JUDGMENT
R.C. Jain, J.
1. The petitioner has filed this petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) praying a direction on the PWD of Rajasthan State to release a sum of Rs. 1.33 crores, out of a total escalation of Rs. 4.51 crores in favor of the petitioner upon the petitioner furnishing security for the same or in the alternative for a direction to place a sum of Rs. 1.33 crores in a secure account till the rights and liabilities of the parties are finally adjudicated upon in the arbitral proceedings.
2. The petition has been moved with the averments and allegations that the respondent was awarded the work of widening, strengthening and reconstruction of Bhiwadi-Alwar-Karauli-Mandrail Road, (235 KM long) by the Rajasthan, Public Works Department in the year 1992. The respondent in turn engaged the petitioner and some other sub-contractors to execute the said work. Petitioner was to do the work of widening, strengthening and reconstruction of road for a length of 77 km, in two stretches, one from km 147 to km 108 and the other from km 8 to km 38 which the petitioner completed to the entire satisfaction of the respondent and the State of Rajasthan and a certificate to that effect was issued. It is alleged that despite the completion of the work to the satisfaction of all concerned and receiving the payment from the Public Works Department of Rajasthan Government, the respondent withheld the payment of certain bills of the petitioner in regard to escalation amount. The petitioner invoked the arbitration agreement for resolution of the dispute. Arbitral Tribunal is presently looking into the claims of the petitioner and certain counter claims filed by the respondent. According to the petitioner the respondent is likely to receive a sum of Rs. 4.51 crores from the State of Rajasthan towards escalation costs out of which petitioner’s share comes to Rs. 1.33 crores which the respondent is bound to pass on to the petitioner. That in case the amount is not passed on to the petitioner or preserved either with the State of Rajasthan or in this Court, the petitioner is likely to suffer irreparable injury as he apprehends that the respondent might misappropriate the share of the petitioner in the escalation amount to be received by the respondent from the State of Rajasthan.
3. On the first ever date of hearing i.e. 25.9.2003, while issuing notice on the petition, this Court directed the Public Works Department of Rajasthan State to retain a sum of Rs. 1.33 crores out of the payments due to the respondent.
4. The respondent has contested the petition by filing a reply and an application for vacation of the ad-interim ex-parte order dated 25.9.2003. In the reply to the petition, the respondent has raised preliminary objections to the effect that the petitioner has filed the present petition by intentionally suppressing material facts in regard to filing a similar and identical petition under Section 17 of the Act before the Arbitral Tribunal with a similar prayer which was dismissed by the Arbitral Tribunal on 8.9.2001; the petitioner has not challenged the said order of the arbitral tribunal and has filed the present petition by suppressing this and other material facts in regard to respondent having been declared sick unit under the provisions of Sick Industrial Companies (Special Provisions )Act, 1985 {SICA} and having the protection of the said Act. It is, however, not disputed that the petitioner has invoked the Arbitration Agreement but it is contended that initially they made a claim of Rs. 25,61,61,372/- which was latter on enhanced to Rs. 37,94,62,509/- which claims are being contested by the respondent. On the other hand, it is pleaded that the respondent has also filed counter claims arising out of the same contract before the Arbitral Tribunal and the claims and counter claims are receiving the consideration of the Arbitral Tribunal and, therefore, it is wholly premature for the petitioner to claim any protection or interim measure within the meaning of Section 9 of the Act. It is denied that any irreparable injury would be caused to the petitioner and on the other hand it is pleaded that balance of convenience lies in favor of the respondent rather than the petitioner.
5. In the rejoinder, the petitioner has controverter the objections and pleas raised in the reply and has reasserted the averments and allegations made in the petition.
6. I have heard Mr.M.S. Vinaik, learned counsel representing the petitioner and Mr. P.K. Bansal, learned counsel representing the respondent at length and have given my thoughtful consideration to their respective submissions.
7. Before dwelling on the merits of the petition, it is pertinent to notice that before filing the present petition, the petitioner had moved an application under Section 17 of the Act before the Arbitral Tribunal praying for interim orders for the preservation and protection of subject matter of arbitration. In the said application the prayer was as under :
“It is therefore most respectfully prayed that this learned Arbitral Tribunal may be pleased to order and direct the respondent to refrain from appropriating the payment of Rs. 5.88 crores approximately (or such other amount whether higher or lower that may be released by the Rajasthan PWD) and order the said amount to be deposited into a fixed deposit in a nationalized bank till the pendency of the arbitral proceedings.
Any other order or orders that may be deemed fit in the circumstances may also be passed by this Learned Arbitral Tribunal.”
8. The said application was contested by the respondent by filing a reply inter-alia on the grounds that the work executed by the petitioner was not completed satisfactorily and the respondent was, therefore, constrained to invoke the bank guarantee furnished by the petitioner. It was denied that the petitioner was entitled to any kind of protection or interim measure as sought for by him in the application under Section 17 of the Act. After hearing the parties, the Arbitral Tribunal disposed of the application of the petitioner under Section 17 of the Act by an order dated 8.9.2001 which reads as under:
“The claimant has sought an injunction under Section 17 of the Arbitration Act.
