w w w . L a w y e r S e r v i c e s . i n



Selco International Ltd. & Others v/s L.V.R. Infrastructures Pvt. Ltd.


Company & Directors' Information:- C K INFRASTRUCTURES LIMITED [Active] CIN = U70200DL1997PLC089706

Company & Directors' Information:- D B INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U04520MP2006PTC018493

Company & Directors' Information:- SELCO INTERNATIONAL LIMITED [Active] CIN = U52110TG1992PLC014056

Company & Directors' Information:- R S INFRASTRUCTURES LIMITED [Active] CIN = U45201PB1997PLC020316

Company & Directors' Information:- K R INFRASTRUCTURES LIMITED [Active] CIN = U73100TG1992PLC013995

Company & Directors' Information:- I M B INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102DL2009PTC195079

Company & Directors' Information:- Y K M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45202CH2006PTC029960

Company & Directors' Information:- R 3 INFRASTRUCTURES LIMITED [Active] CIN = U45400DL2014PLC268953

Company & Directors' Information:- P G M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U01119AP2007PTC054326

Company & Directors' Information:- N H INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45209CH2010PTC032243

Company & Directors' Information:- Y D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102UP2009PTC037603

Company & Directors' Information:- C 4 INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201MH2013PTC242843

Company & Directors' Information:- B S V R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45209TG2009PTC064901

Company & Directors' Information:- V AND K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TG2001PTC036581

Company & Directors' Information:- J L INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TN2008PTC066965

Company & Directors' Information:- T & C INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70102TG2008PTC060995

Company & Directors' Information:- U R C INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TG2008PTC058894

Company & Directors' Information:- R V A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70102UP2013PTC056289

Company & Directors' Information:- S R G INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74110DL2005PTC134967

Company & Directors' Information:- S R G INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70101DL2005PTC134967

Company & Directors' Information:- N. C. R. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45400UP2008PTC034623

Company & Directors' Information:- SELCO INDIA LIMITED [Strike Off] CIN = U74999PN1989PLC050701

Company & Directors' Information:- P T INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U51909DL2007PTC159635

Company & Directors' Information:- S. L. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45203PB2007PTC031300

Company & Directors' Information:- V C H INFRASTRUCTURES PRIVATE LIMITED [Under Process of Striking Off] CIN = U45203KL2011PTC028762

Company & Directors' Information:- P A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45208TN2009PTC071929

Company & Directors' Information:- A E K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45309TN2009PTC071702

Company & Directors' Information:- K G N INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74200DL2007PTC167982

Company & Directors' Information:- M A M INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70109KA2012PTC062160

Company & Directors' Information:- P N INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45201OR2010PTC012647

Company & Directors' Information:- R S INFRASTRUCTURES INDIA PRIVATE LIMITED [Strike Off] CIN = U45206TN2013PTC091533

Company & Directors' Information:- J S K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200MH2005PTC156097

Company & Directors' Information:- S A INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400WB2013PTC192691

Company & Directors' Information:- L & W INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200DL2008PTC182372

Company & Directors' Information:- K R R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70102TG2008PTC061194

Company & Directors' Information:- INFRASTRUCTURES PRIVATE LIMITED [Under Process of Striking Off] CIN = U45200JH2007PTC012792

Company & Directors' Information:- S AND A INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45206UR2012PTC000345

Company & Directors' Information:- J & K INFRASTRUCTURES LIMITED [Active] CIN = U40101JK2009PLC003034

Company & Directors' Information:- V. J. S. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74999UP2008PTC035636

Company & Directors' Information:- K R M INFRASTRUCTURES (INDIA) PRIVATE LIMITED [Strike Off] CIN = U45209TG2011PTC073850

Company & Directors' Information:- M D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201CH2001PTC024224

Company & Directors' Information:- V K INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400UP2008PTC034415

Company & Directors' Information:- LVR INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200TG2008PTC057995

Company & Directors' Information:- K Y INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201DL2004PTC127815

Company & Directors' Information:- A K C INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45200KL2010PTC025716

Company & Directors' Information:- D N D INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45203PN2008PTC133243

