Case Note & Summary
The appellant, Srimauli Infrastructure Pvt. Ltd., was awarded a contract for four-laning of Osmanabad-Yedshi-Latur-Nanded road by the respondents, State of Maharashtra and its officers, pursuant to a tender in 2008. The appellant furnished the required performance guarantee and executed a concession agreement on 18.09.2009. However, by letter dated 20.11.2010, the respondents terminated the contract. The appellant filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Principal District Judge, Latur, seeking quashment of the termination letter and an interim injunction restraining the respondents from entering into an agreement with any other party for the same work. The trial court rejected the application on 07.01.2011. Aggrieved, the appellant filed the present appeal. The High Court heard the parties and by consent took up the appeal for final disposal. The court considered the submissions and found that the appellant had made out a prima facie case, the balance of convenience was in favour of granting interim relief, and irreparable injury would be caused if the termination was allowed to stand. Consequently, the High Court allowed the appeal, set aside the trial court's order, and granted interim relief in terms of the application, directing that the termination letter be quashed and the respondents be restrained from awarding the work to any other party pending disposal of the arbitration proceedings.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Termination of Contract - The appellant sought quashment of termination letter and restraint on re-awarding work - The trial court rejected the application - The High Court held that the appellant had made out a prima facie case and balance of convenience was in favour of granting interim relief - The termination was set aside and respondents were restrained from awarding the work to any other party pending arbitration (Paras 1-10).
Issue of Consideration
Whether the appellant is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the respondents from terminating the contract and from awarding the work to a third party pending arbitration.
Final Decision
The High Court allowed the appeal, set aside the order dated 07.01.2011 passed by the Principal District Judge, Latur, and granted interim relief in terms of the application, quashing the termination letter and restraining the respondents from awarding the work to any other party pending disposal of the arbitration proceedings.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- termination of contract
- balance of convenience
- prima facie case
- irreparable injury
Case Details
2011 LawText (BOM) (04) 20
Arbitration Appeal No. 01 of 2011
Shri P.M. Shah, Senior Counsel holding for Shri A.M. Karad for appellant; Mr. Pradeep Deshmukh, Special Counsel for respondents
Srimauli Infrastructure Pvt. Ltd.
State of Maharashtra, The Chief Engineer, Public Works Department, The Superintending Engineer, Public Works Department, The Executive Engineer, Public Works Department
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Nature of Litigation
Appeal against order rejecting application under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief in relation to termination of contract.
Remedy Sought
The appellant sought quashment of the termination letter dated 20.11.2010 and restraint order against respondents from entering into agreement with any other party for the same work.
Filing Reason
The respondents terminated the contract awarded to the appellant for four-laning of a road, and the appellant sought interim protection pending arbitration.
Previous Decisions
The Principal District Judge, Latur, rejected the appellant's application under Section 9 of the Arbitration and Conciliation Act, 1996 on 07.01.2011.
Issues
Whether the appellant is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996?
Submissions/Arguments
Appellant argued that the termination was arbitrary and that it had a prima facie case, balance of convenience in its favour, and would suffer irreparable injury if interim relief was not granted.
Respondents opposed the application, contending that the appellant had not made out a case for interim relief.
Ratio Decidendi
The court held that the appellant had made out a prima facie case, the balance of convenience was in favour of granting interim relief, and irreparable injury would be caused if the termination was allowed to stand, warranting interim protection under Section 9 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
The appellant presented an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking quashment of the letter dated 20.11.2010 terminating the contract awarded in favour of the appellant.
The appellant has also claimed restraint order against the respondents restraining them from entering into an agreement with anybody else in respect of work allotted to the applicant vide concession agreement dated 18.09.2009.
Procedural History
The appellant filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Principal District Judge, Latur, which was rejected on 07.01.2011. The appellant then filed the present appeal before the High Court, which was admitted and taken up for final disposal by consent.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9
