Arbitration Case No. 1 of 2023 · The High Court
Case Details
IN THE HIGH COURT OF JHARKHAND AT RANCHI Commercial Appeal No. 20 of 2023 --------- M/s. Raasi Refractories Ltd., H. No. 14-145/9, Kodandaramnagar, Near Sharda Talkies, Sarrornagar, P.O. Saroornagar, P.S. Saroornagar, Hyderabad-500060 Telangana, its General Manager (Marketing) Mr. Deepak Srivastava, son of late S.P. Srivastava, permanent resident of Sai Balaji Enclave, Flat No. 204, Swatantrata Nagar, Krishnarajpuram, P.O. and P.S. K.R. Puram, Dist. Bengaluru- 560036, Karnataka. through Versus M/s. Steel Authority of India Ltd., Ispat Bhawan, Lodi Road, P.O. Box 3049, P.O. & P.S. Lodi Road, New Delhi-110003 and its operational plant being the Bokaro Steel Plant, P.O. & P.S. Bokaro Steel City, Jharkhand-827001. …… Appellant ------ …… Respondent CORAM : HON’BLE DR. JUSTICE S.N. PATHAK HON’BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY For the Appellant For the Respondent ------ : Mr. Aniruddha Bhattacharya, Advocate Mr. Anupam Anand, Advocate Mr. Arnav Raj, Advocate Mr. Pranav Kumar, Advocate : Mr. Indrajit Sinha, Advocate Mr. Ankit Vishal, Advocate Ms. Sneh Singh, Advocate ------ 06/02.09.2024 This appeal has been filed against the order dated 18.09.2023, passed by learned District and Additional Sessions Judge-I-cum- Presiding Officer, Commercial Court, Bokaro in Arbitration Case No. 1 of 2023, whereby the learned Court has been pleased to reject, on contest, the application filed by the appellant seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act, 1996’). 1 Arguments of the appellant.
Facts
2. While giving the background of the case, Mr. Anirudha Bhattacharya, learned counsel appearing for the appellant has submitted that vide Letter of Acceptance issued by the respondent, an agreement was entered into between the parties on 27th March, 2018 for supply of 42 sets of “130 T steel ladle Refractory set for SMS-I”. Out of 42 sets of steel ladles, the appellant has supplied only 6 sets and no payment for supplied articles was made to the appellant. So far as the remaining supply is concerned, the respondent had issued risk purchase notice
Legal Reasoning
a) Prima facie case; b) Balance of convenience; & c) Irreparable loss and injury. 14. As far as prima facie case is concerned, learned Court has considered this aspect of the matter and has recorded that it is admitted by the Appellant that till the month of March, 2019, the Appellant was able to supply only 6 sets of steel ladles out of 42 sets and failed to supply the rest number of ladles inspite of repeated opportunities given to it. In this backdrop, the learned Court recorded that the Appellant had not come before the Court with clean hands as the Respondent was a Government Company and one of the largest producer of steel and any order of injunction against such companies may lead to delay in infrastructure projects. The learned Court was also of the view that Rourkela Steel Plant was a necessary party as the deduction was made towards risk purchase action under a Purchase Order of a different contract being executed by the Appellant at Rourkela Steel Plant and also recorded that the Appellant had not come before the Court with clean hands and had filed the petition only to deprive the Respondents of their legitimate rights. Thereafter, the learned Court recorded that the Court did not find prima facie case in favour of the appellant. As far as the point regarding balance of convenience is concerned, the learned Court recorded that it was an admitted fact that the Appellant did not comply with the purchase order; it was also an admitted fact that writ petition was filed by the Appellant being W.P.(C). No. 3699 of 2019 which was disposed of vide order dated 17.09.2019 giving liberty to the Appellant to invoke Arbitration 6 Clause and take necessary steps in accordance with law, but the petitioner did not invoke the Arbitration Clause to get the dispute resolved. In the aforesaid background, the learned Court was of the view that the Appellant could not establish the balance of convenience in their favour and further recorded that the Appellant was in continuous default in making supply. While considering the 3rd elements i.e. irreparable loss and injuries, the learned Court observed that the Appellant would not suffer any irreparable loss and injuries and recorded that loss can be compensated in terms of money and that the prime purpose of Arbitration & Conciliation Act was to resolve the dispute between two parties. The Court was of the view that when there is already an agreement between the parties, both the parties should be given an opportunity to place their submissions. After having recorded and considering the aforesaid three elements i.e. prima facie case, balance of convenience and irreparable loss and injuries, against the Appellant, the Court refused to grant relief to the appellant under Section 9 of the aforesaid Act, 1996. 15. From perusal of the entire records and considering the arguments advanced on behalf of the parties, it is crystal clear that the aforesaid three ingredients are not at all satisfied by the appellant in the present facts and circumstances of the case. These three ingredients were well discussed by the learned Court while considering the case of the appellant and consequently refused to grant relief under section 9 of the aforesaid Act of 1996. 