ORDER
K.S. Kumaran, J. (Chairman)
1. Central Bank of India (hereinafter referred to as “the respondent-Bank”) has filed O.A. 62/2002 for the recovery of money from appellant-Madan Stores (hereinafter referred to as “the appellant-defendant”) and others. The said O.A. is pending before the DRT-III Delhi, (hereinafter referred to as “the DRT”).
2. Appellant-defendant filed LA. 249/2002 before the DRT with a prayer to adjourn the proceedings awaiting the orders/award of the Arbitral Tribunal in the matter of arbitration between appellant-defendant and Indian Petrochemicals Ltd. (hereinafter referred to as the “IPCL”). This request of the appellant-defendant was declined by the learned Presiding Officer of the DRT observing that if some arbitration proceeding is pending between the appellant-defendant and IPCL relating to some contract, that has nothing to do with this O.A., and, therefore, the adjournment cannot be granted.
3. Aggrieved by the same, the appellant-defendant has preferred this appeal. The respondent-Bank, who is contesting this appeal, has filed a suitable reply opposing this appeal.
4. I have heard the Counsels for both the sides and perused the records.
5. The learned Counsel for the appellant-defendant points out that the above said O.A. 62/2002 has been filed before the DRT for the recovery of Rs. 1,75,03,235/- against the appellant (and respondents 2 to 7 herein) on the basis of the Bank guarantees issued to IPCL by the respondent-Bank on behalf of the appellant, but disputes arose between the appellant-defendant and IPCL with regard to the amount shown as outstanding against appellant-defendant in the accounts of IPCL. The learned Counsel for the appellant-defendant contends that in spite of the protest by the appellant-defendant with regard to the certain amounts debited against it and the failure of IPCL to reconcile the account, IPCL wanted to invoke the Bank guarantees furnished by the respondent-Bank, and, therefore, the appellant-defendant filed Suit No. 1783/2000 before the Hon’ble High Court of Delhi for injunction restraining the respondent-Bank from encashing the Bank guarantees. According to him, the request of appellant-defendant for interim injunction was declined by order dated 17.8.2000, and, therefore, the appellant-defendant filed an appeal before the Division Bench of Hon’ble High Court of Delhi. He points out that by order dated 22.8.2000, while issuing notice, IPCL was restrained from invoking the Bank guarantees in the meanwhile. According to the learned Counsel for the appellant-defendant IPCL appeared before the Division Bench of the Hon’ble High Court of Delhi on 6.9.2000, made a statement that they have not invoked the Bank guarantees, and, therefore, the appeal filed by the appellant-defendant was dismissed as premature. The learned Counsel for the appellant-defendant further contends that on the very next day i.e. 7.9.2000 IPCL issued a notice invoking the Bank guarantees and, therefore, once again the appellant filed an application for injunction for restraining the encashment of the Bank guarantees, but that application was dismissed.
6. The learned Counsel for the appellant-defendant points out that against the order of the Hon’ble High Court of Delhi, the appellant-defendant filed Special Leave Petition (SLP) 17392/2000 before the Hon’ble Supreme Court of India and Hon’ble Supreme Court of India by order dated 6.11.2000 issued notice observing that in the event of the money being paid by the respondent-Bank to IPCL, and ultimately if the appellant-defendant succeeds, IPCL will be required to repay the amount so collected along with such interest as the Court may award. The learned Counsel for the appellant-defendant points out that the respondent-Bank had even filed an application before the Hon’ble Supreme Court of India for an order to the effect that on payment of the amount under the Bank guarantees, the respondent-Bank shall be entitled to claim the amount from the petitioner i.e. the appellant-defendant herein, and that the appellant-defendant shall not be entitled to dispute the bona fides of the said payment, but this application was dismissed by the Hon’ble Supreme Court of India by order dated 9.1.2001, holding that the application of the Bank was misconceived and was an attempt on the part of the Bank to get out of its commitment. The learned Counsel for the appellant-defendant points out that since the respondent-Bank paid the amounts, as per the Bank guarantees invoked, to IPCL (as is seen from annexure “R-6” dated 9.1.2001 filed with the reply of the respondent-Bank) the SLP was ultimately dismissed as having become infructuous.
