Bombay High Court
Ashoka Buildcon Ltd., Nashik vs Maha Active Engineer India Pvt.Ltd. … on 30 April, 2025
Author: A.S. Chandurkar
Bench: A.S. Chandurkar
2025:BHC-AS:19955-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
COMMERCIAL ARBITRATION APPEAL NO.10 OF 2024
ALONG WITH
INTERIM APPLICATION NO.8120 OF 2024
INTERIM APPLICATION NO.313 OF 2025
Ashoka Buildcon Ltd., ]
Having Registered Office at : ]
S.No.861, Ashoka House, ]
Ashoka Marg, Vadala, Nashik-422011 ] .. Appellant/Applicant
Versus
1. Maha Active Engineers India Pvt. Ltd., ]
Having Registered Office at : ]
F-108, Eastern Business District, ]
Lal Bahadur Shastri Marg, Bhandup (West), ]
Mumbai - 400 078. ]
Through its Director - Mr. Sunil V. Vidolkar ]
2. Maharashtra State Electricity Distribution ]
Company Ltd., ]
Having Registered Office at : ]
Prakashgad, G-9, Anant Kanekar Marg, ]
Bandra (East), Mumbai - 400 051. ]
Through its Chief Engineer (Project) ] .. Respondents
Mr. Nikhil Sakhardande, Senior Advocate, with Mr. Hrishikesh Chitale,
Mrs. Shubra Swami, i/by Mr. Hitesh B. Sangle and Mr. Abhinav Vyas,
Advocates for the Appellant-Applicant.
Mr. Sharan Jagtiani, Senior Advocate, with Mr. Vishal Kanade, Ms. Bindi
Dave, Mr. Aayesh Gandhi and Mr. Gaurang Samel, i/by Wadia Ghandy &
Co., Advocates for Respondent No.1.
Mr. Rahul Sinha, Advocate, i/by DSK Legal, for Respondent No.2-MSEDCL.
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CORAM : A.S. CHANDURKAR & RAJESH PATIL, JJ
The date on which the arguments were concluded : 21ST FEBRUARY, 2025.
The date on which the Judgment is pronounced : 30TH APRIL, 2025.
JUDGMENT :
[ Per A.S. Chandurkar, J. ]
1. Admit. The Commercial Arbitration Appeal is taken up for final
disposal with consent of learned counsel for the parties.
2. In this Commercial Arbitration Appeal filed under Section 37 of the
Arbitration and Conciliation Act, 1996 (for short, “Act of 1996”), a
common order dated 15th March 2024 passed by the learned District Judge
– 2, Nashik below Exhibits 1, 5 and 25 in Commercial Arbitration
Application No.1 of 2024 is under challenge. By the said order, the
Arbitration Application preferred by the 1 st respondent – Maha Active
Engineers India Private Limited (“MAEIPL” for short) under Section 9 of
the Act of 1996, read with Section 10 of the Commercial Courts Act, 2015,
came to be allowed. A direction was issued to the appellant – Ashoka
Buildcon Limited (“ABL” for short) to deposit a sum of Rs.63,27,46,890/-
in Court within a period of six weeks with an alternative to furnish a bank
guarantee of a nationalized bank of the said amount within a period of six
weeks. ABL was also restrained from disposing of, selling, encumbering,
alienating, transferring, parting with possession of, creating any third-
party rights or otherwise dealing with its assets and properties, movable
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and/or immovable till the commencement of the arbitration proceedings.
It was also directed to deposit 20% amount as received by it from the 2 nd
respondent – Maharashtra State Electricity Distribution Company Limited
(“MSEDCL” for short) within a period of six weeks and further to disclose
on oath all its assets, movable and immovable, tangible and intangible
with encumbrances and furnish necessary details within a period of six
weeks. ABL was also directed not to enter into any compromise with
MSEDCL which would have the effect of prejudicing the rights of MAEIPL
without its consent. By the said order the application preferred by
MSEDCL below Exhibit-25 for deleting its name from the proceedings was
rejected. ABL being aggrieved by the aforesaid order, as passed below
Exhibits 1 and 5, has filed the present Commercial Arbitration Appeal
raising a challenge to the same.
3. Facts in brief that are relevant for considering the challenge as
raised are that on 3rd October 2008, a Form of Contract Agreement came
to be executed between MSEDCL and ABL pursuant to Tender No.8 floated
by MSEDCL for various works of erection, testing and commissioning of
sub-transmission lines, distribution lines with allied works to be carried
out at the Jalna Circle, Aurangabad Rural of MSEDCL. Thereafter a
Contract Agreement was entered into between ABL and MAEIPL with
regard to works that were sub-contracted to MAEIPL by ABL. It is the case
of MAEIPL that the work under the Contract Agreement was completed on
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31st March 2011, after which ABL received some amounts from MSEDCL
in that regard. MAEIPL made its demand from the aforesaid amount
received by ABL and part payment thereof came to be made. After
exchange of communications between ABL and MAEIPL in the matter of
making of payments, MAEIPL on 19 th September 2016 issued a
communication to ABL seeking resolution of certain issues between them.
ABL on 7th December 2016 issued a communication to MAEIPL stating
therein that only an amount of Rs.2.44 crores was due and payable by it.
