IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18-1-2010 CORAM THE HONOURABLE MR.JUSTICE M.CHOCKALINGAM AND THE HONOURABLE MR.JUSTICE T.RAJA OSA Nos.450 of 2009 and 2 of 2010 and MP No.1 of 2009 in OSA 450 of 2009 and MP No.1 of 2010 in OSA 2 of 2010 M/s.Arkay Energy (Rameswaram) Ltd., New No.20 (Old No.129) Chamiers Road, Nandanam, Chennai 600 035. .. Appellant in both appeals vs 1.M/s.Madura Coats Pvt. Ltd., Rep. By its Vice President (Excise & Legal) Sandeep Sharad Chandra Thakur New Jail Road, Madurai 625 001. .. 1st Respondent in
OSA 450/2009
2.PTC India Limited
(Formerly Power Trading Corpn.
Of India Ltd.) 2nd Floor, NBCC Tower 15 Bikaji Cama Place New Delhi .. 2nd Respondent in both appeals 3.M/s.Sundaram Fasteners Ltd. Rep. By its President Finance & Secretary Registered Office at No.98-A, VII Floor, Dr. Radhakrishnan Salai Mylapore, Chennai 600 004. .. 1st Respondent in OSA 2/2010
Original side appeals preferred under Sec.XXXVI read with Order 1 of O.S. Rules read with Clause 15 of Letters Patent against the order of this Court made in Application Nos.4782 and 4835 of 2009 dated 8.12.2009.
For Appellant : Mr.AR.L.Sundaresan
Senior Counsel
for Ms.AL.Ganthimathi
in OSA 450/2009
Mr.R.Muthukumarasamy
Senior Counsel
for Mr.A.Jenasenan
For Respondents : Mr.P.R.Raman for R1 in
OSA 450/2009
Mr.M.S.Krishnan
Senior Counsel
for M/s.Sarvabhauman
Associates for R1 in
OSA 2/2010
COMMON JUDGMENT
(Judgment of the Court was delivered by M.CHOCKALINGAM, J.)
These two intracourt appeals have arisen from the common order of the learned Single Judge of this Court allowing the applications in Application Nos.4782 and 4835 of 2009 and prohibiting the second respondent garnishee therein from paying the first respondent, the appellant herein, a sum of Rs.26.67 crores and also from disbursing the amount under the agreement on account of the purchase of electrical energy from the appellant and direct the said garnishee to deposit the said amount into the Court pending disposal of the arbitral proceedings.
2.These appeals have arisen under the following circumstances:
(a) Originally, applications were filed under Sec.9 of the Arbitration and Conciliation Act, 1996, for an interim injunction restraining the appellant herein from supplying the electrical energy generated by it to anyone other than its captive consumers pending disposal of the arbitral proceedings and also from stopping the supply of power to the applicants therein pursuant to the power supply agreements pending disposal of the arbitral proceedings. Those applications were numbered, and they were contested by the appellant. On enquiry, all those applications were ordered by the learned Single Judge granting interim orders in favour of the applicants therein who are the first respondent in both the appeals. Challenging the same, appeals were taken before the Bench and the order of the learned Single Judge granting interim injunction was affirmed. Not satisfied, the appellant took it on appeal before the Apex Court, where the orders of this order were affirmed.
(b) It is also an admitted position that after the passing of the order of the learned Single Judge, contempt proceedings were initiated since those orders were not obeyed. During the pendency of the earlier appeals before the Bench, those contempt applications were pending, and even this day, they are pending. Pending those applications, the respective first respondent in these appeals moved the instant applications seeking prohibitory orders against the garnishee. The learned Single Judge after hearing the contentions put forth by the learned Counsel for the applicants seeking prohibitory order, and the learned Counsel for the first respondent therein and also looking into the materials available, took the view that it was a fit case where prohibitory order has got to be granted, and accordingly allowed the applications. Challenging those orders, the appellant has brought forth these two appeals.
