Tata Projects Limited vs N.E.I. Projects (India) Ltd.
1991 Latest Caselaw 143 Del

JUDGMENT

D.P. Wadhwa, J.

(1) These arc two applications filed in the petition (though registered as Suit) under Section 20 of the Arbitration Act, 1940 (hereinafter referred to as the "Act" or even the "Arbitration Act"). First- application is by the petitioner and is under Section 41 read with Schedule 11 of the Act and also under Order 39 Rules 1 and 2 and Section 151 of the Code of Civil Procedure (for short the "Code"). The other application is by the respondent filed under Section 41 read with Schedule Ii of the Act and Order 39 Rule 4. Order 38 and Section 151 of the Code.

(2) The petitioner filed the suit and the application on November 27, 1990. When this came up before me for admission on November 29, 1990, I passed the following order : "THIS is a petition under Section 20 of the Arbitration Act. As I look at the relevant clause relating to settlement of disputes by arbitration, the award may be ultimately a foreign award. However, at this stage. I will leave the question open, and issue summons in the suit and notice in the application to the defendant for 18th December, 1990. Meanwhile, by means of an ad interim exparte order, the defendant is restrained from remitting out of the country or otherwise using, spending or disbursing an amount of Rs.2,07,00,000.00 (Rupees Two crores and seven lakhs) out of the money to be received hereinafter by the defendant from the National Thermal Power Corporation Limited (NTPC Ltd) dusty. Plaintiff to comply with the provisions of proviso to Rule 3 of Order 39 of the Code of Civil Procedure."

(3) Though the respondent filed reply to the application (1. A. No. 10756 of 1990), it also filed the application (I A. 1 1404 of 1990) for having the aforesaid order vacated.

(4) Let me now give a few facts, which are relevant for decision of the two applications.

(5) As the name shows, the petitioner is a public limited company under the Companies Act, 1956. The respondent is also a company but registered in United Kingdom under the laws of England, having its registered office there, but also having office at New Delhi, and a project office at the site of the project in the District Sonebadra in the State of Uttar Pradesh. National Thermal Power Corporation Limited (for short "NTPC") as again a company but a government company under the Companies Act, 1956, established for the purpose of constructing super thermal power plants and generation and distribution of electricity in the country. For the purpose of constructing a Super Thermal Power Project at Riband Nagar in District Sonebhadra (UP), Ntpc entered into a contract with the respondent. As a part of and in pursuance to this contract, the respondent also entered into several sub contracts with various parties including the one with the petitioner bearing contract agreement No. 315/1001 dated November 10, 1987. This contract was for erection of Turbine Generators, Boiler Feed Pumps and Auxiliary Equipment at the said project It may be noted that under the main contract between Ntpc and the respondent, the respondent was to install and commission 2x500 Mw Thermal Units as a Turnkey Project for the NTPC. Some of the clauses of the contract between the petitioner and the respondent are relevant and these may be set out as under (the term contractor meaning the petitioner) :

1.7'Engineer' shall mean the officer appointed in writing by Npil to act as Engineer from time to time for the purpose of the Contract.

5.1The Contract shall be considered as having come into from the date of the acceptance of Award of Contract/Letter of Award.

5.2The laws applicable to this Contract shall be the law in force in India. The Courts of Delhi shall have exclusive jurisdiction in all matters arising under this Contract.

22.0SETTLEMENT Of DISPUTE/ARBITRATION.

22.1Except as otherwise specifically provided in the Contract all disputes concerning questions of fact arising under the Contract shall be decided by the Engineer subject to a written appeal by the Contractor to the Engineer, whose decision shall be final to the parties hereto.

22.2Any disputes or differences including those considered as such by only one of the parties arising out of or in connection with the contract shall be to the extent possible settled amicably between the parties.

22.3If amicable settlement cannot be reached then all disputed issued shall be settled by arbitration as provided below.

22.4If any dispute or difference of any kind whatsoever shall arise between Npil and the Contractor, arising out of the Contract for the performance of the works whether during the progress of the works or after its completion or whether before or after the termination, abandonment or breach of the Contract, it shall, in the first place, be referred to and settled by the Engineer, who, within a period of fifteen (15) days after being requested by either party to do so, shall give written notice of his decision to Nipl and the Contractor.

