LexSUNDARAM FINANCE LTD. versus NEPC INDIA LTD.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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SUNDARAM FINANCE LTD.
A
v.
NEPC INDIA LTD.
JANUARY 13, 1999
(SUJATA V. MANOHAR AND B.N. KIRPAL, JJ.)
B
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Arbitratio11 a11d Conciliatio11 Act, 1996: Sectio11s 9 and 21.
Interim orde1~Seeking of-Before co111111e11ceme11t of arbitra-
tion-Held, Court ca11 pass interim order eve11 before comme11ceme11t of c
wbitral proceedings-It is not necessary to issue a 11otice invoking arbitration
clause to the opposite party before filing application u11der S. 9 for interim
relief-However, before passi11g the interim order court must be satisfied that
there exists a valid arbitration agree111e11t a11d that the applicant inte11ds to
take the dispute to arbitration-Court may pass a co11ditio11al order with a D
view to seei11g that effective steps are take11 by the applicant for comme11ci11g
the arbitral proceedi11gs-Arbitratio11 Act, 1940, Ss.41(c), 20 a11d Sch.
Il--{f11ited Nations Commissio11 on Intemational Trade Law-Model Law
011 I11tematio11al Commercial Arbitration adopted in 1985, .Art.9.
Sections 9 and 22-Rules u11der-Maki11g of-By High Courts-Held,
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High Cuurts should make rules u11der S.82 consistent with the Act providing
for the manner of fili11g the application, the documents which should accom-
pany the same and the manner of dealing with the same under S.9.
Provisio11s-/11terpretation of-Held, Should be construed i11de-
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pe11dently without refere11ce to the principles underlying the repealed-Arbitra-
tion Act, 1940-Should be co11strued with reference to the UNCITRAL Model
Law.
Interpretation of Statutes:
Basic Rules--fl.ule of Literal Construction-adopting of.
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Words and Phrases:
"Before''-Mea11i11g of-/n the co11text of S.9 of the Arbitration a11d
Conciliation Act, 1996.
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89
90
SUPREME COURT REPORTS
[1999] 1 S.C.R.
A
The respondent had entered into a hire-purchase agreement with the
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appellant in respect of two wind turbine generators along with all acces-
sories. The terms of agreement contemplated payments being made in
instalments by the respondent. However, the respondent paid the first
fifteen instalments and thereafter committed default and payment was not
B
made in spite of several demands being made by the appellant.
The purchase agreement contained an arbitration clause and, there-
fore, the appellant filed an application under Section 9 of the Arbitration
and Con~iliation Act, 1996 before the Trial Court for interim custody of
the hire-purchase equipment. The Trial Court passed an interim order to
c that effect.
The respondent filed a petition before the High Court challenging
the aforesaid order of the Trial Court. The High Court allowed the petition
on the ground that as no arbitration proceedings were pending and even
D the arbitrator had not been appointed, an application under Section 9 of
the 1996 Act for getting interim relief alone was not maintainable and,
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therefore, the Trial Court had no jurisdiction to entertain such an applica-
tion. Hence this appeal.
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Disposing of the appeal, this Court
HELD: 1.1. Under the Arbitration and Conciliation Act, 1996 the
Court can pass interim orders under Section 9. Arbitral proceedings
commence only when the request to refer the dispute is received by the
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respondent as per Section 21 of the Act. The material words occurring in
Section 9 are "before or during the arbitral proceedings". This clearly con-
templates two stages when the Court can pass interim orders, i.e:, during
the arbitral proceedings or before the arbitral proceedings, There is no
reason as to why Section 9 of the 1996 Act should not be literally construed.
Meaning has to be given to the word "before" occurring in the said section.
G The only interpretation that can be given is that the Court can pass interim
orders before the commencement of arbitral proceedings. The Court has
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jurisdiction to entertain an application under Section 9 either before
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arbitral proceedings or during arbitral proceedings or after the making of
the arbitral award but before it is enforced in accordance with Section 36
H of the Act. [98-G-H; 99"A·D]
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SUNDARAM FINANCE LTD. v. NEPC INDIA LTD.
91
1.2. However, when a party applies under Section 9 of the 1996 Act A
it is implicit that it accepts that there is a final and binding arbitration
agreement in ·existence. It is also implicit that a dispute must have arisen
which is referable to the arbitral tribunal. Section 9 further contemplates
arbitration proceedings takExcerpt shown. Read the full judgment & AI analysis in Lexace.