MAEIPL on the same day pointed out the difference in the amounts and
pursued its claim with ABL. After further exchange of communications,
MAEIPL on 12th December 2019 raised further claims while seeking
settlement of its outstanding dues. On 13th December 2019, MAEIPL
demanded an amount of Rs.1.94 crores from the admitted liability of
Rs.2.44 crores from ABL. Thereafter on 16 th December 2019, MAEIPL
invoked the arbitration clause and nominated its Arbitrator based on the
cause of action dated 7th December 2016. In reply, ABL on 28 th December
2019 stated that no discussions had taken place between the
representatives of the parties in the light of the Dispute Resolution clause
in the Contract Agreement. On 13 th January 2020, MAEIPL without
prejudice to its notice sought amicable resolution of the disputes with ABL.
In the meanwhile, on 15th February 2020, an award was passed in favour
of ABL and against MSEDCL by which ABL was awarded an amount of
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Rs.48,41,40,260/-. MSEDCL challenged the aforesaid award in this Court
and by an order dated 19 th December 2023, on the basis of a workable
arrangement between the said parties, MSEDCL deposited an amount of
Rs.21,10,10,828/- by way of cash deposit and Rs.31,65,31,242/- by way
of bank guarantee. The amount deposited in cash was permitted to be
withdrawn by the ABL subject to furnishing an undertaking as regards
refund. Thereafter on 12th January 2024, MAEIPL again invoked the
arbitration clause claiming an amount of Rs.113,76,27,213/-. On 17 th
January 2024, MAEIPL filed an application under Section 9 of the Act of
1996 against ABL and MSEDCL making various prayers including deposit
of a sum of Rs.63,27,46,890/-. ABL filed its reply on 12 th February 2024
opposing the prayer for interim relief. After MAEIPL filed its rejoinder on
24th February 2024, the learned Judge by the impugned order dated 15 th
March 2024 decided the Arbitration Application under Section 9 of the Act
of 1996, which order is impugned in the present Appeal.
4. The Commercial Arbitration Appeal was taken up on 15 th July 2024
and by an interim order it was directed that subject to ABL complying with
Condition No.1(iv) of the impugned order and seeking prior leave of this
Court in the context of Condition No.1(v), it was permitted to deal with its
assets and properties. Pursuant thereto, ABL on 3 rd August 2024 filed an
affidavit-of-disclosure as regards details of its assets and liabilities as well
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as a provisional working balance sheet as on 18 th July 2024. The
investments of ABL as well as its net-worth as a Company was indicated. It
is in the aforesaid backdrop that the learned counsel for the parties have
been heard.
5. Mr. Nikhil Sakhardande, learned Senior Advocate for ABL made the
following submissions :-
(a) MAEIPL invoked jurisdiction under Section 9 of the
Act of 1996 after considerable delay and laches :-
It was submitted that for the purpose of seeking relief
under Section 9 of the Act of 1996 prior to
commencement of the arbitration, it was necessary for
an applicant seeking such relief under Section 9 to
move the Court with reasonable expedition. The
conduct of the applicant in doing so was the relevant
factor while determining whether it was entitled for
such relief. According to the learned Senior Advocate,
the initial notice for appointment of the Arbitrator
having been issued by MAEIPL on 16th December
2019, it ought to have taken immediate steps to seek
relief under Section 9 of the Act of 1996. Considering
the fact that the contract in question was executed and
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completed by 31st March 2011, the first claim made byMAEIPL was on 19th September 2016. It was urged
that the breaking point resulting in disputes between
the parties had arisen on 19th December 2011 itself as
it was the case of MAEIPL that the retention amount
received by ABL was not paid to it within a period of
seven days. Except for issuing various
communications, there was silence on the part of
MAEIPL after 7th December 2016 till the issuance of
communication dated 12th December 2019. Thus, on
the own showing of MAEIPL, the notice seeking
appointment of an Arbitrator was barred by limitation.
In this backdrop therefore the reliefs sought by
MAEIPL could not have been granted under Section 9
of the Act of 1996. Referring to the decision of the
Supreme Court in B and T AG Vs. Ministry of Defence,
2023 INSC 549, it was submitted that mere exchange
of communications or undertaking of negotiations
between the parties would not postpone the cause of
action that had accrued earlier. To further substantiate
this contention, the learned Senior Advocate also
placed reliance on the decisions in Bharat Sanchar
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Nigam Limited and Anr. Vs. Nortel Networks IndiaPrivate Ltd., 2021 INSC 175, Geo Miller and
Company Private Ltd. Vs. Chairman, Rajasthan Vidyut
Utpadan Nigam Ltd., 2019 INSC 989 and Arif Azim
Company Ltd. Vs. Aptech Ltd., 2024 INSC 155 . It was
thus urged that the learned Judge while exercising
jurisdiction under Section 9 of the Act of 1996 failed
to give serious consideration to this aspect of the
matter. On account of the delay on the part of MAEIPL
in filing proceedings under Section 9 of the Act of
1996, the relief sought ought to have been denied to
it.
(b) In the absence of any prima facie case, balance of
convenience being indicated and the absence of
likelihood of any irreparable loss being made out,
relief under Section 9 of the Act of 1996 could have
been granted :-
It was urged that the direction issued by the learned
Judge under Section 9 to deposit an amount of
Rs.63,27,46,890/- within a period of six weeks or to
furnish a bank guarantee of a nationalized bank for
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the said amount was in the nature of a directionissued under provisions of Order XXXVIII Rule 5 of the
Code of Civil Procedure, 1908 (for short, “the Code”).
Unless the principal conditions of the said provision
were satisfied and unless there were specific
allegations made with cogent material by MAEIPL that
ABL intended to deprive MAEIPL of the fruits of
litigation, such direction could not have been issued.
