Goyal Mg Gases Pvt. Ltd. vs Gulati Industrial Fabrication ...
2009 Latest Caselaw 3006 Del

 *         IN THE HIGH COURT OF DELHI AT NEW DELHI


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

+OMP No.205/2009
%                                                04.08.2009
   GOYAL MG GASES PVT. LTD.        .... Petitioner
             Through : Mr. P.S. Bindra, Adv.

     Versus

     GULATI INDUSTRIAL FABRICATION (P) LTD.
                                          .... Respondent
              Through:  Mr. Sudeep Kr. Shrotriya with
                        Mr. K.K. Khurana, Advs.



     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. By this application under Section 9 of the Arbitration and

Conciliation Act petitioner has sought an injunction against the

respondent, company to the effect that the respondent and its

directors, employees, etc. should be restrained from selling,

transferring and alienating or creating any third party rights and

interest over the assets and properties of the respondent.

2. The case of the petitioner is that the petitioner has filed

an arbitration claim against the respondent, company before the

learned Arbitrator to the tune of Rs.1,16,52,301/- as liquidated damages on account of delay in supply of air cooling towers, water

cooling towers and GOX vessels.

3. It is stated that the respondent, in view to frustrate the

execution of the award likely to be passed in favour of the petitioner

was trying to sell his property so that the petitioner may not

execute the award and was left high and dry. Hence the prayer.

4. The petition is accompanied by a supporting affidavit

only wherein an authorized signatory has stated that he was

conversant with the facts. Notice of the petition was served upon

the respondent and counsel for the respondent stated that he need

not file reply and arguments can be heard right away.

5. It is submitted by respondent's counsel that on an

application under Section 17 made by the respondent before the

learned Arbitrator it is the petitioner who has been asked to give a

bank guarantee of Rs.25 lakhs in favour of the respondent. He also

submitted that the petitioner had failed to place on record any

material to show that there was any effort by the respondent to sell

or dispose of any property. On the other hand, respondent was

establishing another factory to manufacture more products. Thus,

petition was a frivolous petition and liable to be dismissed.

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.

7. There was nothing on record to arrive at the conclusion

that plaintiff had a prima facia case. The plaintiff has not shown how

he has a good prima facie case. Mere filing of claim 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 ad veloram Court fee is payable on value of

claim. Even where the real claim may be of few lakhs, one may file

a claim running into crores as he has not to pay Court fee. Similarly

the petitioner has failed to place on record any material to show

intention of the respondent to sell or dispose of property to defeat

the claim of petitioner. A respondent cannot be debarred from

dealing with his property merely because claimant has invoked

Arbitration Clause and filed a claim before the Arbitrator. An

applicant under Section 9 of the Arbitration and Conciliation Act, to

get such an order has to show that he has prima facie a bonafide

and a valid claim before the Arbitrator and he has also to satisfy the

Court that the respondent was about to remove or dispose of all or

any part of his property with the intention of obstructing or

defeating the implementation of the award that may be passed

against the respondent. The petitioner has failed on both the counts

to satisfy this Court. There are no merits in the petition. The

petition is hereby dismissed.

August 04, 2009                     SHIV NARAYAN DHINGRA J.
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