Dismissed

Sew Infrastructure Limited v. The Federal Democratic Republic of Ethiopia

Telangana HC10 Jan 2023ICOMAA/1/2022

Case brief

AI extract

What is this about?

The appeal challenged a single judge's order dismissing an application under Section 9 of the Arbitration and Conciliation Act seeking to restrain invocation of bank guarantees after the arbitral tribunal held the invocation valid. The division bench dismissed the appeal, affirming that post-award, a party against whom the award was passed cannot seek such interim relief.

What the court decided

AI extract

Sew Infrastructure Limited Vs The Federal Democratic Republic… — Arbitration | Telangana HC (2023)

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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD

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TUESDAY,THE TENTH DAY OF JANUARY TWO THOUSAND AND TWENTY THREE

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PRESENT

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THE HON'BLE SRI JUSTICE P. NAVEEN RAO AND

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THE HONOURABLE SRI JUSTICE J. SREENIVAS RAO

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ICOMAA NO: 1 OF 2022

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Appeal Under Section 37 (1) (a) of the Arbitration and Conciliation Act Rl/w. Section 13 (1A) of the Commercial Courts Act, 201 5 against the order dated 13-10-2022in Arb. Appl. No.54of 2016.

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Between

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SEW lnfrastructure Limited, A company incorporated under the Companies Act, 1956 Having its registered office at 6-3-871 , Snehalata Greenlands Road, Begumpet, Hyderabad - 500016. Represented by its Director. V. Rajkumar, S/o. Mr. Raja Rama Mohan Rao

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. Appellant / PETITIONER

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AND

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1 . y'hef ederal Democratic Republic of Ethiopia, Ethiopian Roads Authority, RAS Abebe, Aregay Street. PO Box No.'1770, Addis Ababa, Ethiopia.

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Bank of Abyssinia, Ethiopian Re I Cross Society, HQ Building, Near Gandhi Hospital, P.O. Box No. 12947, Addis Ababa, Ethiopia

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State Bank of lndia, Corporate^{Accounts GroupBranch.6-3-699,Ozone} Complex. 2ndFloor, Puniagutta^{Main Road, Hyderabad-500082, lndia}

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...RESPONDENTS/^ResPondents

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lA NO: 1 OF 202²

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PetitionunderSectionl5,tCPCprayingthatinthecircumstancesstated in the affidavit filed^{in support of the petition, the High Court may be pleasedto} dispense with^{the filing of the certifiedcopy of the order dated1 3'10'2022} passed by the Hon'ble^{Courtin Arb Appl No 54 of 20'16'}

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lA NO: 2 OF 2022

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Petition under Order 39 Rule 1 & 2 of CPC^praying that in^the circumstances stated in the affidavit filed in support of the^petition, the^High Court may be pleased to restrain the Respondent Nos. 2 & 3 from invoking/honouring/encashing/paying the Counter Bank Guarantees i.e. Bank Guarantee No. 1303912FG001593 daled 23.11.2012 for an amount of ETB 33,564,500.23, Bank Guarantee No. 1303912FG0001594 dated 23.11 .2012 for an amount of USD 3,543,440.08, Bank Guarantee No. 1303913FG0000180 dated 09.02.2013 for an amount of ETB 77 ,727, 733 and Bank Guarantee No. 1303913FG0000'181 dated 09.02.2013 for an amount of USD 5,744,060.00 .

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Counsel for the Petitioner: SRl. AVINASH DESAI

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Counsel for the Respondents: SRI RATHAN SINGH

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The Court made the following: ORDER

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PNRI & JSR.' lcoMMA Nd. t oF 2022

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HONOURABLE SRI JUSTICE P. ITAVEEN RAO AND HONOT'RABLE SRI JUSTICE J. SR"EENTVAS RAO

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ICOMMA. No. 1 OF 22

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JUDGMENT: I^{Perthe Hon'ble} Si^{Justice J. SreeniuasRao} \

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This appeal, under section 37 (1) (a) of the Arbitration and Conciliation Act, read with Section 13 (1A) of the Commercia-l Courts Act, 2015 is hled aggrieved by the order dated l3-7O-2O22 passed by the learned single Judge of this Court in Arbitration Application No.54 of 2O 16.

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The appellant is the applicant in Arbitration Application No. 54 of 2016, which is SEW Infrastructure Limited, a company incorporated under the Laws of India and having its registered office at Begumpet, Hyderabad, hereafter called as SEW. The respondent No. 1 is the Ethiopian Roadways Authority, hereafter called as ERA, an entity of the Federal Democratic Republic of Ethiopia, the respondent No.2 is the Bank of Abyssinia hereafter called as BOA and the respondent No.3 is the State Bank of India (sBr).

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PNRJ & JSRJ I(:OMMA N6 1 0F tOtt

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BRIEF. FACTS OF THE cAsE :

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3.1 The appellant submitted a bid on 22-06-2022 for awarding contract works for construction of roads under Mombassa - Nairobi - Addis Ababa Corridor Phase III Project: Hawassa - Ageremarian Section, Lot 1 : Hawassa - Chuko in Ethiopia. In the bidding process floated by ERA, a contract for construction of roads was awarded to SEW and contract agreement dated 30.ll.2Ol2 was entered into by the parties. [n terms of the contract the BOA has issued four Bank Guarantees (BGs) to ERA on the basis of counter BGs issued by SBl/third respondent on behalf of SEW. Out of four BGs, two BGs are Advance Balk Guarantees hereafter called as ABG, which are en-cashable on the condition of SEW applying the funds received for the project purposes, which are outside the scope of the roads project. The other two BG's are Performance Bank Guarantees hereafter called as PBG, which are en-cashable upon declaring the contractor/SEW being in default under the contract.

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3.2 While things stood thus, disputes arose between SEW and ERA, on delay in execution of the project. SEW claimed that delay is attributable to ERA, as it did not hand over the

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rLi

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PNR.J & JSRJ ICOMMA, No:1 OF 2022

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I II I

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project sites without obstructions and encumbrances for execution of the road project. The General Conditions of Contract hereafter called as GCC provided for mechanism of forming a Dispute Board to which any dispute arising between the parties has to be referred. It is the case of SEW that as per Clauses 2O-4 and 20.5 without referring the dispute to the Dispute Board and without following conditions of settlement under GCC, ERA unilaterally issued notice of termination dated 20.05.2OL6, which was served on SEW on 23.05.2016 giving a notice of 14 days for termination of the contract. SEW issued reply dated 30.05.2016 asserting that delay and slow progress of work was due to various reasons attributable to ERA.

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3.3 In letter dated 22.O4.2016, ERA provisionally extended the contract period by 60 days, which was expired on 2l.06.2016.It appears that^SEW made^{a reqrrest for extension} of time but without considering the said^{application,ERA} terminated thecontract.

