1. This arbitration appeal purportedly filed under Section 37(2)(b) of the J&K Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act") is directed against a composite order dated 08.10.2019 passed by the Arbitral Tribunal comprising of Hon'ble Justice (Retd.) F.M.Ibrahim Kalifulla, Hon'ble Justice (Retd.) Kurian Joseph and Hon'ble Justice (Retd.) Mansoor Ahmed Mir in Arbitration cases No.4-A, 4-B and 4-C of 2019, all titled as M/s Ircon International Limited v. State of Jammu & Kashmir and others. The challenge to the order impugned by the appellant is only to the extent it defers the consideration of applications filed by the appellant purportedly under Section 17 of the Act seeking a direction to the respondents to release undisputed amount/payments in reference to the three works which are subject matter of aforementioned three arbitration cases.
2. Without alluding to the nature of dispute, claims and counter claims filed by the parties, it would be appropriate to advert to only a few facts, which are relevant for the disposal of this appeal.
3. Pursuant to three e-NITs floated by the Chief Engineer (Planning & Design), JKPDD for design, supply, test, transport, survey, construction, erection, testing and commissioning of 66/11 KV, 33/11KV sub-transmission sub-station, augmentation of existing sub-transmission sub-station lines, etc., the petitioner submitted its bids and being eligible participated in the bidding process. Being successful bidder in regard to all the contracts, the appellant was issued the letter of allotment followed by execution of three separate agreements. During the execution of works, there arose certain disputes between the parties. The dispute resolution mechanism envisaged under the contract having failed to achieve settlement of the disputes, the appellant filed three applications AP Nos.02, 03 and 04 of 2019 in terms of Section 11 of the Act and sought intervention of this Court for appointment of an independent Arbitral Tribunal to adjudicate the disputes arising between the parties. These three applications were disposed of by a Judge of this Court (Justice Dhiraj Singh Thakur) and Arbitral Tribunal, as noted above, was constituted to resolve the disputes between the parties. As is apparent from the interim orders passed by the Arbitral Tribunal from time to time, the parties appeared before the Arbitral Tribunal and filed their claims and counter claims along with relevant supporting documents.
4. While the Arbitral Tribunal was set to formulate points for determination in the reference, three applications one in each arbitration reference came to be filed by the appellant claiming, inter alia, a direction to the respondents to release the undisputed amounts/payments due to the appellant in all the three contracts. The applications were stylef as applications under section 17 of the Act and the release of undisputed amounts/payments was sought by way of interim measure of protection. In the applications filed, the appellant specifically pleaded that in relation to works subject matter of adjudication, there are certain payments due to the appellant regarding which there is no dispute. Invoices prepared and the bills raised had got the approval of the respondents and were lying in the account section of the project wing of the respondents. It is, thus, submitted that since the payment of Rs.6.73 crores in arbitration case No.4-A of 2019 and payment of Rs.10.80 crores in arbitration case No.4-B of 2019 and payment of Rs.3.93 crores in arbitration case No.4-C of 2019 are the admitted payments and have not been specifically disputed by the respondents, as such, the Tribunal should issue a direction purportedly under Section 17 of the Act to release the aforesaid payments.
5. The respondents resisted the claim of the appellant for release of so called admitted payments and filed their objections in each of the application. The long and short of the stand taken by the respondents to oppose the applications is that the payments claimed by the appellant are not admitted but are subject matter of adjudication in the main reference. It was the specific stand of the respondents before the Arbitral Tribunal that due to the abandonment of works by the appellant, the respondents have been put to a huge financial loss. They, therefore, invoked the clause of the contracts providing for liquidated damages. It was submitted that on account of liquidated damages, the appellant was liable to pay an amount which is more than the amount claimed by the appellant and, therefore, no payment could be released in favour of the appellant. It was, thus, claimed by the respondents that no amount, as claimed by the appellant, is due. The Arbitral Tribunal considered all the three applications and vide order impugned deferred the consideration thereof primarily on the ground that there was a specific issue raised in this regard in the main dispute and, therefore, it would be appropriate to defer the consideration of the applications and take them up along with main disputes. As is apparent from the impugned order, the applications of the appellant have not been specifically rejected. The Arbitral Tribunal after deferring the consideration of the applications moved by the appellant has further proceeded to formulate points for determination in the main reference. The appellant is aggrieved of only that part of the order impugned, which defers the consideration of the applications moved by the appellant seeking release of certain admitted amount in relation of all the three contracts.
6. The impugned order to the extent aforesaid is assailed by the appellant primarily on the ground that once the amounts claimed by the appellant are admitted amounts and not subject matter of dispute between the parties, it is incumbent upon the Arbitral Tribunal to exercise the power vested in it under Section 17 of the Act to direct its release pending consideration of the main references. It is submitted that in case Section 17 of the Act is not invoked even in the given facts and circumstances, the whole object of vesting power in the Arbitral Tribunal under Section 17 of the Act to grant interim measure of protection would be nullified. In short, the grievance of the appellant is that the Arbitral Tribunal has refused to exercise jurisdiction arbitrarily, which vests in it by virtue of Section 17 of the Act. The Arbitral Tribunal has failed to appreciate that withholding of admitted payments of the appellant is illegal and arbitrary. Equally illegal and arbitrary, is the refusal by the Arbitral Tribunal to exercise its jurisdiction and grant interim measures in favour of the appellant.
