Case Note & Summary
The petitioner, Acron Developers Private Limited, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief against the respondent, Patel Engineering Limited. The dispute arose from a construction contract awarded in 2010 for the execution of civil, structural, architectural, and finishing works for seven towers at the 'Proposed Smondoville Residential Apartments' in Bangalore, valued at Rs.37,47,59,624/-. The petitioner furnished bank guarantees and submitted 26 running account bills totaling Rs.15,45,13,401/- from June 2010 to December 2013. The petitioner claimed that it constructed an extra area of 40,000 sq. ft. beyond the 'good for construction' drawings, and the respondent agreed to pay for the actual built-up area. However, the respondent terminated the agreement on 22nd October 2011 and threatened to encash the bank guarantees. Subsequently, the parties executed a Deed of Settlement on 31st October 2011, which modified certain terms of the original agreement. The petitioner alleged that the respondent failed to make payments and sought an injunction restraining the respondent from selling, alienating, or creating third party rights over its property in Bangalore, or in the alternative, to deposit Rs.15,45,13,401/- in court. The relief regarding bank guarantees had become infructuous as the court had refused ad-interim injunction on 28th November 2013. The court held that the petitioner failed to establish a prima facie case or balance of convenience in its favour. The claims were disputed and required adjudication in arbitration. The property sought to be injuncted was not specifically linked to the contract, and no irreparable loss was demonstrated. Consequently, the petition was dismissed with no order as to costs.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Injunction against property - The petitioner sought to restrain the respondent from dealing with its property or to deposit a sum of Rs.15,45,13,401/- as security for its claims under a construction contract. The court held that the petitioner failed to establish a prima facie case or balance of convenience in its favour, as the claims were disputed and the property was not specifically linked to the contract. The petition was dismissed. (Paras 1-20) B) Arbitration - Bank Guarantees - Section 9 of the Arbitration and Conciliation Act, 1996 - Injunction against encashment - The relief regarding bank guarantees became infructuous as the court had earlier refused ad-interim injunction on 28th November 2013, and the guarantees were already encashed. (Para 1) C) Contract Law - Termination and Settlement - Deed of Settlement dated 31st October 2011 - The parties entered into a settlement after termination of the original contract, which modified certain terms. The court noted that the petitioner's claims for extra work and unpaid bills were disputed and required adjudication in arbitration. (Paras 2-4)
Issue of Consideration
Whether the petitioner is entitled to an interim injunction restraining the respondent from selling, alienating, or creating third party rights over its property, or in the alternative, directing deposit of Rs.15,45,13,401/-, pending arbitration.
Final Decision
The petition is dismissed. No order as to costs.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Prima facie case
- Balance of convenience
- Irreparable loss
- Interim injunction against property
- Bank guarantee encashment
- Termination of contract
- Deed of settlement
- Running account bills
- Extra work claims
