SPA AGENCIES INDIA PVT LTD Vs. HARISH RAWTANI

JUDGEMENT

(1.) This appeal under Section 37 of Arbitration and Conciliation Act, 1996 (A&C Act, for short), involves an interesting question regarding the power of Civil Court under Section 9 of A&C Act to pass orders as an interim measure during arbitral proceedings when arbitral tribunal has already passed an order in respect of subject matter of the dispute.

(2.) The appellant herein, namely, M/s. SPA Agencies (India) Private Limited (hereafter, SPA) is an incorporated entity engaged in the business of distributor/agency of various artefacts, porcelain and glassware manufactured by Villeroy and Boch. To open their showroom in Hyderabad, they took three shops bearing door Nos.6-3-680/B/1, 2 and 3, forming part of premises bearing No.6-3-680/B admeasuring 1020 Sq. yards (hereafter, petition schedule premises). It is a double storeyed building situated in Punjagutta road, Hyderabad. Respondent, namely, Harish Rawtani, entered into three franchise agreements with SPA on 15.5.2006. As stipulated therein, SPA deposited Rs.88,20,000/- as non-forfeitable, non-refundable and interest free deposit. Be it noted that Rawtani himself is a lessee of petition schedule premises under lease deed dated 11.5.2005 and he is in the business of running franchise showrooms of various companies. In 2007, respondent instituted O.S.No.438 of 2007 for cancellation of franchise agreements and for recovery of possession of petition schedule premises. SPA filed application being I.A.No.5401 of 2007 under Section 8 of A&C Act. In view of the arbitration clause in franchise agreement, the Court of III Additional Chief Judge, City Civil Court, Hyderabad, referred the matter to sole arbitrator (hereafter, arbitral tribunal). SPA filed three applications under Section 17 of A&C Act offering to deposit certain amounts. The arbitral tribunal considered the matter and passed orders on 20.9.2008 directing SPA to deposit an amount of Rs.13,18,590/- upto the month of September 2008 on or before 15.10.2008 in respect of premises No.6-3- 680/B/1. A direction was also issued to deposit Rs.2,19,765/- per month duly remitting the same through arbitral tribunal on or before 7th of every month commencing from October 2008 till the termination of arbitration. Five months thereafter, Rawtani filed application under Section 9 of the A&C Act before the Court of III Additional Chief Judge, praying for a direction to SPA to deposit with sole arbitrator Rs.44,25,000/- as well as Rs.18,97,155/- due and payable for the months from December 2008 to February 2009 and continue to deposit Rs.6,32,385/- every month. In the said application, respondent, inter alia, pleaded that SPA disobeyed the orders of arbitral tribunal, while enjoying petition schedule premises, and alleged that there is possibility of SPA vacating the premises without paying the amounts due to respondent. The case was opposed by SPA alleging that petition is not maintainable as arbitration is pending, that they have kept non-forfeitable and nonrefundable amounts deposit with respondent and that respondent has no cause of action for filing the O.P. Learned III Additional Chief Judge by impugned order dated 09.9.2009 allowed the petition directing SPA to deposit Rs.44,26,695/- and another sum of Rs.18,97,155/-, which is due from SPA for the months of December 2008 to February 2009 and to continue to deposit Rs.6,32,385/- every month on or before 7th of every month with sole arbitrator.

(3.) Senior Counsel for SPA submits that there are three franchise agreements in respect of three separate premises belonging to respondent and, therefore, the Court below could not have passed order in one O.P. filed under Section 9 of A&C Act. Secondly, he submits that respondent filed petition by way of enforcing order passed by arbitrator under Section 17 of A&C Act and such jurisdiction does not vest in the Civil Court. Lastly he submits that after the sole arbitrator passed orders on 20.9.2008 on the interim application made by SPA, appellant paid certain amounts and all the subsequent events have been erroneously ignored by the Court below. He relied on Md. Army Welfare Housing Organisation v. Sumangal Services (P) Ltd. (1) (2004) 9 SCC 619 = AIR 2004 SC 1344 and Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. (2) (2007) 7 SCC 125 = AIR 2007 SC 2563.