Case Note & Summary
The appeal arises from an order dated 14th September 2010 passed by a learned Single Judge of the Bombay High Court in an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996. The respondent, United Spirits Limited, had obtained a consent award dated 31st March 2010 against the appellants, Paras Collins Distilleries Pvt. Ltd. and others, for a sum of Rs.8.80 crores. The award was made by a Sole Arbitrator, Justice S.P. Bharucha, former Chief Justice of India. The respondent filed Arbitration Petition No.1072 of 2010 seeking an order of attachment of Rs.2.65 crores payable by Andhra Pradesh Beverage Corporation Ltd. to the appellants, appointment of a Court Receiver, and an injunction restraining the appellants from creating third party rights in their properties. The learned Single Judge allowed the petition and passed an order of attachment and appointed a Court Receiver. The appellants challenged this order by way of an appeal. The Division Bench, consisting of Chief Justice Mohit S. Shah and Justice Dr. D.Y. Chandrachud, dismissed the appeal, holding that the Single Judge was justified in passing the interim measures to secure the amount due under the consent award. The court observed that the appellants had failed to pay the award debt and there was a genuine apprehension that they might dissipate their assets. The court also noted that the principles of Order 38 Rule 5 of the Code of Civil Procedure, 1908, regarding attachment before judgment, are applicable to proceedings under Section 9 of the Arbitration Act. The appeal was dismissed with no order as to costs.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Attachment before judgment - The respondent sought attachment of Rs.2.65 crores payable by Andhra Pradesh Beverage Corporation Ltd. to the appellants and appointment of a receiver over the appellants' properties to secure the amount due under a consent award. The Single Judge allowed the petition. The Division Bench held that the order was justified as the appellants had failed to pay the award debt and there was a risk of dissipation of assets. (Paras 1-6) B) Arbitration - Consent Award - Enforcement - Section 9 of the Arbitration and Conciliation Act, 1996 - The consent award dated 31st March 2010 required the appellants to pay Rs.8.80 crores to the respondent. The respondent filed a petition under Section 9 seeking interim measures to secure the amount. The court held that Section 9 empowers the court to pass orders to protect the interests of the award holder, including attachment and appointment of receiver. (Paras 2-5) C) Civil Procedure - Attachment before judgment - Order 38 Rule 5 of the Code of Civil Procedure, 1908 - The court noted that the principles for attachment before judgment under the CPC are applicable to proceedings under Section 9 of the Arbitration Act. The respondent demonstrated that the appellants were likely to dispose of their assets to defeat the award. (Paras 4-6)
Issue of Consideration
Whether the learned Single Judge was justified in passing an order of attachment of Rs.2.65 crores payable by a third party to the appellants and appointing a Court Receiver in respect of the appellants' properties under Section 9 of the Arbitration and Conciliation Act, 1996, pending enforcement of a consent award.
Final Decision
The appeal is dismissed. The order of the learned Single Judge dated 14th September 2010 and the clarification order dated 6th October 2010 are upheld. No order as to costs.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Order 38 Rule 5 of the Code of Civil Procedure
- 1908
- Attachment before judgment
- Consent award
- Appointment of receiver