22.5Save as hereinafter provided, such decision in respect of every matter so referred shall be final and binding upon the parties until the completion of the works and shall forthwith be given effect to by the Contractor who shall proceed with the works with all due diligence, whether be or Nipl requires arbitration as hereinafter provided or not.

22.6If after the Engineer has given written notice of his decision to the parties, no claim to arbitration has been communicated to him by either party within thirty (30) days from the receipt of such notice, the said decision shall become final and binding on the parties.

22.7In the event of the Engineer failing to notify his decision as aforesaid within thirty (30) days after being requested as aforesaid or in the event of either Npil or the Contractor being dis-satisfied with any such decision, or within thirty (30) days after expiry of the first mentioned period of thirty (30) dauire that the matters in dispute be referred to arbitration as hereinafter provided.

228.The arbitration shall be conducted by three arbitrators, one each to be nominated by Npil and the Contractor and the third to be named by the President of the International Chamber of Commerce, Paris All Rules of Conciliation and Arbitration of the International Chamber of Commerce shall apply to such arbitrations. The arbitration shall be conducted at such places as the arbitrators may determine.

229.The decision of the majority of the arbitrators shall be final and binding upon the parries. The expense of the Arbitrators may, from time to time, with the consent of all the parties enlarge the time for making the award. In the event of any of the aforesaid arbitrators dying, neglecting, resigning or being unable to act for any reason, it will be lawful for the party concerned to nominate another arbitrator in place of the outgoing arbitrator.

22.10The arbitrator shall have full powers to review and/or revise any decision, opinion, directions, certification or valuation of the Engineer in consonance with the Contract, and neither party shall be limited in the proceedings before such arbitrators to the evidence or arguments put before the Engineer for the purpose of obtaining the said decision.

22.11No decision given by the Engineer in accordance with the a foregoing provisions shall disqualify him as being called as a witness or giving evidence before the arbitrators or any matter whatsoever relevant to the dispute or difference referred to the arbitrators as aforesaid.

28.0ENGINEER'S DECISION.

28.1The Engineer shall make decisions on the day to day operation of the Contract and instruct the Contractor accordingly.

28.2The Engineer shall have the authority to vet and approve any claims for additions to the Contract Price and any claims for additional costs and expenses made by the Contractor.

28.3The Engineer shall have the authority to vet and approve any claims for extensions of time.

28.4In respect of all matters which are left to the decision of the Engineer including the granting or with-holding of the certificates, the Engineer shall, if required to do so by the Contractor give in writing a decision thereon.

28.5If in the opinion of the Contractor, a decision made by the Engineer is not in accordance with the meaning and intent of the Contract, the Contractor may file with the Engineer within ten (10) days after receipt of the decision, a written objection to the decision. Failure to file an objection within the allotted time will be considered as acceptance of the Engineer's decision and the decision shall become final and binding.

28.6The Engineer's decision and the filing of the written objection thereto shall be a condition precedent to the right to request arbitration. It is the intent of the Agreement that there shall be no delay in the execution of the Works and the decision of the Engineer is rendered shall be promptly observed."

(6) The petitioner complains breach of the contract by the respondent and has raised various claims totalling Rs. 20,710,604.01 under various heads, subject to its rights to future claims.

(7) Then, the petitioner says that in terms of the contract, it wrote various letters to the respondent lodging claims which should have been forwarded by the respondent to the Engineer for his decision, but the respondent failed to do so. It further says that without prejudice to this submission these letters were also addressed to the respondent at its project site where Mr. G.M. Ford, Engineer, was working and that the matter was within his knowledge, but even he failed to convey the decision in respect of the claims of the petitioner. Further, and again without prejudice to this, the petitioner states that it had received no intimation from the respondent for appointing an Engineer as defined in clause 1.7 read with Clause 22 of the general conditions of the contract, and, as such, a person who bad been posted as Engineer and to whose notice the claims of the petitioner had been brought should have considered the same and given his decision. He having failed to do so, the petitioner invoked the arbitration clauses and filed this petition. It further says that as per its information Mr. Ford had also left the services of the respondent before June 1990 and no other Engineer had so far been appointed in his place, and on that account any notice to the Engineer will not arise. (I, however, find that except for the last claim on account of final 10% payment all the claims had arisen earlier to June i990.) For the purpose of getting interim relief till the arbitration agreement is filed and disputes referred to arbitration, the petitioner says that respondent is a foreign company and its assets are in Uk, and the only work which the respondent is carrying on in India ii that of erection and commission of the aforementioned project of NTPC. It further says that the respondent has no assets of any type in this country except the moneys to be received by it from the Ntpc and in case Ntpc is not restrained or injuncted from making the payments to the respondent, the petitioner would suffer an irreparable loss and it will not be possible for the petitioner to recover any amount from the respondent in satisfaction of any desree which, the petitioner says, is very likely to be passed on the basis of the award in favor of the petitioner and against the respondent. It further says that the project in question is more or less ready and after the project is complete all the moneys will be taken out of the country by the respondent and outside the jurisdiction of this court, and the respondent at the same time is likely to leave the jurisdiction of this Court. Lastly, the petitioner says, it has a prima facie case and in all likelihood award will be in its favor it, therefore, prays that Ntpc be restrained from making the payment and the respondent from receiving the same from Ntpc, the extent of Rs. 20,710.604.01.

