IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD MONDAY, THE NINETEENTH DAY OF DECEMBER TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE SRI JUSTICE V.ESWARAIAH AND THE HON'BLE SRI JUSTICE K.S. APPA RAO C.M.A. No. 692 OF 2011 Between: M/s. Universal Granites, Rep. by its Managing Partner Mr. I.V.Nanda Gopal Appellant AND M/s. Vijaya Granite Exports, Rep. by Mr. T.Venkateswara Rao and another Respondents The Court made the following : JUDGMENT: (per THE HON’BLE SRI JUSTICE V.ESWARAIAH) Heard both the counsel at the interlocutory stage and with their consent, the main appeal itself is taken up for final disposal. A Royalty Lease Agreement was entered in between the parties herein on 26.6.2007 for production and selling of granite blocks. As per the said royalty lease agreement, the second respondent is the proprietor of the first respondent. The respondents herein obtained a quarry lease on 9.10.2002 for black pearl granite over an extent of 2.000 hectares in Sy.No.81/10(P) of Yadavalli village, Chilakaluripet Mandal, Guntur District from the Industries and Commerce (Mines – II) Department, Government of A n d h ra Pradesh for the period from 19.10.2002 to 18.10.2022. It is stated that the appellant herein has got expertise to extract the blocks of Black Pearl Granite in a scientific manner with minimum wastage in the quarry by employing appropriate machinery and latest technology in stone cutting and quarrying. The said royalty lease agreement for production and selling of granites on royalty basis was entered into subject to the condition that the appellant herein deposits a sum of Rs.10.00 lakhs which shall be adjusted against royalty fees in the last seven months of the lease period. The concerned clause in the said agreement for the purpose of resolving the issue involved in the present lis is clause (5) which says that both the parties have agreed that the minimum monthly royalty is Rs.1,50,000/- payable by the appellant to the respondents and as per clause (10) of the agreement, both the parties have agreed that the lease period is for three years, which shall be extended for a further period of three years with mutual consent. As per clause 24, both the parties have agreed that any dispute arising out of the said agreement shall be referred to an Arbitrator under the Arbitration Act and the place of arbitration will be at Hyderabad only and any further dispute with regard to the said agreement will be within the exclusively jurisdiction of courts in Hyderabad only. It is stated that certain disputes arose among the parties and pending settlement of the disputes before the arbitrator, appellant herein filed a petition under Sec. 9 of the Arbitration and Conciliation Act, 1996 in Arb. O.P. No. 1313 of 2010 on the file of the Second Addl. Chief Judge, City Civil Court, Hyderabad seeking to restrain the respondents herein from interfering with the peaceful possession and enjoyment of the petition schedule property. It is stated that prior to the filing of the above O.P. itself, arbitration clause was invoked by issuing registered notice on 19.6.2010 and arbitration proceedings have also been commenced pending the O.P. The court below by the impugned order dated 13.06.2011 disposed of the said O.P. with the following directions: 16. The petition is allowed as follows: (i) There shall be temporary injunction restraining forceful and highhanded interference of the respondents in respect of the petition schedule property during the arbitration proceedings subject to condition of petitioner taking steps for commencement of arbitration proceedings before the Hon’ble Arbitrator referred by both the parties within three months. (ii) If the arbitration proceedings are not commenced and no steps are taken by the petitioner for specific appointment of Arbitrator and commencement of arbitration proceedings within three months, the injunction granted stands automatically vacated without any further order of this Court. (iii) Further the continuation of the injunction order passed by the Court subject to the petitioner paying all the arrears of lease amount at Rs.1,50,000/- per month from the date of expiry of lease period i.e. from 27.6.2010 till date within one month and the petitioner shall continue to pay the same to the respondents every month. (iv) It is hereby clarified that the dues, if any, for the period prior to 27.6.2010 and adjustment of amounts paid in terms of the orders of this Court will be the subject matter of arbitration and the payment is ordered only as an interim measure subject to finalisation of issue as to entitlement of parties by the Hon’ble Arbitrator. (v) There shall be no order as to cost…” Aggrieved by the same, the appellant herein filed this appeal inter alia contending that the order of the court below imposing condition No.(iii) is contrary to law and that the appellant was forcibly prevented from undertaking any activity during the interregnum period for extension of lease period and the court below ought to have granted interim injunction during pendency of the said O.P. in order to conduct the quarry operations and in any event, the condition No.