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Taking recourse to clause 20.06 as the General^condition of contract that envisages^{reference to Arbitral Tribunalfor} resolution of disputes the^{appellant herein filed Arbitration}

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PNR.I & .JSRJ ICOMM.{ No1 I OF²⁰²²

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Application No. 54 of 2076 before this'Court^{under section9 of} the Arbitration ald Conciliation Act,^{1996 (for brevity "TheAc()} for the following reliefs :

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i) to restrain ERA, its agents, ofrt.cers, emplogees^etc., bg utag of injunction from inuoking trtto ABGs and^tu-to PBGs;

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ii) to restrain BOA from honouing/ en-cashing ABG and PBG on behalf of SEW;

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iii) to restrain SBI from honouring/ en-ec,ashing counter BC issued to BOA; and

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iu) to stay operation of all further actions pursuant to the notice oJ tennination, dated 2O-O5-2O16 including ong coerciue steps and en-cashment of BG issued on beLalf of SEW bg BOA and SBI.

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Initially, this Cor.rrt passed interim order dated

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06.06.2016, which reads as under :

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"Heard leamed counsel for t]re^petitioner and Sri Deepak Bhattacha-qee for respondent No.3.

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We have perused the letter, dated 20-05.2016, bearing referenceNo .MMS / 267 / 12-222L and so also t-l-re letter, dated 22.O4.2OI5 bearing reference No.AIC/RE/SEW /16/Contr./ 1146. It is not clear whether Bank guarantee has been encashed by respondent No.l. lrarned counsel for respondent No,3 submits that respondent No.3 has not received any communication from respondent Nos.l and 2.

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In the circumstances, issue notice to respondent Nos.l and ? retumable ot 16.e6-2O16.

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In ad,lition to Court notice, petitioner is directed to issue personal notice to respondent Nos.l and 2 including

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<br>

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PN&-I & JSTU TCOMMA No,. 1 OF 2022

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service of notice through e-mail or any other mode and file afidavit of service-

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Stand over to 16.06.2016. TiU 16.06.2O16, parties are dirccted to maintain status quo. It is made clear that ttris Court has not examined merits of the case."

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The above said interim order was extended from time to

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time.

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7 . It is appropriate to notice that the interse dispute was referred to the Arbitral Tribunal at Paris, France in ICC Case No.23274/WA. The Arbitral Tribunal concluded the proceedings and passed final award on 27 -O7.2021-

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It appears from the record that after passing of the above interim order, Arbitration Application No.54 of 2016 was assigned to the learned single Judge. In the said case, Vacate Stay Petition was filed by BOA in I.A. No.2 of 2Ol7 to vacate the interim order dated 06.06.2016.

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g. Basing upon the^{pleadings and contentionsofthe} appellant as^{well as second respondent,the learnedsingle} Judge framed^{the following issues :}

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ISSIIES:

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i. Whether app[cant/SEw^{has madeou.t a case of fraud'} irretrievable'^{injury and specialequitiesso as to seek} relief of injunctlon^{to restrain invocationof BGs''} .--

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PNRJ & JSRJ ICOMM Noa l OF 2022

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ll. Whether applicalt/SEw has wrongly invoked the .jurisdiction^{of this Court to snatch interimordcx arld} whether any cause of action has arisen within the territorial^jurisdiction of this Court.

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t Whether the respondent No.1/ERA and respondent No.2/BOA have violated tie status quo order dated 06.06.20!6 passed by this Court and whether BOA be permitted to seek to vacate the interi]rl order until it pu.ges itseu from contempt.

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Whether status quo order passed by this Court can be continued post-award even when termination of contract and invocation of BGs were held to be valid by thc Arbitral Tribunal.

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The learned single .Iudge after considering the material evidence on record and after hearing both the sides, dismissed the Arbitration Application taking note of the award passed by the Arbitral Tribunal dated 27-03-2021 more particularly or the Arbitral Tribunal held that invocation of BG's is va-lid, vacated the interim order dated 06-06-2016.

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Questioning the above said order passed by the learned singlejudge, the appellant filed the present appeal.

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L2. Sri Avinash Desai, learned counsel appearing on behalf of the appella,t vehemently contended that the status quo order dated 06.06.2O16 granted by this Court was intimated to ERA vide e-mail dated 10.O6.2016. BOA was also intimated about tlre status guo order by personal ribtice dated 1 1.06.2016. Inspite of having knou . _ -^.zledge of status"quo order, ERr{ and BOA

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PNRJ & JSRJ ICOMMA. Nd, L OI; 2022

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invoked the subject BG's. BOA made^{payment under ABG on} 20.11.2016 i.e., five months after interim status^quo order^was passed and payment under PBG was made on lO.lO.2Ol7 by BOA to ERA and they are liable for contempt for deliberately violating the orders of this Court.

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12.1 He further contended that ERA and BOA colluded and illegally encashed BG's under the guise of order dated l6.lO.2OL7 passed by the Federal High Court of Ethiopia. Infact, the Ethiopian Court was misled by ERA and BOA and stafus quo order passed by this Court was suppressed. ERA has not even appeared before this Court to answer the claim of SEW. BOA cannot be permitted to act as proxy to ERA and seek to vacate the interim order. A party violating the interim order cannot be heard until it purges itself from contempt. BOA is responsible for the present state of things as Bank Guarantee amounts were paid in violation of orders of this Court. BOA is trylng to achieve something indirectly, which ERA could not achieve directly.

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12.2 The learned counsel would further submit that the^., learned single Judge ought to have considered the contention tl , ,

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PNR' & JSRJ ICOMMA Nd 1 OP 2022

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of the appellant that this Court has jurisdiction to entertain the application under section 9 of the Act, as the appellant does not have any other remedy in law as per proviso to Section 2(21 of the Act and as amended in 2O15. The Court hearing the arbitral award under Section 34 of the Act only has the power to suspend the operation of the award and the said court has no power to pass further interim directions. Similarly, under the French Code of Civil Procedure, the Court of Appeal has no power to pass interim orders as claimed in the Arbitration Application No.54 of 2016 filed under Section 9 of the Act.

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12.3 The learned counsel for the appellant further contended that the arbitral tribunal has erroneously held that invocation of BG's was vaiid. Such conclusion is contrary to the frndings recorded by the arbitra-l tribunal in Para No's.223 to 225 of the award dated 27 .O7 .2021 . Though the SEW has made out a case for continuation of status quo order the same was not considered by the learned single Judge.

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L2.4 The learned counsel for the appellalt would submits that *:::' Respondent cannot be allowed to take advantage of.its

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PNR.J & JSR.J tcoMM,{ Nd. L Ot' 2022

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own wrong in paying the amounts under the Performance and Advance Bank Guarantees in violation of the orders passed by this court dated 06.06.2016. ERA has not appeared before this Court till today to answer the allegations of irretrievable injury, unjust enrichment and invocation of BG's in violation of order of this Court datedo6.O6.2o2l6.

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12.5 In support of his contention, the learned counsel for the appellant reiied upon the decision in ULTRATECH CEIIIIENT LIMITED W. RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM1 . He would urge tJlat Section 9 orders can be passed post award and pending challenge against the award as held in I. SUDERSHAN RAO v. EVERSHINE BUILDERS PRwATE LIMITED2 ., GAIL (INDIA) LTD. v. LATIIT RASAYANI PRTVATE LIMITED3 "' SAPIARISHI HOTELS P\if. LTD. v. NATIONAL INSTITUTE OF TOTIRISM AND HOSPITALITYA., and MEDIMA LLC v. BALASORE ALLOYS LIMITEDS.