(i) For preventing the respondent from appropriating the payment of Rs. 5 crores expected to be released by Rajasthan PWD and
(ii) To depositing the said amount by way of fixed deposit in a nationalised bank.
The Tribunal after carefully perusing the pleadings from both sides and arguments lead by each party have come to the conclusion that in view of Section 22 of SICA it would not be judicious to grant such a restraining order for the following reasons:
1. The claimant is yet to establish its claim.
2. The sum sought to be secured is a futuristic assets.
3. The claimant’s application suffers from latches as the Claimant waited fro 4 years to seek the remedy.
4. Such an injunction would serve by way of a ‘distress’ order and as such violative of Section 22 of the SICA.
5. By passing such an order the Tribunal would appropriate the function of BIFR and put hurdles in the path of a possible reconstruction scheme of the Respondent company.
6. The order if granted would put the Claimants on priority over nationalised banks F.I.s and other secured creditors.
7. A more efficacious remedy is available to the Claimant under Section 9 of the Arbitration Act whereby they can approach the Court directly.
The application is thus dismissed.’
9. Admittedly the order dated 8.9.2001 passed by the arbitral tribunal was not challenged by the petitioner through any appropriate proceedings and, therefore, the same shall be deemed to have acquired finality. Surprisingly, despite of those happenings and proceedings before the Arbitral Tribunal, the petitioner while filing the present petition has not made even a whisper about those proceedings and the order made by the Arbitral Tribunal. This omission cannot be explained on any other hypothesis except that the petitioner wanted to deliberately suppress the facts about filing similar proceedings before the arbitral tribunal and having suffered an unfavorable order. The Apex Court and various High Courts have taken a serious view of the incidence of suppression of facts or putting forth misleading facts by a party in the petition and have held that ordinarily a party seeking an equitable relief before the Court would be unsuited on the ground of suppression of relevant and material facts even if the party has a case on merits. In the present case, it would appear that the petitioner has deliberately suppressed not only the facts about the petitioner having approached the Arbitral Tribunal with an identical or similar prayer and the same having not found favor with the Tribunal but also failed to disclose about the respondent having been declared a sick company within the meaning of Sick Industrial Companies (Special Provisions )Act,1985 {SICA}. Therefore, for this reason alone this Court must hold that the petitioner has dis-entitled itself to an equitable relief like the one sought in the present petition. Had the facts in regard to the proceedings under Section 17 of the Act taken up before the Arbitral Tribunal been disclosed before the Court, perhaps, this Court would not have granted the ex-parte ad-interim injunction on 25.9.2003.
10. Mr. Vinaik, learned counsel representing the petitioner has made a vehement plea for continuance of the ad-interim ex-parte injunction primarily on the ground that the amount which is likely to come in the hands of the respondent from the State of Rajasthan towards escalation costs of the project, in fact, is the property of the petitioner and, therefore, it must be preserved and protected. It is further contended that if the amount is paid to the respondent, it might be misappropriated by the respondent-company which has already been declared a sick company. On the other hand Mr. Bansal, learned counsel representing the respondent has contended that the petitioner is not entitled to continuance of the restraint order dated 25.9.2003 because such an order besides being prejudicial to the interests of the respondent is directly hit by the provisions of Section 22 of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA}. It is not disputed that the respondent-company is a sick company, therefore, any legal proceedings against the respondent shall be governed by the provisions of the SICA Act more particularly by Section 22 of the said Act. The question as to whether a sick company can be subjected to any distress proceedings or restraint order has been considered by the Supreme Court and various High Courts in a number of decisions. In the case of Maharashtra Tubes Ltd. Vs.State of Industrial & Investment Corporation of Maharashtra Ltd. and Another (1993) 2 SCC 144 the Apex Court considered the scope and interpretation of Section 22 of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA} and laid down as under:
“The purpose and object of suspension of proceedings etc. under Section 22(1) of the 1985 Act is to await the outcome of the reference made to the BIFR for the revival and rehabilitation of the sick industrial company. The words ‘or the like’ which follow the words ‘execution’ and ‘distress’ are clearly intended to convey that the properties of the sick industrial company shall not be made the subject-matter of coercive action of similar quality and characteristic till the BIFR finally disposes of the reference made under Section 15 of the 1985 Act. The legislature has advisedly used an omnibus expression ‘the like’ as it could not have conceived of all possible coercive measures that may be taken against a sick undertaking. Section 29 of the 1951 Act permits coercive action against the defaulting industrial concern of the type which would be taken in execution or distress proceedings, the only difference being that in the latter case the concerned party would have to use the forum prescribed by law for the purpose of securing attachment and sale of property of the defaulting industrial concern whereas in the case of a Financial Corporation that right is conferred on the creditor corporation itself which is permitted to take over the management and possession of the properties and deal with them as if it were the owner of the properties. If the Corporation is permitted to resort to the provision of Section 29 of the 1951 Act while proceeding under Section 15 to 19 of the 1985 Act are pending it will render the entire process nugatory. In such a situation the law merely expects the corporation and for that matter any other creditor to obtain the consent of the BIFR or, as the case may be, the appellate authority to proceed against the industrial concern. The law has not left them without a remedy.
