Case Note & Summary
The petitioner, Sanmit International FZE, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief against the respondents, Rashtriya Chemicals and Fertilizers Ltd. and another, in relation to a contract for supply of Egyptian Rock Phosphate. The dispute arose from a purchase order dated 8 November 2011 for 50,000 MT, later reduced to 16,000 MT due to commercial non-viability and civil unrest in Egypt. The petitioner supplied 14,500 MT, which was within the agreed tolerance. However, the respondents insisted on supply of the balance quantity as per the original order and threatened to invoke the performance bank guarantee. The court considered whether the petitioner had made out a prima facie case for interim relief. It noted that the respondents had accepted the reduction in quantity and the amended performance guarantee. The court held that the petitioner had a strong prima facie case, balance of convenience was in its favor, and irreparable loss would be caused if the guarantee was invoked. Accordingly, the court restrained the respondents from invoking the performance bank guarantee and from taking coercive steps for alleged breach, until the disposal of the arbitration proceedings or until further orders.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Court granted interim relief restraining invocation of performance bank guarantee and coercive steps, holding that the petitioner made out a prima facie case of variation of contract and force majeure, and balance of convenience was in favor of granting protection to maintain status quo pending arbitration (Paras 1-10).
Issue of Consideration
Whether the petitioner is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the respondents from invoking the performance bank guarantee and from taking coercive steps for alleged breach of contract, given the agreed reduction in supply quantity and the force majeure circumstances.
Final Decision
The court allowed the petition and restrained the respondents from invoking the performance bank guarantee and from taking any coercive steps against the petitioner for alleged breach of contract, until the disposal of the arbitration proceedings or until further orders.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- prima facie case
- balance of convenience
- irreparable loss
- force majeure
- variation of contract
- performance bank guarantee
Case Details
2012 LawText (BOM) (02) 66
Arbitration Petition (Lodging) No. 110 of 2012
Mr. S.U. Kamdar, Senior Advocate with Mr. Rohan Cama with Mr. Benny Joseph i/by M/s. Benny Joseph Law Offices for the petitioner; Mr. Astad Randeria with Mr. M.S. Bodhanwalla & Mrs. Prachi Raj Mhatre i/by M/s. Bodhanwalla & Co. for respondent no.1
Rashtriya Chemicals and Fertilizers Ltd. & anr.
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Nature of Litigation
Arbitration petition seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996.
Remedy Sought
Restraining the respondents from invoking the performance bank guarantee and from taking coercive steps for alleged breach of contract.
Filing Reason
Dispute over supply quantity of Egyptian Rock Phosphate; respondents insisted on original quantity despite agreed reduction and force majeure circumstances.
Issues
Whether the petitioner is entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the respondents from invoking the performance bank guarantee and from taking coercive steps for alleged breach of contract.
Submissions/Arguments
Petitioner argued that the contract was varied by mutual agreement to reduce the quantity from 50,000 MT to 16,000 MT, and that force majeure circumstances (civil unrest in Egypt) prevented further supply.
Respondents argued that the original contract remained in force and the petitioner was in breach for not supplying the balance quantity.
Ratio Decidendi
The court held that the petitioner made out a prima facie case of variation of contract and force majeure, and the balance of convenience was in favor of granting interim protection to maintain status quo pending arbitration, as irreparable loss would be caused if the bank guarantee was invoked.
Judgment Excerpts
The Petitioner has invoked Section 9 of the Arbitration and Conciliation Act, 1996 in view of the arbitration clause in the agreement/contract between the parties.
The Petitioner supplied cargo, loaded on board the MV Sam Panther, which arrived in Mumbai on November 28, 2011 and accordingly fully discharged its cargo, 14500 MT of Egyptian rock phosphate, on 4 December 2011.
Procedural History
The petitioner filed Arbitration Petition (Lodging) No. 110 of 2012 under Section 9 of the Arbitration and Conciliation Act, 1996. The petition was heard finally by consent of parties on February 1, 2012, and judgment was pronounced on February 10, 2012.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9
