The High court of Delhi held that it is improper for court to demand bank for guarantee when the implementation of award is not frustrated under Section 9 petition
FAO(OS) (COMM) 29/2022 & CM APPL. 7026/2022
Case Title: Skypower Solar India Pvt Ltd v. Sterling and Wilson International FZE
Appearance
Council for petitioner – Mr. Dayan Krishnan and Mr. Arvind Nayar, Senior Advocates with Mr. Tishampati Sen, Ms. Riddhi S, Mr. Anurag Anand & Mr. Himanshu Kaushal
Council for the respondent -Mr. Darpan Wadhwa, Sr. Adv. with Mr. Jaiyesh Bakshi, Mr. Ravi Tyagi, Ms. Manmilan Sidhu, Mr. Sameer Patel, Ms. Sudiksha Saini & Mr. Ankit Tyagi
Date of Judgement: 10.11.2023
CORAM: HON’BLE MR JUSTICE VIBHU BAKHRU HON’BLE MR JUSTICE AMIT MAHAJAN
Introduction
The Delhi High Court contended that the power utilized by the court in command under section -9 of the Arbitration and Conciliation Act of 1996 will not contend for the demand of Bank guaranty to protect the claims made by the party holding in the arbitration proceedings, except if it is been clarified that the contended party is isolating its assets or acting in a manner that would frustrate the enforcement of the Arbitral Award.
Facts of the case
S&W had filed a petition under Section 9 of the A&C Act and was the petitioner in the original petition OMP(I)(COMM) 461/2018.
S&W is an affiliate of Sterling and Wilson Private Limited (hereafter ‘SWPL’), which is an Indian entity incorporated under the Companies Act, 2013
It is submitted by the parties in the present appeals that dispute in respect of Sunshakti Solar Power Projects Private Limited, The present appeals are confined to the interim measures of protection granted in OMP(I)(COMM) 461/2018, by the impugned judgment.
S&W, inter alia, claims that it is entitled to receive the supply price of USD 30,719,892.60. S&W claims that it had supplied solar module PV inverters and other equipment to SIPL for commissioning the Project in terms of the Offshore Supply Agreement In terms of the OSA, S&W was entitled to 90% of the price of the Offshore Supplies amounting to USD 30,719,892.60 on achievement of the Commercial Operation Date (COD) of the Project. According to S&W, SIPL’s obligation to pay the Supply Price was independent of any other contractual arrangement between SIPL with SWPL or any of its group entities.
The appellant challenged the impugned order on the following grounds: The direction by the Ld. Single Judge to furnish the bank guarantee to secure the amount in dispute is akin to an attachment before judgment, however, this direction was in contradiction to the principles laid down in Order XXXVIII Rule 5 of the CPC.
Analysis by the court
The court contended that the present appeal is allowed to the limited extent of setting aside the direction to the appellants to provide a bank guarantee to partly secure the claims of the respondent. We clarify that all other interim measures of protection granted in terms of the impugned order continue to be operative.
It is also clarified that this would not preclude the respondent from seeking such interim relief as advised in the arbitral proceedings. Needless to say any application made by the respondent shall be considered uninfluenced by any observations made in this order.
The Court held that the Court exercising powers under Section 9 of the A&C Act would not order the furnishing of Bank Guarantee (BG) to secure the claims of a party pending the arbitration proceedings unless it is shown that the ordering party is alienating its assets or acting in a manner that would frustrate the enforcement of the Arbitral Award.
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Written By
Kaulav roy chowdhury