Shubham HP Security Force Private Ltd v. Central Warehousing Corporation

12. The appellant sent a reply to the Arbitration Notice that the joint committee has not been instituted which was replied to by the respondent stating the Arbitral Tribunal has already been constituted and the joint committee could not be formed.

13. The High Court vide Order dated 11th March 2022 dismissed the application of the appellant for interim relief under Section 9 of the Act,

1996.

14. The appellant appealed against the aforementioned order before High Court and the Court vide Order dated 18th November 2022 appointed a learned Sole Arbitrator.

15. The Appellant preferred an application under section 17 of the Act 1966, seeking interim reliefs before the learned Arbitrator

16. The appellant thus filed an appeal under Section 37(2) of the Act, 1966 against the order of dismissal dated 21st February 2023 in an application under Section 17 of the Act, 1966 passed by the learned Sole Arbitrator.

6. In case Shubham HP is not able to fulfill its obligations on account of MGT, Shubham HP shall be liable to pay the shortfalls towards fixed/variable amount along with applicable GST within 3 days of tax invoice raised by CWC as per rules under GST law, in case Shubham HP fails to pay the same CWC shall recover the shortfall towards fixed/variable amounts by way of encashment of performance bank guarantee submitted by Shubham HP. 6.[3] Shubham HP shall furnish to ewe a statement showing calculation of the variable amount payable to CWC, at the end of each month, which shall be duly certified by the auditor of Shubham HP. Further, after the close of the accounting year also, SHUBHAM HP shall pay the variable amount due for the last quarter and in the event the total variable amount for the accounting year is less than the annual minimum guaranteed amount variable as provided above, the difference in the amount, if any shall also be paid within 10 (ten) days of the close of the accounting year along with the certificate from the auditor containing necessary details as mentioned above. In case of failure on part of SHUBHAM HP in making due payment of fixed and variable amount in any month on due date the BG will be immediately encashed by CWC.

17. Learned counsel for the appellant submitted that the respondent had set up a procedure under the agreement of issuing a tax invoice for a sum equivalent to the shortfall of achieving the monthly MGT (Minimum Guaranteed Throughout) target in the first place, before encashment of the Bank Guarantees (BG) of the appellant.

18. It is submitted that the respondent, therefore, acted in an arbitrary manner and failed to adhere to SAMA. The same is in violation of Article 6 (Consideration), 6.[1] (h) – payments, receipts and disbursals. The withdrawal by the respondent was illegal for the simple reason that no GST invoices were ever provided to the appellant for the shortfall of the MGT demanding the shortfall amount along with applicable GST.

19. It is submitted that prior to the date of presentation of the BG by the appellant in the month of January 2021, no demand notice was raised.

20. It is submitted on behalf of the appellant that the impugned order is illegal as the respondent firstly permits the appellant to commence operations without submission of BG owing to the COVID-19 lockdown so that collections with the respondent could begin and simultaneously refused to accept bills of the appellant without submission of bank guarantee. The appellant has invested his own funds towards repairing the CFS to the tune of Rs. 2 CR. And further as the sum of Rs. 15 Cr appx. towards operational costs.

21. It is submitted by learned counsel for the appellant that the impugned order is erroneous because the terms of SAMA are unreasonable and unfair. As per clause 6.[1] (b) of SAMA pertaining to ensuring Minimum Guaranteed Throughout (MGT) of 60,000 TEU annually and on a monthly pro-rata basis which comes to 5,000 TEU is excessive and extremely arbitrary in nature.

22. Further, it is submitted that in case the appellant is not able to fulfill the required amount of MGT, the respondent according to clause 6.[1] (h) (6) of SAMA will have the right to encash the BG. It is submitted on behalf of the appellant that Clause 6.1.h which is also related to the previous clause is one-sided and unduly harsh on the appellant. Its implementation is not also not clear.

23. It is submitted that the respondent has charged the appellant with 3 types of remittances under three different heads summarised in Clause 6.[1] (a) Fixed Lump sum of Rs. 4,00,05,001/- on a per annum basis, Clause 6.[1] (b) Variable Amount equivalent to Rs 626 per TEU with guaranteed MGT of 60,000/- per annum or actual sale whichever is higher and Clause 6.[1] (c) the percentage of revenue share @ 2% of the total turnover generated through operations from the facility.

24. It is submitted that Clause 6.[1] (h) says that the above three remittances will be retained/adjusted by the respondent from the collections on a fortnightly pro-rata basis at the end of each fortnight. Learned counsel for the appellant submitted that the clause mentioned herein is not commercially viable.

