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2005 (7) TMI 702

OMP No. 382/2003 and is No. 9853/2003 - Dated:- 8-7-2005 - R.C. Jain For the Appellant: M.S. Vinaik, Adv For the Respondents: P.K. Bansal, Adv. JUDGMENT R.C. Jain, J. 1. The petitioner has filed this petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act') praying a direction on the PWD of Rajasthan State to release a sum of ₹ 1.33 crores, out of a total escalation of ₹ 4.51 crores in favor of the petitioner upon the petiti .....

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e satisfaction of all concerned and receiving the payment from the Public Works Department of Rajasthan Government, the respondent withheld the payment of certain bills of the petitioner in regard to escalation amount. The petitioner invoked the arbitration agreement for resolution of the dispute. Arbitral Tribunal is presently looking into the claims of the petitioner and certain counter claims filed by the respondent. According to the petitioner the respondent is likely to receive a sum of  .....

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objections to the effect that the petitioner has filed the present petition by intentionally suppressing material facts in regard to filing a similar and identical petition under Section 17 of the Act before the Arbitral Tribunal with a similar prayer which was dismissed by the Arbitral Tribunal on 8.9.2001; the petitioner has not challenged the said order of the arbitral tribunal and has filed the present petition by suppressing this and other material facts in regard to respondent having been .....

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r. 5. In the rejoinder, the petitioner has controverter the objections and pleas raised in the reply and has reasserted the averments and allegations made in the petition. 6. I have heard Mr.M.S. Vinaik, learned counsel representing the petitioner and Mr. P.K. Bansal, learned counsel representing the respondent at length and have given my thoughtful consideration to their respective submissions. 7. Before dwelling on the merits of the petition, it is pertinent to notice that before filing the pr .....

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d the respondent was, Therefore, constrained to invoke the bank guarantee furnished by the petitioner. It was denied that the petitioner was entitled to any kind of protection or interim measure as sought for by him in the application under Section 17 of the Act. After hearing the parties, the Arbitral Tribunal disposed of the application of the petitioner under Section 17 of the Act by an order dated 8.9.2001 which reads as under: "The claimant has sought an injunction under Section 17 of .....

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if granted would put the Claimants on priority over nationalised banks F.I.s and other secured creditors. 7. A more efficacious remedy is available to the Claimant under Section 9 of the Arbitration Act whereby they can approach the Court directly. The application is thus dismissed.' 9. Admittedly the order dated 8.9.2001 passed by the arbitral tribunal was not challenged by the petitioner through any appropriate proceedings and, Therefore, the same shall be deemed to have acquired finality. .....

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ith an identical or similar prayer and the same having not found favor with the Tribunal but also failed to disclose about the respondent having been declared a sick company within the meaning of Sick Industrial Companies (Special Provisions )Act,1985 {SICA}. Therefore, for this reason alone this Court must hold that the petitioner has disentitled itself to an equitable relief like the one sought in the present petition. Had the facts in regard to the proceedings under Section 17 of the Act take .....

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hit by the provisions of Section 22 of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA}. It is not disputed that the respondent-company is a sick company, Therefore, any legal proceedings against the respondent shall be governed by the provisions of the SICA Act more particularly by Section 22 of the said Act. The question as to whether a sick company can be subjected to any distress proceedings or restraint order has been considered by the Supreme Court and various High Cour .....

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ld not have conceived of all possible coercive measures that may be taken against a sick undertaking. Section 29 of the 1951 Act permits coercive action against the defaulting industrial concern of the type which would be taken in execution or distress proceedings, the only difference being that in the latter case the concerned party would have to use the forum prescribed by law for the purpose of securing attachment and sale of property of the defaulting industrial concern whereas in the case o .....

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the marginal note." 11. In support of his contention that despite a company having been declared sick, the legal bar envisaged under Section 22(1) of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA} would not apply to the proceedings seeking interim relief. Mr. Vinaik has placed reliance on a Single Judge decision of this Court in the case of Mafatlal Industries Ltd. & Anr. Vs . Mahanagar Telephone Nigam Ltd. 99(2002)DLT204 . On the basis of the facts of that case, t .....

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the petitioner has been able to make out a prima facie case entitling him for relief claimed by him it may be noticed at once that the relief sought by the plaintiff is in the nature of attachment before judgment or pre-award attachment. No doubt that such a pre-award attachment in arbitration is common to many legal systems. In French law it is known as saisie conservatoire which literally means a 'conservative seizure' or 'a seizure of assets so as to conserve them for the creditor .....

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do so to cause obstruction or delay in the execution of any decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property." 13. It is well led that an order of attachment before judgment is a drastic remedy and the power has to be exercised with utmost care and caution as it may be likely to ruin the reputation of the parties against whom the power is exercised. The Court must act with utmost circumspection before issuing an orde .....

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ion and completion of the work. It is urged that the petitioner is not likely to succeed in his claims and in any case the Arbitral Tribunal has yet to adjudicate on those claims and, Therefore, it is wholly pre-mature for the petitioner to invoke the provisions of Section 9 for relief of far-reaching consequence. It is not disputed that the Arbitral Tribunal is still in the process of adjudication of the claims and counter claims of the parties and has yet to make its Award. Therefore, at this .....

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