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Uppal Eng. Co. (P) Ltd. Versus Cimmco Birla Ltd.

2005 (7) TMI 702 - DELHI HIGH COURT

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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1992. The respondent in turn engaged the petitioner and some other sub-contractors to execute the said work. Petitioner was to do the work of widening, strengthening and reconstruction of road for a length of 77 km, in two stretches, one from km 147 to km 108 and the other from km 8 to km 38 which the petitioner completed to the entire satisfaction of the respondent and the State of Rajasthan and a certificate to that effect was issued. It is alleged that despite the completion of the work to th .....

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377; 4.51 crores from the State of Rajasthan towards escalation costs out of which petitioner's share comes to ₹ 1.33 crores which the respondent is bound to pass on to the petitioner. That in case the amount is not passed on to the petitioner or preserved either with the State of Rajasthan or in this Court, the petitioner is likely to suffer irreparable injury as he apprehends that the respondent might misappropriate the share of the petitioner in the escalation amount to be received .....

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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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laims arising out of the same contract before the Arbitral Tribunal and the claims and counter claims are receiving the consideration of the Arbitral Tribunal and, Therefore, it is wholly premature for the petitioner to claim any protection or interim measure within the meaning of Section 9 of the Act. It is denied that any irreparable injury would be caused to the petitioner and on the other hand it is pleaded that balance of convenience lies in favor of the respondent rather than the petitione .....

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esent petition, the petitioner had moved an application under Section 17 of the Act before the Arbitral Tribunal praying for interim orders for the preservation and protection of subject matter of arbitration. In the said application the prayer was as under : "It is Therefore most respectfully prayed that this learned Arbitral Tribunal may be pleased to order and direct the respondent to refrain from appropriating the payment of ₹ 5.88 crores approximately (or such other amount whethe .....

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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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is yet to establish its claim. 2. The sum sought to be secured is a futuristic asset. 3. The claimant's application suffers from latches as the Claimant waited for 4 years to seek the remedy. 4. Such an injunction would serve by way of a 'distress' order and as such vocative of Section 22 of the SICA. 5. By passing such an order the Tribunal would appropriate the function of BIFR and put hurdles in the path of a possible reconstruction scheme of the Respondent company. 6. The order .....

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Surprisingly, despite of those happenings and proceedings before the Arbitral Tribunal, the petitioner while filing the present petition has not made even a whisper about those proceedings and the order made by the Arbitral Tribunal. This omission cannot be explained on any other hypothesis except that the petitioner wanted to deliberately suppress the facts about filing similar proceedings before the arbitral tribunal and having suffered an unfavorable order. The Apex Court and various High Co .....

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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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oner and, Therefore, it must be preserved and protected. It is further contended that if the amount is paid to the respondent it might be misappropriated by the respondent-company which has already been declared a sick company. On the other hand Mr. Bansal, learned counsel representing the respondent has contended that the petitioner is not entitled to continuance of the restraint order dated 25.9.2003 because such an order besides being prejudicial to the interests of the respondent is directly .....

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ts in a number of decisions. In the case of Maharashtra Tubes Ltd. Vs. State of Industrial & Investment Corporation of Maharashtra Ltd. and Another [1993]1SCR340 the Apex Court considered the scope and interpretation of Section 22 of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA} and laid down as under: "The purpose and object of suspension of proceedings etc. under Section 22(1) of the 1985 Act is to await the outcome of the reference made to the BIFR for the reviv .....

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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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matter any other creditor to obtain the consent of the BIFR or, as the case may be, the appellate authority to proceed against the industrial concern. The law has not left them without a remedy. The expression 'proceeding' in Section 22(1) must be widely construed. It cannot be confined to legal proceedings understood in the narrow sense of proceedings in a court of law or a legal tribunal for attachment and sale of the debtor's property, notwithstanding the use of that expression in .....

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he learned Single Judge has held that the bar or embargo envisaged under Section 22(1) of SICA apply to such disputes included in sanctioned scheme and that respondents apprehension that any future claim against the petitioner would be barred under Section 22(1) of SICA was misconceived and devoid of merits. In the opinion of this Court, the said view was taken on a very peculiar set of facts and circumstances of the case and on a plea sought to be raised by the MTNL against the sick company and .....

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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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ment' is contained in Order 38, Rule 5 to 13 in the First Schedule to the Code of Civil Procedure. Before a person is entitled to an order of attachment before judgment Rule 5 requires the plaintiff to prove that the following circumstance exists: (i) the defendant is about to dispose of the whole or any part of his property. (ii) the defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court; (iii) the defendant is intending to .....

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r of attachment and unless it is clearly established that the defendant, with intent to obstruct or delay the execution of the decree that my be passed against him, is about to dispose of whole or any part of his property. An attachment before judgment is not a process to be adopted as a matter of course because the suit is yet to be tried and the defense of the defendant is yet to be tested. At that juncture the relief which is extraordinary, could be granted only if the conditions for its gran .....

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