3.Advancing arguments on behalf of the appellant, the learned Senior Counsel Mr.AR.L.Sundaresan in OSA 450/2009 and the learned Senior Counsel Mr.R.Muthukumarasamy in OSA No.2/2010 would submit that when the earlier orders passed by the learned Single Judge granting interim injunction were challenged before this Court, this Court had an occasion to consider all the submissions made and pointed out in paragraph 26 of the order that the arbitral proceedings are pending and the questions as to whether the respondents continue to be the captive consumers and whether they are entitled to have supply of electrical energy continuously and whether they are entitled for damages, and if to be so, what is the quantum are to be decided in the arbitral proceedings; and that under the circumstances, the amount is not at all quantified and it remains unascertained.
4.Pointing to the affidavits filed by the applicants before the learned Single Judge, the learned Senior Counsel would submit that the averments in the affidavits were so bald; that they do not make out a prima facie case for granting any interim relief of attachment since what were all stated was that the appellant had no intention to comply with the terms of the agreements, and they did not follow the orders of the Court, and apart from that, they were generating electrical energy, and the income generated by the supply of electrical energy to the second respondent is the only source of income, and the applicants had reliable information to believe that the appellant was endeavoring to appropriate and exhaust the same in order to defeat the award that was likely to be passed against the applicants; that these averments would not in any way satisfy the legal requirement; and that the remedy to be granted under Order 38 Rule 5 of CPC is an extraordinary one.
5.Added further the learned Senior Counsel that the learned Single Judge has not taken into consideration the total value of the plant and machinery including the assets of the appellant that would be exceeding Rs.200 crores; that the claim for which prohibitory order was sought for in A.No.4782 of 2009 is Rs.26.67 crores and that of A.No.4835 of 2009 is Rs.1.83 crores; that it is pertinent to point out that the appellant is generating electrical energy which is being sold and thereby generating money; that they are getting more than Rs.20 crores per month; that apart from that, they have got assets available; that they are also getting periodical income, and under such circumstances, there is no question of defeating the claim of the applicants; that even if there is any award passed in favour of the applicants quantifying the damages, the assets are well available; and that under the circumstances, it had no basis at all.
6.Added further the learned Senior Counsel that neither there is a prima facie case, nor balance of convenience is in favour of the applicants; that the learned Single Judge has not considered any one of the aspects, but has granted the prohibitory order, and hence it has got to be set aside since the circumstances do not warrant for granting prohibitory order.
7.Added further the learned Senior Counsel that in the instant case, if the order granted by the learned Single Judge is to be affirmed, it would not only cause hardship and prejudice to the appellant herein, but also make the entire business a standstill; that it cannot give electrical energy; that further it would not be worked out either to the benefit of the appellant or to the benefit of the respective first respondent who stopped the remedy; and that under such circumstances, the order of the learned Single Judge has got to be vacated.
8.The Court heard the learned Senior Counsel Mr.M.S.Krishnan appearing for the first respondent in OSA 2/2010 and also the learned Counsel for the first respondent in OSA 450/2009 Mr.P.R.Raman on the above contentions. In short, they pointed out that the arbitral proceedings have commenced; that the claim before the Arbitrators is more than Rs.125 crores and Rs.25 crores respectively; that what has been before the learned Single Judge would cover only Rs.26.67 crores and Rs.1.83 crores respectively; that originally, there was an order granting interim injunction directing the appellant not only to continue to give electrical energy to the respondents but also not to give it to the third parties; that from the time when it was ordered by the learned Single Judge till this day, though days have gone, they have not obeyed the orders of the Court; that they have caused prejudice; thereby the respective respondents have not only paid the extra amount what is quantified, but also the penalty and also all electrical charges; that all have been calculated and placed before the learned Single Judge; that the averments what are all found in the affidavits in support of the applications would suffice to grant interim order of attachment as one envisaged under Order 38 Rule 5 of CPC; that if the prohibitory order is allowed to continue, it would not cause prejudice; that the circumstances that were taken into account by the learned Single Judge were that originally the interim order was not only to supply the electrical energy to the respective respondents but also not to give it to the third parties; that if the appellant is allowed to carry on the business, that would mean that they would continue to supply it to the third parties and would not obey the order of the Court; that under such circumstances, it is a fit case where the prohibitory order was to be given; that accordingly, it was considered by the learned Single Judge and it has been granted, and hence, it has got to be confirmed.