7. Having heard Mr. Sunil Sethi, Senior Advocate for the appellant and Mr. Amit Gupta, AAG for the respondents, I am of the view that the appeal filed by the appellant under Section 37(2)(b) of the Act is not maintainable. Though, the applications filed by the appellant for seeking a direction to the respondents to release admitted amounts are purportedly under Section 17 of the Act, yet a careful perusal whereof would show that the same are essentially applications requesting the Arbitral Tribunal to pass an interim award. Admittedly, arbitral award which includes an interim award in terms of Section 2(c) of the Act, is not appealable under section 37 of the Act but could only be made subject matter of challenge under Section 34 of the Act.
8. With a view to better appreciate the position of law, it would be appropriate to notice few relevant provisions of the Act.
2(c) "Arbitral Award includes an interim award."
Section 17. "Interim measures ordered by arbitral tribunal
Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute.
(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section(1)"
Section 31(6). "arbitral tribunal may, at any time during the arbitral proceedings, make an interim arbitral award on any matter with respect to which it may make a final arbitral award."
9. A mere glance of Section 17 of the Act would make it clear that the Arbitral Tribunal has been given discretion to act on the request of a party and direct the other party to take any interim measure of protection in respect of the subject matter of dispute. The power vested in Arbitral Tribunal in terms of Section 17 of the Act is essentially aimed at protecting the lis and lies in the discretion of the Arbitral Tribunal. Such exercise of power may be necessitated, if the refusal to exercise such power is likely to render the main dispute in reference infructuous or is likely to cause irreparable loss and injury to the party claiming such measure.
10. True it is, order granting or refusal to grant interim measure under Section 17 is appealable under Section 37(2)(b) of the Act. The power of the Tribunal to order a party to take any interim measurer of protection is akin to the power of the court vested in terms of Section 9 of the Act. At this juncture it would be pertinent to refer to set out Section 9(ii).
"9. Interim measures etc., by Court
A party may before or during arbitral proceedings or at any time after the making of the arbitral award but before it becomes decree of a Court, apply to a Court-----
(ii) for an interim measure of protection in respect of any of the following matters, namely;-
(a) the preservation, interim custody or sale of any goods which are the subject matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute and arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of and in relation to any proceedings before it."
11. The interim measures that can be ordered by the Court under Section 9 or by the Arbitral Tribunal under Section 17 may, inter alia, relate to securing the amount in dispute of arbitration. Neither the Court acting under Section 9 of the Act nor arbitral tribunal exercising its power under Section 17 of the Act is empowered to direct a party to release payment in favour of the party making an application by way of interim measure of protection. Such request of the party applying before the arbitrator/arbitral tribunal for seeking direction to the other party to release the admitted payments cannot, by any stretch of reasoning or imagination, be issued by the Court under Section 9 of the Act or by the arbitral tribunal under section 17 of the Act. If at all, there are certain claims of payments regarding which the parties are not at dispute, the arbitral tribunal may well pass an interim award, which, if passed could only be challenged by way of application under Section 34 of the Act. Needless to say that in terms of Section 31(6) of the Act, reproduced herein above, arbitral tribunal is empowered to make an interim award during the arbitral proceedings, on any matter with respect to which it may make a final arbitral award. The arbitral tribunal in the instant case has not decided the applications of the appellant and has deferred their consideration till the disputes in the main references are taken up for final consideration.
12. This Court is in agreement with Mr. Sethi, learned senior counsel appearing for the appellant, that the postponement of consideration of the applications moved by the appellant is virtually rejection of their applications and, therefore, the impugned order cannot be termed as innocuous. However, looking to the facts of the case in hand, particularly the nature of prayer made by the appellant in its applications, it is beyond any pale of doubt that the appellant has essentially prayed for passing of the interim award with regard to the amounts, which, as per the appellant, are not in dispute between the parties. It is, however, different matter that the respondents in their objections have raised a specific dispute with regard to the aforesaid claim of the appellant. It is claimed that the appellant owes to the respondents certain amounts on account of liquidated damages, which are more than the amounts claimed by the appellant in their applications.
13. In these circumstances, it is difficult to accept the contention of the appellant that the amounts/payments which they have claimed before the arbitral tribunal are admitted payments and, therefore, arbitral tribunal ought to have accepted their applications and directed the respondents to release such payments.
14. In view of the foregoing discussion and position of law adumbrated herein above, this Court is of the consi
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dered view that the impugned order passed by the arbitral tribunal is not appealable and, therefore, cannot be assailed by way of appeal under Section 37(2)(b) of the Act. Merely, because applications filed by the appellant before the arbitral tribunal are styled as applications under Section 17 of the Act, would not bring the order impugned within the purview and ambit of Section 17 of the Act. The order impugned, even if it is taken to be an order refusing to direct the respondents to release the admitted payments may constitute interim arbitral award liable to be challenged only by way of application under Section 34 of the Act. As rightly observed by the arbitral tribunal, the amounts/payments claimed by the appellant are part of or subsume in specific issue raised in this regard in the main reference. As a matter of fact, the arbitral tribunal has, in the order impugned itself, framed sixteen points for determination including point No.14, which pertains to the issue of admissibility of amount claimed, liquidated damages, interest and cost of arbitration etc. The points of determination, when considered in their entirety, would fortify the observation of the arbitral tribunal that the amounts/payments claimed by the appellant as "admitted payments" are not the admitted payments but are subject matter of disputes to be decided by the arbitral tribunal in the main references. 15. For all these reasons, this Court holds this appeal not maintainable and the same is, accordingly, dismissed.