Referring to the decision of the Supreme Court in
Sanghi Industries Ltd. Vs. Ravin Cables Ltd. and Anr.,
2022 INSC 1050, it was submitted that there was
absence of necessary pleadings in this regard in the
application filed under Section 9 of the Act of 1996.
Though the Supreme Court in its decision in Essar
House Private Ltd. Vs. Arcellor Mittal Nippon Steel
India Ltd., 2022 INSC 957 had observed that if a
strong prima facie case had been made out and the
balance of convenience was in favour of grant of
interim relief, the same could not be refused on the
basis of mere technicalities such as absence of
necessary pleadings incorporating the grounds seeking
attachment before judgment under Order XXXVIII
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Rule 5 of the Code. Nevertheless, the said principleswere required to be followed and even on that basis
MAEIPL had failed to make out a prima facie case,
indicate the balance of convenience in its favour and
that irreparable loss would be caused to it if such
relief was denied. Reference was also made to the
judgment of the Delhi High Court in Dr. Vivek Jain Vs.
Prepladder Private Ltd., 2023 SCC OnLine Del 6370 . It
was urged that on a complete reading of the
impugned order, there was no finding whatsoever that
the Court was satisfied that there existed a prima facie
case in favour of MAEIPL, the balance of convenience
was in its favour and there was likelihood of
irreparable loss being caused to it. Hence, no relief
under Section 9 of the Act of 1996 could have been
granted to it. In absence of any finding on these
relevant and material aspects, the learned Judge erred
in granting relief in favour of MAEIPL.
(c) Absence of reasons to indicate the manner in which
the figure of Rs.63,27,46,890/- was arrived at :-
After referring to the averments made in the
application filed under Section 9 of the Act of 1996,
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the reply filed by ABL, the rejoinder filed to it byMAEIPL as well as the exchange of communications
between the parties it was urged that there was no
indication as to how MAEIPL had arrived at the figure
of Rs.63,27,46,890/-. It was submitted that till
December, 2016, MAEIPL had claimed dues of Rs.2.44
crores. However in the arbitration notice issued on
16th December 2019, this figure became
Rs.44,86,29,320/- without indicating the basis for the
same. Subsequently, in the second arbitration notice
dated 12th January 2024, the amount increased to
Rs.113,76,27,213/-. In the absence of any nexus being
established between the figure of Rs.63,27,46,890/- to
the documents on record, the learned Judge was not
justified in accepting the said figure and directing ABL
to deposit such amount. Referring to the reply filed by
ABL to the application filed under Section 9 of the Act
of 1996, it was submitted that denial of the pleadings
as made by MAEIPL was sufficient for the purposes of
opposing the application filed under Section 9 of the
Act of 1996. The claim if made by MAEIPL could be
opposed on merits in the arbitration proceedings.
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Merely on the ground that there was a mere denial of
pleadings and absence of a specific case being putforth
by ABL, the learned Judge was not justified in
accepting the entire case set up by MAEIPL. The
burden to make out a prima facie case was on MAEIPL
which it failed to do. The learned Judge therefore
misdirected himself while passing the impugned order
under Section 9 of the Act of 1996.
(d) Scope for interference under Section 37 of the Act of
1996 :-
It was submitted that it would be open for the Court
exercising jurisdiction under Section 37 of the Act of
1996 to interfere with the discretion exercised by the
Court of first instance if it is shown that the Court
while granting interim relief has ignored the settled
principles of law and has thus exercised discretion
arbitrarily. In the present case, no clear finding was
recorded by the learned Judge of a prima facie case
being made out by MAEIPL and that balance of
convenience was on its side. It was further not found
that if no relief under Section 9 was granted in favour
of MAEIPL, the award if passed in its favour would be
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unenforceable. Considering the fact that thearbitration proceedings had not commenced when the
impugned order was passed, it was necessary for the
learned Judge to have given due importance to these
aspects before granting any relief under Section 9 of
the Act of 1996. Referring to the judgment of this
Court in M/s. Halliburton India Operations Pvt. Ltd.
Vs. Vision Projects Technologies Pvt. Ltd., 2024 BHC-
OS:8918-DB, it was submitted that ABL had made out
a strong case for interference under Section 37 of the
Act of 1996.
On these grounds it was urged that the impugned order was liable
to be set aside and the application filed by the MAEIPL under Section 9 of
the Act of 1996 was liable to be dismissed.
6. Mr. Sharan Jagtiani, learned Senior Advocate appearing on behalf of
MAEIPL opposed the Commercial Arbitration Appeal and submitted as
under :-
(a) There was no delay on the part of MAEIPL in seeking
relief under Section 9 of the Act of 1996:-
It was urged on behalf of MAEIPL that after receiving
its notice dated 16th December 2019, ABL continued
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engaging in discussions with promises of releasing thedue amounts as a result of which MAEIPL awaited the
payment of its dues. MAEIPL being a sub-contractor,
ABL was in a dominating position and hence it had
initiated proceedings under Section 9 of the Act of
1996 as a matter of last resort. In the meeting held on
15th July 2023, ABL had promised resolution of all
pending issues as it was expecting to receive funds
from MSEDCL pursuant to the award passed in its
favour on 15th February 2020. MAEIPL got information
of the fact that there was a settlement between ABL
and MSEDCL pursuant to which amounts were
deposited in the proceedings filed by MSEDCL for
challenging the award passed against it. Since ABL
stopped its discussions thereafter, it became apparent
that ABL had no intention to pay the dues of MAEIPL.
It was in these circumstances that the proceedings
under Section 9 of the Act of 1996 came to be filed.
