UNION OF INDIA versus RAMAN IRON FOUNDRY

Citation: [1974] 3 S.C.R. 556 · Decided: 12-03-1974 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Dismissed

Cited by 6 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

556 
UNION OF INDIA 
v. 
RAMAN IRON FOUNDRY 
March 12, 1974 
(P. N. BHAGWATI AND P. K. GOSWAMI, JJ.] 
Indian Arbitration Act (10of1940), s. 
41 (b)-Court when can· issue· interim 
in function, bldian Contract Act (9of1872), s. 74-Stipulation of amount -of da-
nwges in contract-Cla1:n for damages for breach-If claim for liquidated 
or un· 
liquidated damages. 
'Sqms due,' meaning of. 
A dispute arose regarding the per(onnance of a coritract between the appellant 
and respondent, each party contending that the other had committed a breach of 
the contract and claiming large sums of money by way of damages. The appel-
lant's claim was for damages stipulated under cl. 14 of the contract. The res-
pondent was called upon to pay the amount claimed and was also informed that 
on failure to make the payment the appropriate officer would be authorised to 
recover the amount from the pending bills of the respondent in respect of other 
contracts under cl. 18 of the Contract. The respondent thereupon moved the 
High Court under s. 20 of the Arbitration Act, 1940, and the claim and counter 
claim were referred to arbitration. During the pendency of the arbitration some 
amounts became due and payable by the appellant to the respondent in respect of 
other contracts between them. The respondent applied to the High Court for 
an injunction restraining the appellant from recovering its claim for damages 
from the an1ounts which had fallen due and the High Court granted the injunction 
holding that cl. 18 did not authorise the appellant to appropriate the anlounts 
of any pending bills of the respondent towards satisfaction of its claim for da-
mages against the respondent 
unless such claim was either admitted by the res~ 
pendent or adjudicated upon by the arbitrator or the Co.urt. 
Dismissing the appeal to this Court, 
HELD : (1) The order of interim injunction cannot be said to be outside the 
scope of the High Court's power under s. 41 (b) of the Arbitr~tion Act. [563D-El 
(a) Section 41 (b) says that the Court s1'all have, for the purpose· of and in relation 
to arbitration proceedings, the same power of making orders in respect of any of 
the matters set out in the second schedule as it has for the purpos~ of and in relation 
to any proceedings before the Court and one of the matters set out in the second 
A 
B 
c 
D 
E 
Schedufo is •interim injunction.' The Court has therefore power to issue interim 
F 
injunction. But such interim injunction can only be for the purpose of and in re-
lation to arbitration proceedings.The Court could not therefore make an in-
terim ofder which, though ostensibly in form an order of interim injunction, in 
substance amounted to a direction to the appellant to pay the amounts due to the 
respondent under other contracts. 
{562F-563A] 
(b) However, in the' present case, tlle order of 'interim injunction' does not 
expressly or by necessary implication direct the appellant to pay amounts due to 
the respondent under other contracts. The appellant can still refuse to pay such 
G 
amounts if it thinks it has a valid defence and the only remedy open to the res-
pondent then would be to take measures in an appropriate forum. No breach of 
the interim injunction as such would be involved in non-payment of such amounts 
by the appellant to the respondent. The only thing which the appellant is inter-
dicted from doing is to satisfy its claim for damages by appropriating such amounts. 
Such an order would be within the power of the court under s. 41 (b), because 
the clain1 for damages forms the subject matter of .arbitration proceedings. 
[563A-P] 
(2) The appellant had no right or authority under cl. 18 to appropriate the 
H 
amounts of other pending bills of the respondent, in or towards satisfaction of 
its claim f.or damages against the respondent, and so, the High Court has justi-
fied 
in issuing the interim injunction. [5690] 
A 
B 
c 
D 
F 
G 
H 
UNION v, RAMAN IRON FOUNDRY 
557 
. <al, Thollg~ ~ 
words"w~ any claim for the payment of a sum of money 
anses . ~og 
10 the o~og part of cl 18 arc words of great amplitude, covering · 
eve_n a claun for damages, 1t is a wc)l settled rule of interpretation, applicable alike 
to 1mtruments .at to .statutes 
tha~ the mea~g of ordinary words is to be found 
not ~ much in stnct etymologacal propriety of language nor even in popular 
~as ID the subject: or occasion on which they are used and the object which is 
intended to be. attained. The context and col

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