Bombay High Court
Psp Projects Limited, Ahmedabad vs Bhiwandi Nizampur City Municipal ... on 6 April, 2022
Author: R.I. Chagla
Bench: R.I. Chagla
Digitally signed
by JITENDRA
JITENDRA SHANKAR
SHANKAR NIJASURE
Date:
NIJASURE 2022.04.08
17:40:58 +0530
909-coarast-8341-2022.doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
COMM. ARBITRATION APPEAL (ST.) NO.8341 OF 2022
PSP Projects Ltd. ...Appellant
Versus
Bhiwandi Nizampur City Municipal Corp. ...Respondent
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Mr. Karl Tamboly with Sheetal Shah and R. Bandekar i/b. Mehta and
Girdharlal Advocate for the Appellant.
None for the Respondent.
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CORAM : R.I. CHAGLA J.
DATE : 6TH APRIL, 2022.
ORDER :
1. Heard Mr. Karl Tamboly, learned Counsel for the Appellant. An Affidavit proving service of Arbitration Appeal on Respondent dated 5th April, 2022 has been tendered and taken on record. The Respondent has been duly served with the papers and proceedings in the above Commercial Arbitration Appeal filed in this Court as well as notice of today's date when the Appellant is moving the Arbitration Appeal for urgent orders.
2. Mr. Tamboly has tendered draft amendment on behalf of the Appellant which is taken on record and marked 'X' for identification.
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909-coarast-8341-2022.doc
3. The Appellant is granted leave to amend the Commercial Arbitration Appeal (L) No.8341 of 2022 in accordance with the draft amendment marked 'X'. Amendment shall be carried out within a period of one week from today i.e. 12th April, 2022. Re-verification is dispensed with.
4. Mr. Tamboly has referred to the orders passed by the District Judge - 2, Thane which had prior to passing the impugned order restrained the Respondent Corporation from invoking the bank guarantee till filing of Reply to the Application for interim relief under Section 9 of the Arbitration Act. This is by order dated 17th June, 2021. Thereafter by further order dated 9th September, 2021, the District Judge - 2, Thane had rejected the measures under Section 9 of the Arbitration Act. However, the interim protection granted to the Appellant on 17th June, 2021 was extended upto 24th September, 2021.
5. Arbitration Appeal (St.) No.17652 of 2021 was with Arbitration Petition No.89 of 2021 was filed in this Court. By an order dated 4th October, 2021, this Court recorded that by Application under Section 9 of the Arbitration Act, the Appellant / Petitioner had sought an injunction against Respondent - Municipal 2/6 909-coarast-8341-2022.doc Corporation from invoking bank guarantee. It was point out by the learned Senior Counsel Mr. Apte appearing for the Corporation that till the date of the said order dated 4th October, 2021, there has been no invocation of the bank guarantee by the Corporation. The contract has not yet been terminated and even if there are disputes, contractual provisions for settlement of resolution of those disputes has not yet been followed or completed. This Court accordingly disposed of Arbitration Appeal (St.) No.17652 of 2021 by requiring the Respondent - Corporation to follow the contract in the matter of termination and also to give the Appellant at least 72 hours notice of invocation of any bank guarantee in question.
6. By communication dated 6th October, 2021, the Municipal Commissioner terminated the contract with the Appellant under Clause 3(ii) of the tender and agreement with immediate effect. The Municipal Commissioner gave final notice of termination of contract and forfeiting deposit by encashing bank guarantee from 72 hours form the date of communication as per the directions of this Court dated 4th October, 2021.
7. The Appellant filed Application on 14th October, 2021 before the District Judge - 2, Thane for a suitable order of ad-interim 3/6 909-coarast-8341-2022.doc injunction / status quo in so far as the invocation of bank guarantee was concerned as according to the Appellant, in the event bank guarantee was invoked, the Appellant will suffer irreparable loss and injury not to mention that this Application preferred by an Appellant will become infructuous. Reply has been endorsed on the communication by the Advocate for Respondent. Pursuant to the Application, the District Judge - 2, Thane directed the Respondent herein to maintain status quo about the bank guarantee executed in favour of the Respondent and to inform this order to the concerned bank, so as to stop the further process, if the bank guarantee is already not encashed by 4.00 p.m. The parties were directed to argue the matter on its own merits on the next date.
8. By the impugned order dated 25th March, 2021, the District Judge - 2, Thane has rejected the Application of the Appellant under Section 9 of the Arbitration Act which had sought to restrain the Respondent by injunction from invoking bank guarantee dated 24th June, 2019 or any part thereof. The order dated 25th March, 2021 has been impugned in the above Arbitration Appeal. A separate order dated 25th March, 2022 has been passed by the District Judge - 2 Additional Sessions Judge, Thane which had stayed the effect of the impugned order dated 25th March, 2022 by period 4/6 909-coarast-8341-2022.doc of two weeks only for clear understanding that time will not be extended for any reason after that proceeding closed.
9. The Arbitration Appeal was filed by the Appellant on 1st April, 2022.
10. I have considered that the stay of the effect of the impugned order which had been granted by the District Judge - 2, Additional Sessions Judge, Thane is scheduled to expire on 8th April, 2022. Further, the fact that the Respondent though having been served, has not remained present when this application has been made for continuation of stay of the effect of the impugned order dated 25th March, 2022. Further the continuation of stay of the effect of the impugned order requires to be considered in the light of the orders passed from time to time by the District Judge - 2, Thane which had restrained the Respondent - Corporation from invoking bank guarantee till the hearing and disposal of the Petition filed under under Section 9 of the Arbitration Act and the stay of two weeks thereafter. Further, this Court by order dated 4th October, 2021 in Arbitration Appeal (L) No.17652 of 2021 required the Respondent Corporation to follow the contract in the matter of termination apart from giving the Appellant at least 72 hours notice 5/6 909-coarast-8341-2022.doc of invocation of any bank guarantee in question. Hence the following order:-
(i) The impugned order dated 25th March, 2022 is stayed by a period of three weeks from today.
(ii) The Respondent shall inform the Bank of Baroda, Anand Nagar, Baroda branch to stop the further process of encashing the bank guarantee till further orders of this Court in the Arbitration Appeal and / or expiry of three weeks stay of the impugned order, which ever is earlier.
(iii) Notice of the order shall be served by the Advocates for the Appellant on the Respondent forthwith. It is made clear that in the event the Respondent does not appear on the next date, the Arbitration Appeal will be heard in their absence for further stay of the impugned order.
(iv) List the Arbitration Appeal under the caption of High on Board on 22nd April, 2022.
[R.I. CHAGLA J.] 6/6