There was no delay whatsoever in initiating such
proceedings. It was further submitted that before the
learned Judge, ABL had raised a plea of the arbitration
proceedings being barred by limitation. The bar of
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limitation was not specifically pressed in the presentproceedings by contending that the same would be
raised in the arbitral proceedings. However, the aspect
of delay on the part of MAEIPL in filing the
proceedings under Section 9 of the Act of 1996 was
being raised for the first time in appeal. In any event,
it was submitted that the proceedings under Section 9
had been filed with promptitude and that the learned
Judge after been duly satisfied in that regard had
granted relief to it. There was no substance in this
contention of ABL.
(b) A prima facie case having been made out by MAEIPL,
relief was rightly granted to it :-
In this regard, the learned Senior Advocate referred to
the averments made in the Arbitration Petition filed
under Section 9 of the Act of 1996 as well as the
affidavit-in-reply filed by ABL. Except for vague
denials, ABL did not contest the claims as made by
MAEIPL in the Arbitration Petition. It only raised the
issue of limitation specifically. On the basis of these
pleadings, it was submitted that the learned Judge in
paragraphs 21 and 23 of the impugned order came to
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the conclusion that MAEIPL had made out a strongprima facie case and therefore proceeded to grant the
reliefs prayed for by it. There was sufficient
documentary material on record to support the
findings recorded by the learned Judge in this regard.
The conduct of ABL clearly indicated its unwillingness
to pay the dues of MAEIPL. By wrongfully withholding
substantial amounts that were due to be received by
MAEIPL, the learned Judge was justified in granting
relief in favour of MAEIPL. Moreover, one of the
considerations while exercising jurisdiction under
Section 9 of the Act of 1996 was to protect the subject
matter of the dispute till the passing of an award and
its enforcement. Relying upon the decision of this
Court in Valentine Maritime Ltd. Vs. Kreuz Subsea Pte
Ltd. and Anr., with connected matter, 2021 SCC
OnLine Bom 75, it was submitted that denial of such
relief would have resulted in grave injustice to
MAEIPL that was seeking a protective order. It was
thus submitted that the relief granted by the learned
Judge in favour of MAEIPL was not liable to be
interfered.
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(c) Even in absence of the case being strictly made out
under the provisions of Order XXXVIII Rule 5 of the
Code, relief could be granted in the interest of
justice :-
In this regard it was submitted that the learned Judge
took into consideration the judgment of the Supreme
Court in Essar House Private Limited (supra) as well
as other decisions of this Court and thereafter turned
down the objection as regards non-compliance of the
provisions of Order XXXVIII Rule 5 of the Code by
MAEIPL. The defence raised by ABL in its reply was
also taken note of and thereafter on being satisfied
that denial of interim relief to MAEIPL would cause
prejudice, the learned Judge proceeded to grant this
relief. Moreover, the obstructive conduct of ABL was
also evident from the documentary material on record
coupled with its ill intention of not paying the dues
under contract T-08 to MAEIPL. On being satisfied that
the award that was likely to be passed would merely
be a paper award and that its execution would be
defeated, relief was granted in favour of MAEIPL. In
this regard the learned Senior Advocate placed
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reliance on the decisions in Deccan Chronicle HoldingsLtd. Vs. L & T Finance Ltd., 2013 SCC OnLine Bom
1005, Ajay Singh Vs. Kal Airways Private Ltd. and
Ors., with connected matter, 2017 SCC OnLine Del
8934, Jagdish Ahuja and Anr. Vs. Cupino Ltd., with
connected matter, 2020 SCC OnLine Bom 849, Dinesh
Gupta and Ors. Vs. Anand Gupta and Ors., 2020 SCC
OnLine Del 2099, Kotak Mahindra Bank Ltd. Vs.
Williamson Magor & Co. Ltd. and Anr., 2021 SCC
OnLine Bom 305, J.P. Parekh and Anr. Vs. Naseem
Qureshi and Ors., 2022 : BHC-OS : 8897 and Karanja
Terminal & Logistics Pvt. Ltd. Vs. Sahara Dredging
Ltd., 2023 SCC OnLine Bom 594. It was thus
submitted that this contention raised by ABL did not
warrant acceptance.
(d) Interference with exercise of discretion by the Court of
first instance :-
It was submitted that in exercise of appellate
jurisdiction under Section 37 of the Act of 1996, the
Court would not interfere with the exercise of
discretion of the Court of first instance and substitute
its discretion in that regard. It was only if the Court of
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first instance had exercised discretion arbitrarily,capriciously or perversely or where the Court had
ignored the settled principles of law regulating grant
or refusal of interlocutory injunctions, there was a
scope for interference. Since the learned Judge
considered all relevant aspects that were urged before
him and after being duly satisfied in that regard
proceeded to grant interim relief, there was no reason
to interfere with the same only on the premise that
different view of the matter could be taken by this
Court. Since a possible view of the matter was taken
by the learned Judge under Section 9 of the Act of
1996, there was no reason to interfere with the
exercise of such discretion. To substantiate this
contention, the learned Senior Advocate placed
reliance on the decisions of the Supreme Court in
Wander Ltd. and Anr. Vs. Antox India P. Ltd., 1990
Supp Supreme Court Cases 727, Shyam Sel and Power
Ltd. and Anr. Vs. Shyam Steel Industries Ltd., 2022
INSC 303 and the decisions of this Court in Stoughton
Street Tech Labs Pvt. Ltd. Vs. Jet Skyesports Gaming
Pvt. Ltd. (Appeal (Lodging) No.16492 of 2022 decided
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on 6th June 2022), Ambrish H. Soni Vs. ChetanNarendra Dhakan and Ors., with connected matter,
2024 SCC OnLine Bom 2820 and M/s. Halliburton
India Operations Pvt. Ltd. (supra). It was therefore
urged that ABL had failed to make out any case
whatsoever for causing interference in exercise of
appellate jurisdiction under Section 37 of the Act of
1996.
