Case: Tuticorin Coal Terminal Private Limited Vs. Gelguera Gruas India Private Limited

the manner in which it is projected. sought. Mr. Andhyarujina was guarded in his submission that the relief sought is in Section 17 application is not based on the bank guarantee or merely an attempt to secure the amount collected by the petitioner pursuant to invocation of the bank guarantees and therefore not subject matter of the first application under Section 9.17. Furthermore we have to bear in mind that after the amendment of the act and substitution of Section17 by virtue of Section17(2) reads as follows :...(2) Subject to any orders passed in an appeal under Section 37, any order issued by the Arbitral tribunal under this Section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908 (5 of 1908), in the same manner as if it were an order of he Court.In view of this amendment what we have here is rather a unique situation whereby despite an order of this Court under Section 9 being confirmed in appeal and in the SLP by virtue of its dismissal, a fresh order affecting rights of the petitioner has been passed. By virtue of the deeming provision of Section 17(2) this order is to be treated as order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure in the same manner as if it were order of the Court. This results in a rather incongruous situation which certainly could not have been permitted since the highest Court has already confirmed the order passed by the division Bench of this Court approving the order passed under Section 9. An order under Section 17 which shall be deemed to be an order of court cannot result in setting the clock back to prevent the petitioners from utilising the funds received under the guarantees encashment of which has been permitted. The funds are now at the disposal of the petitioners. In the light of the order under Section 9 attaining finality the impugned orders certainly cannot be expressed as order of the Court. For this reason also the order impugned cannot be enforced in law and hence cannot be sustained.18. Apropos the contention that the application seeks to secure an admitted sum of money, I enquired of Mr. Andhyarujina whether in the light of such alleged admission, the respondent had sought any interim award to which Mr. Andhyarujina fairly stated that no such application for interim award had been made. It transpires that the so called admission was not in any pleading in the arbitration proceedings but refers to the very same amount which formed the subject matter of the Statutory notice under Section 434 of the Companies Act and a Company petition based on that notice to which reference was made in the Section 9 order. As stated above the Company Court had observed that admission of liability was in anticipation of the work under the contract and not as the result of termination of the contract. Different sets of circumstances arose on termination of the contract and this aspect has been dealt with by the Court while disposing of the Section 9 Applications.19. It is also not possible to accept Mr. Andhyarujinas contention that the application under Section 17 is by way of an application to furnish security as contemplated under Order 38 Rule 5. In my view none of the elements of the said Order or Rule have been satisfied and on that ground alone this contention of the respondent is liable to be rejected. The Arbitral Tribunal has not passed the order after having come to any satisfaction that the petitioner was about to dispose of the property or remove property from the jurisdiction with intention to delay or execution of any award that has to be passed. Paragraph 30 of the order passed under Section 9 deals with the submission on behalf of the respondents in support of the plea of irretrievable injustice and special equities in their favour. The respondents contention has been recorded thus in paragraph 31 (iv):That if the Arbitral Tribunal ultimately decides in favour of the FGIPL, it would be impossible to recover the amounts under the Bank guarantees from TCTPL causing great irretrievable injury / injustice to FGPIL. TCTPL being a Special Purpose Vehicle has no other assets or businesses apart from its Concession Agreement with V.O.Chidambaranar Port Trust and the assets created therein. FGIPL verily believes that all the loans given by the lenders to TCTPL are secured by exclusive first charge on all the assets provided under the Concession Agreement. FGPIL verily believes that lenders were also furnished the Corporate Guarantee by ALBA Aisa Pvt. Ltd (Holding Company of TCTPL) TCTPL is not making much revenue or operating cash inflow since the project has not been commissioned, on account of issues between TTCTPL and V.O. Chidambaranar Port Trust.20. This submission was dealt with by the Court in its order under Section 9. The contention on behalf of the respondent that the petitioner does not have any assets and the respondent is left high and dry and thus it will be unable to execute an award has been rejected. The Court found that the promoters of the petitioner had already invested about 170 crores in the project and the Concession Agreement between the parties was for a period of 30 years during which users of the facilities would be required to pay appropriate handling charges. The estimated revenue during the balance of the Concession period was Rs.10,067.14 crores to be appropriated in the manner set out in the contract. The petitioner also had a counter claim of Rs.600 crores and the Court held that the adjudication of the proceeding on the basis that the claim of the respondent would be upheld by the Arbitral Tribunal and the counter claim could be dismissed, cannot be accepted. In this view of the matter the so called admission of liability is not significant.