Ker HC | After appointment of Sole Arbitrator, it is up to the Arbitrator to consider the question as to whether appellant would be entitled to claim any interim measure of protection under S. 17 of  Arbitration and Conciliation Act, 1996; HC cannot interfere

Kerala High Court

Kerala High Court: T.V. Anilkumar, J., dismissed the present Appeal against the impugned order of Additional District Court whereby the Court refused to order attachment of disputed land and machineries.

In the instant case, the appellant purchased some scrap and machineries from the respondent company under Memorandum of Understanding (MoU) dated 31-01-2017. Although the appellant paid a substantial amount, some amount was still outstanding towards the purchase price. The appellant claimed that, some of the goods kept in the disputed land were yet to be removed. The appellant contended that, the respondent had withheld the goods and proposed to sell them along with the disputed land. It was stated that the appellant had suffered a huge loss due to the alleged breach of contract committed by the respondent.

Stand taken by the respondent was that all the goods purchased by the appellant were already removed from the premises and some amount towards value of goods was outstanding due. The respondent set up a rival claim of loss and sought damages from the appellant.

The contention of the appellant was that until the claim for damages is determined by the Arbitral Tribunal, the disputed land, machineries etc. had to be kept intact or else, the appellant might not be in a position to recover the loss from the respondent. The appellant submitted that the court below refused to grant reliefs in respect of the scrap and machineries only for the reason that they were not scheduled in the petition. Therefore, the matter may be remitted back to the Court below and appellant may be given an opportunity to incorporate the property in the original petition.

The respondent argued that the appellant had not made out any prima facie case also the Court below had dismissed the Original Petition (Arb) on the ground that the material facts were suppressed by the appellant. Regarding physical possession of the land, the respondent had already approached another Bench of this Court seeking liberty to be reserved with it for sale of the property for settling its liabilities. The respondent opposed prayer for remittance of the case to the Court below and contended that, sole Arbitrator had already been appointed after the impugned order was passed, there is a legal bar under Section 9(3) of the Arbitration and Conciliation Act, 1996 (“the Act”) which precludes the court below from granting any interim measure of protection.

The Court opined that attachment of land as sought by the appellant could not be granted as the said land had already become the secured asset of Edelweiss Asset Reconstruction Company, Mumbai. Under Section 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2016 (“SARFAESI Act”), the physical possession of the property was already taken over by Chief Judicial Magistrate.  In view of the appointment of sole Arbitrator, the Court said that, it is up to the learned Arbitrator to consider the question as to whether the appellant would be entitled to claim any interim measure of protection under Section 17 of the Act.

The Court dismissed the appeal, holding that there was no reason to interfere with the impugned order passed by the court below. [K.K. Ibrahim v. Cochin Kagaz Ltd, 2020 SCC OnLine Ker 7755, decided on 01-12-2020]

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