(8) The respondent has contested the claim of the petitioner and, rather, has railed its claim for Rs. 23,470,76500 against the petitioner. The respondent says, it is a wholly owned subsidiary of Northern Engineering Industries plc (for short "NET"). It has raised various objections to the maintainability of the present petition stating that the provisions of the Act are inapplicable and that the petitioner could not invoke the arbitration clause before first approaching the Engineering. The respondent states that the petitioner was notified by letter dated May 11, 1987, that Mr. Brian Nugent was to act ai Engineer beginning July 1, 1987, for all purposes under the contract. Then, the respondent says that in the facts and circumstances of the case. provisions of Section 41 read with Schedule Ii of the Act and those of Order 39 Rules 1 and 2 and Section 151 of the Code are inapplicable. It is stated that the petitioner has no prima facie case either, and there is no question of the petitioner suffering any irreparable loss or there being any balance of convenience in its favor in case the inierim relief prayed by it is refused. Without prejudice to these cnntentions, it was stated at the Bar that the respondent was prepared to submit an undertaking to this court to the following effect: "IF any amount is ultimately found due and payable to the Plaintiff by Mei Projects (India) Ltd., in respect of the contract which is the subject matter of the suit, then Northern Engineering &a-7 H Industries plc which is the holding company of Nei Projects (India) Ltd., will honour the said liability in this country."

(9) At the same time, it was also stated that the respondent will not take out of this country any money or any of its assets, but then, on the pleas of the respondent, it will not itself be left with any money after the project is complete. The respondent, then, says that only the provisions of the Foreign Awards (Regulation and Enforcement) Act, 1961 (for short "Foreign Awards Act"), would be applicable in the present case, and the petition under Section 20 of the Act was incompetent. Then, the respondent has stated as to how it came into picture for construction of super thermal power project at Rihand Nagar. It has stated that there were discussion between the Government of India and the Government of Uk when it was conceived to set up the super thermal power plant at Rihand at a turnkey project funded by a total grant- in-aid and soft loan package by UK. Nei Plc which is a company incorporated under the Laws of England and is the parent company of the respondent was nominated by the Government of Uk to be the lead contractor with other major British Companies to execute the project. Ntpc being a public sector Corporation of the Government of India was to be the purchaser of the power station. It then refers to the contracts executed between Nei Plc and Ntpc and also between Ntpc and the respondent. It states that the contract between Ntpc and the respondent is purely a cost reimbursement contract and the respondent if not earning any profit there from and that the money received by the respondent from Ntpc is not the earning of the respondent. Nor does the money belong to the respondent. Then, the respondent describes the cost reimbursement nature of the contract. It lays, it has employed 15 sub-contractors working on the project, the petitioner being one of them. The invoices of the sub-contractors are forwarded by the respondent to Ntpc for payment, and out of that an amount of 7.5% is paid to the respondent by Ntpc as coordination charges. These coordination charges cannot be repatriated by the respondent out of the country and are wholly utilised by the respondent to meet its establishment costs in India, so the respondent states. It further says that apart from 7.5% coordination charges, the respondent is also to be paid a maximum of Pounds Sterling six million to cover expatriate supervision charges and that this amount is to be paid in England and is also a reimbursement at it is linked to the actual salaries and cost of expatriate supervision. Thus, the respondent says that the money received by it from Ntpc is not Its earning, but this payment is meant for sub-contractor as per their invoices. As noted above, the respondent has disputed various claims of the petitioner and has raised its own claim.

