N. Srinivasa vs M/S. Kuttukaran Machine Tools Ltd

3. The facts leading to the filing of this appeal may be summarized as follows: -

5. The Addl. City Civil Judge at Bangalore by his order dated 23rd of September 2006 allowed the application filed by the appellant, inter alia, on a finding that "there are serious 6 issues to be tried before the arbitrator and that the appellant has successfully made out a prima facie case for grant of injunction in the manner prayed for in the application." The learned Addl. City Civil Judge, Bangalore, while disposing of the application for injunction, came to a finding prima facie that the respondent intended to sell the property in dispute to some other persons at a higher price as it was found that the intending purchasers were frequently visiting for the purpose of purchasing the property in dispute. The Addl. City Civil Judge, Bangalore, therefore, held prima facie that the respondent was likely to sell the property in dispute and if it was sold, it would make the award of the learned Arbitrator infructuous for which, the appellant shall suffer irreparable loss and injury. Accordingly, upon the aforesaid findings, the Addl. City Civil Judge, Bangalore disposed of the application for injunction directing the parties to maintain status quo in the matter of transferring, alienating and creating any third party interest in respect of the property in dispute.

17. In view of our discussions made herein above, we are of the view that the disputes raised by the parties can only be determined by the sole Arbitrator and when admittedly, an 19 Arbitrator has been appointed to decide such dispute, the parties should be directed to maintain status quo in the matter of transferring, alienating or creating any third party interest in the same till the award is passed by the sole Arbitrator.

18. At the same time, considering the fact that some time would be required for the Arbitrator to pronounce his award wherein the question whether time was the essence of the contract or not would be required to be determined and if the parties are directed to maintain status quo in respect of the property in dispute, till such award is passed, and for that reasons, the respondent would not be entitled to transfer, alienate the property in dispute during the pendency of the Arbitration proceeding and considering the balance of convenience and inconvenience of the parties, we feel it proper to direct the appellant to deposit the balance amount of Rs.4,99,03,829/- (Four Crores Ninety Nine Lacs Three Thousand Eight Hundred Twenty Nine) within a period of three months from the date of supply of a copy of this order to the VI Additional City Civil Judge, Bangalore, in fixed 20 deposit for a minimum period of six months initially in a nationalized bank in favour of the respondent and renew the same till the disposal of dispute before the Arbitrator. The original fixed deposit receipt shall be kept with the arbitrator. In the event of failure of deposit of the aforesaid amount, the order of status quo, as granted by the VI Additional City Civil Judge, Bangalore and affirmed by us, shall automatically stand vacated and the order of the High Court, vacating the order of status quo, shall immediately come into operation.

19. In the light of the discussions made hereinabove, we set aside the order of the High Court and restore the order of the VI Additional City Civil Judge, Bangalore subject to the conditions mentioned hereinabove.

20. For the reasons aforesaid, the appeal is allowed to the extent indicated above. There will be no order as to costs.