2 crores within 30 days. Challenging the aforesaid two orders passed by the court below, the appellant preferred these two

¶36

Arb.Appeal Nos.22 & 23/14 -6-

¶37

appeals before this Court, under Section 37(1)(a) of the Act.

¶38

By order dated 9/5/2014 in Arbitration Appeal No.22/2014 this Court has ordered that, the time limit stipulated by the impugned order for furnishing security shall stand extended till 22/5/2014. Later, by order 22/5/2014, this Court has extended the time limit fixed for furnishing security for a further period of one month, i.e., till 22/6/2014. But, on 31/5/2014, the case was brought up at the instance of the learned Senior Counsel for the respondent, pointing out that, as the work is already over there is every possibility of the appellant collecting the entire amount due from CIAL even before the expiry of the extended period of 22/6/2014 fixed by this Court for furnishing security.

¶39

We heard the learned counsel for the appellant and also the learned Senior Counsel appearing for the respondent. The learned counsel for the appellant contended that, the court below went wrong in directing the appellant to furnish security for Rs.2 crores and also granting an interim injunction against the appellant from collecting 3^rd RA bill amount from CIAL. The

¶40

Arb.Appeal Nos.22 & 23/14 -7-

¶41

learned counsel further submitted that, the appellant finds it difficult to furnish security as its entire assets are charged to its bankers. Moreover, considering the facts and circumstances of the case, the court below ought not have directed the appellant to furnish security for such an exorbitant amount. Per contra, the learned Senior Counsel for the respondent supported the reasoning given in the impugned orders and contended that, the appellant never had any intention to furnish security, instead, taking advantage of the indulgence granted by this Court, it is attempting to collect the entire amount due from CIAL even before the expiry of the extended period granted by this Court for furnishing security.

¶42

It is now well settled by a catena of decisions of the Apex Court that, Section 9 of the Act enables the parties to approach the court, 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 of the Act, for certain interim measures of protection enumerated under Clauses (i) and (ii) of Section 9 and the court is empowered to grant

¶43

Arb.Appeal Nos.22 & 23/14 -8-

¶44

such interim measures as may appear to the court to be just and convenient. Section 9 of the Act itself brings in the concept of “just and convenient” while speaking of passing any interim measure of protection and the concluding words “and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it” also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by this provision. Therefore, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient, while passing an interim measure under Section 9 of the Act.

¶45

In the case on hand, the respondent filed I.A.No.342/2014 before the court below seeking an order directing the appellant to furnish security for an amount of Rs.4 crores. The appellant filed counter to the said application and the respondent has also filed an additional affidavit. Both sides

¶46

Arb.Appeal Nos.22 & 23/14 -9-

¶47

produced documents in support of their contentions. The thrust of the argument advanced before us by the learned counsel for the appellant is that, in the light of the documents on record, the court below ought not have directed the appellant to furnish security for such an exorbitant amount of Rs.2 crores.

¶48

From a perusal of the order impugned in Arbitration Appeal No.22/2014 we find that, on the basis of the pleadings and the documents on record, the court below concluded that an amount of Rs.2.70 crores is approximately due to the respondent from the appellant as the amount due to the work carried out up to 3^rd RA bill coupled with allied expenses, tax paid, etc. The respondent has carried out work till 21/1/2014 and encashed the 1^st and 2^nd RA bills. Though, the 3^rd RA bill was due for the work carried out from 14/11/2013 till 21/1/2014, the same was not encashed as objected by the appellant. The court below further noticed the contention of the respondent that, the contract work awarded to the appellant is almost over and will be completed during the middle of May and in such an event, the appellant will encash the final bill after the work is over and therefore, the

¶49

Arb.Appeal Nos.22 & 23/14

¶50

-10-

¶51

respondent will not get an opportunity to realise the amount due from the appellant. It was in such circumstances, in order to protect the corpus of the arbitration, the court below in exercise of its powers under Section 9 of the Act, directed the petitioner to furnish security for Rs.2 crores within 30 days.

¶52

The discretion exercised by the court below taking into consideration the concept of prima facie case, balance of convenience and irreparable injury cannot be found fault with in the absence of any case made out by the appellant that such exercise of discretion by the court below is either perverse or patently illegal. Moreover, from the submission made before us by the learned counsel for the appellant, the appellant finds it difficult to furnish security as its entire assets are charged to its bankers. Therefore, we find considerable force in the submission made by the learned Senior Counsel for the respondent that, the appellant never had any intention to furnish security, instead, taking advantage of the indulgence granted by this Court, it is attempting to collect the entire amount due from CIAL even before the expiry of the extended period granted by this Court

¶53

Arb.Appeal Nos.22 & 23/14

¶54

-11-

¶55

for furnishing security.

¶56

In such circumstances, we find no grounds to interfere with the order of the court below dated 11/4/2014 in I.A.No.342/2014 in O.P.(Arb.)No.78/2014, which is under challenge in Arbitration Appeal No.22/2014. Though, the appellant is not entitled for any indulgence from this Court, taking a lenient view, we grant the appellant a further time of one week from today to furnish security as ordered by the court below in I.A.No.342/2014 in O.P.(Arb.)No.78/2014. But, it is made clear that, this will not stand in the way of the respondent in moving any applications before the court below seeking any further interim measures of protection under Section 9 of the Act.

¶57

Similarly, by order dated 29/1/2014 in I.A.No.339/2014, which is under challenge in Arb. Appeal No.23/2014, the court below granted an interim injunction against the appellant from collecting 3^rd RA bill amount as per Work Order No.CIAL/Civil/400A from CIAL till 31/1/2014. In the facts and circumstances of the case referred to in the foregoing

¶58

Arb.Appeal Nos.22 & 23/14 -12-

¶59

paragraphs, the court below cannot be found fault with in granting an interim injunction against the appellant from collecting 3^rd RA bill amount as per work order, which discretion has also been exercised by the court below taking into consideration the concept of prima facie case, balance of convenience and irreparable injury. In the absence of any case made out by the appellant that such exercise of discretion by the court below is either perverse or patently illegal, we find no grounds to interfere with the order of the court below dated 29/1/2014 in I.A.No.339/2014 in O.P.(Arb.)No.78/2014, which is under challenge in Arbitration Appeal No.23/2014.

¶60

In the result, Arb.Appeal No.22/2014 is dismissed, subject to the direction contained in para.14 above. Arb.Appeal No.23/2014 is also dismissed. No order as to costs.

¶61

Sd/- HARUN-UL-RASHID, JUDGE

¶62

Sd/-

¶63

skj

¶64

ANIL K.NARENDRAN, JUDGE

Vishal Infractructure Limited v. Paulose George Construction Company Pvt.Ltd

Case brief

What is this about?

What did the court decide?

Vishal Infractructure Limited v. Paulose George Construction Company Pvt.Ltd

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

K.K.Mammu Vs the Special Tahsildar(La),Ernakulam

State of Kerala, Rep. by District Collec Vs Soudhamini and Another

State of Kerala Vs Sri. Thomas

K.M.Suhara Vs Spl.Tahsildar (La),Kasargod & Others

N.Velappan Vs State of Kerala

Nalini Vs State of Kerala