7. The learned Counsel for the appellant-defendant contends that the disputes between the appellant-defendant and IPCL, including the invocation of the Bank guarantees were referred for arbitration before the Arbitral Tribunal by the Hon’ble High Court, and since the matter is pending before the Arbitral Tribunal, which is competent to decide the disputes including the invocation of the Bank guarantees, the DRT should adjourn the matter awaiting the decision of Arbitral Tribunal.
8. But, the learned Counsel for the respondent-Bank, on the other hand, contends that the respondent-Bank is not concerned with the agreement or the dispute between the appellant/defendant and IPCL. According to the respondent-Bank, the payment to IPCL was made under the orders of the Hon’ble Supreme Court in the SLP referred to above, and that the SLP has been dismissed on 18.7.2001 as having become infructuous. The learned Counsel for the respondent-Bank also contends that the order dated 6.11.2000 passed by the Hon’ble Supreme Court in SLP 17392/2000 does not debar the respondent-Bank from recovering its dues from the appellant/defendant and others. According to the learned Counsel for the respondent-Bank, the amount was paid by the respondent-Bank to IPCL on behalf of the appellant/defendant, and, therefore, the amount is recoverable irrespective of the disputes between the appellant/defendant and IPCL, since, according to him, the Bank guarantees are independent agreements between the respondent-Bank and the appellant/defendant. He also contends that the respondent-Bank is also not a party to the proceedings before the Arbitral Tribunal, He, therefore, contends that the proceedings in the O.A. need not be adjourned awaiting the orders of the Arbitral Tribunal.
9. I have considered the rival contentions put forward by the learned Counsel for the appellant/defendant and the respondent-Bank. The contention of the appellant/defendant is that even according to the respondent-Bank, the legality of the invocation of the Bank guarantees by IPCL is not a matter in issue before DRT. He contends that this issue will be decided by the Arbitral Tribunal and, therefore, it is only proper that the DRT should await the decision of the Arbitral Tribunal on this issue.
10. Concededly, the Hon’ble Supreme Court had directed payment of the amount covered by the Bank guarantees to IPCL, of course, with the observation that in case the appellant/defendant succeeds, IPCL will repay the money with interest. While the learned Counsel for the appellant/defendant contends that in view of this order passed by the Hon’ble Supreme Court, the liability is on the part of the IPCL to pay back the money to the respondent-Bank, the learned Counsel for the respondent-Bank contends that the Hon’ble Supreme Court’s order does not indicate that the money has to be repaid by IPCL to the Bank. The Hon’ble Supreme Court, in the order dated 6.11.2000, while issuing notice in the SLP, but declining to grant stay, has ordered that in the event of the money being paid by the Bank to the respondent(s), and ultimately the petitioner therein (appellant/defendant herein) succeeding, the respondent(s) will be required to repay the amount so collected along with such interest as the Court may award. But, that depends upon the success of the appellant/ defendant. The appellant will succeed or loose, as the case may be, only after it contests the case of the Bank. The S.L.P. has been dismissed by the Hon’ble Supreme Court. Of course, the disputes between the appellant and IPCL have been referred for Arbitration by the Arbitral Tribunal. But, the respondent-Bank is not a party to those proceedings. The contention of the respondent-Bank is that the Bank guarantees are an independent and separate agreements between the respondent-Bank, and the appellant/defendant, and that the respondent-Bank who has paid the money under the Bank guarantees is entitled to recover it in the proceedings before the DRT. He further contends that the orders passed by the Hon’ble Supreme Court do not, in any way, debar the respondent-Bank from pursuing its remedies under the Act before the DRT. He, therefore, contends that the proceedings before the DRT need not be adjourned.