9.The Court paid its anxious consideration on the submissions made.
10.It is not in controversy that originally, applications were filed for interim injunction by the respective respondents before the learned Single Judge seeking a direction to the appellant to continue to supply electrical energy to them and also not to give it to third parties. It could be seen from the available materials that from the day when the order was made by the learned Single Judge, though it was also affirmed by the Bench and thereafter it was affirmed by the Apex Court, the electrical energy was not supplied. Further, it is pertinent to point out that they have been continuing to give electrical energy to the third parties, and thus here is a case of alleged disobedience of the orders of the Court.
11.So far as the contention put forth by the learned Senior Counsel for the appellant that the averments found in the affidavits are so bald, and they would not satisfy the legal requirements as envisaged under Order 38 Rule 5 of CPC is concerned, the same cannot be countenanced. As rightly pointed out by the learned Single Judge, the averments would suffice. In a given case, the Court has to look into not only the averments, but also the necessary circumstances and appraise them also. The same would actually come under the clause “averments or otherwise”. As regards the word “otherwise”, the Court has to look into the circumstances attendant when an application for attachment before judgment is made. In the instant case, the entire claim as could be seen from the affidavits is based on three clauses. The first one is relating to the amount what has actually been paid, and the second one is the penalty that has been suffered. The third one is that it is calculated for a period of six months. It comes to Rs.26.67 crores and Rs.1.83 crores respectively. According to the learned Counsel for the first respondent, the claim was actually more than Rs.125 crores before the arbitral tribunal and if to be calculated, it is only the meager part of the amount what has to be secured. Now, at this juncture, the contention put forth by the learned Senior Counsel for the appellant is that if the prohibitory order is allowed to be continued, it would not only cause hardship, but also stop the generation of electrical energy and that would come to a standstill. This Court has to point out that if the generation of electrical energy was to be done as per the earlier orders of the Court, the appellant was to continue to supply electrical energy to the first respondent but not done. On the contrary, the appellant wants to generate energy and give it to third parties which was originally restrained by the Court. Under the circumstances, it is a fit case where the claims before the arbitral tribunal are to be made and an award to be passed, and till then, it has got to be secured. It is further to be pointed out that in a given case like this, once an application for attachment before judgment is brought forth, not only the provisions of Order 38 Rule 5 of CPC for giving such orders would arise but also the inherent powers which are available to the Court under Sec.151 of CPC would come into operation. As rightly pointed out by the learned Single Judge, all the circumstances have got to be appraised and hence rightly the order has been passed.
12.Considering the facts and circumstances as put forth by the appellant’s side, this Court is of the considered opinion that if the prohibitory order is not to continue
M.CHOCKALILNGAM, J.
AND
T.RAJA, J.
nsv
in the alternative, the appellant should furnish a bank guarantee for a reasonable amount within a stipulated period and if not done, the order of the learned Single Judge has got to be continued. For that purpose, the time is fixed as 30 days herefrom within which period the appellant should furnish bank guarantees for the entire amount namely Rs.18 crores and Rs.1.5 crores respectively, and if not done, the prohibitory order already granted by the learned Single Judge should continue.
13.Accordingly, both these original side appeals are disposed of. It is made clear that no one of the observations made above would stand in the way of taking a decision in the arbitral proceedings. The parties will bear their own costs. Consequently, connected MPs are closed.
(M.C.,J.) (T.R.,J.)
18-1-2010
Index: yes
Internet: yes
nsv
OSA Nos.450 of 2009
and 2 of 2010