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Sri Rathan Singh, learned Senior Counsel appearing for the second respondent contended that the Cor.rrts in India or at

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' 1:ot8;^{ts scc-zro} '^{zotz(o) aLt-:+:} 3 2014 SCC Online GUJ 14836 o zoig scc online Ts 1765 : (2019) 6 ALr 439 (DB) '^{MaNu/ws/os4olzozr}

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PNRJ & JSRJ ICOMMA. l{6. I O$ 2022

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any rate Courts at Hyderabad do not have territorial jurisdiction to entertain this application. No part of cause of action has arisr:n within the^jurisdiction of this Court. SEW is an Indian contractor. ERA is a State Entity 1n Ethiopia. BOA/Vacate Petitioner is a bank based in Ethiopia. SBI is a balk based in Hyderabacl. The contract was executed in Ethiopia. The project site is in Ethiopia. ABG and PBG were given through IIOA. Merely the because SBI issued counter BG to BOA, it would not give rise to any cause of action for instituting this arbitration application before this Court.

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13.1 The learned Senior Counsel contended that SEW has not rnade out any case for granting injunction to restrain ERA from invoking BG. There is no fraud or irretrievable injury alleged in the arbitration application. BOA was bound to honour the call for invocation of BG. If restraint orders are passed in matters relating to BG's without adhering to setfled principles of law, then entire global commercial transactions would collapse. BG is lifeline of commercial tralsactions. BOA does not have any say in the inter se disputes between SEW and ERA. The reputation ancl stakes of BOA are involved. In commercial transactions, banks are brought in to assure payment under

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PNR.I & JSRJ rcoMMA- Nd. I OF 2022

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BG's.

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13.2 The learned Senior Counsel for the second respondent also contended that the award d.tated. 27.07.2021 has been passed by the Arbitral Tribunal in France. Section 9 Petition can be invoked only to pass interim order for protecting assets before, during and after passing arbitration award. In view of the award dated 27.07.2021 being passed by the Arbitral Tribunal, the Arbitration Application No.54 of 2016 filed by the appellant has been rendered infructuous. The Arbitral Tribunal specilically held that invocation of BG's are valid as per findings at Para Nos. 221, 227 and 228. BG is an independent contract. He would further submit that the dispute relating to bank guarantees is governed by ICC Uniform Rules of Demand Guaranties. The Arbitral Tribunal recognized that money has been paid by BOA to ERA under ABG and PBG. Finding has been given by the Arbitral Tribunal that contract was validly terminated and encashment of BG's was valid.

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13.3 The learned Senior Counsel for the second respondent further contended that SEW was awarded lt cef:t+in -.- clairns, they did not exercise option of enforcing the award in any of the

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PNRJ & JSRJ fcoMMA. N6. I OF 2022

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countries either- in India or Ethiopia. An appeal was filed by SEW challenging the award dated 27.07.2021. Only the Courts in France have^{jurisdiction.} When, admittedly, the parties submitted themselves to jurisdiction of Courts in France, the Courts in other countries should refrain to entertain the disputes, as otherwise it would erode the faith in the system and have an adverse impact on the commercial transactions.

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13.4 The learned Senior Counsel for the second respondent further contencled that a suit was filed by ERA against BOA and as per order passed by the Ethiopian Court dated 27.07.2021, the BOA had to pay money under ABG's and PBG's to ERA. He further submitted that Section 9 petition merges with the final award and the learned single Judge had rightly dismissed the arbitration application by giving cogent findings and there is no illegality and irregularity, error in the impugned order.

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Having heard the learned counsel for respective parties, now the points that arises for consideration in this appeal are as follows :

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PNRJ & JSR.I ICOMMA. Nd. 1 OF 2022

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i) whether thi^s Court is hauing juri.sdiction to <:ontinue tte proceedings under section 9 of tLte Act ?

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iil uthetLer the appellant is entitl,ed for tLte relief as claimed in Arbitration Appltcation No.54 of 2O16 under section 9 of the Act, tulen the appeal filed by the appellant against Arbitral Autard is pending before the appellate court ? and

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iiil to what relief ?

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As per General Conditions of Contract, Clause 20.06

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provides for arbitration, which reads as follows:

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"2O.6 Arbitration

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20.6.1 Ang dispute betueen the Parties arising out of or in arutection uith the Contract not settled. amicobtg in acordane with GC Clause 2O.5 abow, and in respect of which tlrc DB's decision (if ang) has rat beome final and binding, shall be fnaLg settled bg arbttration- Arbitration shall be tnrulucted as follous:

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(a) Jot @ntrads with foreign q)ntradors, intematiorlal arbitratiory

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(i) with proeedings administered bg the hstitution designated in th.e Partianlar Conditiors, otr..d anduded. under tle rules of arbitration of sudt in-stihttion; or, iJ so specified in the Particular Conditions,

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(ii) internationol arbitration in awrdarux utith the arbitration rules of the United Nations C,ommission on Internatianai Trade Law^(JNCII:RAL); or (iii) if neither an arbitration institution or UNCITRAL arbitration rul.es is specified in tLLe Partianler Corulitbns, with proccedings administered bg the Internationai Chamber of Commerce (ICC), and u)nducted under tle ICC Rules of Arbitration; bg one or rlore arbitrators oppointed in ac$rdance uith the ,^{so,id arbitration rules.}

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Tle place of arbitration shall be the neutrql location specified in tlD Partiqtlar C.onditiorts, ond the ''arbitration shc,ll be anducted in tlrc larquage for <nmmunications withlaus of Emploger's @untry ..-n

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Admittedly, when the Arbitration Application No.54 of 2016 is pending before this court the Arbitral proceedings commenced and the arbitra] tribunal passed an award on 27-7-2021. In tire said award, the Arbitral Tribunal specifically held that invocation of Bank Guarantee is valid.

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The learned counsel for the appellant in this appeal also relied upon the very same judgments that were relied before the learned single Judge.

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The learned single Judge considered the law laid down by the Hon'lcle Apex Court in ULTRATECH CEMENT LTD. In ULTRATRcIT cEMENT LIMITED (1 supra) Supreme Court held as under

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"7. As 10 whether the orders passed by the different courts, which culminated in t}le two orders, extracted hereinabove, dated 13-12-2013 lMangalam Cemett Ltd. v. Rajasthan Rajga Vidgut Utpadan Nigan Ltd., 2013 SCC Online SC 13331 ard 14-3-2014 lMangalam Cement Ltd. u. Online SC 16921, would continue even a-fter the passing of the arbitral awaJd, in our considered view, would depend on thc nature of the prayer made by tl.e appellalt, when the application under Section 9 was filed, before tJle Court concerned. We have extracted hereinabove the prayer made by the appellant in its Section 9 application. A perusal thereof reveals that the interim injunction was sought "...till adjudication of the dispute arises between the parLies by appointing the arbitrator by the applicant as per.Clausc 9 ofthe agreement dated 15_ lO_2004;igned bv an,i l;g1v76.sn the appllcanl ald lhe respondenl. Da;in; or lnc award by thc arbrlrator, and also till entorccment o? the sard award...'. It is thcrefor p raye r m ad e uy r rr" ap pe r r an1 "u :.Tjs::ft jT :r1 ;, : ff iil :1.^{,:,y. first insrarce was} lill the .;f";.;;;;. #;;,J awa-rd It is undoubrecllv appaJent liom a perusal of

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Section 9 of the Act, extracted above that ttre enlorcement of the award can be effected only under Section 36 of the Act. The aloresaid stage has not yct emerged. The stage presently is of the interregnum, between the passing of the award, and the enforcement of ttre award under Section 36 of the Act.

