Vitthal Sahakari Sakhar Karkhana ... vs Rajlaxmi Petrochem Pvt. Ltd. ...
2017 Latest Caselaw 1871 Bom

                                     (1)                             arbap2.17

             IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                        BENCH AT AURANGABAD

                     ARBITRATION APPEAL NO. 02 OF 2017
                                    WITH
                    CIVIL APPLICATION NO. 3452 OF 2017

Shri Vitthal Sahakari Sakhar Karkhana Ltd... Appellant
Through its Managing Directors,
R/o. Venu Nagar, at post Gursale,
Taluka Pandharpur,
Dist. Solapur.

                                    Versus

Rajlaxmi Petrochem Pvt. Ltd.                          ..       Respondent
Private Limited Company
Through its Director
Dineshkumar s/o. Murlidhar Innani,
Age. 45 years, Occ. Business,
R/o. Main Road, Beside Latur General 
Stores, Latur.

Mr.N.B. Khandare, Advocate for the appellant.
Mr.Swapnil S. Rathi, Advocate for sole respondent.


                                     CORAM :  T.V. NALAWADE,J.

DATED : 20.04.2017

ORAL JUDGMENT :-

1. Heard both the sides.

2. Admit.

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3. This Arbitration Appeal is filed against the

order made below Exh.15 dated 13.01.2017 in Civil M.A.

(Arb.) No.245 of 2016 by the learned Principal District

Judge, Latur. The application was filed under section 9

of the Arbitration and Conciliation Act, 1996. The

present appellant has filed written statement, though the

learned Principal District Judge, Latur, has observed

that no separate reply is filed to the interim

application. After hearing both the sides, the learned

Principal District Judge, Latur, has restrained the

appellant/Co-operative Sugar Factory from selling the

molasses.

4. There is agreement between the appellant and the

respondent and under the agreement the appellant has

agreed to supply 100 lakh liters Special Denatured Spirit

(SDS) to the respondent. Though there was initially

agreement of supply of 100 lakh liters, some amount was

withdrawn. But the learned Counsel for the respondent

submitted that under the agreement, still the appellant

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will be required to supply 100 lakh liters of aforesaid

material and as on today quantity of around 48 lakh

liters is supplied. The distillery was not working with

full capacity due to shortage of supply of sugarcane and

so as per the agreement expected quantity is not

supplied. The submission is made that in this year the

distillery unit came to be closed in the month of January

2017 due to shortage of supply of sugarcane. The

submissions made show that around 150 MT of molasses is

lying in the factory premises and value of molasses is

around Rs.56 lakh. It is grievance of the respondent

that this molasses could have been utilized for producing

SDS, but it was not done intentionally and the sugar

factory wants to sell the molasses to make money by

committing breach of contract. There is clear

probability that it was not practicable to keep

functioning the unit with such small quantity of

molasses.

5. The submissions made show that due to short

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supply of SDS, in the past in the year 2016, notice was

given as per the agreement by the respondent and

intention was expressed to appoint the Arbitrator. This

notice was not replied by other side. No steps were

taken by the respondent for appointment of the

Arbitrator. The application under section 9 was filed in

the District Court in the year 2016 and the interim order

came to be made on 13.01.2017. In view of provisions of

section 9 (2) of the Arbitration Act, the respondent

needs to take further steps to go for the appointment of

Arbitrator. Learned Counsel for the respondent submitted

that respondent is going to take steps immediately, but

till then the interest of the respondent is required to

be protected.

6. The learned Counsel for the sugar factory

submitted that during this season when temperature has

crossed 40oC, it will be hazardous to keep such quantity

of molasses in the factory premises and any untoward

incident may happen. This Court holds that this

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possibility cannot be ruled out. However, the interest

of the respondent also needs to be protected. The learned

Counsel for the respondent submits that at least an

amount of more than Rs.5 Crore of the respondent is with

the present appellant, so to that extent interest of the

respondent needs to be protected. It is not disputed that

the amount of the respondent is with the appellant. In

view of these circumstances, this Court holds that in the

present matter some alternate way can be chosen and sale

proceeds of molasses can be directed to be deposited in

the District Court, where proceeding under section 9 of

the Act is still pending.

7. In the result, the order made by the learned

Principal District Judge is hereby modified by following

order :-

. Present appellant - Shri Vitthal

Sahakari Sakhar Karkhana Ltd., is hereby allowed

to sell the molasses as per law and the amount

is to be deposited immediately with the record

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of sale in the District Court. If there is

breach of order, action will be taken against

the appellant. Such undertaking also to be

given in the District Court by the applicant

before proceeding with the sale.

8. With the above directions the arbitration appeal

is allowed and disposed of.

9. In view of disposal of the Arbitration Appeal,

connected Civil Application for stay does not survive and

stands disposed of.

[T.V. NALAWADE,J.]

snk/2017/APR17/arbap2.17