25. It is submitted that the respondent itself has not implemented the clauses of SAMA in a clear and transparent manner. Further, since the inception of the operations by the appellant in the month of April 2020 in the CFS, the appellant failed to achieve the said monthly target MGT of 5000 TEU, in the event of which as per clause 6.[1] (h) (6) the respondent must raise tax invoice which needed to be cleared within three working days in failure of which the respondent was entitled to encash the BG.

26. It is submitted that for a period of 10 months beginning from April 2020 to January 2021, the respondent never raised any tax invoice/demand notice in lieu of the shortfall of the appellant in achieving target MGT. It is a matter of fact the BG was submitted by the appellant for the first time only in January 2021, however, it did not stop the respondent from raising the tax invoice/demand notice for the shortfall. The respondent had a total collection of about 11 Cr. with itself and did not adjust the shortfall for that period from the total collections either. The respondent started adhering to the clause since February 2021, after they were in receipt of BG submitted by the appellant, and proceeded to encash it whenever there was a shortfall. Therefore, two different and contradictory approaches are evident and the implementation of remittances on a pro-rata basis is itself flawed.

27. It is submitted on behalf of the appellant that the nature of clause 6.l(h)(6) is arbitrary in nature and financially not viable. The said clause imposes upon the appellant an unduly harsh and unviable obligation which is evident from the fact that after terminating the agreement with the appellant the respondent drastically changed the clause related to MGT and the way in which the BG will be encashed by the respondent for the subsequent tender as well as in SAMA agreement for the current Strategic Alliance Management Operator (SAMO) namely M/s Budget CFS Pvt. Ltd. for the said facility.

28. It is further submitted on behalf of the appellant that the learned Arbitrator failed to appreciate the necessity of restraining the new operator from commencing operations as the outcome of the present arbitral proceedings will also have a huge bearing on the new operator.

29. It is submitted that if after the adjudication of the dispute, the learned Arbitrator awards the claim in favour of the appellant then how it is to be made applicable is in a grey area. It is submitted that the present Arbitral proceedings may still take a year to complete, the new operator will proceed to make huge investments in the CFS and will be aggrieved if asked to vacate to CFS upon the arbitral award being passed in favor of the appellant. It is pertinent to mention that the Customs Department (NHA VA SHEV A) (General) through its office memo bearing no. F.No. S/5- Gen- 2s/2022-23 CCSP Cell dated 20th January 2023 while according permission in favor of the new operator M/s Budget CFS Terminals Pvt Ltd has specifically made it subject to the outcome of the present arbitral proceedings. However, such information in the considered view of the appellant will not bind the new operator to object to handing over the peaceful possession of the facility by filing a petition under section 34 of the Act, 1996 and further appeals the statute provides.

30. It is submitted that it is because the new operator by then will be fully functional with his own investments in the facility and he will be aggrieved if, after a lapse of more than 1.[5] years, he is asked to leave the facility. The situation could have been avoided had the learned Arbitrator restrained the new operator from entering the premises as the very tender documents of the new operator issued by the respondent are an outcome of the unlawful termination of the appellant and is challenged in the present arbitral proceedings.

31. It is submitted further on behalf of the petitioner that the learned Arbitrator failed to consider the blatant bias and discrimination as the termination of the contractual relationship between the parties was done for settling personal scores and vested interests.

32. It is submitted that at the time when the tender was awarded in favour of the appellant, M/s Conex Terminals Pvt Ltd was also awarded the tender dated 24th December 2019 floated by the respondent bearing reference no. CWC/RO-MUM/BUSSSAMO/CFS-DISTRIPARK/2019-

20. The said tender was awarded in favour of M/s Conex in the month of April/May 2020 and they had to begin operations along with the submission of a performance bank guarantee within 4 months from the said date.

33. It is submitted that upon failure to do so, the respondent had to again float fresh tenders. However, M/s Conex only applied for the issuance of a Bank Guarantee in October 2020 and commenced operations next year in May 2021.

34. It is submitted that the relaxations offered to M/s Conex are dubious in nature as the respondent never offered similar relaxations to the appellant. The respondent being a government entity is not expected to implement SAMO with the same terms differently with two different entities.

35. Learned counsel for the appellant further submitted that the learned Arbitrator failed to appreciate that the interim relief sought by the claimant to restrain the respondents from acting on termination notice dated 16th November 2021 was necessary as it is a major issue and point of contention between the parties which is being adjudicated by the learned Arbitral Tribunal. The dispute pertains to the appointment of the new operator.