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E. We are of the view that the prayer made by the appellant clearly included the period, after the pronouncement of the award by the Arbitral Tribuna-I. In tl.e above view of the matter, it is not possible for us to hold that the proceedings pending before this Court, have been rendered infructuous. In any case, it is now imperative for us to determine whether or not the impugned interim order, should continue I ill the proceedings under Section 34 of the Act (presently pending before the District Judge) are concluded. We are satisfied in directing that the appelfant shall, with effect from the date of t]le commencement of the arbitral award, pay for the fly ash taken by it from the respondent at the rate of Rs 245 per metric tonne (i.e. in consonance with the arbitral award), till the determination of the proceedings under Section 34 of fhe Act. We however cla,rify, that in case, for any reason, the a-rbitral award is set aside'or modified, as prayed for by the respondent Nigam, the appellant would be liable to pay the higher amount, as the respondent would have been able to procure, as disclosed by the auction already held in 201 1 (for the period with effect from 2012). Likeqiise, in case tJle appellant before this Court succeeds, and is held to be entitled to pay a lesser amount, the paj,.ment with e{Iect fron 2Ol2 would be regulated by the said determination.'

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As noticed by the Hon'ble Supreme Court the appellant prayer under section 9 application was comprehensive and therefore held that application flled before commencement of arbitral proceedings can still be perused.

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As compared to said prayer, the prayer sought in the

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Section 9 application herein is limited. It reads as under:

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Restrain Respondent No.l, its agents, Offrcers, Employees etc., by way of injunction from invoking the subject Bank Guarantee issued by the Respondent No.2 which was counter guaJanteed by

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Respondent No.3 on behalf of tJle ,petitioner herein, the cletails of which a-re as under :

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Bank Nafle	BarkCuergntee,Date& No.	I A-aountof Guarantee	ExpiryDate
Bank of Abyssinia Ethio		^{23-l r 2012}	stB 33,564,500.23
Bank of Ab]'ssinia Etiio	23.11.20t2	usD3543440.08	22.O4.20t7
Bank of Abyssinia Ethio	I	.O2.2013	E-rB 77,727,733.0O
Bank of Abyssirria Ethiopia	11-O2 20t3 EtOA/IBD/APGl006/2012	usD5,744,060.00	31.08.201(r

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Restrain Respondent No.2, its agents, oIlicers, employees etc., from honouring/en-cashing the subject Bank Guarantee issued to Respondent No.1 on behalf of the petitioner as stated in the prayer (1) above-

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Restrain Respondent No.3 its agents, officers, employr:es etc., from honouring/en-cashing the counter Bank Guarantee issued to Respondent No.2 for the petitioner herein above.

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Stay the operation of all furttrer actions pursuant to the notice of termination dated 20.05.2016, including aly coercive steps and encashment of bank guarantees issued on behalf of the petitioner by Respondent Nos. 2 and 3.

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Pass an ad-interim injunction directing the Respondent No.l to subrnit the proceeds of the a-forementioned Bank guarantees invoked (if already en-cashed) along with @ l8o/o p.a. from the date of encashment upto date of such retention by it, in the Registr,v of this Court, such proceeds may be deposited in interest bearing securities wittr a Nationalised Bank; :rnd

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Award costs of prosecuting this Application.

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In I. SUDERSHAN RAO (2 supra), the erstwhile High

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Court of {,ndhra pradesh held as under:

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"7. Tius, ahe first point to- be consideied is whether Section 9 of the Act has no applicati.. i" " "it""J." where the

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PNR.' & JSR.J ICOMMA Nd I OF 2022

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awa-rd is passed and consequently the,present AOP is not maintainable. Section 9 of the Act provides for grant of interirn relief by the Court arrd the object of ttris provision istoo well known to require any mention here. The openiog words of Section 9 read 'a pa-rty may, before or during arbitral proceedings or at any time after the ma]<ing of the arbitral award but before it is enforced in accordance with Section 36, apply to a Court" and the section ttren sets out various t54>es of interim reliefs which cal be sought by a party. It is clear tl:at the words "at any time after the making of the arbitral award but before it is enforced in accordalce with Section 36" clearly show that the interim reliefs stipulated in the said section can be sought even after the passing of the award but before it becomes enforceable.

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2O. In our considered view, proviso (a) is only a procedural devise to ensure that an application hled under Section 9 in a petition pending under Section 34 is conveniently disposed of as an application connected to such a petition and also to bring to the notice of the Court, if necessar]r, about the urgency in the matter arrd press for even an expeditious disposal of both the matlers. Rule 8 or Section 9 of the Act cannot however be construed as laying down that an independent application under Section 9 is not maintainablewhen a petition under Section 34 is pending.

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Coming to the argument of Sri Rarna-krishna Reddy on the third point, it is tlue that the arbitral Tribunal refused the relief of specific performance, but its awa-rd is under challenge in the application filed by tJle second respondent under Section 34 of the Act and that has still to be decided. It cannot be presumed at this stage that the award will be contrrmed by the trial Court. What should be noted is that whether the refusal of relief of specific performarrce by the arbitral Tribunal is right has to be decided by t}le Court- In such a situation, the tria.l Court carmot be faulted for exercising power under Section 9 to grant temporary injunction to preserve the disputed property till adjudication of the second respondent's petition under Section 34 of the Act No provision or precedential authority has been brought to oui notice to hold that^just because the arbitral Tribunal refused the rclief of specific^performance, the Court under Section 9 has no power to pass an order for preservation of the property though of-course that will be subject to the fina.l orders which may be passed by the Court in the^petition or application under Section 34 with respect to the, +Iyatd.-. _ --

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PNR.' & JSR"' ICOMMA. l'lro. I Ots 2022

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In GAIL (INDIA) LTD. (3 supra), the High Court of

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Guj arat held as under:

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"23.^'l'his court, respectfully, does not agree wit1l the view adopted by the Bombay High Court in the case of Drk Indie hn. Ltd. u. Mqharashtra State Etedncitg Generation Compang l-imited (supra) that the object and^purpose of an int erim measure aJter the passing of the arbitral award but b(:fore it is enforced is to secure the property,^goods or amount for the beneht of the party which seeks enforcement- In the opinion of this court, section 9 of the Act d,)es not draw any distinction between the^party who has succeeded in the arbitral proceedings ald a party who has firiled therein. Under the circumstances, either parqr o'ould be entitled to approach the court seeking an interim measure under section 9 of the Act. The contention that the respondent could not have availed of the bcneht under section 9 of the Act as the award already stood enforced, therefore, does not merit acceptance."

