YENEPOYA MINERALS Vs. MAHARASHTRA APEX CORPORATION

JUDGEMENT

(1.) THIS appeal arises out of an Order passed by the Principal District Judge, Dakshina Kannada, in an application under section 9 of the Arbitration and conciliation Act, 1996 whereby the appellant herein has been directed to offer cash security of Rs. 25 lakhs failing which the property mentioned in the schedule to the application would stand attached.

(2.) THE appellant-company it appears has entered into a hire purchase agreement in respect of two 380 KVA Diesel Generating Sets. The total hire amount of Rs. 27,35,000/- was repayable in 35 monthly installments of Rs. 75,972/- each commencing from 1-3-1995. The respondents case appears to be that while the appellant had made some payments, the remaining payments due under the agreement were not made thereby giving rise to a dispute regarding the recovery of the balance amount. Since the hire purchase agreement contained an arbitration clause, the dispute appears to have been referred for adjudication to one Sr. A. S. N. Hebbar. It was during the pendency of the said arbitration proceedings that the respondent appears to have moved an application under section 9 of the Arbitration and Concilliation Act, 1996 seeking an order of attachment of the property described in the schedule to the application. The respondents case was that while the arbitration proceedings were pending, the appellant-company was contemplating the alienation of the property mentioned in the schedule with a view to defeating the award/decree that may be passed in favour of the respondent in the arbitration proceedings. The appellant opposed the said application inter alia on the ground that it is a solvent party and the allegation that it was contemplating sale of its property with a view to defeating the rights of the claimant-respondent were factually incorrect. The Court below has upon consideration of the rival contentions allowed the application and directed the appellant herein to furnish cash security of a sum of Rs. 25 lakhs failing which the property set out in the schedule to the application would stand attached. The present appeal assails the correctness of the said Order as already noticed earlier.

(3.) MR. Bhat, learned Counsel for the appellant made a short submission in support of the appeal. He urged that the Court below had no jurisdiction to entertain the application filed by the respondent as no such application could in the light of the provisions of Section 17 of the Act be entertained. The power to direct making of any interim measure was according to Mr. Bhat vested exclusively in the Arbitral Tribunal and not in the Civil Court. In support of that submission, Mr. Bhat placed reliance upon Section 5 of the Arbitration and Conciliation Act, 1996 and submitted that no judicial authority was empowered to intervene in matters governed by the Act except in so far as such intervention was permitted by a specific provisions to that effect.