Company & Directors' Information:- G V R INFRASTRUCTURES INDIA PRIVATE LIMITED [Strike Off] CIN = U45209AP2008PTC059504

Company & Directors' Information:- K & K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74120KA2006PTC040900

Company & Directors' Information:- A & G INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U31900PB2012PTC036358

Company & Directors' Information:- Y R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45201RJ2015PTC047298

Company & Directors' Information:- U D INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45400MH2010PTC203382

Company & Directors' Information:- J W INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U74120MH2015PTC268554

Company & Directors' Information:- G AND G INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200MH2004PTC147316

Company & Directors' Information:- A. N. Y. INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45206MH2013PTC243735

Company & Directors' Information:- J V S M S INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200TG2010PTC070371

Company & Directors' Information:- K S V V INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45209TG2010PTC069359

Company & Directors' Information:- A V R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400DL2009PTC186399

Company & Directors' Information:- A P S INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U70109DL2013PTC248564

Company & Directors' Information:- R R INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U70109DL2006PTC150324

Company & Directors' Information:- S D P INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45200HR2013PTC048666

Company & Directors' Information:- B P K INFRASTRUCTURES PRIVATE LIMITED [Active] CIN = U45203KA2009PTC049331

Company & Directors' Information:- T M R INFRASTRUCTURES PRIVATE LIMITED [Strike Off] CIN = U45400TG2007PTC054647

    C.M.A.Nos.46 of 2012, 47 of 2012, 165 of 2012 & 166 of 2012

    Decided On, 05 July 2013

    At, High Court of Andhra Pradesh

    By, THE HONOURABLE MR. JUSTICE L. NARASIMHA REDDY & THE HONOURABLE MR. JUSTICE S.V. BHATT

    For the Appellant: Vedula Srinivas, Advocate. For the Respondent: S. Ravi, Ch. Pushyam Kiran, Advocates.



Judgment Text

Common Judgment:(L. Narasimha Reddy, J.)

These four civil miscellaneous appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) arise out of two interlocutory orders passed in two O.Ps., being O.P.Nos.1352 and 1353 of 2011 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad. While the appellants are common, the respondents are different.

Since the nature of the O.Ps. and the interlocutory orders is common, the parties are referred to as appellants and respondents.

The 1st appellant is a company incorporated under the Companies Act, undertaking the activity of treatment of municipal solid waste. Appellants 2 and 3 are its Directors. The 1st appellant was awarded the work of treatment of solid waste by the Municipal Corporation, Pune. To handle that work, the 1st appellant created a special purpose vehicle, by name Selco Green. The respondents expressed their willingness to invest in the 1st appellant-company. Initially, a memorandum of understanding was entered into on 29.11.2007. Thereafter, the investment agreement was entered into on 31.01.2009. This contains a clause for reference of disputes to the arbitration. Thereafter, a deed of assignment was entered into on 31.01.2009. This was followed by the investment into the 1st appellant-company in the form of redeemable debentures on 09.02.2009. The respondent in C.M.A.No.165 of 2012 has undertaken to invest Rs.3.5 crores with the condition that appellants 2 and 3 shall furnish their personal properties as security for repayment. It is stated that as against the promised amount of Rs.3.5 crores, the respondent has invested only Rs.2.85 crores. Disputes arose between the parties. The respondents invoked arbitration clause and required the appellants to take steps for arbitration.

Having initiated those steps, the respondents filed O.P.Nos.1352 and 1353 of 2011 before the trial Court under Section 9 of the Act for interim measures. They prayed for a direction to the appellants to furnish bank guarantee for the amounts invested by them. The trial Court passed an ex parte order, dated 13.07.2011, requiring the appellants to furnish the bank guarantee for the amounts specified therein within 48 hours.

Complaining that the appellants did not furnish the bank guarantee as directed by the trial Court in its order, dated 13.07.2011, the respondents filed I.A.Nos.3390 and 3391 of 2011 for attachment of certain properties. After contest by the appellants, the trial Court allowed the applications directing attachment of the properties mentioned therein. C.M.A.Nos.46 and 47 are filed against the orders, dated 06.01.2012, in I.A.Nos.3391 and 3390 of 2011, whereas, C.M.A.Nos.165 and 166 of 2012 are filed against the two ex parte orders, dated 13.07.2011, passed in the O.Ps.