(10) It cannot be disputed that the arbitration agreement in the present case visualises "International arbitration" as the term is normally understood. Assuming, however, that the provisions of the Arbitration Act are applicable, could it be said that the arbitration agreement has been properly and rightly invoked by the petitioner. There are certain preconditions before the arbitration agreement comes into play. In fact, I find that the meeting of those conditions is sine qua non for the arbitration agreement to come into operation The respondent has contended that an Engineer was appointed and his appointment communicated to the petitioner in writing. The petitioner merely says that such a letter does not appear to be on its record. It has. however, raised a contention that an Engineer is supposedly to be always at the site and since Mr. Nugant was always based in England he could be the Engineer as envisaged in clause 1.7. This does not. appear to be a correct interpretation. Clause 1.7 is quite specific.

(11) The parties envisage amicable settlement of their disputes, but, if that is not possible, then by arbitration as per clauses 22.4 to 22.11 and clause 28 of the contract. The disputes which the petitioner has raised were first to be referred by it to the Engineer for his decision. This has not been done It is only after the Engineer notifies his-decision that the disputes are to be referred to arbitration if the petitioner is dissatisfied with that decision. Time limit has been prescribed within which the Engineer is to give his decision and for the party to invoke arbitration. The decision of the Engineer and the non-acceptance by the petitioner and its specifying the objection thereto is a condition precedent to request for arbitration, in somewhat similar circumstances, this court in M/s. Uttam Singh Duggal & Co. (P) Ltd v. Indian Oil Corporation Ltd. & another, 2nd 1985 Ii Delhi 131, held that the claims were not covered by arbitration agreement between the parties. In that case, the parties had agreed that before any claims or disputes could be the subject matter of arbitration, certain formalities had to be gone into. It. therefore, does appear to me that the present petition itself is incompetent, and, rather, premature.

