M/S SANT RAM AND COMPANY versus THE STATE OF RAJASTHAN AND ORS.

Citation: [1996] SUPP. 8 S.C.R. 931 · Decided: 20-11-1996 · Supreme Court of India · Bench: K. RAMASWAMY, G.T. NANAVATI, K. VENKATASWAMI · Disposal: Dismissed

cites 2 · see the full citation network in Lexace

Judgment (excerpt)

MIS SANT RAM AND COMPANY 
v. 
THE STATE OF RAJASTHAN AND ORS. 
NOVEMBER 20, 1996 
[K. RAMASWAMY, G.T. NANA VAT! AND 
K. VENKATASWAMI, JJ.] 
Code of Civil Procedure, 1908/Arbitration Act, 1940: 
A 
B 
0 XXXIX R. IIS. 41 (b) and Second Schedule-Application for ad 
interim injunction-Dispute referred to Arbitrator by mutual agreement- C 
Pending arbitration respondent sought to adjust amount due to appellant 
in another contract-Application for ad interim injunction by appellant 
seeking to restrain respondent from adjusting the said amount-District 
Judge and High Court held that application was not maintainable-Held, 
under the contract appellant had expressly agreed for adjustment of amount 
pendinK with respondent in respect of claim under the dispute or any other D 
contract with the respondent-Neither on merits nor on principle of law 
there is any illegality in the order passed by High Court warranting 
interference. 
Kamaluddin Ansari & Co. v. Union of India, [1983[ SCR 607, relied E 
on. 
Union of Inida v. Ram Iron Foundry, [1974[ 3 SCR 556, held no 
longer a good law, as it stood overruled in [1983] 3 SCR 607. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 78 ofl991. F 
From the Judgment and Order dated 7.8.90 of the Rajasthan High 
Court in C.R. No. 293 of 1990. 
A.B. Rohtagi, Ms. Indu Malhotra and Ms. Kavita Wadia for the G 
appellant. 
Aruneshwar Gupta. Manoj K.Das and Manish Garg for the 
Respondents. 
The following Order of the High Court was delivered : 
931 
H 
932 
SUPREME COURT REPORTS [I 996] SUPP. 8 S.C.R. 
A 
This appeal by special leave arises from the order of the Single 
Judge of the Rajasthan High Court made in Civil Revision Petition No. 
293/90, dated August 7, 1990. 
The admitted position is that the appellant had entered into a contract 
with the respondent-State for execution of the works of widening ofGagar 
B Diversion Bridge at Bikaner in Sri Ganganagar Section. Pursuant to a 
dispute which arose between the parties, in terms of the contract, the 
matter by mutual agreement, was referred to the arbitrator by name Sri 
K.L. Sethia. Pending arbitration, the respondent sought to adjust the amount 
due to the appellant in another contract. Thereon the appellant filed an 
application in the district Court under Order XXXIX Rule I, Code of 
C Civil procedure, 1908 read with Section 41 (b) of the Arbitration Act and 
the Second Schedule to the Arbitration Act, I 940 for ad interim injunction, 
restraining the respondent from adjusting the same. The District Judge by 
his order held that such an application is not maintainable without. the 
intervention of the Court; therefore, Section 4I(b) and the Second Schedule 
have no application. The same came to be upheld by the learned Chief 
D Justice in the impugned order. Thus this appeal by special leave. 
Shri. A.B. Rohtagi, learned senior counsel for the appellant, contends 
that for entertaining an application under Section 4I(b) read with the 
Second Schedule, it is not a condition that the arbitration proceedings 
E should be pending through the intervention of the Court. Independently 
thereof, when arbitration proceedings were pending between the parties in 
respect of the claim or counter-claim and when the respondent sought to 
adjust the same with the amounts due from other contracts, the Court 
would, in the circumstances, intervene and restrain the respondents from 
adjusting the same as a counter-claim. Otherwise, the arbitration proceedings 
F would be nullified. He placed strong reliance on the judgment of a two 
Judge Bench of this court in Union of India v. Raman Iron Foundry, [1974] 
3 SCR 556. The question is no longer res integra. A Bench of three judges 
of this Court in Kalaluddin Ansari & Co. v. Union of India, [1983] 3 SCR 
607 has considered the scope of Section 41 (b) and the Second Schedule 
G and had held thus : 
H 
"The first question that falls for consideration in this appeal 
is about the exact scope and ambit of Section 41 in order to 
appreciate the contention raised on behalf of the appellant: 
"41. Procedure and powers of Court: Subject to the provisions 
I 
SANT RAM AND CO. v. STA TE OF RAJ. 
933 
of this Act and of rules made thereunder 
(a) The provisions of the Code of Civil Procedure, 1908 
shall apply to all proceedings before the Court, and to all 
appeals, under this Act, and 
A 
(b) The Court shall have, for the purpose of, and in relation B 
to, arbitration proceeding, the same power of making orders 

Excerpt shown. Read the full judgment & AI analysis in Lexace.