THE HON'BLE SRI JUSTICE A.GOPAL REDDY and THE HON'BLE SRI JUSTICE K.S. APPA RAO C.M.A Nos.721 & 771 of 2011 COMMON JUDGMENT: (Per Hon’ble Sri Justice A.Gopal Reddy) These two appeals are directed against the orders dated 02.06.2011 passed by I Additional Chief Judge, City Civil Court, Secunderabad, in O.P.Nos.565 and 564 of 2010, whereby the petitions filed by the respondent herein under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain the appellant herein from utilising the plant and machinery, and shutters and scaffolding material supplied by it under agreements dated 18.07.2009 and 16.06.2009 respectively, were allowed. The appellant herein is in the business of Infrastructure Development, whereas the respondent is carrying on all types of contracts, civil constructions and other engineering works etc. The appellant entered into rental agreements with the respondent for the supply of various plant and machinery for a period of 12 months and shutters and scaffolding material for a period of 24 months, vide agreements dated 18.07.2009 and 16.06.2009 respectively. Under the terms of the agreements, the rental for the equipments as per the schedule is Rs.80,000/- per month and the appellant has to provide security deposit by way of post dated cheques for Rs.9,60,000/-. As per the said agreements, the appellant has to pay the rent within 30 days, failing which, it shall pay penal interest @15% on the amount due. The said agreements further mandate that if the appellant fails to make the payment within the stipulated time, it constitutes default and the respondent is at liberty to take possession of the equipment. Since the appellant was utilizing the plant and machinery and shutters and scaffolding materials in the construction, without paying the rents within the time, and the post dated cheques issued towards the rentals, muchless monthly rentals for 100 Tons of material which was utilised, were dishonoured, proceedings under Section 138 of the Negotiable Instruments Act, 1881 were initiated by the respondent for the amounts due. The respondent also issued several legal notices to the appellant demanding to pay the amounts due with interest thereon. Since the appellant is utilizing the hired material i.e., plant and machinery and shutters and scaffolding material, without paying the rents, the respondent filed the above O.Ps. for securing the possession of the said hired material. The appellant contested the said O.Ps by filing counter- affidavits admitting the execution of the agreements dated 18.07.2009 and 16.06.2009 for supply of plant and machinery and shutters and scaffolding material respectively. In the said counter-affidavits it is stated that the appellant is liable to pay only Rs.3,07,137/- to the respondent as on 30.04.2010 along with interest; that they never utilized the equipment of the respondent nor prevented anybody from entering into their work place and that the supplied material is in unusable condition and lying in their site idle, due to which, they suffered huge loss for which the respondent is liable to pay the damages. It is further stated that the appellant company faced with Satyam Scam and there is nobody to look after the material supplied to them and that they could not use the material supplied since it was very poor quality, and therefore, they are not liable to pay any amount to the respondent. After considering the entire material available on record, the learned I Additional Chief Judge, City Civil Court, Secunderabad, by the impugned orders allowed the petitions directing the appellant to deliver the plant and machinery and shutters and scaffolding material supplied under the two lease agreements, to the respondent herein. Questioning the same, the present appeals are filed. We have heard the learned counsel for the appellant as well as the learned counsel for the respondent. The main contention advanced by the learned counsel for the appellant is that as the plant and machinery and shutters and scaffolding material supplied by the respondent are of inferior quality, the same were not put to use, and therefore, the hire charges could not be paid to the respondent and that even though the same was brought to the notice of the learned Chief Judge, the learned Chief Judge did not consider the same and directed the appellant to deliver the plant and machinery and shutters and scaffolding material to the respondent. In view of the said direction, the appellant will lose an opportunity to establish that the material is of substandard and as such the same cannot be profitably used by it, in the event the matter is placed before the Arbitrator. Hence, the material supplied cannot be returned to the respondent. We do not see any merit in the contention advanced by the learned counsel for the appellant. As per the terms and conditions of the agreements, the payment terms have been agreed between the parties and the remedy provided for them is that the respondent can inspect each item of equipment at least one week prior to the end of rental term for picking it up from the hirer’s site pursuant to the end of rental period; that the respondent can immediately notify the hirer of any discrepancies in the condition of the equipment being returned and the condition of the equipment at the time of delivery and shall not pick such equipment till it meets nearly the same condition as it was at the time of delivery to the hirer; that if the respondent fails to provide such notice in writing within three days after the inspection of the equipment, the respondent will conclusively presumed to have accepted the equipment and that any subsequent claim that the equipment was not provided in fully functional order or in original condition will not be considered. These are all the matters, which can be decided by the Arbitrator, basing upon the evidence, if any, adduced by the parties. For that reason, the appellant cannot detain the materials supplied by the respondent with them. Admittedly, the plant and machinery and the shutters and scaffolding material belong to the respondent and the respondent hired the same to the appellant on rental basis. In view of the same, and particularly during the rental agreement period, if the appellant made any such claims, it is always open for it to contend the same before the Arbitrator in the event the matter is referred to the Arbitrator. In the circumstances, the impugned orders do not warrant any interference by this Court. The Civil Miscellaneous Appeals are accordingly dismissed. There shall be no order as to costs. ________________ A. GOPAL REDDY, J ________________ K.S. APPA RAO, J Date: 03.08.2011 va