16. The finding of the learned Court alleging that Appellant had not come with clean hands was primarily in the backdrop of the fact that the Appellant had not completed the supply and had supplied only 6 sets of steel ladles out of 42 sets inspite of several opportunities. As far as the finding of the learned Court that Rourkela Steel Plant of the Respondent was a necessary party is concerned, the same may not be of much relevance in view of the fact that Steel Authority of India 7 Ltd. (SAIL) was represented through its Registered Office and even Rourkela Steel Plant was an establishment under the Steel Authority of India Ltd. However, such finding does not have a material bearing in the present case considering the fact that at the time of filing of the petition under Section 9 of the Act, 1996, an amount of Rs.53,72,408.28 was already recovered by way of adjustment and it is an admitted fact that thereafter, the remaining amount has also been recovered by way of adjustment. The Appellant had approached before the learned Court seeking a direction upon the Respondents to return the amount of Rs.53,72,408.28 and as of now, the remaining amount have already been realized by way of adjustment. 17. This Court is of the considered view that there is no question of any direction to return the amount which has already been realized by way of adjustment and the remedy would lie through Arbitration. The argument of the Appellant that the entire amount which has been recovered through adjustment is illegal and that such recovery was itself barred by limitation, is essentially a mixed question of facts and law, which would require adjudication by the learned Arbitrator and it cannot be said that recovery was barred by limitation. 18. As far as the element of irreparable loss and injuries is concerned, the learned Court has rightly held that there was no element of irreparable loss and injuries as the amount which has been recovered through adjustment can certainly be compensated in terms of money. 19. Admittedly, the amount, which has been recovered in connection with the risk purchase notice can certainly be considered through arbitration in accordance with law. This Court is of the considered view that at this stage the argument raised by the learned counsel of the appellant that recovery / adjustment of amount relating to risk purchase was barred by limitation, cannot be adjudicated under Section 9 of the Act, 1996 and such issue require adjudication . The fact remains that the entire amount has already been recovered 8 through adjustment and there can be no order of refund of the amount at this stage. 20. In totality of the facts and circumstances, the appellant having failed to satisfy this court with regard to the basic ingredients for grant of relief under Section 9 of the Act of 1996, this Court finds no reason to interfere with the impugned order. 21. Accordingly, this appeal fails and is hereby dismissed. 22. Let the records of the Arbitration Case No. 1/2023 be sent to the Court concerned at the earliest. (Dr. S. N. Pathak, J.) (Anubha Rawat Choudhary, J.) R.Kr./ Kunal 9
Arguments
on 14.06.2019 for amount of Rs.90,52,432/-. Learned counsel submits that despite having raised the bill on account of risk purchase, no recovery was made and the appellant also did not make any demand for the payment of 6 sets which were supplied by the appellant. However, after expiry of more than 3 years from 14.06.2019 (the date of risk purchase notice), an amount of Rs.53,72,408/- was deducted from another contract which was being performed by the appellant at Rourkela. 3. With regard to the action of the respondent, learned counsel appearing for the appellant submits that the respondent could not have raised the demand after expiry of 3 years from 14.06.2019 and therefore, the entire action of the respondent is ex-facie barred by limitation. Learned counsel by referring to the impugned order has submitted that the learned Court has taken into consideration the fair disclosure of the appellant that only 6 sets of steel ladles were supplied and while recording so the Court has erred in law in upholding that the appellant had not come with clean hands, rather, such disclosure of supply of only 6 sets indicates bonafide on the part of the appellant. 4. It is further submitted that learned Court erred in arriving at the conclusion that the authorities of the respondent at Rourkela were 2 necessary party in the proceeding. It is submitted that there was no occasion to make authorities of the respondent at Rourkela as party in the proceedings when the matter was filed under Section 9 of the aforesaid Act of 1996 which was arising out of contract between the parties before the learned Court. It was also submitted that there was no occasion to make party unit-wise as respondent-company was representing both the Units at Rourkela as well as Bokaro. It is submitted that the learned Court has further taken into consideration that inspite of disposal of the writ petition way back on 17.09.2019 being W.P.(C). No. 3699 of 2019, appellant did not take any steps for invocation of arbitration. The learned counsel submits that appellant has already invoked arbitration clause and it is the respondent who has not appointed Arbitrator on its behalf so far and the appellant has yet to take steps under Section 11 of the aforesaid Act, 1996 for the purpose of appointment of an independent Arbitrator. Learned counsel submits that till an Arbitrator is appointed, the appellant was entitled for interim relief but by the impugned order, the learned Court has rejected the same and hence, the present appeal has been filed. Arguments of the respondents. 