High Court · 2025

"i) An expert commissioner, as per the agreement between the parties be appointed for the measurement and to quantify the work done by the plaintiff company on site till date for which the bills are pending, either with the architect for verification or with the plaintiff under preparation. ii) Until an expert is appointed and measurements are done the defendant company be restrained from awarding the work contract of the building to any other agency. iii) The defendant and or their agents and employees should be restrained from to tempering with and/or to damage in any manner the work done by the plaintiff company on the building. iv) to maintain the status quo over the building of Phase two of Galaxy Hospital to preserve the work done by the plaintiff company on site. v) the plaintiff company be allowed to take away its wares of construction, other goods, building materials accounts books etc. kept at the site office of the plaintiff company in the disputed building. vi) The defendants be directed to pay the amount of the bills pending with the defendant company."

6. It appears that response to the said application was filed and rejoinder was also filed, however, for apparently no specific reason, the proceedings remained pending for about ten years.

7. During the said period of ten years, though it is claimed that steps were taken seeking appointment of Arbitrator, however, the appointment did not take place and apparently no further attempt has been made seeking enforcement of the prayer to seek appointment of Arbitrator.

8. During the pendency of the proceedings, on 12.05.2025, an application was filed, inter alia, making the following prayers:- "a. Direct the opposite party to deposit a sum of Rs. 2,56,53,023.75 (as on 12.05.2025) in this Hon'ble Court, or such other security as may be deemed sufficient; b. Pass orders for attachment of the bank account(s) of the opposite party, including but not limited to those listed in Annexure-A, to the extent required to secure the applicant's claim. c. And if such bank balance is insufficient, pass orders for attachment of the immovable property, namely, Galaxy Hospital, situated at Plot Nos. 4, 5, 6 & 7, Dayal Enclave, Mahmoorganj, Varanasi. d. Pass such other or further orders as may be just and necessary in the interest of justice and equity."

9. The cause for making the prayer indicated in the affidavit was that one Mr. V.D. Tiwari, who was holding the largest shareholding and is aged about 75 years, was seeking to of disinvest his stake in the company and the said development has given rise to a grave and genuine apprehension that if such disinvestment or transfer is carried out, the financial and immovable resources of the opposite party will be dissipated rendering respondent's claim illusory or unenforceable and there was a risk of frustrating any arbitral award that may be passed in favour of the respondent.

10. As apparently the appellant was not appearing in the proceedings for few dates, the Commercial Court, after hearing the respondent, came to the conclusion that an amount of Rs. 2,56,53,023.75 was claimed to be outstanding and despite repeated demands, the same was not being paid and the property was sought to be disinvested and, therefore, in case such disinvestment takes place, it would be impossible to seek enforcement of payment and, consequently, passed the order impugned ordering for attachment of FDRs and amount lying with four banks pertaining to the appellant.

11. Counsel for the appellant made vehement submissions that the Commercial Court was not justified in passing the ad-interim order attaching the FDRs and amount lying with the four banks on plea sought to be raised by the respondent. Submissions have been made that the proceedings are pending for over ten years and were not being seriously pursued by the respondent, inasmuch as the appointment of Arbitrator has not taken place so far and no steps in this regard have been taken by the respondent and, on 12.05.2025, the application was filed and surprisingly on same day, the order impugned was passed without providing opportunity of hearing to the appellant.

12. Further submissions have been made that passing of the order in the nature of attachment of the bank accounts would lead to irreparable loss to the appellant and that on the plea raised in the application dated 12.05.2025, no order of the present nature could be passed. It was prayed that the order impugned be quashed and set aside.

13. Learned counsel for the respondent supported the order impugned. Submissions were made that on the one hand the appellant was not appearing before the court in pending proceedings and, on the other hand, the shareholding of the company was sought to be divested, which would make the realization of the arbitral award, which could be passed in favour of the respondent, unenforceable and, therefore, the Commercial Court was justified in passing the order impugned.

14. Submissions have been made that despite the repeated efforts made by the respondent seeking appointment of Arbitrator, on account of non-cooperation and illegal plea raised by the appellant, the Arbitrator could not be appointed and, therefore, the appellant cannot be permitted to take benefit of his own inaction and the order impugned does not call for interference.

15. We have considered the submissions made by learned counsel for the parties and have perused the material available on record.

16. At the outset, it is may be observed that it is most surprising that an application under Section 9 of the Act, which is meant for interim protection before or during the arbitration proceedings, remained pending for over ten years without passing of any effective order by the Commercial Court. Even if the parties are seeking not to cooperate in disposal of the matter, the Commercial Court is not without powers to proceed with the matter and decide the same in accordance with law.