¶157

In SAPTARISHI HOTELS PVT. LTD. (4 supra) this Court

¶158

held as under:

¶159

"35. The afore-stated case law makes it clear that t}le Coun exercising power under Section 34 of the Act of 1996 is not restrained from interfering with the arbitral Award even by way of modification. It can modiry the Award, by sustaining it in relation to pa.rts thereof and setting it aside in relation to others, as long as such parts are severable. Therefore, the very foundational premise, which formed the basis for the decisions in DIRK INDIA PRMTE LIMITED and NUSSLI SWIIZERLAND,m., stands shal<en. Once it is accepted that the Court exercising power under Section 34 cal modi$ the Award, if warranted, as per the provisions thereof arld in the light of tj:e case law cited supra, the pa.rty whose claim was rejected during the aJbitral proceedings, as reflected in the hnal Award, cannot be left remediless (See SUiVIL VASUDEVA u. SUIVD/R GUPIA) during the pendency of the petition frled by such party under Section 34- It may be necessary for such party to seek interim measures of protection, as contemplated under Section 9- As rightty F,ointed out by the^(iujarat High Court in cNL (INDIA) rID., there is no distinction drawn, as per the language of Section 9, betw(cn a party \aho has succeeded in the arbitral proceedings as opposed to a party who has lost and bothrrrc equally entitted ro.invok; thJ provisions oia;";" 9, ev(.n ajrler passing of thc n"uf urtiti"f-a*Jb;;;f;, execution thereof. In this context, it may be noteJ tiat .- -;:11,r]1l1tinar Award is a trir nwa,JaJ;-,n;:;..,;. ,i@,u. uuce rr rs accepted thar there is a possibilrty ol- rhe

¶160

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I I

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PNR,J & JSI?.I ICOMMA, 116. ) OF 2022

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nature of the Award being chalged by exercise of jurisdiction by the Court under Section 34, it cannot be ruled out that a hil' Award may transform into al Award favouring one or the other pafiy- Be it noted that in the case on hard, both parties have filed petitions under Section 34 and they are^pending consideration. That being so, until the disposal of these pending petitions under Section 34, the appellants cannot be non-suited on the ground that the Award in question is a 'nil'Awa-rd, disentitling them from invoking tl.e provisions of Section 9.',

¶164

24. In MEDIMA LLC (5 supra), the High Court of Calcutta

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held as under:

¶166

"18. The other point of objcction taken by the award debtor pertains to non-avai.lability of the remedy under Section 9 in a post-award scenario in relation to a foreign award which isenforceable under Part l1 of the Act.

¶167

Is this argument legally tenable?

¶168

For tl.e above, the respondent relies on the language of Section 9, the relevant part of which is set out below:

¶169

"9. lnterim Measures, etc. by Crurt.-(l) A party may, before or during arbitral proceedings or at any time after the making of the arbitra-l a{ard but before it is enforced in accordance with Section 36, apply to a court ..."

¶170

l9. The language ".-. and an arbitrat award made or to be made..." in section 2(2) read witll the proviso mal(es it clear tiat Section 9 would apply in a post-awaid scenario subjectto the otier conditions of t}le proviso being satisfied. Second, the perceived gap between Section 9 so far as it mentions enforcement under Section 36 and the enforceability - recognition under Part II would defeat the very purpose of introduction of tl1e proviso to Section 2l2l if alJowed to magni& into a conflict. There is every chance that an award-holder of an arbitration which took^place outside lndia would be rendered remediless if prompt and effective interim measures are not^granted to the award- holder in the interregnum in relation to the assets of t}le award-debtor which are located in lndia. ln other words, if suitable interim measures are not granted to a foreign awardholder arld the award is made to^pass the tests for enforcement under Part^{II, t}le award-holde4rnay be} denuded of irs righrs- The act, together^{wittr thc amdfrtforrts.} intends to facilitate^quick resolution^{of disputes thmugh alternative} means. Hence, asking an award^holder to wait until the award is recognised ald enforced is^antithetical to the^very objective of the Act. The l,aw Commission in its 246th Report noticed the aioresaid as also t].e lack of an efficacious remedy io furtherance of thc award.

¶171

J'...

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lt may hence be said, and with good reason, that Section 9 read with the proviso to Section 2(2) would require a purposive constmction which would be in line with the intention of the framers for bringing in t.Ile proviso by the Amendment Act of 2016- The objective of the amendment was to make the proviso workable, not stultiryit by reason of a conflict with Section 9."

¶175

In DIRK INDIA PRIVATE LIMITED (6 supra), the

¶176

Bombay High Court held as under :

¶177

"13. Two facets of Section 9 merit emphasis. The first rclates to the nature of the orders that can bc passed under clauses (i) arrd (ii). ... Clause (ii) contemplates an interirn measur€ of pr()tection for: (a) the preservation, interirn custody or sale of any goods which are t-Ile subject-Datter of the arbltratioa agreeEeEt;^(b) s(--currng the amount in dispute in the arbitration; and^(c) the dctention, preservalion or inspection of any property or thing which is the subject-Dattes of tbe dispute in arbitration; ... ard

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(c) stLch othcr interim mcasure of protection as may appear to the Court to be just and convenient. The underlying themc of cach one of the sub-clauses of clause (ii) is the immediate and proxiaate nexus between tJle interim measure of protection arld the preservation, protection and securirrg of the subject-matter of the dispuce in the arbitral proceedings. In other words, tlle ordcrs that are contemplated under clause (ii) are rcgarrted as interim measures of protection intended to protect the claim in .rrbitration from being frustrated. The interim measure is intcnded to saJeguard the subjectmatter of the dispute in the course oI the arbitral proceedings. The second facet of Section 9 is the proximate nexus between the orders that are sought and t}le arbitra-l proceedings. When an interim measure of protection is sought before or during arbitrai proceedings, such a measure is a step in aid to the fruition of the arbitral proceedings- When sought after an arbitral award is made but before it is enforced, the measure of prote(:tion is intended to safeguaJd the fruit of the proceedings until thc cventual enforcement of the award. Here again the measure of protection is a step in aid of enforcement. It is intended to ensure that enforcement of the arva,rd results in a realizable claim and that the award is not rendered illusorv by dealings that s/ould put the subjectof the award beyond the pale of enforcement- .-.

¶179

Contextua-ljy, therefore, the scheme of Section 9 posrutates _an application for the grant ,f ,rr:-i|rt".lrn measure of protection after rle -it;il ;i ; ;;;;a award arld before it is en lorced for the benefit of the pa-rtv *- ^- whi.h "..k;';"f.;:;: t of the arzrd- An inie rim

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measure of protection within the meanilg of Section 9(ii) is intended to protect through the measure, the fruits of a successful conclusion ofthe arbitra.l^proceedings. A^party whose claim has been rejected in the course of the arbitral proceedings cannot obviously have arr arbitral awa-rd enforced in accordalce with Section 36. The^{object and} purpose of an interim measure after the passing of the arbitral award but before it is enforced is to secure the property, goods or amount for the benefrt of the party which seeks enforcement.

