REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4918 OF 2008
(Arising out of S.L.P. (C) No. 24175 of 2007)
M/s. GAIL (I) Ltd. .....Appellant
Versus
Bal Kishan Agarwal Glass Industries Ltd. ....Respondent
JUDGMENT
Dr. ARIJIT PASAYAT.
1. Leave granted.
2. Challenge in this appeal is to the judgment of a Division
Bench of the Allahabad High Court disposing of appeal (FAFO
No. 1339-D of 2007) which was preferred by the appellant
against the order dated 31.8.2007 passed by learned Judge of
Small Causes Court/Civil Judge (Senior Division) Agra, in Suit
No. 285 of 2007. By the said order the application for interim
mandatory injunction was disposed of with certain directions.
3. Background facts as projected by the appellant giving
rise to the appeal in a nutshell are as follows:
On 17.9.1996 an agreement was entered into between
the appellant and the respondent for supply of gas. The
agreement was valid upto 31.3.2002 and was further extended
from time to time upto 31.3.2006. On 3.12.2004 officials of
the appellant inspected the factory premises of the respondent
and found that gas supply has been tampered with. Similar
incidents were noticed on 15.1.2005 and 17.3.2005.
Therefore on 28.5.2005 gas supply was discontinued.
Respondent filed writ petition No. 44679 of 2005 before the
Allahabad High Court. By order dated 18.7.2005 the High
Court dismissed the writ petition on the ground that
alternative remedy of arbitration was available under Section
9 of the Arbitration and Conciliation Act, 1996 (in short the
`Arbitration Act'). The order was not challenged by the
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respondent. On 10.8.2005 proposal was given for restoration
of gas supply on the respondent furnishing undertakings,
which was in fact done. Thereafter gas supply was
reconnected on 22.2.2006. It was again found that the gas
meter was tampered with, which lead to disconnection on
28.2.2006. On 27.3.2006 an order was passed by the District
Judge, Agra to continue gas supply till 31.3.2006. On
3.4.2006 gas supply was stopped. Again a writ petition was
filed by the respondent i.e. Writ petition No. 2283 of 2006. By
order dated 1.11.2006 the Allahabad High Court disposed of
the writ petition holding that the proper remedy for the
respondent was to make a representation to the appellant
since no mandamus can be issued for extension of contract or
for giving benefit to any proposed contract. On 29.3.2007
appellant indicated the terms for re-connection namely
deposit of 50% of the outstanding amount of Rs.8,10,79,057/-
and security for balance through mortgage of immovable
property and clearance of all outstanding dues in respect of
the gas supply. Civil Suit No.285 of 2007 was filed by the
respondent with inter alia a prayer for directing the appellant
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to execute the deed of renewal of gas supply without
demanding any payment or security. An application was filed
by the appellant in terms of Order VII Rule 11 of the Code of
Criminal Procedure, 1908 (in short the `CPC') and Section 8 of
the Arbitration Act. Learned Civil Judge directed that the
fresh proposal dated 9.2.2006 should be given effect to
without any further terms and conditions. As noted above an
appeal was preferred which was disposed of by the impugned
order dated 18.9.2007 on certain terms. The terms read as
follows:
1. The Plaintiff-Respondent shall deposit a sum of two
crores with the respondent and a security to the
tune of six crores in the form of second charge of
the immovable property along with bond for
payment with the Defendant-Appellant.
2. Out of two crores, the plaintiff-respondent shall
deposit a sum of Rs.50 lac with the defendant-
appellant within a period of one month. The
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security to the tune of six crore will also be
deposited within a month.
3. They will further continue to deposit a sum of Rs.5
lac per month with the plaintiff-respondent in the
first week of every month till entire Rs. two crores
are deposited. The first installment of Rs.5 lac will
start from the month of November, 2007 i.e., the
first installment of 5 lac has to be paid by 7th of
November, 2007. These deposits will be in addition
to the charges of the gas to be supplied to the
Plaintiff-Respondent. They will be kept by the
Defendant-Appellant in fixed deposit in any
nationalised bank and will abide the Arbitration
proceedings and subject to final decision of the
case.
4. The Defendant-Appellant will resume gas supply of
the Plaintiff-Respondent after deposit of Rs. 50 lac
and the security for 6 crores.
5. It will be open to the Defendant-Appellant to stop
the gas supply in case of default in depositing the
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payment within the above stipulated time.
6. Defendant-Appellant will also be entitled to inspect
the meters and any if tampering in meter is found,
it will be open to the Defendant-Appellant to stop
the supply of gas after giving notice to the Plaintiff-
Respondent.
4. According to Mr. G.E. Vahanvati learned Solicitor
General what in essence the respondent sought for in the suit
is relief in terms of Section 10 of the Specific Relief Act, 1963
(in short the `Act'). In order to bring application of the said
provision there must be a contract. Section 39 of the said Act
relates to an obligation flowing from a contract upon mutually
agreed upon terms. There was no question of any automatic
renewal. As a matter of fact the extension of the period of
contract is not automatic and has to be done on mutually
agreed upon terms. In the instant case, there was no contract
in existence, and therefore there is no question of granting any
relief in the suit. Additionally, there was a specific clause
relating to arbitration. It is pointed out that the Civil court
was aware of the earlier order of the High Court. It is,
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therefore, submitted that the learned Civil judge could not
have passed the order which was impugned before the High
Court. Unfortunately the High Court disposed of the appeal
before it without taking note of the fact that earlier in Writ
Petition No. 44679 of 2005, the court had dismissed the writ
petition on the ground of alternative remedy. The said order
was not challenged. It is accepted that an arbitrator has in
fact been appointed.
5. Mr. T.R. Andhyarujina, Learned Senior Counsel
appearing for the respondent on the other hand submitted
that the appellant's conduct was not above board. Initially, it
had suggested certain terms for reconnection. But backed out
of it and even it was not keen on the early disposal of the
proceeding before the arbitrator. The question whether any
amount is payable as penalty as claimed by the appellant can
be the subject matter of adjudication by the arbitrator. Since
unreasonable terms were indicated for resumption of gas
supply, the respondent had no alternative but to avail the civil
suit. It was suffering huge losses and there were human
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problems like unemployment of a large number of employees
who earn their livelihood from their employment in the
respondent's factory. A proposal has also been filed by the
respondent during the hearing of the appeal.
6. Mr. Vahanvati, submitted that since the matter is
pending before the Arbitrator, the Civil Court should not have
passed any order and the High Court was not justified in
practically affirming the order of the trial court except
variation of certain conditions.
7. Undisputedly, the proceedings are pending before the
arbitrator. Under Section 17 of the Act, interim orders can be
passed by the Arbitrator.
8. In the circumstances we dispose of the appeal with the
following directions:
1. Within a period of ten days from today
the respondent shall make an
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appropriate application for interim
arrangement before the Arbitrator;
2. Within a period of three days from the
date of receipt of copy of the application,
the appellant shall file the
response/objection, if any;
3. Within a period of ten days thereafter the
Arbitrator is requested to dispose of the
application in accordance with law. It is
open to the respondent to place the
proposal which was filed in the Court.
Needless to say, the Arbitrator shall
consider the matter in proper
perspective.
9. We make it clear that we have not expressed any opinion
on the terms of the conditions, if any, which can be imposed
and/or whether any interim order is called for in the matter.
The appeal is accordingly disposed of without any order as to
costs.
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........................................J.
(Dr. ARIJIT PASAYAT)
..........................................J.
(Dr. MUKUNDAKAM SHARMA)
New Delhi,
August 7, 2008
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