Case Law Details
Manish Aggarwal Vs RCI Industries And Technologies Ltd. (Delhi High Court)
In the present case, quite clearly, the learned Sole Arbitrator has declined to grant the interlocutory order sought by the appellants in exercise of his discretionary power under section 17 of the A&C Act. Has this discretionary power been exercised in a manner that is palpably arbitrary, capricious, irrational or perverse? In the opinion of this court, the answer to that question is an emphatic ‘No’. The interlocutory relief sought was to secure the counter-claims made by the appellants, which counter-claims are evidently disputed and the determination of which is yet to be made. In fact the learned Sole Arbitrator was in the process of hearing the appellants on their counter-claims. Interlocutory orders were sought on the ground that the respondent’s financial position was weak and would render any award granted on the counter-claims, a mere ‘paper-award’. This ground was premised solely on the fact that the respondent’s net-worth was in the ‘negative’. However, the learned Sole Arbitrator proceeded objectively on the basis that the ‘negative’ net-worth had reduced over the period March 2017 to March 2021, partly for the reason that the respondent had discharged the dues owed by DMT, i.e. the unit purchased from the appellants, to third party creditors. In any case, grant of the interlocutory relief sought, would have amounted to converting the indeterminate and unsecured counter-claims preferred by the appellants, into secure claims, which is ordinarily frowned upon in law.
Viewed from the settled perspective of guarded and sparing use of the powers under section 37(2)(b) of the A&C Act in only exceptional circumstances; and even more so when the exercise of discretion by the arbitrator is not seen to be arbitrary, capricious, irrational or perverse, this court finds no reason to interfere in the order made by the learned Sole Arbitrator in this case.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
By way of the present appeal under section 37(2)(b) of the Arbitration & Conciliation Act 1996 (‘A&C Act’), the appellants impugn order dated 19.08.2021 made by the learned Sole Arbitrator, declining to allow an application seeking interim measures of protection under section 17 of the A&C Act. The application under section 17 was moved by the non-claimants, who are the appellants in the present appeal, who had sought to secure the amounts comprised in their counter-claims. The principal ground for seeking to secure the amount in dispute in the counter-claims was the alleged ruinous financial position of the claimant, who is the respondent in the present appeal.
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