36. Therefore, it is submitted that the Court may set aside the order dated 21st February 2023. (On behalf of the respondent)

37. Learned counsel for the respondent vehemently opposed the instant appeal preferred by the appellant and prayed to dismiss the same for being devoid of any merit.

38. Heard learned counsel for the parties and perused the record. I have also perused the impugned order as well as the entire Arbitral record brought on record. I have also given thoughtful consideration to the submissions advanced by the parties.

FINDINGS AND ANALYSIS

39. The first question to be considered in the light of these submissions is with regard to the scope of this Court‟s jurisdiction under Section 37(2) of the Act. Before delving into the judicial decisions, it is pertinent to reproduce the relevant portion of Section 37 of the Act, 1996:

37. Appealable orders.— (2) An appeal shall also lie to a Court from an order granting of the arbitral tribunal.— (a) accepting the plea referred in sub-section (2) or subsection (3) of section 16; or (b) granting or refusing to grant an interim measure under section 17.

40. In Dinesh Gupta v. Anand Gupta, 2020 SCC OnLine Del 2099, this Court considered the matter with reference to Section 5 of the Act and the generally limited nature of the Court‟s power in arbitration proceedings, to conclude as follows:

final arbitral awards, are required to be considered on the basis of the principles governing stay, by appellate courts, under Order 41 Rule 5 of the CPC, indicate, to an extent, that the principles of Order 41 are also required to be borne in mind, while exercising appellate jurisdiction, under Section 37.

62. The 1996 Act is, preambularly, a fallout of the United Nation's Commission on International Trade Law (UNCITRAL), adopted in 1995 as the Model Law on International Commercial Arbitration. The Statement of Objects and Reasons, preceding the 1996 Act, stipulates, in paras 2 to 5 thereof, as under, in this respect:

63. The Supreme Court has, in Chloro Controls (I) Ltd. v. Severn Trent Water Purification Inc., held that the legislative intent and essence of the 1996 Act “is to bring domestic as well as international commercial arbitration in consonance with the UNCITRAL Model Rules, the New York Convention and Geneva Convention”. The afore-extracted passages, from the Statements of Object and Reasons of the 1996 Act has, necessarily, to guide the Court, while interpreting the provisions thereof. While on the point, it may be noted that, in Bharat Sewa Sansthan v. U.P. Electronics Corporation Ltd., the Supreme Court has clearly held the “main objective of the (1996) Act” as being “to make provision for an arbitral procedure which is fair, efficient and capable of meeting the needs of the specific arbitration and to minimise the supervisory role of courts in the arbitral process and to permit an arbitral Tribunal to use mediation, the conciliation or other procedures during the arbitral proceedings in settlement of disputes, etc.”

64. There can be no gainsaying the proposition, therefore, that, while exercising any kind of jurisdiction, over arbitral orders, or arbitral awards, whether interim or final, or with the arbitral process itself, the Court is required to maintain an extremely circumspect approach. It is always required to be borne, in mind, that arbitration is intended to be an avenue for “alternative dispute resolution”, and not a means to multiply, or foster, further disputes. Where, therefore, the arbitrator resolves the dispute, that resolution is entitled to due respect and, save and except for the reasons explicitly set out in the body of the 1996 Act, is, ordinarily, immune from judicial interference.

65. Interestingly, while examining, in Snehadeep Structures (P) Ltd. v. Maharashtra Small Scale Industries Development Corporation Ltd., the scope of the expression “appeal” as employed in Section 7 of the Interest on Delayed Payments to Small Scale and Ancillary Undertakings Act, 1993, the Supreme Court held that, “if … the meaning of “appeal” is ambiguous, the interpretation that advances the object and purpose of the legislation, shall be accepted.” Purposive interpretation, as has been noticed in Shailesh Dhairyawan v. Mohan Balkrishna Lulla and Richa Mishra v. State of Chhattisgarh, has, over time, replaced the principle of “plain reading” as the golden rule, for interpreting statutory instruments.

66. In my opinion, this principle has to guide, strongly, the approach of this Court, while dealing with a challenge such as the present, which is directed against an order which, at an interlocutory stage, merely directing furnishing of security, by one of the parties to the dispute. The power, of the learned Sole Arbitrator, to direct furnishing of security, is not under question; indeed, in view of sub-clause (b) of Section 17(1)(ii) of the 1996 Act, it cannot. The arbitrator is, under the said sub-clause, entirely within his jurisdiction in securing the amount in dispute in the arbitration. Whether, in exercising such jurisdiction, the arbitrator has acted in accordance with law, or not, can, of course, always be questioned. While examining such a challenge, however, the Court has to be mindful of its limitations, in interfering with the decision of the arbitrator, especially a decision taken at the discretionary level, and at an interlocutory stage.”