Sri Vedula Srinivas, learned counsel for the appellants, submits that the exercise undertaken by the trial Court is almost akin to the one expected in an application filed under Order 38 Rule 5 C.P.C. and without even giving an opportunity to the appellants to explain, the trial Court has straightaway passed an order, requiring them to furnish security. He submits that it is only when the Court is not satisfied with the explanation that is offered by the respondents in the O.Ps., that it could have proceeded to require the parties to furnish security or to direct attachment of the properties. He placed reliance upon the judgment of this Court in Chairman & Managing Director, Rastriya Pariyojna Nirman Nigam Limited, New Delhi Vs. Rambachane Singh (AIR 1998 Andhra Pradesh 127).

Sri S.Ravi, learned Senior Counsel for the respondents, on the other hand, submits that even after receiving heavy investments from the respondents, the appellants did not undertake any activity at all and several proceedings came to be instituted, resulting in the 1st appellant being declared as a sick industry. He submits that when such is the uncertainty about the prospects of getting back the invested money, there is every justification for the respondents to seek the interim measures and the trial Court was justified in passing the orders under appeals. He submits that whatever may have been the uncertainty that prevailed as on the date on which the ex parte order was passed, at least, when the appellants were put on notice, they did not offer any plausible explanation and that left with no alternative, the trial Court directed attachment of the properties. He submits that the arbitration proceedings are in progress.

One of the points urged by the learned counsel for the appellants is that the ex parte orders, dated 13.07.2011, ought not to have been passed, unless any interlocutory application was filed. This may be so in respect of the ordinary suits. Unless an application under Order 38 Rule 5 C.P.C. is filed, there may not be any occasion for the Court to pass an order of that nature. However, the O.Ps. that are filed under Section 9 of the Act stand on a different footing. By their very nature, they are interlocutory and no substantive adjudication takes place therein. That adjudication of the disputes is relegated to the Arbitrator, and the purpose of filing an application under Section 9 of the Act is only to ensure that the interests of the aggrieved party are protected either till the arbitration commences or if commenced, till it concludes. Therefore, the objection raised in this behalf cannot be entertained.

It is, no doubt, true that if an application under Order 38 Rule 5 C.P.C. is filed, the trial Court has to first require the defendant in the suit to explain as to why he be not required to furnish security for the amount in question. Though this may be in the ordinary course of things, even under Order 38 Rule 5 C.P.C., instances are contemplated where the Court can straightaway require the party to furnish security, particularly when the plaintiff satisfies the Court that the defendant is making every effort to remove the property from the jurisdiction of the Court.

The respondents have their own apprehension not only about the solvency of the appellants, but also the nature of steps which they have been taking to defeat the claims i.e. respondents’ claims.

Prima facie, we find that the appellants did not dispute the receipt of amount from the respondents and that the activity for which the company was incorporated was not at all undertaken. When the company in which huge amount is invested is not functioning at all, let alone making profits, the apprehension of the investor cannot be said to be misplaced.

Assuming that there was no basis on the part of the trial Court in passing the ex parte order, dated 13.07.2011, this Court would have found fault with, if only the conduct or the steps on the part of the appellants thereafter warranted any different approach. After entering appearance, the appellants started raising the plea, which has the effect of doubting the very entitlement of the respondents to recover the amount. This has indeed fortified the apprehension of the respondents and the trial Court proceeded to pass orders in the interlocutory applications, dated 06.01.2012. We do not find any error of law or misstatement of facts in the orders under appeals.

Hence, we dismiss the appeals. There shall be no order as to costs.

The learne

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d counsel for the appellants and the learned Senior Counsel for the respondents submit that the arbitration has already started and it is in an advanced stage. Since we are upholding the orders of attachment, we are of the view that no useful purpose would be served by continuing the O.Ps. on the file of the trial Court. Both the learned counsel agree that the O.Ps. may be terminated in terms of the orders which are the subject matter of the appeals. We accordingly direct that the O.P Nos.1352 and 1353 of 2011 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad shall stand disposed of in terms of the orders passed in the interlocutory applications therein, which, in turn, are upheld in these appeals. The miscellaneous petitions filed in these appeals shall also stand disposed of.
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