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]15. The case of the respondents and as canvassed by Mr. Andhyarujina is that the application under Section 17 is the result of a fresh cause of action namely rejection of the SLP. In my view rejection of the SLP has resulted in confirmation of the order of the appeal Court in which the order passed under Section 9 has merged. The order of the Supreme Court does not give rise to fresh cause of action to seek relief qua the very subject matter of the application under Section 9. The order under Section 9 makes reference to the Order passed by me as Company Judge in Company Petition No. 780 of 2015 seeking winding up of the petitioner company.Thus, the so called admission was not really an unqualified admission which could entail an order for payment in the manner in which it is projected. sought. Mr. Andhyarujina was guarded in his submission that the relief sought is in Section 17 application is not based on the bank guarantee or merely an attempt to secure the amount collected by the petitioner pursuant to invocation of the bank guarantees and therefore not subject matter of the first application under Sectionview of this amendment what we have here is rather a unique situation whereby despite an order of this Court under Section 9 being confirmed in appeal and in the SLP by virtue of its dismissal, a fresh order affecting rights of the petitioner has been passed. By virtue of the deeming provision of Section 17(2) this order is to be treated as order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure in the same manner as if it were order of the Court. This results in a rather incongruous situation which certainly could not have been permitted since the highest Court has already confirmed the order passed by the division Bench of this Court approving the order passed under Section 9. An order under Section 17 which shall be deemed to be an order of court cannot result in setting the clock back to prevent the petitioners from utilising the funds received under the guarantees encashment of which has been permitted. The funds are now at the disposal of the petitioners. In the light of the order under Section 9 attaining finality the impugned orders certainly cannot be expressed as order of the Court. For this reason also the order impugned cannot be enforced in law and hence cannot be sustained.18. Apropos the contention that the application seeks to secure an admitted sum of money, I enquired of Mr. Andhyarujina whether in the light of such alleged admission, the respondent had sought any interim award to which Mr. Andhyarujina fairly stated that no such application for interim award had been made. It transpires that the so called admission was not in any pleading in the arbitration proceedings but refers to the very same amount which formed the subject matter of the Statutory notice under Section 434 of the Companies Act and a Company petition based on that notice to which reference was made in the Section 9 order. As stated above the Company Court had observed that admission of liability was in anticipation of the work under the contract and not as the result of termination of the contract. Different sets of circumstances arose on termination of the contract and this aspect has been dealt with by the Court while disposing of the Section 9 Applications.19. It is also not possible to accept Mr. Andhyarujinas contention that the application under Section 17 is by way of an application to furnish security as contemplated under Order 38 Rule 5. In my view none of the elements of the said Order or Rule have been satisfied and on that ground alone this contention of the respondent is liable to be rejected. The Arbitral Tribunal has not passed the order after having come to any satisfaction that the petitioner was about to dispose of the property or remove property from the jurisdiction with intention to delay or execution of any award that has to be passed. Paragraph 30 of the order passed under Section 9 deals with the submission on behalf of the respondents in support of the plea of irretrievable injustice and special equities in their favour.This submission was dealt with by the Court in its order under Section 9. The contention on behalf of the respondent that the petitioner does not have any assets and the respondent is left high and dry and thus it will be unable to execute an award has been rejected. The Court found that the promoters of the petitioner had already invested about 170 crores in the project and the Concession Agreement between the parties was for a period of 30 years during which users of the facilities would be required to pay appropriate handling charges. The estimated revenue during the balance of the Concession period was Rs.10,067.14 crores to be appropriated in the manner set out in the contract. The petitioner also had a counter claim of Rs.600 crores and the Court held that the adjudication of the proceeding on the basis that the claim of the respondent would be upheld by the Arbitral Tribunal and the counter claim could be dismissed, cannot be accepted. In this view of the matter the so called admission of liability is not significant.