Case Note & Summary
The case involved an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Madras High Court. The applicants, M/s.Goseago Multimodal Corporation and two others, sought an interim injunction restraining the respondent, Priya Blue Industries Pvt. Ltd., from moving or handling scrap materials from Neyveli Lignite Corporation (NLC) and from acting in breach of agreements dated 26.03.2024 and 06.07.2024. The dispute arose from a Composite Agreement for Exclusive Sale and Financial Assistance dated 26.03.2024, under which the applicants claimed to have invested Rs.13 crores, enabling the respondent to become the successful bidder for dismantling and removing scrap from NLC. The applicants alleged that the respondent was attempting to sell the scrap without their consent, in breach of the Composite Agreement. On 13.02.2025, the court granted an ex-parte interim injunction, recording an undertaking from the applicants to indemnify NLC for any losses. The respondent subsequently filed A.No.843 of 2025 to vacate the injunction, challenging the jurisdiction of the Madras High Court on the ground that the seat of arbitration was Bhavnagar, Gujarat, as per the Agreement for Business Arrangement dated 06.07.2024 and two Addendums of the same date, which allegedly superseded the earlier Composite Agreement. The respondent argued that the applicants themselves, in their arbitration invocation notice dated 05.02.2025 under Section 21, had invoked the three-member tribunal procedure from the subsequent agreement, acknowledging its applicability. Additionally, the respondent contended that the applicants had breached the agreement by failing to pay the full advance of Rs.15 crores and not furnishing documents for a bank guarantee, forcing the respondent to directly pay Rs.120 crores to NLC, with total investments of Rs.137 crores. The respondent also alleged suppression of Addendum-II, which contained forfeiture and reimbursement clauses, and argued that balance of convenience and irreparable injury favored vacation of the injunction to avoid termination of the NLC contract and third-party claims. In response, the applicants relied on the Composite Agreement's clauses providing for Chennai jurisdiction and arbitration, maintained they were ready and willing to perform, and offered to reimburse Rs.120 crores within a week. The court heard detailed submissions from both sides on jurisdiction, supersession, suppression, breach, and balance of convenience, and reserved the matter on 27.02.2025, with the order pronounced on 03.03.2025. The final decision on the vacation application and the interim injunction was awaited in the complete judgment.
Headnote
A) Arbitration Law - Jurisdiction under Section 9 - Seat of Arbitration - Arbitration and Conciliation Act, 1996, Section 9 - The respondent contended that the seat of arbitration was Bhavnagar, Gujarat as per the subsequent Agreement dated 06.07.2024, which superseded the earlier Composite Agreement, and thus the Madras High Court lacked jurisdiction. The applicant argued that the earlier composite agreement provided for Chennai jurisdiction. The court considered the territorial jurisdiction for a Section 9 application. (Paras 6, 9-11) B) Contract Law - Supersession of Agreement - Subsequent Agreement Superseding Earlier MoU - Indian Contract Act, 1872, General Principles - The respondent argued that the Agreement for Business Arrangement dated 06.07.2024 along with Addendums superseded the earlier Composite Agreement dated 26.03.2024, and that the applicants' own arbitration invocation notice under Section 21 of the Act followed the three-member tribunal procedure from the subsequent agreement, confirming supersession. The court noted these contentions. (Paras 6, 10) C) Civil Procedure - Interim Injunction - Suppression of Material Facts - Code of Civil Procedure, 1908, Order 39 - The respondent submitted that the applicants suppressed Addendum-II dated 06.07.2024, which contained terms for forfeiture and reimbursement, and thus did not approach with clean hands, warranting vacation of interim injunction. The court examined this allegation. (Paras 7(d), 11) D) Contract Law - Breach of Contract - Alleged Breaches by Both Parties - Indian Contract Act, 1872 - The applicants alleged breach by the respondent in selling scrap without consent, while the respondent alleged breach by the applicants in failing to pay the full advance and provide documents for bank guarantee, forcing the respondent to directly pay Rs.120 crores to NLC. The court considered the competing claims of breach. (Paras 4, 7(a)-(c)) E) Injunction - Balance of Convenience and Irreparable Injury - Factors for Interim Relief - Specific Relief Act, 1963 - The respondent contended that balance of convenience favored vacation as they had invested over Rs.137 crores and continuation of injunction could lead to termination of NLC contract and third-party claims. The applicants offered to reimburse Rs.120 crores if granted time. The court evaluated these factors. (Paras 7(c), 9, 11)
Issue of Consideration
Whether the Madras High Court has jurisdiction to entertain the Section 9 applications when the seat of arbitration is contested as Bhavnagar, Gujarat; and whether the interim injunction granted on 13.02.2025 should be vacated.
Final Decision
Decision not clearly stated
Law Points
- Legal points not extracted
- Section 9 application maintainable only at seat of arbitration
- supersession of earlier agreement by subsequent agreement
- suppression of material facts bars interim relief
- balance of convenience and irreparable injury factors for interim injunction.