On the basis of these contentions, it was submitted that there was
no merit in the Commercial Arbitration Appeal preferred by ABL and the
same was liable to be dismissed.
7. We have heard the learned counsel for the parties at length and with
their assistance we have perused the documentary material on record. We
have thereafter given due consideration to the respective submissions
made by the learned counsel. The same therefore fall for consideration.
7.1 (i) Interference by an appellate Court with the exercise of
discretion by the Court of first instance :-
The impugned order dated 15th March 2024 has been
passed in exercise of jurisdiction under Section 9 of
the Act of 1996. The said order proceeds to issue
various directions against ABL to deposit the
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quantified amount in Court or furnish a bankguarantee for such amount, restrains it from alienating
or creating third party rights in its assets and
properties till the commencement of the arbitration
proceedings, further directs ABL to deposit 20% of the
amount received by it from MSEDCL in the arbitration
proceedings with it and also directs it to file an
affidavit-of-disclosure of its assets. It restrains ABL
from entering into any compromise with MSEDCL in
the pending arbitration proceedings. These directions
have been issued while exercising jurisdiction under
Section 9 of the Act of 1996. The same being in the
nature of an exercise of discretion, the scope for
interference by the appellate Court is well settled. As
held in Wander Ltd. and Anr. (supra) that if the Court
of first instance has exercised discretion reasonably
and in a judicial manner, merely because the appellate
Court would have taken a different view would not be
a justifiable reason to interfere with the exercise of
discretion by the Court of first instance. In its
subsequent decision in Shyam Sel and Power Ltd. and
Anr. (supra), it was reiterated that the scope for
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interference by the appellate Court was limited. Theratio of the aforesaid decisions has been subsequently
followed by various Division Benches in the decisions
relied upon by the learned Senior Advocate for
MAEIPL.
(ii) On the basis of the aforesaid tests, it would be
necessary to examine the challenge as raised by ABL to
the impugned order. If it is found that the exercise of
discretion by the Court of first instance was without
recording any satisfaction as to making out of a prima
facie case, absence of consideration of balance of
convenience and likelihood of irreparable loss, the
impugned order would be liable to be interfered with.
As observed in Shyam Sel and Power Ltd. and Anr.
(supra), the three tests in the matter of grant of
interim injunction are required to be first considered
in the form of a prima facie case being made out,
balance of convenience being in favour and
irreparable injury being caused. Some indication of
these tests being satisfied before the grant of
injunction would be necessary. Similarly, the
consideration as to whether settled principles of law
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regulating grant or refusal of interlocutory injunction
are satisfied would also require consideration. The
scope for interference is no doubt limited but an
exercise in the aforesaid context can be undertaken by
the appellate Court while examining a challenge to a
discretionary order. Keeping these aspects in mind, the
challenge to the impugned order would have to be
examined.
7.2 Aspect of delay in seeking relief under Section 9 of the Act
of 1996 :-
(i) To consider this aspect, a brief reference to the
averments made in the application filed under Section
9 of the Act of 1996 by MAEIPL would be necessary.
After referring to various factual aspects, MAEIPL in
paragraph 3.31 has referred to addressing a
communication dated 19th September 2016 to ABL
with regard to the discussions that took place between
the parties on 8th September 2016. After referring to
the exchange of communications between ABL on 7 th
December 2016 and the response by MAEIPL on 7 th
December 2016, it has been stated that on 17th
December 2016 ABL paid an amount of
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Rs.49,00,000/- to MAEIPL though it was entitled to
receive a much higher amount. These averments can
be found in paragraph 3.35. In paragraph 3.36, it is
pleaded that numerous meetings were held between
the parties but ABL did not comply with its obligations
under the Contract Agreement. In paragraph 3.37 it is
pleaded that MAEIPL addressed a communication
dated 12th December 2019 seeking consideration of its
claims. As there was no response to the same, it is
pleaded in paragraph 3.38 that MAEIPL initiated the
arbitral process on 16th December 2019. ABL
responded to the same on 28th December 2019 and
sought resolution of the disputes amicably as pleaded
in paragraph 3.39. There is reference to
communication dated 13th January 2020 issued by
MAEIPL in paragraph 3.40. After referring to the
award passed by the learned Arbitrator in favour of
ABL on 15th February 2020 in paragraph 3.43, MAEIPL
has thereafter pleaded in paragraph 3.48 that on 5th
January 2024 it addressed an e-mail to ABL seeking
entitlement to amounts under the Contract Agreement
which ABL had received in the award dated 15 th
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February 2020. On there being no response to the
aforesaid, it is stated in paragraph 3.49 that the
Advocates of MAEIPL issued further communication
on 12th January 2024. It is on this basis pleaded in
paragraph 6 that as on 10th January 2024, MAEIPL
was entitled to receive an amount of
Rs.63,27,46,890/- from ABL. The application under
Section 9 of the Act of 1996 was accordingly filed on
17th January 2024.
