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The Delhi High Court has passed a judgement on 24-01-2022 in the case of Chetan Iron LLP vs NRC Ltd. AP (L) NO. 1366 OF 2022. Justice G.S Kulkarni dismissed the petition.

FACTS OF THE CASE

In this case, a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996 (for short “the Act”) whereby the petitioner has prayed for interim measures pending the arbitral proceedings. The dispute between the parties has arisen under a contract for sale of scrap dated 21 September 2021 titled as “Scrap Sale Order” (for short ‘the contract’), issued by the respondent in favour of the petitioner, interalia for a sale of scrap material (Reinforcement Steel, Structural Steel, SS, Aluminum etc.) of the following description as set out:- Scrap of Plant and Machinery (Structural Steel Scrap), Reiforcement Steel scrap – inclusive of all Demolition Charges for structures and plant building upto ground level, SS Scrap, Aluminum Scrap.

The contract provides for general terms and conditions. Clause (3) thereof is the arbitration agreement between the parties. Clause (5)provides for ‘Validity of the Contract’ to provide that the validity of the contract would be upto 30 June 2022. It is provided that the petitioner (buyer) should lift the scrap items from the identified areas on regular basis and on accumulation of scrap materials. It further provides that termination from either side will require 15 days notice in advance. The other relevant clause is Clause 19 which provides that the sale shall be on “as is where is basis” and on “ground clearance basis”, and provides that the items shall be cleared without sorting or removal of any part, and a pick and choose arrangement of collection would not be permitted. It also provides that entire lots should be cleared as directed and that lots shown should be completely removed and the site should be cleared fully and certified by the designated officer. Clause 20 provides that at the time of removal of Scrap material, if any usable/good material is found, the respondent would have right to hold/retain those materials. In the course of execution of the contract, in regard to the payments received from the petitioner, the respondent maintained a ledger account of the petitioner, a copy of which is annexed at ‘Exhibit F’ of the petition, which shows that the petitioner had paid an amount of Rs.2,14,11,212/- and in addition to that it had paid an advance amount of Rs.21,96,468/- which was the credit balance available to the petitioner in such account.

The petitioner has approached this Court praying for interim measures under Section 9 of the Act.

JUDGMENT

In the above context, it would be apposite to consider the position in law. In the celebrated commentary of Pollock and Mulla on “The Indian Contract Act and the Specific Relief Act”, (14^th Edn, Volume II, page 1939), the views of the learned authors on ‘determinable contracts’ being not enforceable as per the provisions of Section 14(1)(c) (pre 2018 amendment) of the Specific Relief Act need to be noted, which read thus: “Clause (c): Determinable Contracts – A contract, which is in its nature revocable, or determinable as described in Specific Relief Act, is not enforceable by specific performance. Specific performance is not decreed if the defendant would be entitled to revoke or dissolve a contract when executed, as in the case of a contract containing an express power of revocation, since it would be idle to do that which might instantly be undone by one of the parties”.

The court took reference from various judgments for refusing injunctory reliefs and specific performance of the contract, when the nature of the contract is determinable there are as follows

• Indian Oil Corporation Ltd v Amritsar Gas Service and Ors,
• Spice Digital Ltd. vs. Vistaas Digital Media Pvt. Ltd., 2012
• Mittal Services Vs. Escotel Mobile Communication Ltd.

By reviewing these judgments court is of opinion that in any event the petitioner cannot be granted any relief applying the well settled principle that an interim relief can be granted only in aid of and ancillary to the main relief. It is prima facie seen that a relief of specific performance or an injunction cannot be granted to the petitioner, hence, a relief of a temporary injunction as an interim measure cannot be granted to the petitioner.

In the aforesaid circumstances, the petition needs to fail. It is accordingly dismissed.

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ARTICLE WRITTEN  BY ABHINAV CHATURVEDI

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