Rajasthan High Court - Jodhpur
Riddhi Siddhi Infraproject Pvt. Ltd vs M/S Anil Industries ... on 29 May, 2024
Bench: Dinesh Mehta, Rajendra Prakash Soni
[2024:RJ-JD:24579-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
D.B. Civil Misc. Appeal No. 873/2024
Riddhi Siddhi Infraproject Pvt. Ltd., Having Its Registered
Address At Rsgs The Universe Campus Hiran Magri Extension
Opposite Sector 9 Udaipur Rajasthan Through Its Authorized
Representative Om Prakash Kumawat S/o Bhanwar Lal Kumawat
Aged About 50 Years R/o Ujjwal Apartment Bhatt Ji Ki Bari
Udaipur Rajasthan
----Appellant
Versus
1. M/s Anil Industries, Old Bus Stand Bhilwara Rajasthan
Through Its Owner Proprietor / Authorized Reprsentative
Anil Dangi Residing At Old Bus Stand Bhilwara Rajasthan
2. Anil Dangi, Navkar Greens Parshwanath Society Bhilwara
3. Anil Dangi S/o Late Parakram Singh Dagi, R/o Navkar
Greens Parshwanath Society Bhilwara
----Respondents
For Appellant(s) : Mr. Pushkar Taimini
Mr. Sanjay Nahar
For Respondent(s) : Mr. Sandeep Saruparia
Mr. Nikhil Ajmera
HON'BLE MR. JUSTICE DINESH MEHTA
HON'BLE MR. JUSTICE RAJENDRA PRAKASH SONI
Judgment
Date of Judgment :: 29/05/2024
Per Hon'ble Mehta, J(oral):
Reportable
1. Instant appeal which has been preferred under Section 13 of
the Commercial Courts Act, 2015, calls in question, the order
dated 24.01.2024, passed by the learned Commercial Court,
Bhilwara, whereby the appellant's request for extending the
interim order dated 10.10.2023 was refused.
[2024:RJ-JD:24579-DB] (2 of 8) [CMA-873/2024]
2. The facts precisely narrated are that the appellant had
moved an application dated 19.09.2023 under section 9 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as
"the Act of 1996") with assertion that in relation to an agreement
dated 10.12.2009, a dispute has arisen between the parties and
as per clause 31 of the said agreement which was to be resolved
by way of arbitration. And accordingly, invoking clause 31, the
appellant appointed Mr. Satyanarayan Derashri as an Arbitrator
and initiated the proceedings as required. But as the respondent is
not taking any interest, the proceedings in terms of clause 31 and
decision by way of Arbitration is likely to take some time. It was
thus, prayed that until the dispute is resolved by the Arbitrator
and award is passed, by way of interim measure the respondent
be restrained from alienating the property or from raising
construction on the disputed land and also be directed to maintain
status quo.
3. Pursuant to the application aforesaid, the Commercial Court
passed an order dated 10.10.2023 and directed the parties to
maintain status quo in relation to the land (Khasra Nos.3021,
3022, 3023 of Tehsil Bhilwara) in dispute.
4. Thereafter, on 18.01.2024, the appellant moved this Court
by way of filing an application under section 11 of the Act of 1996,
for securing appointment of Arbitrator.
5. During the pendency of above referred application viz. Civil
Misc. Case No.15/2023, pending before the Commercial Court, it
was contended by the respondent that the order dated 10.10.2023
had a life of 90 days only, per force provision of section 9(2) of the
Act of 1996. Faced with such stand, the present appellant filed an
[2024:RJ-JD:24579-DB] (3 of 8) [CMA-873/2024]
application dated 11.12.2023 with a prayer to pass further orders
under section 9 of the Act of 1996 or to extend the interim order
dated 10.10.2023.
6. The appellant's said application was rejected and the
application (Civil Misc. Case No.15/2023) filed under section 9 of
the Act itself was disposed of by the Commercial Court on
24.01.2024. While rejecting the application (Civil Misc. Case
No.15/2023), the Commercial Court observed that the appellant
was required to take up the arbitral proceedings within a period of
90 days i.e. on or before 10.01.2024, whereas the application
under section 11 of the Act of 1996 came to be filed before
Hon'ble High Court belatedly, on 18.01.2024. According to the
Commercial Court as the appellant had failed to take up the
proceeding for securing appointment of Arbitrator within the
statutory timeline of 90 days, no indulgence can be granted.