5. Learned counsel appearing on behalf of the respondents, on the other hand, while opposing the prayer of the appellant, has submitted that the entire amount arising out of risk purchase notice on 14.06.2019 has already been adjusted from the contract works at Rourkela. He has also submitted that once the amount has been adjusted, there can be no question of any refund to the appellant. 6. Referring to the reliefs, as prayed for by the appellant at the time of filing of the arbitration case under Section 9 of the Act, 1996, it could be gathered from relief no. (c) that an amount of Rs.53,72,408.28 was already recovered out of Rs.90,52,432/- and it is submitted that so far as the remaining amount is concerned the same has already been adjusted. 3 7. Learned counsel has further submitted that the issue as to whether the amount could have been adjusted arising out of risk purchase notice on 14.06.2019 has to be taken care of by an Arbitrator and this opportunity granted by this Court in the writ petition being W.P.(C) No. 3699 of 2019 has not been availed by the appellant. 8. Learned counsel submits that considering all the aforesaid aspects of the matter, the relief sought for by the petitioner under Section 9 of the said Act of 1996 has rightly been rejected by the learned Court. Rejoinder of the appellant. 9. Learned counsel for the appellant, in response, does not dispute that the entire amount has been adjusted by the respondents. Findings of this court. 10. After hearing the parties and given the aforesaid background, this Court finds that the appellant had filed the arbitration case under Section 9 of the said Act for the following reliefs: - a) An order of injunction restraining the respondents, its men, agents, servants and/or assigns from recovering any amounts whatsoever from the petitioner in terms of the Purchase Order dated May 3, 2018; b) An order of injunction restraining the Respondents, its men, agents, servants and/ or assigns from acting in furtherance of the risk-purchase clause for recovering the amount of Rs.90,52,432/-; c) An order of mandatory injunction (Mareva Injuction) directing the Respondents, its men, agents, servants and/or assigns to return the amount of Rs.53,72,408.28/- (Rupees Fifty Three Lakh Seventy Two Thousand Four Hundred and Eight Rupees and Twenty Eight Paise) as illegally deducted from the Rourkella PO to the petitioner; d) Without prejudice to the aforementioned, as an alternative to prayer c) an order of mandatory injunction directing the Respondent, its men, agents, servants and/or assigns to deposit the amount of Rs.53,72,408.28 Rupees Fifty Three Lakh Seventy Two Thousand Four Hundred and Eight Rupees and Twenty Eight Paise) as illegally deducted from 4 the Rourkela PO with this Learned Court in an interest bearing account, till adjudication of the disputes and leave be given to the Petitioner to withdraw the same subject to furnishing a requisite security; e) An order of injunction restraining the Respondent, its men, agents, servants and/or assigns from withholding any dues of the Petitioner under the PO or any other purchase order or any other contract towards the illegal demand of risk purchase amount of Rs.90,52,432/- (Rupees Ninety Lakhs Fifty-Two Thousand Four Hundred and Thirty-Two); f) An order of mandatory injunction directing the Respondent, its men, agents, servants and/or assigns to release all payments due and payable to the Petitioner under the PO including the sum of Rs.69,86,964/- (Rupees Sixty-Nine Lakhs Eighty-Six Thousand Nine Hundred and Sixty Four only); g) An order of status quo be passed in respect of the risk- purchase/ risk and cost action and recovery action being caused by the Respondent towards the illegal demand of risk purchase amount of Rs.90,52,432/- (Rupees Ninety Lakhs Fifty-Two Thousand Four Hundred and Thirty-Two), pending the disputes being referred to arbitration. h) In order of granting leave to move the present application on an ex-parte ad interim basis on the basis of this petition. 11. Going through the reliefs as aforesaid, this Court is of the considered view that at the time of filing of the arbitration case under section 9 of the Act of 1996 against the risk purchase amount of Rs.90,52,432/-, an amount to the extent of Rs.53,72,408.28 was already adjusted. Under such circumstances and considering the scope, relief which could at best be granted under Section 9 of the Act, 1996 was relating to the remaining amount and there was no question of asking the respondent to deposit the amount of Rs.53,72,408.28 and hand it over to the appellant, which was already recovered. Therefore, this Court is of the view that such relief as prayed for by the appellant regarding deposit the recovered amount of Rs.53,72,408.28 was beyond the scope of Section 9 of the Act, 1996. 12. So far as the remaining amount is concerned, admittedly no interim 5 order was passed by this Court and admittedly, the remaining amount already stands recovered through adjustment. 13. Law is well settled that before granting interim relief, the following three ingredients are to be satisfied by the parties: -