Delhi High Court Shri Shankar Vijay Saw Mill vs Union Of India on 13 November, 1979 Equivalent citations: 17(1980)DLT179 JUDGMENT R. Sachar, J. (1) The matter relates to the type of injunctions which can be issued by this court in arbitration proceedings arising out of contracts entered into between the D. G. S. & D., Govt. of India and the Contractors. Doubt has been cast on s (2) The petitioner is a registered firm and carries on the business of manufacturing and selling timber. The Director General of Supplies and Disposal (D. G. S. & D.) functions as a purchase organisation for the Government of India and makes purchases for the various departments. In response to an invitation to tender by D. G. S. & D. for the supply of Bijasal logsst Class, the petitioner made an offer to supply 1016 cubic metres at a flat rate of Rs. 669.00 per cubic metre. The D. G. S. & D. issued an acceptance of tender No. TWI6/107/61/721/261065/PAOP dated 24.12.1973. The said acceptance of tender contained an arbitration clause. It appears that later on disputes arose between the petitioner and the D. G. S. & D. The case of the petitioner being that there was no concluded contract while the case of the Union of India is that there was a concluded contract and the petitioner was, bound by the acceptance of tender. The petitioner did not supply the goods and the contract was cancelled on 28.8.1974 at the risk and cost oi the petitioner. TheD.G.S.&D claims to have made risk purchases and to have incurred an extra cost of Rs. 92,364.00 . Thereafter the petitioner was informed by the D G.S. & D by its letter of 24.12.1974 that an extra cost of Rs. 92,364.00 has been incurred on repurchase and asking him to pay this amount and also telling him that if this is not paid alternative arrangements will be made to recover the same. It appears that there were some other contracts also between the petitioner and the respondent. It is the petitioner's case that some payments are due to the petitioner from those contracts (bills for the work performed by him). The petitioner moved this court under Section 32 & 33 of the Arbitration Act claiming that there was no concluded contract in existance between the parties containing any arbitration clause. The petitioner also sought an injunction alleging that the respondents were threatening to deduct the amount of Rs 92,354.00 from the payment dug on bills of other contracts. The Union of India has however, countered the allegation and maintains that there is a concluded contract and that it is entitled to recover the amount on account of risk purchase on behalf of the petitioners. It is however, denied that the respondents were trying to recover the amount of Rs. 92,364.00 by deducting or appropriating it from the payments alleged to be due to the petitioner under other contracts. The main matter has still to be decided and we are not concerned in this reference with that and need not be detained by that. (3) The question before us has arisen out of application for injunction namely Ia 630/76 filed by it in which it is prayed that the respondents be restrained from enforcing the said recovery by adjusting/withholding or deducting from its other bills in any manner whatsoever. The Union of India did not oppose the issuance of injunction restraining the recovery by way of 'adjustment' or by way of "Deduction". It however, opposed, and that is the stand even before us, the grant of an injunction against the 'withholding' of the amount from other bills of the petitioners. The argument is that the injunction against 'withholding' of the amount from other bills of the petitioner in fact amounts to a direction to pay the said bills which is outside the power to issue interim injunction, in the application under sections 32 and 33 of the Arbitration Act. (4) N this court large number of applications under sections 32 & 33 of the Arbitration Act have been moved in matters similar to this. In most of the cases injunctions were being issued by the learned single judges restraining the respondents from "deducting" "appropriating" or "withholding" the amounts from other bills of the contractor. One such matter was taken to the Supreme Court and is reported in (1974 Supreme Court 1265) Union of India v. Air Foam Industries. The Union of India put forward the extreme claim that by virtue of clause 18 in the General Conditions of Contract it was entitled to recover by appropriating any sum on account of damages which may become due to the Contractor, from other bills by deducting the corresponding amount from those other contracts. This plea was negatived by Supreme Court which held that as this sum was only claim and that there was no adjudication on it the Union of India had no right or authority to appropriate the amount of other pending bills of the contractors in or towards the satisfaction of its claim for damages against it and that therefore injunction issued rest