(12) Further, by virtue of Section 41 the Second Schedule to the Act applies, and this court has powers to secure the amount in difference in the reference. To my mind. the same provisions as contained in the Code for granting interim reliefs in a suit should apply for the purpose of securing the amount in difference if the circumstances for that exist. Section 94 of the Code provides for supplementary proceedings in a suit when, in order to prevent the ends of justice from being defeated, the court may, if it is so prescribed, pass various intetim orders mentioned therein this would include passing of orders under Order 38 Rules 1 and 5 Order 39 Rules 1 and 2 and Order 40 Rule I of the Code. Of course, the court has also inherent powers to pass interim orders in the ends of justice apart from the provisions aforesaid. This would be so in view of the decision of the Supreme Court in Manohar Lal Chopra v Raj Bahadur Rao Raja Seth Hiralal, . The interim order which I made at the time of admission of the petition would virtually amount to attachment before judgment. The petitioner is not asking me to exercise my jurisdiction for appointment of any Receiver. It is confining mainly to the provisions of Order 38 Rules 1 and 5 and Order 39 Rules 1 and 2 of the Code. In V.K Gujral v. Roland Burny Air 1980 Delhi 70. the petitioner filed a suit for recovery at certain money being the balance of price of the work done towards repairs and renovation at the residence of the respondent, a Belgium Diplomat. In that suit, the petitioner filed an application under Order 38 Rule 1 requiring the respondent to furnish security for his appearance and for satisfaction of the decree. It was said that the stay of the respondent in India was temporary. The court held that there were serious disputes between the parties to be tried and it could not be said that the case set up by the petitioner was bona fide and unimpeachable one. The court in that case, therefore, declined the application of the petitioner. There is no allegation by the petitioner that the respondent with intent to delay the petitioner, or to avoid any process of the Court or to obstruct or delay the execution of any decree that may be passed against it, is about to leave the local limits of the jurisdiction of this court its property or any part thereof or even that the respondent is about to leave India under circumstances affording reasonable probability that the petitioner will or may thereby be obstructed or delayed in the execution of any decree that may be passed against the respondent in the proceedings. To my mind, therefore, provisions of Order 38 Rule I are inapplicable. It was well known to the petitioner that after the project was complete, the respondent had no other work in the country and it is on that account that the respondent would be leaving the country which would be in the normal course of its working. Then, under Order 38 Rule 5 the Court has to be satisfied that the respondent with intent to obstruct or delay the execution of any decree that may be passed against it is about to dispose of whole or any part of its properly or about to remove the whole or any part of its property from the local limits of the jurisdiction of this court. No such intention of the respondent has been spelt by the petitioner Again I do not know how the provisions of Rules 1 and 2 of Order 39 of the Code would be applicable in the present case Under Rules 1 and 2, as applicable to the present case, it has to be proved that the respondent threatens or intends to remove or dispose of its property with a view to defraud its creditors. Mr. Thadani did say that some other petitions under Section 20 of the Arbitration Act have also been filed against the respondent which are pending in this court where the total claims of those petitioners aggregate to over rupees one hundred million He further said that the Income Tax Department has also raised demands against the respondent and against which the respondent has filed writ petition in this court. He said. all this would show that the respondent would not be in a position to meet the liability by virtue of the decree that may be passed against it. He said. though the respondent says that 7 5% of the amount of the bill is to be retained to meet the cost of its establishment in India, it was getting its commission and other profits on sale of machinery by it in England and was not repatriating the same to this country. I do not know why should the respondent repatriate its profit to this country and why should any argument be raised on that It is not that whenever a petition is filed under Section 20 of the Act making certain claims that orders have to be passed for securing the amount in difference in the reference. No stay has been granted in other petitions filed against the respondent and which are pending before me. It is not the case of petitioner that the petitioner would not be able to recover the amount from the respondent in England if ultimately award is made in its favor when it is to be enforced. The petitioner's case is that it will have to incur unnecessary expense and inconvenience and also because of lack of foreign exchange it will not be possible for the petitioner to pursue its remedy in England. In this context, the petitioner referred to a decision of the Supreme Court in Michael Golodetz and other Serajudding and Co, . In this case, the arbitration clause in !he agreement provided that any dispute arising out of the contract was to be settled by arbitration in New York according to the Rules of American Arbitration Association. Disputes having atisen. the respondent. an Indian Company, filed a suit in Calcutta High Court, The appellant company, as the respondent, applied for stay of the suit under Section 34 of the Arbitration Act. The Supreme Court observed that the law applicable to the dispute was Indian Law and all evidence was in India and there were difficulties In respect of foreign exchange which practically made it impossible to the Indian firm to attend or to take their witnesses to New York, and that the proceedings in New York would, thus, be in effect exparte and that would result in injustice to the Indian party. Considering, therefore, the balance of convenience and other circumstances, the court held that the facts established made out a sufficient reason for not granting stay under Section 34 of the Act. This decision of the Supreme Court rendered in 1963 regarding the difficulty in respect of foreign exchange cannot be made applicable in the year 1991. In fact, this was not the only circumstance and court has discretion to stay or not under Section 34 of the Act. Otherwise, this judgment is of no application.

(13) The parties agreed that the arbitration shall be conducted under the Rules of Conciliation and Arbitration of the International Chamber of Commerce, Paris (ICC Rules). They left the discreation to the arbitrators as to where the arbitration was to be conducted It is always appropriate to see if the parties agreed, either expressly or by implication, as to how the claim of a parly is to be secured during the pendency of the arbitration proceedings in the present case, therefore, it is better to refer to the Icc Rules. There is no specific provision in these Rules, but Clause 5 of Article 8 slates that before the file is transmitted to the arbitrator and in exceptional circumstances even thereafter, the parties shall be at liberty to apply to any competent judicial authority for interim or conservatory measures, and they shall not by so doing be hold to infringe the agreement to arbitrate or to effect the relevant powers reserved to the arbitrator. The Icc Rules encompass the whole gambit of arbitration and it was submitted that these expressly and even by necessary implication exclude passing of any order requiring giving of security as sought by the petitioner. It was submitted that the words "for interim or conservatory measures" as mentioned in Clause 5 of Article 8 do not bring the case of the petitioner within the scope - of that clause. This does not appear to me to be correct. The words have to be- given their true and natural meaning and effect. These words would include the securing the amount in difference in arbitration in the circumstances of the case and when the ends of justice so demand. But the court will not exercise its jurisdiction as a matter of course. It will do so only in exceptional circumstances That the claimant would not be able to recover the amount under the award in its own country which though it may be able to do so in the country of the opposite party in itself, to my mind, is not an exceptional circumstance. The principles of or grant of interim relief are well established. To this should be added another principle when dealing with a case in the context of international trade and inter national arbitration. This is that only in exceptional cases the court should order securing the amount in difference in the reference and such an order should not be granted in the normal courge, though if it was a domestic arbitration the court might have made such an order. The reason, to my mind, is that with the advent of international arbitration in great deal and horizons of international trade expanding and the provisions of enforceability of awards in a foreign country being then- on account of reciprocal arrangements and the laws of the countries incorporating the recommendations of the international convention. New York, on enforcement of arbitral awards there- cannot possibly be any impediment in recove, ing the a.mount under the award which may ultimately be passed in favor of the claimant. In the present case the assets of the respondent are in England and still an undertaking is offered to be filed by the holding company as mentioned above. There therefore, does not appear to be any reason why the award, if made in favor "of the petitioner, could not be enforced in England against the respondent. This is particularly so when the parties have entered into an agreement to refer the disputes to arbitration under the Icc Rules which may ultimately result in a foreign award under the New York convention and could certainly be enforceable in England under the laws there. Any other interpretation would strike a death knell at international arbitration. I do not find any special circumstances in the present case for me to pass any order securing the amount in difference in the reference.