(ii) Coming to the reply filed on behalf of ABL to the
application filed under Section 9 of the Act of 1996, it
has denied the averments made by MAEIPL in the said
proceedings. It has further denied the claim as made
by MAEIPL to the amount of Rs.63,27,46,890/-. In its
specific pleadings from paragraph 86 onwards, it has
been stated that there was no cause of action for
MAEIPL to file the application under Section 9 of the
Act of 1996. In paragraph 89, it has been pleaded that
the claim made by MAEIPL was time barred and that
the proceedings were barred by limitation. In
paragraph 94, it has been pleaded that since the
proceedings had been filed belatedly, there was no
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prima facie case in favour of MAEIPL to grant any
relief whatsoever. In paragraph 96, it is stated that
though the arbitration clause was invoked vide notice
dated 16th December 2019, no steps were taken
thereafter. It was thus pleaded that no relief be
granted to MAEIPL on these counts.
(iii) MAEIPL filed its rejoinder affidavit denying that the
proceedings filed by it were barred by limitation. It
referred to part payments made by ABL between 27 th
January 2012 to 13th June 2014. It also referred to
certain other payments made thereafter. It has further
referred to registration of a First Information Report
on 23rd September 2022 against ABL, its General
Manager and its employees in relation to a bribery
case in Patna, Bihar. It was further stated that in May
2023, the National Highways Authority of India had
withdrawn a Letter of Award that had been granted to
ABL. On this basis it was reiterated that the prayers
made under Section 9 of the Act of 1996 were liable to
be granted.
(iv) On a consideration of the pleadings of the parties in
the application filed under Section 9 of the Act of
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1996 and reply thereto, it becomes evident that the
work under the contract was stated to be completed
sometime in the year 2011. On 17 th December 2016,
ABL paid an amount of Rs.49,00,000/- to MAEIPL.
After exchange of various communications, MAEIPL
invoked the arbitration clause by its communication
dated 16th December 2019. There was again some
exchange of communications between the parties and
in the meanwhile the Sole Arbitrator passed his award
in favour of ABL and against MSEDCL on 15 th February
2020. In the proceedings filed by MSEDCL for
challenging the said award, an interim arrangement
was made on 19th December 2023 after which on 5th
January 2024 MAEIPL issued an e-mail to ABL seeking
payment of its dues under Contract T-08. This was
followed by their Advocate’s communication dated
12th January 2024 and filing of the proceedings under
Section 9 of the Act of 1996 on 17th January 2024.
(v) One of the factors to be considered before grant of any
relief under Section 9 of the Act of 1996 is whether
the applicant has approached the Court with
reasonable expedition. This aspect has been
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considered by the Supreme Court in Essar House
Private Ltd. (supra) and thereafter in Sepco Electric
Power Construction Corporation Vs. Power Mech
Projects Limited, 2022 INSC 981. In other words,
besides the triple test of a prima facie case, balance of
convenience and irreparable loss, the conduct of the
applicant in approaching the Court with reasonable
expedition under Section 9 of the Act of 1996 is also
relevant. If the documentary material on record is
considered, it becomes clear that MAEIPL has been
pursuing its demands with ABL since 2012 onwards
after the work under the Contract Agreement was
completed by it as a sub-contractor. It is noticed from
the record that after ABL paid an amount of
Rs.49,00,000/- to MAEIPL on 17th December 2016, the
next communication addressed by MAEIPL as pleaded
in paragraph 3.37 is on 12th December 2019, “as a
matter of final attempt”. Prima facie, this would
indicate absence of any steps on the part of MAEIPL
after 17th December 2016 till 12th December 2019 as
per their pleaded case. Again, after the award was
passed by the Sole Arbitrator on 15 th February 2020, it
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is only on 5th January 2024 that MAEIPL has
addressed an e-mail to ABL seeking its dues under the
Contract Agreement. Taking the aforesaid as a cause of
action for seeking relief, MAEIPL has instituted
proceedings under Section 9 of the Act of 1996.
(vi) On a consideration of the aforesaid pleadings as well
as the communication dated 5th January 2024 issued
by MAEIPL, it becomes evident that after 17 th
December 2016 when an amount of Rs.49,00,000/-
was paid by ABL to MAEIPL, for a period of about
three years it has not been indicated as to whether
MAEIPL took any further steps in the matter. We have
referred to the pleadings in paragraph 3.37 of the
application preferred by MAEIPL under Section 9 of
the Act of 1996 in that regard. Further, after invoking
the arbitration clause against ABL on 16 th December
2019, MAEIPL in its communication dated 5 th January
2024 has stated that after 16th December 2019 it did
not precipitate the matter and was regularly following
it up with ABL. Again, there are no further
communications placed on record after 16 th December
2019 till the issuance of notice on 5th January 2024. In
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the backdrop of the fact that the work under the
contract was stated to be completed in 2011, the
absence of effective steps from December 2016 till
December 2019 and thereafter from 16th December
2019 till 5th January 2024 would be a factor to be
considered. This aspect would be relevant while
considering the entitlement to grant of discretionary
reliefs under Section 9 of the Act of 1996. As noted
above, the conduct of a party in moving the Court
with expedition is also considered material besides
satisfying the triple test of making out a prima facie
case, indicating the balance of convenience in its
favour and the likelihood of irreparable loss being
caused.
(vii) The aforesaid conduct of MAEIPL as is evident from its
pleadings can be dissected into two parts; one part
being its entire claim that it has to recover from ABL
pursuant to the Contract Agreement dated 24 th
February 2009 and the other part based on the award
passed by the Sole Arbitrator on 15th February 2020
followed by the order passed on 19 th December 2023
in the proceedings filed by MSEDCL under Section 34
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of the Act of 1996 against ABL. As regards the claim of
MAEIPL for recovery of its entire dues is concerned,
after receiving an amount of Rs 49,00,000/- from ABL
on 17th December 2016 the invocation of the
arbitration clause is only on 16th December 2019.