11. I agree with the learned Counsel for the respondent-Bank in this regard. Bank guarantees to IPCL were issued as per the agreement between the respondent-Bank and the appellant/defendant. The appellant/defendant has to establish that the right of the respondent-Bank to recover the money paid thereunder is dependent upon any other agreement between the appellant/defendant and IPCL. These are matters which will have to be pleaded and proved before the DRT by placing the necessary material in support thereof. Without even filing the written statement, but by merely stating that the invocation of the Bank guarantees was illegal and bad, and that the Arbitration proceedings are pending before the Arbitral Tribunal wherein the disputes between the appellant/defendant and IPCL, including the invocation of the Bank guarantees, are under consideration, the appellant cannot be heard to say that the proceedings before the DRT should be adjourned, awaiting the orders passed by the Arbitral Tribunal. It is for the appellant/defendant to raise before the DRT the pleas open to it, including the plea that the invocation of the Bank guarantees is illegal and to establish the same. Of course, the respondent-Bank may put forward the plea that it is not open to the appellant/defendant to take such aplea. But, that is a matter which will have to be considered and decided by the DRT by taking into consideration the relevant materials placed before it, and in accordance with law. It may be that the Arbitral Tribunal is seized of the matter regarding the disputes between the appellant/defendant and IPCL, including the invocation of the Bank guarantees, and the payment made. But, at the same time, it has to be borne in mind that the DRT has the jurisdiction to decide the O.A. pending before it. The learned Counsel for the appellant/defendant also does not question the jurisdiction of the DRT to decide the O.A. He contends that if proceedings before the DRT are allowed to proceed, it may result in a conflict of decisions by the Arbitral Tribunal and the DRT. He further contends that if a decision is rendered by the DRT, it will prejudice the appellant/defendant in the proceedings before the Arbitral Tribunal and since the proceedings before the Arbitral Tribunal were commenced earlier than the O.A. before the DRT, the proceedings before the DRT should be adjourned to await the orders. There is no specific provision under the Act for adjourning the O.A. on these grounds. Therefore, the proceedings before the DRT in the O.A. cannot and need not be adjourned to await the result of the proceedings before the Arbitral Tribunal on these grounds. The DRT is not bound by the provisions of the CPC. Therefore, if at all, the appellant/defendant can rely upon Sub-section (25) of Section 19 of the Act which provides as follows :
“The Tribunal may make such orders and give such directions as may be necessary or expedient to give effect to its orders or to prevent abuse of its process or to secure the ends of justice.”
Of course, the DRT will be entitled to pass orders to secure the ends of justice, but, allowing the proceedings before the DRT to go on cannot mean that ends of justice will be defeated. As pointed out already, the appellant/defendant can put forward all the pleas open to it under law, and oppose the O.A. It is for the DRT to decide whether the objections are sustainable or not in accordance with law. Therefore, it cannot be stated that ends” of justice will be secured only if the proceedings in the O.A. are adjourned. Conflicting decisions cannot always be avoided. Except stating that prejudice will be caused, it has not been shown as to what will be the prejudice that will be caused to the appellant-defendant if the proceedings in the O.A. are allowed to go on. Therefore, in my view, the application for adjourning the matter has rightly been dismissed by the DRT, and the appeal has to fail.
12. However, it is seen from the impugned order that if the appellant/defendant did not file the written statement by 9.12.2002, its right to file written statement shall stand automatically closed. But, in view of the fact that the appellant/defendant has been urging that the O.A. should be adjourned to await the orders of the Arbitral Tribunal, I am of the view that the appellant/defendant shall be given another opportunity in the interests of justice to file its written statement putting forward all the pleas, factual and legal, that are open to it. The appellant/defendant shall file written statement before the DRT within six weeks from the date of this order.
13. Accordingly, the appeal is dismissed with these observations.
14. Copy of this order be furnished to the appellant/defendant and the respondent-Bank.