7. Mr. Taimini, learned counsel for the appellant argued that
Commercial Court has erred in non-suiting the appellant on the
ground that it has not taken up the arbitral proceedings under
section 11 of the Act of 1996, within a stipulated period (upto
10.01.2024).
8. He invited Court's attention towards section 21 of the Act of
1996 and submitted that arbitral proceedings should be deemed to
have commenced on 12.07.2023-when the notice of appointment
of Arbitrator was received by the respondent. He argued that as a
matter of fact and law, the arbitral proceedings had already
commenced and the mandate of section 9(2) of the Act of 1996
had been met.
[2024:RJ-JD:24579-DB] (4 of 8) [CMA-873/2024]
9. Learned counsel for the appellant submitted that when the
appellant has already filed an application under section 11 of the
Act of 1996 before the High Court, it was upon the learned
Commercial Court to have either passed a fresh order under
section 9 of the Act of 1996 or to have extended the interim order
dated 10.10.2023 for a further period.
10. Mr. Saruparia, learned counsel for the respondent
vehemently opposed the appellant's prayer and submitted that the
appellant has intentionally delayed the filing of application under
section 11 of the Act of 1996 and since, it had not filed application
under section 11 of the Act of 1996 within prescribed period, the
Commercial Court was justified in rejecting its request. He argued
that no indulgence can be granted to a litigant who is not vigilant
about statutory requirements.
11. Mr. Saruparia, learned counsel for the respondent prayed
that the appeal be dismissed and the interim order of maintaining
status quo passed by this Court vide order dated 21.03.2024 be
vacated.
12. Heard learned counsel for the parties.
13. So far as sub-section (2) of section 9 of the Act of 1996 is
concerned, the same indisputably provides that "the arbital
proceedings shall be commenced within a period of 90 days from
the date of such order". If such expression is read in isolation, the
order of the Commercial Court appears to be infallible, but the
same has been passed being oblivious of what has been contained
in section 21 of the Act of 1996.
14. According to section 21 of the Act of 1996, once the notice
of appointment of Arbitrator has been given by either party, the
[2024:RJ-JD:24579-DB] (5 of 8) [CMA-873/2024]
arbitral proceedings should be deemed to have commenced. The
step for filing the application under section 11 of the Act of 1996 is
a step in furtherance of securing appointment of Arbitrator and the
same cannot be construed to be commencement of arbitral
proceedings.
15. There is no gainsaying the fact that an application under
section 11 of the Act of 1996 has been filed by the appellant on
18.01.2024 and both the parties are contesting the same before
the designate of Hon'ble the Chief Justice.
16. As observed above, the notice for appointment of Arbitrator
had been issued on 12.07.2023 and hence, the arbitral
proceedings had commenced. As such the view taken by the
Commercial Court is contrary to law. The reasons given by the
Commercial Court that as the appellant took up proceeding under
section 11 of the Act of 1996 on 18.01.2024 after passing of 90
days' time from the date of interim order, no order can be passed
is also unsustainable in the eye of law.
17. Sub-section (2) of section 9 of the Act of 1996 is wide
enough and it unequivocally empowers the Court to extend an
order of interim measure. Opening words of section 9-"A party
may, before or during arbitral proceedings or at any time after the
making of arbitral award" and the closing phrase of sub-section(2)
"within a period of 90 days from the date of such order or within
such further time as the Court may determine", clothe the Court
with power to extend the order of interim measure even beyond
90 days.
