IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE J.B.KOSHY & THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN MONDAY, THE 7TH JULY 2008 / 16TH ASHADHA 1930 Arb.A.No. 15 of 2008() ------------------------------ (AGAINST O.P(ARB.) NO.765/2007 DT. 17.3.2008, SECOND ADDITIONAL DISTRICT COURT, ERNAKULAM) APPELLANT - RESPONDENT NO.1: --------------------------------------------- PATI - BEL JOINT VENTURE HAVING ITS OFFICE AT AYINIVILAYIL KRUPA BHAVAN, HOUSE NO.442, PERINGANDUE ROAD, KARUVATTA (S), ADOOR-23, PATHANAMTHITTA DT. REP. BY ITS PROJECT MANAGER, MR. WONG YOKE SUM. BY ADV. SRI.K.SUBASH CHANDRA BOSE SRI.V.RAJASEKHARAN PILLAI RESPONDENTS - PETITIONER - RESPONDENT: ------------------------------------------------------------- 1. M/S. GK GRANITES LTD., OORAKKADU, KIZHAKKAMBALAM.P.O, ERNAKULAM DT., REP. BY ITS MANAGING DIRECTOR SRI. GEORGE ANTONY. 2. THE PROJECT DIRECTOR (KSTP), KERALA PWD TC 47/1795-1, 2ND FLOOR, 5 & 6, RAJADHANI COMPLEX, OPP. PRS HOSPITAL, KILLIPALAM, KARAMANA.P.O, TRIVANDRUM-22. BY SERNIOR ADVOCATE SHRI JACOB VARGHESE, R1 SRI.JOSE ABRAHAM FOR R1 SRI.VIVEK VARGHESE P.J. FOR R1 SRI.VARUGHESE M EASO FOR R1 SMT.PRAISHEEL PRAKASAM FOR R1 SMT.ELIZEBETH MEERA FOR R1 SRI.P.J.VINOD JOSEPH FOR R1 SRI.VIVEK VARGHESE P.J. FOR R1 THIS ARBITRATION APPEALS HAVING BEEN FINALLY HEARD ON 7.7.2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON I.A. NO. 1555 OF 2008 IN ARB. APPEAL NO. 15 OF 2008 --------------------------------------------------- DISMISSED. ID/- J.B. KOSHY, JUDGE. 7.7.2008 ID/- P.N. RAVINDRAN, JUDGE. vsv J.B. Koshy & P.N.Ravindran, JJ. -------------------------------------- Arb.Appeal No.15 of 2008 --------------------------------------- Dated this the 7th day of July, 2008 Judgment Koshy,J. First respondent filed an application under section 9 of the Arbitration and Conciliation Act for interim protection restraining the appellants or its agents from alienating two hot mix plants valued at Rs.3.80 crores described in 'B' schedule of the petition and also for a prayer of order of attachment before award of Rs.Nine crores out of the amount payable by the garnishee, second respondent. The first respondent was suppliers of materials such as aggregates, rubble and GSB to the appellant in connection with the execution of 127 k.m. stretch of a road project for and on behalf of the Government of Kerala known as 'KSTP-1 road project'. The above contract was terminated on 4.12.2006. According to them, they were not paid any amount for the rubble and other materials supplied and arbitration is pending regarding that dispute. Total amount claimed now is about Rs.Seven crores. The arbitrator is Justice T.V.Ramakrishnan, a retired Judge of this Court. Arbitration is in progress. Pleadings stage is over and it is expected to finish Arb. Appeal No. 15/2008 2 the arbitration within four months. The appellant also raised a counter claim against the original petitioner. Section 9 petition was filed when contract with the State was terminated and they were under the fear that the appellant whose head office is situated in a foreign country may go away without paying the amount. Therefore, according to them, interim protection was necessary. After hearing the parties, the District Court passed the following order: "Under the circumstances, I find that the respondents are to be restrained by means of a prohibitory injunction from alienating the machineries mentioned in B schedule of the petition till the arbitral award is passed and the first respondent also directed to furnish security to the tune of Rs.9/- crores failing which the second respondent garnishee is directed not to disburse an amount of Rs.9/- crores in their hands to the first respondent till the passing of the arbitral award." It is also further submitted that petitioner has submitted a list of certain machineries offered as security for Rs.9 crores before the District Court. The dispute arose whether security should be furnished before the District Court which passed the order under section 9 or before the arbitrator where the arbitration is pending. A counter affidavit is filed by the first respondent that even after Arb. Appeal No. 15/2008 3 section 9 order was passed, some amounts were paid by the second respondent to the petitioner. 2. Now, the entire scenario has changed. After negotiations, second respondent has again entered into a contract with the appellant. For completing the construction of the road, additional agreement was executed. Therefore, fear of the first respondent that appellant will go away without paying them is out of question. It is also submitted by the counsel for the appellant that apart from the amounts due as per the project and the works already done by them huge amounts are due to them from the National Highway Authority also and there is no question of they leaving the place without paying the amount if awarded against them by the arbitrator. It is further submitted that the order of injunction and attachment should be made only in case of extreme necessity in the interest of justice and it cannot be passed as a matter of routine. 3. In these circumstances, since the appellant is again entrusted by the second respondent with the work of construction of road project, we are of the opinion that the order passed under section 9 needs modification. Appellant has already agreed that they will not sell, remove or alienate the two hot mix plants and also Arb. Appeal No. 15/2008 4 they will not sell the properties offered before the arbitrator as security for the amount of Rs.9 crores to be released by the second respondent. From the materials placed, we also understand that the work now being executed with the second respondent is in progress. In the above circumstances, apart from the security of machineries offered, while releasing the final bill after completing the work, Rs.7 crore shall not be released by the second respondent before the arbitral award, if any, passed is settled by the appellant. But, that will not restrain the second respondent from releasing the present bills already passed. Interest of justice will be satisfied if such an order is passed as the arbitration award can be passed within four months from today. Therefore, we modify the order accordingly. Two hot mix plants and machineries offered as security by the appellant shall not be sold or alienated before the matter is settled and appellant is directed to file an affidavit before the District Court containing such an undertaking within one month from today. We also make it clear that at the time of settling the final bills, Rs.7 crores shall not be released until arbitration award amount, if any, is paid. Pendency of the arbitration proceedings is not a bar in releasing the amount if payable to the appellant. If the work with the second respondent is again rescinded for any reason Arb. Appeal No. 15/2008 5 whatsoever, further bills thereafter shall not be paid to the appellant till the award amount, if any, is settled. The appeal is disposed of accordingly. J.B.Koshy Judge P.N.Ravindran Judge vaa Arb. Appeal No. 15/2008 6 J.B. KOSHY AND P.N.RAVINDRAN,JJ. ------------------------------------- Arb.Appeal No. 15 of 2008 ------------------------------------- Judgment Dated:7th July, 2008