(iii)directing the appellant to pay the alleged arrears of lease amount is illegal. Thus it is stated that when the appellant is prevented from quarrying operations, the court below ought not to have directed to pay the arrears of lease amount. On the other hand Sri K. Sankarayya, learned counsel appearing for the respondents submits that admittedly, the OP filed by the appellant under Sec.9 of the Arbitration and Conciliation Act is only an interim measure for the purpose of granting interim injunction subject to certain terms and conditions and when the OP itself is for interim measure, there cannot be any interim injunction in an application filed as an interim measure and, therefore, the court below having considered contentions of both the counsel, passed the order in favour of the appellant granting interim injunction subject to the condition of his depositing arrears of lease from 27.6.2010. It is stated that the court below disposed of the said O.P. on 13.06.2011 and as per the condition No.3, the appellant has to deposit the entire arrears of lease from 27.6.2010 within one month i.e. by 26.7.2010, but without depositing the said amount, he himself approached this court by filing the appeal on 11.07.2011 and this court by order 13.07.2011 extended the period for compliance of Condition No.3 of the said order and even in the said extended period also, the appellant failed to deposit the amount, as directed by the court below in the said O.P. and, thereafter, filed an application seeking to extend the said order, which is said to have been extended until further orders by order dated 18.08.2011. We are of the opinion that the order of this court dated 18.08.2011 extending the interim order dated 13.07.2011 until further orders cannot be understood to mean that the time stipulated in clause (iii) is extended under further orders. We are further of the opinion that the appellant having failed to deposit the arrears of lease amount, admittedly payable by him, at the rate of Rs.1,50,000/- per month has not been deposited granting of temporary injunction under paragraph 16(i) of the order is only subject to the deposit of arrears of lease amount at the rate of Rs.1,50,000/- per month from 27.06.2010 and continue to deposit the same to the respondents every month. The appellant has not deposited even a single pie towards the lease amount from 27.06.2010. Thus the learned counsel for the respondents submits that as the appellant himself has failed to fulfill the conditional order, they have taken possession of the leased premises. It is further stated that in fact, the appellant is due and payable certain amounts for the period prior to 27.06.2010, which requires to be settled by the Arbitrator as per clause (iv) of the impugned order. We considered the conditions of both the counsel. It is not in dispute that the arbitration proceedings are pending before the Arbitrator. When the application under Sec.9 of the Arbitration and Conciliation Act itself is an interim application, there cannot be any interim order pending final orders in the said application, as the O.P. itself is filed as an interim measure. Under Sec. 9 of the Arbitration and Conciliation Act, any party is entitled to seek for any interim measure or an interim injunction before, during or after the arbitral proceedings. It is not in dispute that the disputes amongst the parties are required to be settled by the Arbitrator only. On the application filed by the appellant himself after invoking the arbitration clause and filing the O.P. under Sec. 9 of the Arbitration and Conciliation Act for grant of interim injunction, the court below, after hearing both the parties only, has rightly granted interim injunction subject to the condition under paragraph No. 16(i) and compliance under paragraph No. 16(iii). Even as per the original agreement, the appellant is admittedly liable to pay the lease amount at the rate of Rs.1,50,000/- per month. It is stated that one of the disputes before the arbitrator is that he is not entitled for the extension of lease. Even assuming as per the understanding of the lease agreement, he is bound to pay the lease amount at the rate of Rs.1,50,000/- per month. There is no dispute with regard to the lease amount payable by the appellant at the rate of Rs.1,50,000/- per month. Therefore, we are of the opinion that the grant of injunction subject to the payment of arrears of lease amount from 27.06.2010 within one month and further direction to continue to deposit the amount every month at the rate of Rs.1,50,000/- cannot be said to be illegal or arbitrary. Therefore, we are of the opinion that the condition No. (iii) is just and valid. The appellant failed to comply with the condition No.(iii) of the order passed by the court below by depositing even a single pie from out of the lease amount of Rs.1,50,000/- from 27.06.2010 till the filing of the appeal i.e. for a period of 13 months, which comes to Rs.19,50,000/-, we do not find any merit in the appeal. Consequently, the appeal fails and is accordingly dismissed with costs. ________________ Justice V.Eswaraiah __________________ Justice K.S. Appa Rao December 19, 2011 MAS