Delhi High Court - Orders
Lava International Ltd vs Mintellectuals Llp on 20 July, 2020
Author: C. Hari Shankar
Bench: C .Hari Shankar
$~6 (original side)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (I) (COMM.) 193/2020 & I.A. 5772/2020 and I.A.
5773/2020
LAVA INTERNATIONAL LTD. ...Petitioner
Through Mr. Arun Kumar Verma, Sr.
Advocate with Mr. Abhay
Verma and Mr. Bibhash Deb,
Advs.
versus
MINTELLECTUALS LLP ..Respondent
Through: Mr. Hrishikesh Baruah and Mr.
Abhinav Aggarwal, Advs.
CORAM:
HON'BLE MR. JUSTICE C .HARI SHANKAR
ORDER
% 20.07.2020
(Video-Conferencing)
I.A. 5772/2020
1. Subject to notarized affidavit being filed, and deficient court fee being paid within 72 hours of resumption of normal court work, exemption, as sought, is granted for the present.
2. The application is disposed of.
I.A. 5773/2020Allowed, subject to all just exceptions. The application is disposed of.
OMP(I)(COMM) 193/2020 Page 1 of 6OMP(I)(COMM) 193/2020
1. The prayer clause, in this petition, reads thus:
"In the aforesaid facts and circumstances of the case, it is most respectfully prayed that this Hon'ble Court may be pleased to:
(a) Allow the present application and further injunct/restrain the Respondent from invoking/en-
cashing or liquidating the Bank Guarantee and Cheque as aforesaid, in satisfaction of the aforesaid arbitral award, till the arbitral award becomes enforceable in terms of Section 36 of the Arbitration and Conciliation Act, 1996, i.e. after expiry of 90 days from the date of the award or an appropriate order is passed in the objections under Section 34 of the Arbitration Act proposed to be filed by the Petitioner, whichever is earlier; AND/OR
(b) Pass an order granting an ad interim ex-parte injunction against the Respondents restraining them from recovering any amount towards satisfaction of the arbitral award till the arbitral award becomes enforceable in terms of Section 36 of the Arbitration and Conciliation Act, 1996, i.e. after expiry of90 days from the date of the award or an appropriate order is passed in the objections under Section 34 of the Arbitration Act proposed to be filed by the Petitioner, whichever is earlier;
AND IN THE ALTERNATIVE
(c) In case it is found that the Respondent has been able to encash the Cheque and/or the Bank Guarantee prior to passing of any orders by this Hon'ble court, the Respondent be directed to provide adequate security to the Petitioner/this Hon'ble Court to ensure restitution of the amount so encashed, in case the need so arises.
(d) Pass an ex-parte ad interim orders in terms of prayer 'a', 'b' and/or 'c' above, AND/OR OMP(I)(COMM) 193/2020 Page 2 of 6
(e) Pass any such order which this Hon'ble Court may deem fit and proper in favor of the petitioner and against the Respondent."
2. Admittedly, the award, dated 15th July, 2020, passed by the learned Arbitral Tribunal, is in favour of the respondent. The grievance of the petitioner, as argued at length by Mr. Arun Kumar Verma, learned Senior Counsel, on the last date of hearing, was directed, principally, against Directions IX and X in para 7 of the award, which read thus:
"IX. The Claimant will be entitled to encash the bank guarantee dated 13.02.2019 for INR 6,00,00,000 furnished by the Bank of Baroda in favour of the Claimant and extended upto 30.09.2020. The Claimant may collect the original of the extension dated 19.06.2020 granted by the bank from the Presiding Arbitrator.
X. The Claimant will also be entitled to encash the cheque dated 19.05.2020 for INR 6,29,09,959 of HDFC Bank issued by the Respondent in favour of the Claimant. The Claimant may collect the cheque from the Presiding Arbitrator."