17. Be that as it may, apparently the proceedings remained pending for over ten years and the Arbitrator has not been appointed so far. Further, from the submissions made by counsel for the parties, it is apparent that despite the allegations made against the appellant of not cooperating and/or raising illegal pleas, the respondent on his part has also not availed any remedy as available under law, including moving an application under Section 11 of the Act.

18. As would be noticed, the original application under Section 9 of the Act made with certain prayers pertaining to appointment of Commissioner for measurements, seeking status quo over the building in question and also for making of payment of amount of bills pending with the appellant and after ten years thereof, the application dated 12.05.2025 was filed seeking deposit of the said amount and, in the alternative, seeking attachment of bank accounts on the plea that one of the shareholders, holding the largest shareholding, was seeking to transfer his shares.

19. The said plea, raised for seeking interim relief, apparently is based on a total misconception of law that on account of transfer of shareholding of a public limited company, the property of the company is being dissipated on account of such transfer of share.

20. The existence of the company, which is a legal person, is not dependent as to who are shareholders of that company. Once the claim of the respondent is against the company, irrespective of the fact whether the shareholder is 'X' or 'Y', the claim on account of transfer of shares is not defeated under any circumstances and, therefore, the plea sought to be raised, while moving the application seeking interim relief, apparently was totally misconceived.

21. The Commercial Court, apparently on the same day, without application of mind on the plea sought to be raised, only on account of moving of the application and accepting the plea that on account of transfer of share, the liability, if any, arising from the arbitral award would be affected, passed the ad-interim order, which cannot be sustained.

22. Consequently, the appeal is allowed. The order dated

12.05.2025 passed by the Commercial Court is quashed and set aside.

23. In view of the fact that the application under Section 9 is pending consideration for over ten years now and pleadings are already complete, it would be required of the Commercial Court to decide the pending application within a period of six weeks from the date of this order.

24. A copy of this order be sent by the office to the Commercial Court concerned. Order Date :- 1.7.2025 AKShukla/P.Sri. (Kshitij Shailendra, J) (Arun Bhansali, CJ) ANIL KUMAR SHUKLA High Court of Judicature at Allahabad

"i) An expert commissioner, as per the agreement between the parties be appointed for the measurement and to quantify the work done by the plaintiff company on site till date for which the bills are pending, either with the architect for verification or with the plaintiff under preparation. ii) Until an expert is appointed and measurements are done the defendant company be restrained from awarding the work contract of the building to any other agency. iii) The defendant and or their agents and employees should be restrained from to tempering with and/or to damage in any manner the work done by the plaintiff company on the building. iv) to maintain the status quo over the building of Phase two of Galaxy Hospital to preserve the work done by the plaintiff company on site. v) the plaintiff company be allowed to take away its wares of construction, other goods, building materials accounts books etc. kept at the site office of the plaintiff company in the disputed building. vi) The defendants be directed to pay the amount of the bills pending with the defendant company."

6. It appears that response to the said application was filed and rejoinder was also filed, however, for apparently no specific reason, the proceedings remained pending for about ten years.

7. During the said period of ten years, though it is claimed that steps were taken seeking appointment of Arbitrator, however, the appointment did not take place and apparently no further attempt has been made seeking enforcement of the prayer to seek appointment of Arbitrator.

8. During the pendency of the proceedings, on 12.05.2025, an application was filed, inter alia, making the following prayers:- "a. Direct the opposite party to deposit a sum of Rs. 2,56,53,023.75 (as on 12.05.2025) in this Hon'ble Court, or such other security as may be deemed sufficient; b. Pass orders for attachment of the bank account(s) of the opposite party, including but not limited to those listed in Annexure-A, to the extent required to secure the applicant's claim. c. And if such bank balance is insufficient, pass orders for attachment of the immovable property, namely, Galaxy Hospital, situated at Plot Nos. 4, 5, 6 & 7, Dayal Enclave, Mahmoorganj, Varanasi. d. Pass such other or further orders as may be just and necessary in the interest of justice and equity."

9. The cause for making the prayer indicated in the affidavit was that one Mr. V.D. Tiwari, who was holding the largest shareholding and is aged about 75 years, was seeking to of disinvest his stake in the company and the said development has given rise to a grave and genuine apprehension that if such disinvestment or transfer is carried out, the financial and immovable resources of the opposite party will be dissipated rendering respondent's claim illusory or unenforceable and there was a risk of frustrating any arbitral award that may be passed in favour of the respondent.