(14) Now as many as 8 petitions under Section 20 of the Arbitration Act are pending in this court against the respondent, though filed by two different parties raising a claim of over Rs. 100,00,000.00. The arbitration agreement is the same in all those matters as in the present case. It is difficult to see how the respondent is going to carry on its work with money blocked like .this. It is a commercial organisation and it needs money to pay to various sub-contractors. It is not that respondent has unlimited supply of money. It is nobody's case that if any award is made, the petitioner will be unable to recover the amount from the respondent even in England.

(15) Considerable arguments were addressed by both the parties on the question if the present proceedings under Section 20. of the Act were maintainable Various decisions were cited at the Bar notably Societe De Traction et D'Electricite Societe Anonyme v. Kamani Engineering Co. Ltd., , Ghulam Jilani and others v. Muhammad Hassan, 29 Indian Appeals 51 IPC), M/s Dhanrajamal Gobindram v. M/s. Shamji Kalidas and Co., . Renusagar Power Co. Ltd v. General Electric Company and another. , Oil and Natural Gas Commission v. Western Company of North America, , and National Thermal Power Corporation Ltd. v. The Singer Company and others. . In Kamani Engineering case the Supreme Court examined the scheme of arbitration contemplated by Icc Rules vis-a-vis Arbitration Act and the Arbitration (Protocol and Convention) Act, 1937, and held that the scheme of arbitration contemplated by Icc Rules was different from the scheme contemplated by Sections 3 to 3s of the Arbitration Act. The Court also observed that the Arbitration Act was enacted in the form of a complete Code on the law of arbitration in India and that all consensual arbitrations were governed by the Arbitration Act and by Section 46 the provisions of the Act, except Subsection (1) of Section 6 and Sections 7,12, 36 and 37 were made applicable to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an arbitration agreement and as if that other enactment were an arbitration agreement, except in so far as the Act was inconsistent with that other enactment or with any rules made there under. By Section 47 it was provided that subject to the provisions of Section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings there under". It may also be noticed that it was not disputed before the court by the parties that arbitration under the Icc Rules were governed by the Protocol on arbitration clauses agreed to at Geneva etc. In this context, therefore, it appears the court mentioned that the Arbitration (Protocol and Convention) Act, 1937, being a law otherwise providing for arbitration the provisions thereof would, by virtue of Section 47, be applicable to arbitration. This judgment, perhaps, helps Mr. Singh in his submission.