3. On the last date of hearing, extensive arguments were advanced by Mr. Arun Kumar Verma, regarding the maintainability of this petition under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "1996 Act") at the instance of petitioner, who was the unsuccessful litigant before the learned Arbitral Tribunal. Towards the conclusion of hearing, however, Mr. Hrishikesh Baruah, learned counsel for the respondent, on instructions, pointed out that the aforesaid bank guarantee, dated 13th February, 2019, for ₹ 6 crores, furnished by the Bank of Baroda in favour of his client, stood invoked and encashed, and the amount had been credited to the account of the OMP(I)(COMM) 193/2020 Page 3 of 6 respondent.
4. Mr. Baruah was directed to file an affidavit, placing the said fact on record. The affidavit has been filed along with bank documents, which clearly disclose that the aforesaid bank guarantee stands encashed and consequent thereupon, ₹ 6 crores stand credited to the account of the respondent.
5. In view thereof, it is clear that prayers (a) and (b) in this petition would not survive.
6. Mr. Verma, nevertheless, presses prayer (c) and invites the attention of this Court to Ground E in the petition, which reads thus:
"E. Because, the recovery of such amounts from the Respondent is also doubtful since the records of the case would reveal that the Respondent is a Limited Liability Partnership which was incorporated just a few days prior to signing of the Research and Collaboration Agreement dated 01.07.2019. To the best of the Petitioner's knowledge the said LLP has no assets whatsoever and is simply working as a commissioned agent for its Principals (including Nokia Technologies Oy). There is no possibility of the present Respondent to be able to return the aforesaid amounts if found returnable to the Petitioner."
7. In view of the above, Mr. Verma prays that the respondent be directed to secure the amount of ₹ 6 crores, relatable to the aforesaid bank guarantee.
8. As narrated hereinabove, the respondent has succeeded before the learned Arbitral Tribunal. As on date, no petition, under Section 34 OMP(I)(COMM) 193/2020 Page 4 of 6 or any other provision of the 1996 Act, impugning the award, dated 15th July, 2020, of the learned Arbitral Tribunal, stands filed, though Mr. Verma submits that his client would be doing so with all due expedition. The right of the respondent, to invocation and encashment of aforesaid bank guarantee, as on date, therefore, cannot be gainsaid.
9. No doubt, even in such a circumstance, this Court would have the jurisdiction to secure the amount, covered by the aforesaid bank guarantee, in exercise of its power under Section 9 of the 1996 Act. In the opinion of this Court, however, such a jurisdiction, especially where it is exercised to the prejudice of the successful claimant before the learned Arbitral Tribunal, can be invoked only in extreme cases, where the non-passing of such peremptory order is likely to frustrate the award of the learned Arbitral Tribunal, and the amount in question may, so to speak, evaporate, if not secured. The only averment in the petition, which could support such a claim, is Ground E as extracted hereinabove.
10. To reiterate, this Court would be justified in passing such an order, to the prejudice of the successful claimant, before the learned Arbitral Tribunal, only if it is satisfied that, in the absence of such an order, the amount in question is in danger of being dissipated.
11. In the circumstances, notice is issued, to the respondent, only qua Ground E in the petition, so that this Court could satisfy itself that the amount of ₹ 6 crores, can, in the event of the Section 34 challenge of the petitioner succeeding, be realized from the respondent.
OMP(I)(COMM) 193/2020 Page 5 of 612. Let an affidavit, dealing with this aspect, be filed by the respondent within a period of two weeks with advance copy to the petitioner, who may file a rejoinder thereto, if any, within one week thereof.
13. Mr. Verma prays that the order passed today, or further of these proceedings, should not inhibit his client from questioning the legality or propriety of the invocation and/or encashment of the bank guarantee, furnished by the petitioner, in the proceedings that he intends to institute under Section 34 of the 1996 Act. It is clarified accordingly.
14. It is also clarified that no opinion is being expressed by this Court on the maintainability of the present petition, under Section 9 of the 1996 Act.
15. Renotify on 25th August, 2020.
C. HARI SHANKAR, J.
JULY 20, 2020 r.bararia OMP(I)(COMM) 193/2020 Page 6 of 6