Case Note & Summary
The matter involved two arbitration appeals arising from interim applications under Section 9 of the Arbitration and Conciliation Act, 1996. The dispute pertained to a water supply concession agreement between Aurangabad City Water Utility Company Ltd. (the contractor) and Aurangabad Municipal Corporation (the employer). After the employer issued a termination notice, the contractor filed MARJI No. 214/2016 before the District Court seeking injunctions to restrain the employer from taking coercive steps, taking over the project, and encashing a bank guarantee. The District Court only partly allowed the application, restraining the employer from acting without following the contractual due process, but refused the other substantial reliefs. Aggrieved, the contractor filed Arbitration Appeal No. 12 of 2016 before the High Court. While this appeal was pending, the contractor filed a fresh application, MARJI No. 326/2016, ostensibly based on the subsequent termination of the contract, and obtained an injunction restraining the employer from acting on the termination notice. The employer then challenged that order in Arbitration Appeal No. 13 of 2016. The High Court admitted both appeals and heard them together. The court examined whether the second application was maintainable and whether an injunction restraining termination could be granted. It observed that the reliefs sought by the contractor would effectively amount to specific performance of the contract, which is barred under Section 14 of the Specific Relief Act, 1963, as compensation would be an adequate remedy. The court further noted that under Section 41(h) of the Act, an injunction cannot be granted when an equally efficacious remedy is available. The court also held that the principles of Order 39 Rule 1 CPC and the limitations of the Specific Relief Act apply to Section 9 applications. The employer argued that the second application was an abuse of process and forum shopping. The court found force in this argument, stating that the termination did not create a fresh cause of action for a new Section 9 application. However, as the provided judgment text is incomplete, the final operative order of the High Court is not recorded in the excerpt. The judgment discussed the legal principles governing the discretionary power under Section 9 and indicated that the contractor's application was not tenable. The decision in the matter would have turned on these principles, but the exact reasoning and final outcome remain unknown from the available text.
Headnote
A) Arbitration - Interim Measures - Section 9, Arbitration and Conciliation Act, 1996 - When considering an application for injunction under Section 9, courts must apply the principles governing temporary injunctions under Order 39 Rule 1 CPC and the limitations under Sections 14 and 41 of the Specific Relief Act, 1963. The relief sought must not amount to specific performance of a contract which is not specifically enforceable. Held that granting an injunction preventing the employer from terminating the contract would be impermissible as it would imply specific performance of a determinable contract (Paras 7-10). B) Contract Law - Specific Performance - Contracts not specifically enforceable - Specific Relief Act, 1963, Section 14 - A contract for which compensation in money is an adequate remedy cannot be specifically enforced. In the context of a water supply concession agreement, the contractor's claim to continue operating the project and collecting user charges could be compensated monetarily. Held that an injunction under Section 9 amounting to specific performance was barred under Section 14(1)(a) of the Specific Relief Act, 1963 (Paras 8-10). C) Civil Procedure - Forum Shopping - Multiple Section 9 Applications - Arbitration and Conciliation Act, 1996, Section 9 - Filing a second application under Section 9 after the first was rejected, while an appeal was pending, and obtaining relief from a different judge, amounts to forum shopping. The termination of the contract did not give rise to a fresh cause of action for a new Section 9 application. Held that the contractor's conduct in filing MARJI No. 326/2016 was improper and an abuse of process (Paras 5-6).
Issue of Consideration
Whether the contractor is entitled to interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 to restrain the employer from terminating the concession agreement and taking over the water supply project, particularly in light of the bar on specific performance of contracts under Sections 14 and 41 of the Specific Relief Act, 1963.
Law Points
- principles under section 38 of Specific Relief Act
- limitations under sections 14 and 41 of Specific Relief Act
- procedure under Order 39 CPC
- contract not specifically enforceable if compensation is an adequate relief
- injunction cannot be granted if equally efficacious relief is available