(16) , Mr. Thadani, learned counsel for the petitioner, was quite vehement in his submission that Arbitration Act was the law of the country and it could not be that jurisdiction of the courts would be barred under this Act by the parties merely agreeing to refer the disputes under the arbitration agreement as per Icc Rules. He said, even if the parties agreed that Icc Rules would apply, the agreement would nevertheless be an arbitration agreement as defined in the Arbitration Act, He said. while granting relief under the Arbitration Act, the court might keep in mind the objects sought to be achieved by the Foreign Awards Act. There appears to be good deal of substance in what Mr.Thadani says. No statutory recognition can be given to the Icc Rules and they are part of no statute These Rules form part of the contract being incorporated in the arbitration agreement between the parties. Mr.Singh's argument has been that when the court orders the arbitration agreement to be filed under Section 20 of the Act and disputes referred to arbitration, it must exercise control over the arbitration proceeding which it will not be able to do so if arbitration is held in a foreign country. This, he said. with reference to various provisions of the Act, but then this argument ouerlooks Sub-section (5) of Section 20 which says that after the reference has been made to the arbitrator "the arbitration shall proceed in accordance with, and shall be covered by, the other provisions of this Act so far as they can be made applicable". In Czarnikow v. Roth, Schmidt and Company, (1922) 2 Kb 478 (CA), (as appearing from the headnote of the report) a contract for the sale of sugar provided that the contract was subject to the rules of the Refined Sugar Association. The rules required that all members of the Association making contracts subject to those rules should refer any disputes arising out of such contracts, including any question of law, to the arbitration of the Council of the Association; and by Rule 19 Neither buyer, seller, trustee in bankruptcy, nor any other person as aforesaid shall require, nor shall they apply to the Court to require, any arbitrators to state in the form of a special case for the opinion of the Court any questions of law arising in the reference, but such question of law shall be determined in the arbitration in manner herein directed. A dispute between the buyers and sellers was referred to the arbitration of the Council. The buyers requested the arbitrators either to state their award in the form of a special case under Section 7 of the Arbitration Act, 1898. or alternatively to state a case for the opinion of the Court under Section 19 upon certain points of law arising in the reference, or to give them an opportunity of applying to the Court for an order directing them to state a case. The arbitrators, thinking themselves precluded by Rule 19, refused to emply with that request, and made their award without giving the buyers an opportunity of applying to the Court for an order. The buyers moved to set aside the award on the ground of misconduct of the arbitrators in so refusing. The Court of Appeal held that Rule 19 and the agreement embodying it were contrary to public police and invalid, as involving an ouster of the statutory jurisdiction of the Courts under the Arbitration Act, and that the award must be set aside

(17) 1. however, put it to Mr Singh that where a party should go if he had to seek relief for "interim or conservatory measures" under Clause 5 of Article 8 of the Icc Rules. His answer was that the party will have to file a civil suit and not start proceedings under the Arbitration Act. In that case that party will come up with an application under Order 38 Rules 1 and 5 and Order 39 Rules 1 and 2 of the Code and may invoke inherent powers of the court as well. I have already held that for securing the amount in difference in reference, as mentioned in second Schedule read with Section 41 of the Arbitration Act, the same principles would apply as contained in Order 38 Rules 1 and 5 and Order 39 Rules I and 2 and Section 151 of the Code 1 may also note that Mr. Singh submitted that apart from his objection that the present petition was not maintainable and without prejudice to his other contentions, the respondent has no objection to the disputes being referred to arbitration under the Icc Rules. Be that as it may, it is, therefore, immaterial for the decision of the present applications whether the petitioner files a regular suit or a petition under Section 20 of the Arbitration Act. as it is undisputed that he could approach the court for an urgent interim relief to secure the amount that may be passed under the award. A petition under Section 20 of the Act may even be converted into a regular suit on payment of court fee. it is, therefore, not necessary for me to analyze the various judgments cited at the Bar, and those mentioned above and others. I will note that during the course of arguments a photocopy of the affidavit dated January 23, 1991, of Mr. Brian Baker, Commercial Director of Northern Engineering Industries Plc was referred to and brought on record by Mr. Singh, and a copy banded over to Mr. Thadani, who, in fact, filed his objections to the acceptance of such an affidavit. I find, the affidavit containing the undertaking in order, and I see no reason why the courts in England will not hold Northern Engineering Industries Plc and Nei Projects (India) Limited bound by the undertaking given in these proceedings.

(18) For all these reasons, I am of the opinion that the petitioner has not made out any special case for grant of any interim relief. I will, therefore, vacate the order dated 29th November 1990, subject, however, to the respondent filing an undertaking in this court, both by the respondent as well as Northern Engineering Industries Plc in terms mentioned in the body of this order. Respondent shall also not remove any of its assets outside India during the pendency of these proceedings without permission of this Court. The stay order will stand vacated only on filing of the undertakings on affidavits. For this purpose let the matter be listed before the Deputy Registrar on February 28, 1991.

(19) Both the applications stand disposed of in terms mentioned above. There will be no order as to costs.