Thereafter, the next notice referred to is dated 5 th
January 2024. This is in view of the interim
arrangement made between MSEDCL and ABL in the
Section 34 proceedings on 19th December 2023. In the
said proceedings as per the Consent Minutes of Order,
MSEDCL was required to deposit Rs.91,12,12,106/-
being 20% in the form of cash deposit and also furnish
a bank guarantee for an amount of
Rs.136,68,18,158/- towards balance 30% . The claim
made by MAEIPL under Section 9 is for an amount of
Rs.63,27,46,890/- as on 10th January 2024. According
to MAEIPL’s own case, it was entitled for an amount of
Rs.9,74,12,889/- from the 20% amount of cash that
was directed to be deposited by MSEDCL and
Rs.14,61,19,333/- from the 30% amount secured by
bank guarantee. This has been specifically pleaded by
MAEIPL in paragraph 3.46 of the application filed
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under Section 9 by it. The relevant pleadings in that
regard read as under :-
“In view of the Contract Agreement, the
Petitioner is entitled to receive an amount of
INR 48,70,64,444/-, which is the Petitioner’s
entitlement from the amounts which
Respondent No.1 would receive from
Respondent No.2 in respect of the work carried
out by the Petitioner. Consequently, the
Petitioner is entitled to INR 9,74,12,889/- out of
the said 20% amount being deposited by
Respondent No.2 and INR 14,61,19,333/- of the
said 30% amount being secured.”
This aspect has been referred to in paragraph 9 of the
impugned order.
(viii) In our view, MAEIPL has acted with expedition only
after 19th December 2023 when the interim
arrangement by consent was arrived at between
MSEDCL and ABL. An e-mail has been issued on 5 th
January 2024 and the Arbitration Petition was filed on
17th January 2024. We are therefore inclined to hold
that MAEIPL has invoked the jurisdiction under
Section 9 of the Act of 1996 with expedition only in
view of the Consent Minutes of Order dated 19 th
December 2023. Thus, on the backdrop of the said
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arrangement between MSEDCL and ABL, the claim of
MAEIPL deserves consideration under Section 9 to
that extent. This finding is recorded after considering
the response of MAEIPL after it invoked the arbitration
clause on 16th December 2019 and thereafter
proceeded to issue the second arbitration notice only
on 12th January 2024.
Thus, considering the overall conduct of parties
including the case set up by MAEIPL in the Arbitration
Petition under Section 9 of the Act of 1996 as well as
its pleadings in paragraph 3.46 referred to earlier, the
same deserves to be considered to the extent it is
based on the award dated 15th February, 2020.
7.3 Entitlement to relief under Section 9 :-
(i) The claim made by MAEIPL in the Arbitration Petition
filed by it under Section 9 of the Act of 1996 is for an
amount of Rs 63,27,46,890/-. The claim in this regard
is yet to be adjudicated. The manner in which this
figure has been arrived at by MAEIPL has not been
clearly indicated in its Arbitration Petition. However,
as per the pleaded case of MAEIPL in paragraph 3.46
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of the Arbitration Petition it claims entitlement to aportion of amount deposited by MSEDCL in cash and
the bank guarantee furnished. The response of ABL in
its pleadings is of a general nature. Its specific
defence is based on the aspect of limitation qua the
entire claim of MAEIPL. It is however not the case of
ABL that MAEIPL was never appointed as its sub-
contractor for the work under Contract T-08 or that it
was not entitled to any amount at all. An amount of
Rs 49,00,000/- has admittedly been paid by ABL on
17th December, 2016. The dispute thus is as regards
the balance amounts receivable by MAEIPL from ABL.
Further, the arbitration proceedings between ABL and
MSEDCL resulting into award dated 15th February
2020 also relate to Contract T-08. It is for this very
work that MAEIPL was appointed as sub-contractor by
ABL.
(ii) As stated earlier, the reply filed by ABL indicates that it
has chosen to simply deny the case of MAEIPL. It
contends that adjudication of the outstanding amounts
could be undertaken in the arbitration proceedings. It
has merely stated that the claim of MAEIPL was barred
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by limitation. In our view, ABL ought to have come up
with its definite stand on the pleadings of MAEIPL in
the Arbitration Petition. Whether an applicant has
satisfied the triple test of making out a prima-facie
case, balance of convenience in its favour and
likelihood of irreparable loss has to be adjudged on
the basis of the case pleaded by the applicant and the
response of the non-applicant. Simplicitor denial by
itself may not, in a given case, dislodge the entire case
of the applicant. The overall material on record as well
as conduct of parties would be required to be taken in
to consideration while recording a prima-facie
conclusion in this regard.
(iii) As regards the contention raised on behalf of ABL that
there was absence on the part of MAEIPL in strictly
complying with the requirements of Order XXXVIII
Rule 5 of the Code prior to granting any relief under
Section 9 of the Act of 1996, in our view, the ratio of
the decisions in Essar House Private Ltd. and Sepco
Electric Power Construction Corporation (supra) could
be made applicable to the facts of the present case. It
has been held in the aforesaid decisions that though
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jurisdiction under Section 9 of the Act of 1996 should
not ordinarily be exercised, ignoring the basic
principles of procedural law, the technicalities of the
Code cannot prevent the Court from securing the ends
of justice. All that the Court was required to see was
whether the applicant seeking relief had made out a
prima facie case, whether the balance of convenience
was in its favour and whether there was a likelihood
of irreparable loss being caused. On these aspects
being satisfied, the Court exercising power under
Section 9 of the Act of 1996 may not withhold relief
merely on the technicality of absence of averments
incorporating the grounds under Order XXXVIII Rule 5
of the Code.