¶183

The Court which exercises^jurisdiction under Section 34 is not a court of first appeal under the^provisions of the Code of Civil Procedure. An appellate court to which recourse is taken against a decree of the trial Court has powers which are co-extensive with those of the trial Court. A party which has failed in its claim before a trial Judge can in appeal seek a^judgment of reversal and irl consequence, the passing of a decree in terms of the clairrr in the suit. The court to which an arbitration petition challenging the award under Section 34 lies does not pass an order decreeing the claim. Where ar arbitral claim has been rejected by the arbitra] tribunal, the court under Section 34 may either dismiss the objection to the a-rbitral award or in the exercise of itsjurisdiction set aside the arbitral award. The setting aside of an arbitral award rejecting a clai-rn does not result in the claim which was rejected by the Arbitrator being decreed as a result of the judgment of the court in a petition under Section 34. To hold t}rat a petition under Section 9 would be maintainable after the passing of an arbitral award at the behest of DIPL whose claim has been rejected would result in a perversion of the object and purpose underlying Section 9 of tie Arbitration and Conciliation Act, 1996. DIPUS application under Section 9, ifallowed, would result in the grant of interirn specifi.c performalce of a contract in the teeth of t]le findings recorded in tlle arbitra-l award. The interference by the Court at this stage to grant what in essence is a plea for a mandatory order for interim specifrc performalce will negate the sanctity arld eflicacy of arbitration as a form of alternate disputes redressal. What such a litigating partjr cannot possibly obtain even upon completion of the proceedings under Section 34, it cannot^possibly secure in a petition under Section 9 after the award. The object arrd purpose of Section 9 is to^provide an interim measure that would protect the subject-matter of the arbitral proceedings whether before or during the continuance of the arbitral proceedings ald even thereafter upon conclusion of the proceedings until the award is enforced. Once the award has been made and a claim has been rejected as in^the present case, even a successfill challengc to the award under Section 34 does not result an order decreeing the claim. ln thiS vicw 6i the matler, there could be no occasion to take recourse to Section 9. Enforcement for the purpose of Section 36 as a decree of the Court is at

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the behest of a person who seeks to enforce the award."

¶187

ln HINDUSTAN CONSTRUCTION COMPANY LIMITED' (7

¶188

suPra), the Supreme Court held as under:

¶189

'36. lnterpreting Section 9 of t}re Arbitration Act, 1996, a Division Bench of the Bombay High Court in Drk (ndia) (P) Ltd. v. Maharashtra Sfate Power Generation Co. Ltd. [Dirk (India) (P) Ltd. v. Maharashtra State Power Generation Co. Ltd.,2OL3 SCC Online Bom 481 : (2013) 7 Bom.CR 4931 held that : (SCC Online Bom para 13)

¶190

"13. ... The seconcl facet of Section 9 is the proximate nexus bet\rren the orders that ai'e sought anci the arbitral proceedings. When an interim measure of protection is sought before or during arbitral proceedings, such a measure is a step in aid to the lruition of the arbitral proceedings. When sought after an arbitral award is made but before it is enf,rrced, the mcasurc of protection is intended to safegua-rd the fmit of the proceedings until the eventual enforcement of the award. Here again the measure of protection is a step in aid of enforcement. It is htended to ensure t-llat enforcement of the award results in a realisable clairn and that the award is not rendered illusory by deri-lings that would put t]re subject of the award beS.ond the pale of enforcement."

¶191

In KANWAR SINGII SAINI's case (8 supra), the Supreme

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Court held as under:

¶193

"17. Application under Order 39 Rule 2-A CPC lies only rvhere disobediencc/ breach of an injunction granted or ordercomplained of was one that is granted by the court under Order 39 Rules 1 and 2 CPC, which is naturally to enurt during the pendency of the suit- However, once a suit is decreed, the interim order, if aly, merges into the final order. No litigant can derive aly benefit from mere pendency of case in a court of law, as the interim order always merges in the final order to be passed in the case alld if the case is ultimately dismissed, the interim order stands nullifi erl au tomatically.

¶194

(vid^.^l! sircar u. state of U.P.11993 Supp (2) SCC 734 : 1993 SCC (L&S) 896 : 09931 24 ATC 8321, Shiu Shanker u. U.p.SRZC[1995 Supp 12)^sCC 726 : l99s SCC ir,&S) lOlS : (1995) 30 ATC

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PNRJ & JSIdJ ICOMMA. No: I OF 2022

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3171, Arya Nagar Inter College v. Sree KumarTiwary (1997) 4 SCC 386 : 1997 SCC (L&S) 967 : AIR 1997 SC 30711 , GTC Industies Ltd. u. Unbn of India [(19981 3 SCC 376 : AtR 1998 SC 15661 and. Jaipur Municipal CotptL u- C.L. Mislva {(2OOS) 8 SCC 4231.

¶198

In STEEL AUTHORITY Of. INDIA LTD. (SAILI (9 supra),

¶199

the High Court of Delhi held as under:

¶200

"7. We are unable to appreciate this submission of learned senior counsel for t}Ie appetlant for the reason that as Mr. Dutt has rightly pointed out that should the arbitrator reject the claim petition, tNs order would automatically become a nullity and should the clairn petition be allowed, the said order will hold the fietd and the interim would merge in the final order."

¶201

In ULTRATETCH CEIf,ENT LIMITED's case (1 supra) interim order was passed in favour o{ ttre appellant on 31.O1.0214 wherein the appellant was aflowed to purchase fly ash from the respondent Nigamat Rs.25O per metric tonne. The arbitration award was passed on 18-02.2015 and supplementary award on 17-O5-2O15. Under the awards, the appellant was allowed to ca-rry away fly ash for another period of frve years from 2072 to 2Ol7 at the rate of Rs.245 per metric tonne and the said price was lower than the price determined under Section 9 (Rs.25O per metric tonne) of the Act. The Supreme Court held that the prayer made by the appellant included the period, after the pronouncement of the award by the Arbitral Tribuna-l and it is not possible to hold that tJre proceedings pending before the Court have been rendered infructuous. It was specifically observed by the Supreme Court in para 8 that tlle appellalt shall, with effect from the date of commencement of the arbitral award, pay for the fly ash taken by it from the respondent at the rate of Rs-245 per metric tonne (i.e. in consonance with t.Ile arbitral award), till the determination of the proceedings under Section 34 of the Act. As the arbitral award was in favour of the appellant it was held that interim order dated 31.01-2014 has not been rendered infructuous. In other words, l}le interim order was continued as it would be a step-in-aid to the hnal award/ enforcement of award and not in derogation of the award.

¶202

The judgment in I. SUDERSHAI{ RAO's,qgse (2 supra) is notapplicable to tfre facts of this casb. The,issue in the said case is not seeking relief of extension of pre-award interim order post-award. In the said cas4 t}.e claim of specifrc performance of contract of sale was rejected by award of the

¶203

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Arbitrat Tribunal dated^, 12.O1.2OO8. The claimants/ appellalt filed apptication under Section 9 of the Act for grant of temporaqr injunction restraining t.I.e respondents from alienating or creating third party interest over the application schedule property, pending disposal of the application under Section 34 of the Act challenging the award. [n that context, it was held by a learneci Division Bench of this Court that the Court under Section 9 of the Act has power to pass interim order even after the Arbitral Tribunal refused relief of specific performance when Section 34 application is pending-

¶206

tn GAIL IINDIAI LTD.'S case⁽³ supra), interim orders were passed in favou r o[ the respondent on 28.01.2014 and 29.O1 .'2074 pending arbitration proceedings. The arbitrator passed award on 3O. I O.2O 14 dismissing the claim of the respondent. The appellalt preferred an appeal challenging interinr order passed under Section 9 of the Act. The appelll1nt withdrew tht: appeal on the ground that it has become infructuous due to passing of the award by the arbitrator in favour of the appellant and thereafter, the respondent moved an application for interim relief pending arbitration application. tn para 23 of the^judgment, it was held by the Gujarat High Court that either party is entitled to approach the Court seeking an interim measure under Section 9 of the Act even if the party has failed in the arbitral proceedings.

