Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.

Jaguar Overseas Limited Versus Seagull Maritime Agencies Pvt Ltd.


Court / Forum : High Court of Delhi
Citation : OMP(I) (COMM) 183/2020
Coram : Justice V. Kameswar Rao
Subject : Section 9 of the Arbitration and Conciliation Act, 1996 (“1996 Act”)
Date of Decision : 2020-08-06

Brief Facts

  • The Petitioner had entered into an agreement with the Government of Zambia through the Ministry of Health, Zambia for construction of health posts, including providing prefabricated structures and for supply and installation of essential equipment in various regions of Zambia.
  • Therefore, for the purpose of exporting the material for the project, the Petitioner had entered into an agreement (“Agreement”) with the Respondent wherein the Respondent was appointed as the handling agent for the purposes of ex-works, FOB arrangements, customs clearance, transportation, freight forwarding, multimodal activities, etc. with respect to the shipment of around 250 containers containing the material for the above mentioned project to the sites in Zambia.
  • The Petitioner had terminated the Agreement with the Respondent with respect to 18 containers, however the Respondent was still under the obligation for shipment of 57 containers.
  • The Petitioner had filed the present petition under section 9 of the 1996 Act whereby, in effect, the Petitioners had prayed that the Court may direct the Respondent, to ensure the transportation/ release of the containers from the Port authorities to their onward destination to Zambia.
  • The prayers were opposed by the Respondent on the ground, that the Petitioner is guilty of not making the payment of shipments in terms of the Agreement.

Issues

  1. Whether the Court has a power to mould reliefs under a petition filed under section 9 of 1996 Act?

Decision

  • The Court held that under section 9 of the 1996 Act, the Court has a wide discretion to mould the relief for safeguarding the rights of the parties and has the discretion to pass an interim order of protection as may be just and convenient when the court arrives at a finding that the rights of the party are going to be adversely affected pending the arbitration.
  • The Court relied upon the case of Ashok Kumar v. SBI Officers Association 2013 (3) Arb LR 246 (Del)/ 2013 SCC OnLine 1631 wherein this court has held as under:
    “57. There is another reason which persuades me to reject which is the limited scope of Section 9 of the Act. The mere reading of Section 9 of the Act would reveal that the power of the court under Section 9 can be exercised prior to or during the pendency of the arbitral proceeding or even after passing the award but before enforcement to protect or preserve or sale of any good, amount, or property or thing or any other interim measure as may appear to court just and convenient. The said orders of interim measures under Section 9 are aimed at safeguarding the rights of a party to the arbitration agreement pending the arbitration or its enforcement so that no prejudice can be caused to the said party on account of pendency of the proceedings. However, the said orders of interim protection are not passed on the mere asking when there exists no possibility of safeguarding any private right of the party.

    58. It is true that this court has power to pass interim order of interim protection if it appears to the court as “just and convenient”. The wordings just and convenient provide wide discretion to the court to mould the interim relief for safeguarding the rights of the parties. But the said discretion has to be exercised judiciously and not capriciously or in an arbitrary manner. I agree with Mr. Sandeep Sethi, learned Senior counsel appearing on behalf of the respondents, that the show cause notice issued by the respondents is not liable to be stayed under the scheme of Section 9 of the Act as the petitioners instead of giving the explanation in the meeting or following the prescribed procedure have approached the Court.

    60. Applying the said principle of law to section 9, it can be said that the courts discretion to pass the interim protection order as just and convenient can be exercised when the court arrives at the finding that the rights of the party are going to be affected pending the arbitration or prior to enforcement which needs protection in the interim which makes it just and convenient to pass the order.”
  • Applying the aforesaid principles, the Court directed the Respondent to transport the container subject to the Petitioner paying for the container within a period of 3 days and the Petitioner and Respondent paying the demurrage charges equally.

Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.