(iv) In this regard, we may refer to a recent decision of the
Division Bench of this Court in Ebix Cash World
Money Limited Vs. Ashok Kumar Goel and Ors.,
2025:BHC-OS:4892-DB. It was observed in the
aforesaid context as under :-
8(c)(iii) It is no doubt true that in Sanghi
Industries Limited (supra), the
Supreme Court has held that if in aCOARA-10-2024-Judgment.doc 36/41
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given case all the conditions of Order
XXXVIII Rule 5 of the Code are
satisfied and that the Commercial
Court is satisfied on the conduct of the
opposite party that it is trying to sell its
properties to defeat the Award that
may be passed and/or any other
conduct on the part of the opposite
party which may tantamount to any
attempt on its part to defeat the Award
that may be passed in the Arbitral
proceedings, the Commercial Court
could pass an appropriate order
including a restraint order to secure
the interest of the parties. It may be
noted that the Supreme Court in the
said case however noticed that there
were serious disputes on the amount
claimed by the parties before it which
were yet to be adjudicated in the
proceedings before the Arbitral
Tribunal. We may also note that in
Sepco Electric Power Construction
Corporation (supra), the Supreme
Court considered the decisions of this
Court in Jagdish Ahuja Vs. Cupino
Limited, 2020 4 Bom CR 1, Valentine
Maritime Limited (supra) and the
judgment of the Delhi High Court in
Ajay Singh vs. Kal Airways Private
Limited, 2017 4 ArbLR 186. It
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the aforesaid decisions and thereafter
held that the presence of a good prima
facie case, balance of convenience and
approaching the Court with reasonable
expedition were relevant factors.
(v) In that view of the matter, we are of the opinion that
the interest of MAEIPL deserves to be protected to the
extent of the claim made by it in paragraph 3.46 of the
Arbitration Petition. This is in view of the fact that
under the sub-contract between ABL and MAEIPL, it is
entitled to receive 91% consideration towards the total
work of Contract T-08 from the amounts to be
received by ABL. The work in question is stated to
have been completed on 31st March 2011. Part
payment to some extent has been made by ABL. The
fact that the Court of first instance has exercised
discretion in favour of MAEIPL is also a factor that
cannot be entirely overlooked. Thus, taking an overall
view of the matter on the basis of the material on
record, the conduct of parties and their contractual
obligations, we are of the view that MAEIPL has, to a
limited extent, made out a case for entitlement to
relief under Section 9 of the Act of 1996.
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(vi) Having said that, it has to be noted that the learned
Judge in the impugned order has not given any
reasons for accepting the figure of outstanding dues as
Rs.63,27,46,890/- while directing ABL to secure the
same. In the absence of MAEIPL showing expedition in
invoking the provisions of Section 9 of the Act of 1996
after having invoked the arbitration clause on 16 th
December 2019 coupled with absence of sufficient
material to hold that an amount of Rs.63,27,46,890/-
ought to be secured in its favour, the impugned order
is liable to be modified to that extent. Instead of
accepting this figure as stated by MAEIPL, we would
therefore prefer to consider the amount awarded by
the learned Arbitrator in his award dated 15 th
February, 2020. As regards Contract T-08, the amount
awarded to ABL is Rs 48,70,64,444/-. As per the
pleaded case of MAEIPL, it claims an amount of Rs
9,74,12,889/- from the 20% amount of cash deposited
by ABL as per the Consent Minutes. It also claims an
amount of Rs.14,61,19,333/- from the 30% amount of
bank guarantee furnished by MSEDCL. Except for
mere denial, ABL has not set up any specific defence
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qua these pleadings. Hence, to that extent the order
passed by the learned Judge deserves to be interfered
with and modified. It is also to be noted that pursuant
to the interim order dated 15th July 2024, ABL has
filed its affidavit of disclosure giving details of its
immovable and movable assets. The direction issued
by the learned Judge to that extent stands complied
with.
8. In the light of discussion made hereinabove, the following order is
passed :-
(i) The common order passed by the learned District Judge-2,
Nashik below Exhibits 1, 5 and 25 dated 15th March 2024
in Commercial Arbitration Application No.1 of 2024 is
partly modified.
(ii) Ashoka Buildcon Limited is directed to deposit an amount
of Rs.9,74,12,889/- and furnish bank guarantee for an
amount of Rs.14,61,19,333/- within a period of six weeks
from today with District Court, Nashik.
(iii)Ashoka Buildcon Limited shall not enter into any
compromise with the Maharashtra State Electricity
Distribution Company Limited that would affect the rights
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of Maha Active Engineers India Pvt. Ltd. without its writtenconsent.
9. The Commercial Arbitration Appeal is partly allowed in aforesaid
terms, leaving the parties to bear their own costs. The Interim Applications
are also disposed of.
[ RAJESH PATIL, J. ] [ A.S. CHANDURKAR, J. ]
Digitally
signed by
COARA-10-2024-Judgment.doc 41/41 SNEHA SNEHA
ABHAY DIXIT
Dixit ABHAY Date:
DIXIT 2025.05.02
18:39:11
+0530
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