¶207

The aforesaid view was subscribed by a learned Division Bench of this Court in SAPfARISHI HOIISIf Pt T. LTD.'s case (4 supra) In the said case final award dated O6.72.2O7a was passed by the Arbitral Tribunal rejecting the claim of the appellant and counter claim of the respondent. Both the appellant and the respondent filed applications under Section 34 of the Act cha.llenging the rejection of claims and counter claims respectively and it was lreld tJlat even if 'nil'award is passed, it does not disenlitle the party from invoking the provisions of Section 9 of the Act. The point involved in the UEDIMA LLC's case (5 supra) was whether remedy under Section 9 of the Act is available in post award scenario in relation to a foreign awar(t, which is enforceable under Part II of the Act and it was lreld that the remedy under Section 9 of the Act is available.

¶208

The judgments in I. SUDERSHAN RAO'S case (2 s}pra);^{GAIL (INDIAILTD.'S case(3 supra);SAPTARISHI} HOTELS P't/T. LTD.,s case (4 supra) and MEDIMA LLC,s ::::: l1."p.")^{are nor applicable tL the facts of the present} case irncl are of no trelp to the ,applicant/SEW trereini fn aff these four decisions. the oppii"otion'rna", i).ion'g of !!" !": lzoc,s -lited. qJter autard urcrs pqssed. - This Cowa ts not d.eqling with sucft issue ';-;;;" "?"]rn.

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Court is only concerned with continuation of interim order post-award and at the instance of the applicant/SEw, against whom award was passed, more particularly, in regard to relief of invocation of BGs.

¶212

The learned senior counsel for the 2.d respondent relied on a judgment of the Hon'lcle Supreme Court in WANDER

¶213

LTD. & ANR. V/s. ANTOX INDIA P.LTD⁶ ., wherein the Hon'ble Supreme Court held that on grant of injunction under Order-39, Rule-l of CPC at the first instance when the fact finding Court exercised its jurisdiction and rejected the claim of injunction, the first appellate court is not justified to interfere with the orders passed by the trial court.

¶214

The larger Bench of the Hon'ble Delhi High Court in NUSSLI SWITZERLAND LTD. V/s. ORGANIZING COMMITTEE CoMMoN WEALTH GAIIES in FAO (OS) 121 OF 2OI4 held as

¶215

follows :

¶216

We highlight the catchwords of Section 9 : A par-ty may, 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, apply to a court.

¶217

A plain textual reading of the above indicates that at any stage of the proceedings, before, during or after the making of the arbitral award (but before it is executed) a parqr to an arbitration agreement may approach the Court seeking interim measures. The word 'but' can either be a conjunction or a pmposition

¶218

6 1990 (Supp) SCC-727

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or a nourr or an adverb. In the textual setting in which tlle word trut'finds itself in the section, it is obwiously not used as a noun or an adverb, Whether the word .but'^{isread as a conjunction} or^{proposition would} mal<e no difference because iI read as a conjunction, the section would read : -A party may, before or during arbitral proceedings or at any time aiter the making of tl.e arbitral award and not before it is enforced" and if read as a proposition, the section would read : A party rnay, before or during arbitral proceedings or at any time aftL.r tlle making of the arbitral award except before it is enforced".

¶222

As noted by the Division Bench of the Bombay t{igh Court Section 2(h) of the Arbitration and Conciliation Act, 1996 defines "parry" to mearr "a party to an arbitration agreement''. And thus literally read the section could mean that arry party, irrespective of whether or not it has or can have an enforceable claim in its favour, can avail the remedy under Section 9 of the Arbitration and Conciliation Act, 1996.

¶223

In paragraph 12 and 13 of i* opinion, the Aui.sbn Betrch of the Bombag High Court hz.s oprned a-s uru)er:

¶224

" 12. Tun fd/:ets of Section 9 meit empha.sis. The frst rehates to tlLe nadoe of th-e ord.ers th.ot caft be pdssed under clantses (i) ond (ir). Ctouse (i) centenwlotes .rn order appointing o guardian Jor a uirar or a person of urLsound mind for tlle purposes of arbitral proceedtqs. Clause (ii) q)ntenel@tes dn interin measure of prolEction for: (a) the presenntio\ interim^q$todg or sole of ang go<x,s uthich are tlw subjecT-mttler of the arbitrqtion agreeme ; (bl securirq the anount in dispute in the arbitration; and. (c) the detcniion" presen)@tion or inspection of oilg proryrtg or thittg u.thich is th.e subject-mafter of the dispute in arbitr@tiory (d) on inteim injunction or tlle appointtuent of a receiver; aru1 (e) such other irieim mcasure of protection a-s fiaA apryor to tle C-ourt to be jt6t dnd d)nuenieflL The uderlyiq fhene of eoth one of tlle subclouses of clotae (ii) is thc imitedidte dnd proimate nenLs between the intcim fiLeosure of protectian and the preseruatiory protection and sea.Littg of the subject' matter of lhe dispute in tLLe arbitra.l pro(Eedings. bt otter utord.s, th.e orders that dre conteflV)lated utuler clause (ii) are regarded.a-s inteim m.easures of protedjon intended k) protect tfu. claim in arbitration from being frustrated. The interim mea.sure i-s intend.ed to safeguard the subject_ motter of the dispute itt the course of the arbitrol procet dutgs. n@ se(otu7 facet of Sec[ton 9 L, Lhe pronmolt, nents beltu,,err thp nrit4rs lfual Are Soughl b;; the .arbitral proceedin^s. Wten an inleim meas_ure ol :iff^{"':;:;:::iT{,:;;I:Ttri,,#ii:,tr::ri}

