Maharashtra Seamless Ltd. vs India Oil Corporation Ltd.
2009 Latest Caselaw 100 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  F.A.O.(OS) No.473/2008

                                 Date of Decision:15th January 2009

      MAHARASHTRA SEAMLESS LTD.                  ..... Appellant
                   Through: Mr. Sandeep Sethi, Sr. Advocate
                             with Mr. V. Seshagiri & Mr. Alok
                             Tiwari, Advocates
              versus

      INDIA OIL CORPORATION LTD.                ..... Respondent
                     Through: Mr. V.N. Kaura, Advocate with Mr.
                               Rakesh Sawhney and
                               Mr. Paramjeet Benipal, Advocates
      CORAM:
      HON'BLE MR. JUSTICE MUKUL MUDGAL
      HON'BLE MR. JUSTICE VIPIN SANGHI

      1. Whether the Reporters of local papers may
         be allowed to see the judgment?
      2. To be referred to Reporter or not?
      3. Whether the judgment should be reported
         in the Digest?

%                          JUDGMENT (Oral)

MUKUL MUDGAL, J.

1. Admit.

2. With the consent of the parties we have taken up the appeal

for final disposal. The present appeal is directed against the order

dated 24.11.2008 passed by the learned Single Judge in O.M.P. No.

569/08 preferred by the appellant under Section 9 of the Arbitration &

Conciliation Act to, inter alia, seek restraint against the respondent

from acting on the impugned letter dated 17th September, 2008. By

the letter dated 17th September, 2008, the respondent communicated

its decision to procure Grade 70 pipes from some other alternate

source at the risk and cost of the appellant by invoking Clause 4.23.3

of the General Conditions of Contract (Section 4). The learned Single

Judge, it appears, did not grant any ex-parte ad-interim order of

injunction. By the impugned order, notice was issued to the

respondent who appeared and accepted notice before the learned

Single Judge. The respondent was granted time to file the reply and

the next date of hearing is fixed as 2nd February, 2009. Since no ad-

interim injunction was granted in favour of the appellant, feeling

aggrieved, the appellant has preferred the present appeal.

3. It is submitted by the learned counsel for the respondent that

this appeal itself is not maintainable under Section 37 of the

Arbitration & Conciliation Act, 1996 since the appellant‟s petition under

Section 9 has not been decided and notice has been issued thereon.

We are not going into the merits of this plea of maintainability raised

by the learned counsel for the respondent in view of the order we

propose to pass in this appeal.

4. Along with the present appeal, the appellant has also

preferred C.M. Nos. 16978-80, inter alia, seeking interim orders to

restrain the respondent from invoking the performance guarantee

dated 13th May, 2008 issued by Standard Chartered Bank at the

behest of the appellant in favour of the appellant. On 02.12.2008,

when the matter came up before this Court, the following interim order

was passed:

"List on 8th December, 2008.

In the meanwhile, since it is stated on instructions by Mr. Rakesh Sawhney, learned Counsel for Respondent/Caveator that the pay order pursuant to the encashment of the Bank Guarantee has been received by the Petitioner today and deposited in its account, Respondent is directed to keep the amount of pay order in a „no-lien account‟ till further orders by this Court."

5. It is pointed out to us that the counsel for the appellant

issued letter dated 2nd December, 2008 to the Standard Chartered

Bank, copy whereof is annexed to the affidavit dated 5th December,

2008 and the same inter alia reads as under:

"Apropos our letter dated December 2008 whereby we had informed you that we had, for and on behalf of our Client, Maharashtra Seamless Limited, filed the subject Appeal against Indian Oil Corporation Limited ("IOCL"). Please note that the subject Appeal was listed on December 2, 2008 before the Division Bench of the Delhi High Court comprising of Hon'ble Mr. Justice Mukul Mudgal and Hon'ble Mr. Justice Manmohan.

At the hearing of the Appeal the counsel for IOCL represented to the Ld. Bench that it had invoked the Performance Guarantee No. 316020213313-HP dated May 13, 2008 for Rs. 8,52,79,100.00/- against Maharashtra Seamless Limited and against which invocation the Standard Chartered Bank had issued a bank draft for the said amount to IOCL on December 2, 2008. The counsel for IOCL further represented to the Ld. Bench that the demand draft issued by the Standard Chartered Bank was already en-cashed by IOCL. This fact was refuted by us.

Accordingly, we request you to provide us with the

status of the encashment of the demand draft issued by your bank in favour of IOCL forthwith.

Regards.

Sd/-

Dua Associates Advocates for Maharashtra Seamless Limited"

6. It is submitted by the learned counsel for the respondent that

the order dated 2nd December, 2008 of this Court did not say that the

appellant‟s bank viz. Standard Chartered Bank was required to keep

the money in a „no-lien account‟ and the communication dated 2nd

December, 2008 is contrary to the order passed by this Court.

7. We have heard Mr. Sandeep Sethi, learned senior counsel for

the appellant who has stated that the letter dated 2nd December, 2008

was issued inadvertently, and without understanding the scope of the

order, because the copy of the order was not available. In view of the

explanation given, we do not express any view on the aforesaid

aspect. The counsel for the appellant is advised to be more careful in

future.

8. Taking into account the fact that the Bank Guarantee already

stands invoked, and money transferred to the respondent‟s bank; the

overall facts and circumstances, and without going into the merits of

the contentions in the present appeal, which is only against the order

dated 24th November 2008 passed by the learned Single Judge

whereby notice was issued on the petition preferred by the appellant,

the appropriate course of action to adopt, in our view, would be to

send the parties to the learned Single Judge. The learned Single

Judge is directed to take up the OMP and dispose it off preferably

within eight weeks from the next date of hearing. Both sides would

co-operate and not seek unnecessary adjournments before the learned

Single Judge.

9. In view of the fact that the respondent is a public sector

corporation, we are of the view that the interim order directing the

amount to be kept in „no-lien account‟ has to be vacated. However,

we direct that in case the appellant succeeds before the learned Single

Judge, the amount covered by the Bank Guarantee shall be

transmitted to the appellant within one week. The order passed by us

should not be construed as an expression on the merits of this case.

The learned Single Judge shall proceed entirely on the merits of the

case.

The appeal stands disposed of.

MUKUL MUDGAL, J.

VIPIN SANGHI, J.

JANUARY         15, 2009
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