Morgan Ventures Ltd. vs Nepc India Ltd.
2009 Latest Caselaw 3001 Del

        * IN THE HIGH COURT OF DELHI AT NEW DELHI

                                 Date of Reserve: 27th July, 2009
                                 Date of Order: August 04, 2009


+ O.M.P. No. 203/2009
%                                                   04.8.2009

    MORGAN VENTURES LTD.                  ... Petitioner
                Through: Mr. Abhinav Vashisht, Advocate

         Versus


    NEPC INDIA LTD.                           ... Respondent


+ O.M.P. No. 204/2009

    GOYAL MG GASES PVT. LTD.               ... Petitioner
                 Through: Mr. Abhinav Vashisht, Advocate

         Versus


    NEPC INDIA LTD.                           ... Respondent


+ O.M.P. No. 207/2009

    GOYAL MG GASES PVT. LTD.               ... Petitioner
                 Through: Mr. Abhinav Vashisht, Advocate

         Versus


    NEPC INDIA LTD.                           ... Respondent




 O.M.P. No. 203,204, 207&208/2009                      Page 1 of 6
 + O.M.P. No. 208/2009

       MORGAN VENTURES LTD.            ... Petitioner
                   Through: Mr. Abhinav Vashisht, Advocate

             Versus


       NEPC INDIA LTD.                                    ... Respondent


JUSTICE SHIV NARAYAN DHINGRA

1. Whether reporters of local papers may be allowed to see the
judgment?

2. To be referred to the reporter or not?

3. Whether judgment should be reported in Digest?



JUDGMENT

1. These petitions/applications under Section 9 of the

Arbitration and Conciliation Act, 1996 [for short "the Act"] have been

filed by the petitioners with a prayer that this Court should restrain

respondent company and its directors, officers from selling, disposing

of, transferring, alienating, encumbering or creating third party rights

or interests in the movable/immovable properties and assets of the

respondent company including the investments made by the

respondent in other companies.

2. The notice of the petition was duly served on the

respondent, but the respondent did not appear.

3. The case of the petitioners is that the respondent had

entered into agreements dated 7th October, 2003 with the petitioners

for designing, supply, installation, testing and commission of Wind

Energy Generators. The respondent company was not only to identify

appropriate land with suitable wind velocity but was also to give a

minimum guarantee of generation of 6,75,000 KwH units per machine

per annum. The respondent company failed to fulfill its obligations

resulting into the petitioners invoking arbitration clause and making

claims against the respondent running into crores of rupees. The

petitioners appointed arbitrator in terms of the arbitration clause

contained in the contract. An application under Section 17 of the Act

was made by the petitioners before the arbitrator. However, the

learned arbitrator did not hear and decide this application rather

recused himself from the arbitration because of distasteful objections

taken by the respondent company against the authority of the

arbitrator. Thereafter, another arbitrator was appointed in terms of the

agreement. The respondent did not put appearance before the other

arbitrator despite notices.

4. The petitioners have submitted that this Court should issue

injunction as prayed since the value of the claims of the petitioners

were in crores of rupees and petitioners were likely to succeed before

the Arbitrator and have the award in terms of their claims. The

petitioners apprehended that the respondent in order to frustrate the

award and to deprive the petitioners of fruits of award may alienate its

properties movable and immovable.

5. This Court in Goyal MG Gases Pvt. Ltd. v. Gulati Industrial

Fabrication (P) Ltd. in OMP No. 205/2009 observed as under:

6. A Division Bench of this Court in Rite Approach Group Ltd. vs. Rosoboronextport 139 (2007) DLT 55 has observed that the provisions of Order 38 Rule 5 CPC and the conditions stipulated therein can be read into Section 9 of the Arbitration and Conciliation Act while granting a relief of that nature. It is undisputed that the present application made by the petitioner under Section 9 is in the nature of an application under Order 38 Rule 5 CPC seeking an injunction before passing of decree against sale or transfer of any movable or immovable properties of the respondent. Such an injunction in fact amounts to bringing the entire business of the respondent to standstill since if this Court injuncts the respondent from disposing of or dealing with any movable or immovable assets, respondent would not be able to operate its bank accounts, would not be able to deal with the shares, securities or any of its properties. Such an injunction cannot be granted merely because the petitioner makes vague and unsubstantiated allegations that the respondent was out to sell his property without placing on record any material to show that any effort was made by the

respondent in this direction. In order to grant such a relief, the Court has to be satisfied that the plaintiff had a prima facie case before the Arbitrator and after being satisfied on this ground, the Court has to be further satisfied that the respondent was attempting to remove or disposing of his assets with intention of defeating the award that may be passed.

6. In the above petitions, the petitioners have failed to place

on record any material to show that they have a good prima facie case.

Mere filing of a claim petition before the Arbitrator does not amount to

having a good prima facie case. There are no restrictions in filing

inflated claims before the Arbitrator because no Court fee is to be paid.

In order to see that the claim petition filed by the petitioner was a

genuine, the Court has to scrutinize all the documents relied upon by

the petitioner in support of the claim and the entire correspondence

which took place between the parties. In absence of these documents

and relevant material the Court cannot rule that the petitioner had a

prima facie case. Even if the petitioners had a prima facie case, an

order of the nature which is sought by the petitioners cannot be issued

unless the petitioners satisfy that the respondent was out to sell its

properties in order to defeat the claims of the petitioners. A mere

imagination of the petitioner that the respondent may sell its

properties in order to defeat the claim of the petitioners is not

sufficient to have injunction in the nature of order Order 38 Rule 5 CPC,

even ex-parte. The petitioners were supposed to place material on

record showing that the respondent company was out to sell its

properties in order to defeat the award that may be passed in favour of

the petitioners. The kind of injunction being sought by the petitioners

would bring the respondent company to a standstill, as an injunction

against all movable and immovable properties would mean that the

respondent would not be able to operate its bank accounts, transfer its

shares and make payment to suppliers, creditors and employees. Such

a blanket injunction cannot be granted to the petitioner unless there

was serious apprehension based on material that the respondent

company was about to be would up or closed.

I find that the petitioners have not been able to make out a

case for allowing the petitions/applications. The petitions are hereby

dismissed.

August 04, 2009                      SHIV NARAYAN DHINGRA, J.
vn