¶225

/ .g

¶226

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arbitral proceedings. When sought afrer aa arbitral auard i.s made but before it^i-s edorced" th.e neasure of protection is intended to sdfegudrd the fnlit of th-e pr<rceedings until the euendni enfor@ment of th.e^quard. Here agdin the measure of protection is a step in @id of enforcemenL ]t is intended lo ensure that enforcement of the awerd results tn d reaLisable ctdim and thdt th-e auard is nat retuTered ilhEory bg dealings that wouH^put the subject of the auard begonll the^pale of enforcem-ent. Now it i.s in this backgrounrl that it is necessary for tle Court b inparl a purposirc inteq)retation to the m.eaning of tle expression "dt dng tit E ajler the fiakiq of the arbitrdl award. but before it is enforced in otrnrdance with section 36". Under Section 36, an orbitral award can be enfored. under th.e Code of Ctvil Procedure tn the som.e trlortner as if it uere a decree of the Coun. Tltp dtbitJaj award can be enforced wh.ere th.e time for moking ot applicatiort to set aside tle arbitral aDard und.er Sectian 34 lrus expired or in the etenl of such an applit:otion havtng been ma.de, tt hli.s been refirsed.. Th.e enf,or@nert of an au.tarcl enures to the beneft of th.e partA u.)ho has sea.red an awdrd in tle arbitra) proceedings- Tltrtt is uhA tte enforceabilitg of an auard under Secabn 36 rs juraoposed in the codert of tuo tim.e fram-es, the fvst betng where an appliclation for setting aside an arbitro) award hrts expired dnd tle second ut@re an applbation for^{setting q.stde qn qrbitral awerd was mo.de but uas} reftsed. The enforceabilitg of an ou.tord, in other u.nrds, i.s defned u.tith reference to tle failure of lle otl@r side to fle^{dn opplication} for^{setting qside the award Loithin the} stbukated tim.e limit or hauing f)ed. sudt an application h.o.s failed b establi-sh a ca-se for setting o.side ahe orbitral auard.- Once a challenge to th.e .rbitral duard. has either failed.^{under kction 34 hauiqbeennade urithin tle} stipuloted period or u.)hen no oppltctttion Jor setting o,side the arbitrol au.nrd hns been mdde u.,ithin time, the arbital award betnmes enforceobte at the behest of the panA for whose bervfit th.e award enures. C-antertuq)lg, tl,.erefore, tlle schene of Secti,n 9 postulates an application for the gra.nt of an inteim mea.sure of protectian after th.e nakitrg of an arbitrql award and before it i.s enforc-ed for the beneft of the pqrtg uhich seeks en{or(Ement of t}e alt)ord. An interim meo.sure of protection within the meaning of kction 9(ii) is intetuled to protect tLuough the neasure, tle fruils of a su<:tcssftl con *).sia'r of the orbitrdl proceedhgs. A partA wL@se clttim has been rejected in the^(nurse of the .trbitral prcceedings^(nnnot obttiouslg fuate an^{qrbitral quard.} enforced in accordance utth &ction 36. TlLe obkct otuT purpose of an uttenm measure afur the passing of the erbitral^qword but before it i,s enforced is to secure th.e propetTg, good.s or dmount fot the bercf'Lt of th.e partg ta hich seek-s enforcement.

¶229

Tt@ CourT uhich exercises jurisdiction under Section 34 i.s not a;.court of frst appeol under ttLe prouis{ons of the Code of Ciuil Procedure. An appelllrte court to whbh recoursa i.s taken agafutst a decree of the trial Court ho.s pouers uhich^qJe co extpnsiue uith tllose

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PNR.I & JSRJ TCOMM Nri: 7 OF ,oD

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oJ the triol Court. A partlt tohich ho.s failed in its claim before a tial Judge can in appeoJ seek a judgment of reuersol arul in consequ.errce, the po.ssing of a decree in temls of tle cktim in tfui suiL The coutt ta which dn arbitratioft petition cfuzllertging the a uard under Section 34 lies d.oes not po.ss an order decreeing th.e daim. Where ott arlitral cloim ha^s been rejected bg the arbitral lribunqf, the court under Section 34 mag either d.ismiss the oblection to the orbitral au.)ard or in the exerci-se of its jurisdiction set aside the arbitrql award- The setting aside of on^qrbitrol auard rekcting^q daim does tat result in th.e ckim uhich uq-s rejected bg th.e ArbitratDr being de<reed a-s a resuh of the^judgment of tle^q)urt in a petition uruTer ction 34. To how that^q petition under Sectiorr 9 wouA be maintaitu)ble afier the po-ssing of an arbitrdl award at the bellest of DIPL whose daim hos been reie.cted urould result in a peruers rn of the obiect and purpose wulerlying &ction 9 of the Arbitration orul^{(:oflciliotton} Act, 1996. DIPL'S applicalion under Section 9, if alloued, uxtuld resu)t in the gront oI inleitn specific perfonnonce of a^qrntract in the teetlt of the Jindittgs rarrded in the arbitral du.)ard. The inlerferen!:e bg the^()rurt at thi-s stage to grant whot itt essenoe rs a plea Ior a marulatory order for interim specil-tc perfomdnce u'ill rulgate th.e san titg and effcacg of wbitrattott o.s a fonn of allemate disrytes redressal. What such a litigating porlg con tot possiblV obtail euen upon tnmpletion of the prd:eedings ulder Section 34, it contu)t possiblg secu: in a petitian under Section 9 afrer the^q.uqrd- The obi2ct and. purpose of *ction 9 i-s to provirie an intcim m.eo,stre tlut uloukl probct tle stbjed-rnatler of the arbitrd proteedings uhether before or during the continuance of th.e arbitrqt proceediqs and euen tlereajler upon andstsion of tle [email protected] rlrttil the auard. is enforccd-^()n!z th.e auard has been nade and. d clain has been rejected as in lhe present case, eDen a. su(Eessftl challenge ta th.e &wdrd under Section 34 does rat result dn order dec:reehg the claim. In thi-s uiew of the tatter, there^(pud be no occasion to take rdnurse to *ction 9. Enfor@rnent for lle purpose of kction 36 as a d.ecree of thz C-ourt i:s at th.e beLLest of a person wlo seeks 1o enforce the au.tard.D

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While considering the judgment of the Honlele Apex Court and other High Courts, the larger Bench of the Hon'lcle Delhi High Court specifically held that proceedings under Section 9 of the Act, 1996 seeking interim measures post award was not maintainable.

PNRJ & JSRJ ICOMMA No t OF 2O)2

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We have examined the tenability of the^grounds of appeal, documents placed on record, rival contentions of the parties and the judgments relied upon by them. The records clinchingly show that the issue involved in this appeal is in respect of invocation of the bank guarantee only, which is also the subject matter in arbitral proceedings. Considering the entire documentary evidence on record and upon hearing the respective parties, the Arbitral Tribunal gave specific findings in Para Nos.163, 227,288 in the Arbitral Award holding that invocation of ABG's and PBG's were lawful. Questioning the said Arbitral Award, the appellant has already filed an appeal before the appellate court and the same is pending. When the appeal is pending before the appellate court and the same is ceased by the said appellate court, the appellant is not entitled to seek relief under Section 9 of the Act. If any order is passed under Section 9. of the Act, it amounts to modification of the award passed by the Arbitra,l Tribunai. In view of the same, the appellant is not entitled to seek continuation of the relief sought in Arbitration Application No.54 of 2016 to restrain the respondents from invoking the bank g!.r ararl te e under law. 33. In view of the foregoing reasons ina *r. findings recorded

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PNR.J & JSR.]

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ICOMI\14. No I OF 2O2?-

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by the learned single Judge, we do not find any illegality in the impugned order that calls for indulgence of this court. The learned single Judge has dealt with the issues involved in the Arbitration Application No.54 of 20 16 meticulously, assigned reason lucidl-v and dealt with comprehensively and in our view the findings are based on sound reasoning. We do not find any merit in the ap1;eal and this court afhrms the findings of the learned single Judge and accordingly the appeal fails and the same is dismissed without costs.

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As a sequel, miscellaneous applications pending if any, shall stand disposed of.

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Sd/. K. SRINIVASA^RAO JOINT REGISTRAR c-1,

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//TRUE COPY//

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SECTION^OFFICER

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One Fair Copy^to the^{Hon'ble Sri JusticeP. NAVEEN RAO} (For His LordshiPs^{Kind Perusal)} One Fair Copy^to the^{Hon 'ble Sri Justice J. SREENIVAS RAO} (For His LordshiPs Kind^Perusal)

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