10. As apparently the appellant was not appearing in the proceedings for few dates, the Commercial Court, after hearing the respondent, came to the conclusion that an amount of Rs. 2,56,53,023.75 was claimed to be outstanding and despite repeated demands, the same was not being paid and the property was sought to be disinvested and, therefore, in case such disinvestment takes place, it would be impossible to seek enforcement of payment and, consequently, passed the order impugned ordering for attachment of FDRs and amount lying with four banks pertaining to the appellant.

11. Counsel for the appellant made vehement submissions that the Commercial Court was not justified in passing the ad-interim order attaching the FDRs and amount lying with the four banks on plea sought to be raised by the respondent. Submissions have been made that the proceedings are pending for over ten years and were not being seriously pursued by the respondent, inasmuch as the appointment of Arbitrator has not taken place so far and no steps in this regard have been taken by the respondent and, on 12.05.2025, the application was filed and surprisingly on same day, the order impugned was passed without providing opportunity of hearing to the appellant.

12. Further submissions have been made that passing of the order in the nature of attachment of the bank accounts would lead to irreparable loss to the appellant and that on the plea raised in the application dated 12.05.2025, no order of the present nature could be passed. It was prayed that the order impugned be quashed and set aside.

13. Learned counsel for the respondent supported the order impugned. Submissions were made that on the one hand the appellant was not appearing before the court in pending proceedings and, on the other hand, the shareholding of the company was sought to be divested, which would make the realization of the arbitral award, which could be passed in favour of the respondent, unenforceable and, therefore, the Commercial Court was justified in passing the order impugned.

14. Submissions have been made that despite the repeated efforts made by the respondent seeking appointment of Arbitrator, on account of non-cooperation and illegal plea raised by the appellant, the Arbitrator could not be appointed and, therefore, the appellant cannot be permitted to take benefit of his own inaction and the order impugned does not call for interference.

15. We have considered the submissions made by learned counsel for the parties and have perused the material available on record.

16. At the outset, it is may be observed that it is most surprising that an application under Section 9 of the Act, which is meant for interim protection before or during the arbitration proceedings, remained pending for over ten years without passing of any effective order by the Commercial Court. Even if the parties are seeking not to cooperate in disposal of the matter, the Commercial Court is not without powers to proceed with the matter and decide the same in accordance with law.

17. Be that as it may, apparently the proceedings remained pending for over ten years and the Arbitrator has not been appointed so far. Further, from the submissions made by counsel for the parties, it is apparent that despite the allegations made against the appellant of not cooperating and/or raising illegal pleas, the respondent on his part has also not availed any remedy as available under law, including moving an application under Section 11 of the Act.

18. As would be noticed, the original application under Section 9 of the Act made with certain prayers pertaining to appointment of Commissioner for measurements, seeking status quo over the building in question and also for making of payment of amount of bills pending with the appellant and after ten years thereof, the application dated 12.05.2025 was filed seeking deposit of the said amount and, in the alternative, seeking attachment of bank accounts on the plea that one of the shareholders, holding the largest shareholding, was seeking to transfer his shares.

19. The said plea, raised for seeking interim relief, apparently is based on a total misconception of law that on account of transfer of shareholding of a public limited company, the property of the company is being dissipated on account of such transfer of share.

20. The existence of the company, which is a legal person, is not dependent as to who are shareholders of that company. Once the claim of the respondent is against the company, irrespective of the fact whether the shareholder is 'X' or 'Y', the claim on account of transfer of shares is not defeated under any circumstances and, therefore, the plea sought to be raised, while moving the application seeking interim relief, apparently was totally misconceived.

21. The Commercial Court, apparently on the same day, without application of mind on the plea sought to be raised, only on account of moving of the application and accepting the plea that on account of transfer of share, the liability, if any, arising from the arbitral award would be affected, passed the ad-interim order, which cannot be sustained.

22. Consequently, the appeal is allowed. The order dated

12.05.2025 passed by the Commercial Court is quashed and set aside.

23. In view of the fact that the application under Section 9 is pending consideration for over ten years now and pleadings are already complete, it would be required of the Commercial Court to decide the pending application within a period of six weeks from the date of this order.

24. A copy of this order be sent by the office to the Commercial Court concerned. Order Date :- 1.7.2025 AKShukla/P.Sri. (Kshitij Shailendra, J) (Arun Bhansali, CJ) ANIL KUMAR SHUKLA High Court of Judicature at Allahabad