18. The Commercial Court, while passing the order oppugned,
has relied upon the judgment of Hon'ble Karnataka High Court,
[2024:RJ-JD:24579-DB] (6 of 8) [CMA-873/2024]
cited by learned counsel for the respondent, rendered in the case
of M/s. Paton Constructions Private Ltd. vs. M/s. Lorven
Projects Ltd., and Anr. reported in 2017 SCC Online Kar
3469. We have gone through the same. According to us, the
same differs from the present case in facts and situation. In above
referred judgment, the application under section 9 of the Act of
1996 was presented on 13.11.2013 and interim measure was
granted vide order dated 21.12.2013. The interim measure stood
vacated automatically on expiry of three months from 13.11.2023,
as per Rule 9(4) of the High Court of Karnataka Arbitration
(Proceedings Before the Courts) Rules, 2001 (hereinafter known
as High Court of Karnataka Arbitration Rules, 2001) which
provides that if arbitral proceedings are not initiated within three
months from the date of presentation of the application under
section 9 of the Act of 1996, any interim order granted shall stand
vacated without any specific order to that effect by the Court
which passed the order.
19. On perusal, it is clear that in the above case, the arbitral
proceedings had not been initiated until the application under
section 9 of the Act of 1996 was filed. That apart, Rule 9(4) of the
High Court of Karnataka Arbitration Rules, 2001 mandates that
the process of appointment of Arbitrator has to be initiated before
the expiry of three months from date of presentation of
application under section 9 of the Act of 1996, whereas no such
Rule prevails in State of Rajasthan. However, in present case, the
arbitral proceedings had been initiated way back on 12.07.2023.
The facts of the case in hands is clearly distinguishable from the
facts of the case before Karnataka High Court.
[2024:RJ-JD:24579-DB] (7 of 8) [CMA-873/2024]
20. According to us, as the Commercial Court had passed an
order for taking interim measures to maintain status quo on
10.10.2023, ideally, it should have extended the same in the facts
obtaining in the case. The fact that application under section 11
came to be filed after 90 days (on 18.01.2024) was not indicative
of dilly-dallying tactics or negligence on the part of the appellant.
21. But then, there is another aspect of the matter. The
Commercial Court has passed a blanket order of injunction and
directed the 'status quo' to be maintained in relation to the
disputed land.
22. While passing interim order or taking interim measure, the
Court is required to have a prima-facie grasp of the dispute and
claim of the parties. The Court should look at the nature of
controversy and consider the relief claimed or amount claimed. If
the dispute is in relation to monetary claim or the same can be
measured in terms of money, then, in place of passing blanket
orders of maintaining status quo qua the property, the Court
should secure the amount likely to be awarded to the claimant or
as claimed.
23. Admittedly, the claim of the appellant as shown in para No.6
of the application under section 9 of the Act so also in the
application under section 11 of the Act of 1996 is of Rs.
9,21,81,250/-. Therefore, the Commercial Court was required to
secure the amount of claim or approximate amount which could
be awarded. Whereas the Court has ordered to maintain status-
quo regarding the entire land covered by the agreement. We are
of the considered view that such order has not only affected the
rights of the respondent but has adversely impacted the rights of
[2024:RJ-JD:24579-DB] (8 of 8) [CMA-873/2024]
various investors and purchasers. Passing of the orders like the
one that has been passed in the case in hands, may lead to
innumerable complications.
24. During the course of submission, Mr. Saruparia, learned
counsel for the respondent informed that as against the claim of
the appellant, the respondent proposes to file a counter claim of
Rs.11,37,70,140/-.
25. Hence, in order to meet the ends of justice and to balance
the equity, we deem it appropriate to ask the respondent to
furnish one solvent surety of Rs. 10 Crores to the satisfaction of
the Commercial Court, Bhilwara, within a period of 15 days from
today. The Commercial Court shall not insist upon furnishing cash
security, Bank Guarantee or FDR.
26. The surety so furnished shall remain in force until the
appellant or the respondent move(s)/prefers an application under
section 17 of the Act of 1996 before the Arbitrator to be appointed
by the High Court pursuant to the application under section 11 of
the Act of 1996 that has been filed by the appellant.
27. The arbitrator shall pass a fresh order in exercise of his
power under section 17 of the Act of 1996 (if deemed appropriate)
in accordance with law, without being influenced or affected by the
order instant or any observation made herein.
28. The appeal so also stay application stand disposed of
accordingly.
(RAJENDRA PRAKASH SONI),J (DINESH MEHTA),J
93-raksha/-
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