The expression ‘proceeding’ in Section 22(1) must be widely construed. It cannot be confined to legal proceedings understood in the narrow sense of proceedings in a court of law or a legal tribunal for attachment and sale of the debtor’s property, notwithstanding the use of that expression in the marginal note.”
11. In support of his contention that despite a company having been declared sick, the legal bar envisaged under Section 22(1) of the Sick Industrial Companies (Special Provisions )Act, 1985 {SICA} would not apply to the proceedings seeking interim relief. Mr. Vinaik has placed reliance on a Single Judge decision of this Court in the case of Mafatlal Industries Ltd. & Anr. Vs. Mahanagar Telephone Nigam Ltd. 99(2002)Delhi Law Times 204. On the basis of the facts of that case, the learned Single Judge has held that the bar or embargo envisaged under Section 22(1) of SICA apply to such disputes included in sanctioned scheme and that respondents apprehension that any future claim against the petitioner would be barred under Section 22(1) of SICA was misconceived and devoid of merits. In the opinion of this Court, the said view was taken on a very peculiar set of facts and circumstances of the case and on a plea sought to be raised by the MTNL against the sick company and has absolutely no application to the facts and circumstances of the case in hand. Keeping in view the legal proposition as laid down by the Apex Court, this Court has no hesitation in holding that the present proceedings seeking relief of the kind clearly falls within the description of ‘distress or the like thereo’ and consequently they are not likely to be proceeded further except with the consent of the board or the appellate authority.
12. Now coming to the question as to whether the petitioner has been able to make out a prima facie case entitling him for relief claimed by him it may be noticed at once that the relief sought by the plaintiff is in the nature of attachment before judgment or pre-award attachment. No doubt that such a pre-award attachment in arbitration is common to many legal systems. In French law it is known as saisie conservatoire which literally means a ‘conservative seizure’ or ‘a seizure of assets so as to conserve them for the creditor in case he should afterwards get judgment.’ In UK, Lord Denning gave this procedure a fashionable name- Mareva injunction. In the parlance of arbitration law, it is usually called ‘pre-award attachment.’ This remedy has been available in India from the inception of the Code of Civil Procedure 1908. The order of attachment, before judgment, is passed to ensure the availability of such property at the time of execution of a decree. The procedure relating to ‘attachment before judgment’ is contained in Order 38, Rule 5 to 13 in the First Schedule to the Code of Civil Procedure. Before a person is entitled to an order of attachment before judgment Rule 5 requires the plaintiff to prove that the following circumstance exists:
(i) the defendant is about to dispose of the whole or any part of his property.
(ii) the defendant is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court;
(iii) the defendant is intending to do so to cause obstruction or delay in the execution of any decree that may be passed against him. Vague and general allegations that the defendant is about to dispose of the property.”
13. It is well led that an order of attachment before judgment is a drastic remedy and the power has to be exercised with utmost care and caution as it may be likely to ruin the reputation of the parties against whom the power is exercised. The Court must act with utmost circumspection before issuing an order of attachment and unless it is clearly established that the defendant, with intent to obstruct or delay the execution of the decree that my be passed against him, is about to dispose of whole or any part of his property. An attachment before judgment is not a process to be adopted as a matter of course because the suit is yet to be tried and the defense of the defendant is yet to be tested. At that juncture the relief which is extraordinary, could be granted only if the conditions for its grant stands satisfied.
14. Learned counsel for the respondent has urged that the petitioner has failed to make out any case for grant of an order of attachment before award. In this regard, it is pointed out that as against the total value of the work assigned to the petitioner to the extent of Rs. 22 crores, the petitioner has already been paid a sum of more than Rs. 24 crores and that the respondent has several counter claims against the petitioner arising out of his unsatisfactory execution and completion of the work. It is urged that the petitioner is not likely to succeed in his claims and in any case the Arbitral Tribunal has yet to adjudicate on those claims and, therefore, it is wholly pre-mature for the petitioner to invoke the provisions of Section 9 for relief of far-reaching consequence. It is not disputed that the Arbitral Tribunal is still in the process of adjudication of the claims and counter claims of the parties and has yet to make its Award. Therefore, at this stage it cannot be said if the petitioner or the respondent would succeed on their claims or counter claims and if so, to what extent. The present petition and the prayer made therein appears to be wholly pre-mature. This was precisely the main reason which has weighed with the Arbitral Tribunal in declining a similar prayer made by the petitioner by means of an application under Section 17 of the Act.
15. Thus having considered the matter in its entirety and as a result of the foregoing discussion, this Court is of the considered opinion that the present petition has no merits and is liable to be dismissed. Accordingly, the petition is dismissed. IA No.9853/2003 is allowed and the ad-interim ex-parte injunction order dated 25.5.2003 stands vacated.
The petition and IA No.9853/2003 stand disposed of accordingly.