41. An appeal can be filed under Section 37 of the Act, 1996 if the Court refuses to set aside the impugned Award under Section 34. An appeal shall also lie from an order passed by the Arbitral Tribunal under Section 37(2). Nevertheless, the scope of Section 37 is very limited. The Hon‟ble Supreme Court in Haryana Tourism Ltd. v. Kandhari Beverages Ltd., (2022) 3 SCC 237, held that the High Court cannot enter into the merits of the claim in an appeal under Section 37 of the Act,

1996. The relevant paragraph is reproduced below:

42. The essential test to check the scope of interference of the Court under Section 37 of the Act, 1996 is to check for „patent illegality‟ or contravention to „fundamental policy of Indian Law‟ on the face of the Award.

43. The law surrounding „patent illegality‟ and the „fundamental policy of Indian Law‟ is no more res integra. There has been a catena of judicial decisions that explained the scope and nature of patent illegality and fundamental policy of Indian Law.

44. The Court may only interfere on the limited ground provided under Section 37 of the Act, 1996 i.e. if the impugned order is against the public policy of India.

45. As per the legal position clarified through decisions of this Court violation of Public Policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of justice of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award.

46. The concept of the fundamental policy of Indian law would cover compliance with statutes and judicial precedents, adopting a judicial approach, and compliance with the principles of natural justice and reasonableness.

47. It is pertinent to reiterate that the intention of the legislature while enacting the Act, 1996 was the expeditious and effective disposal of matters. The Act has been set forth with the intention to limit the interference of the courts in Arbitral Proceedings.

48. In order to facilitate this process and to maintain a check on it, a provision to set aside the Award was included. But even then, the order passed by the learned Arbitral Tribunal may only be set aside if it fulfils certain criteria to qualify as being bad in law.

49. In Ssangyong Engineering & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131, the Hon‟ble Supreme Court while explaining the scope of the expression „public policy of India‟ made the following pertinent observations: "23. What is clear, therefore, is that the expression ”public policy of India”, whether contained in Section 34 or in Section 48, would now mean the “fundamental policy of Indian law” as explained in paragraphs 18 and 27 of Associate Builders (supra), i.e., the fundamental policy of Indian law would be relegated to the “Renusagar” understanding of this expression. This would necessarily mean that the Western Geco (supra) expansion has been done away with. In short, Western Geco (supra), as explained in paragraphs 28 and 29 of Associate Builders (supra), would no longer obtain, as under the guise of interfering with an award on the ground that the arbitrator has not adopted a judicial approach, the Court„s intervention would be on the merits of the award, which cannot be permitted post amendment. However, insofar as principles of natural justice are concerned, as contained in Sections 18 and 34(2)(a)(iii) of the 1996 Act, these continue to be grounds of challenge of an award, as is contained in paragraph 30 of Associate Builders (supra).

25. Thus, it is clear that public policy of India is now constricted to mean firstly, that a domestic award is contrary to the fundamental policy of Indian law, as understood in paragraphs 18 and 27 of Associate Builders (supra), or secondly, that such award is against basic notions of justice or morality as understood in paragraphs 36 to 39 of Associate Builders (supra). Explanation 2 to Section 34(2)(b)(ii) and Explanation 2 to Section 48(2)(b)(ii) was added by the Amendment Act only so that Western Geco (supra), as understood in Associate Builders (supra), and paragraphs 28 and 29 in particular, is now done away with.

26. Insofar as domestic awards made in India are concerned, an additional ground is now available under subsection (2A), added by the Amendment Act, 2015, to Section

34. Here, there must be patent illegality appearing on the face of the award, which refers to such illegality as goes to the root of the matter but which does not amount to mere erroneous application of the law. In short, what is not subsumed within “the fundamental policy of Indian law”, namely, the contravention of a statute not linked to public policy or public interest, cannot be brought in by the backdoor when it comes to setting aside an award on the ground of patent illegality.

27. Secondly, it is also made clear that re-appreciation of evidence, which is what an appellate court is permitted to do, cannot be permitted under the ground of patent illegality appearing on the face of the award.

28. To elucidate, paragraph 42.[1] of Associate Builders (supra), namely, a mere contravention of the substantive law of India, by itself, is no longer a ground available to set aside an arbitral award. Paragraph 42.[2] of Associate Builders (supra), however, would remain, for if an arbitrator gives no reasons for an award and contravenes Section 31(3) of the 1996 Act, that would certainly amount to a patent illegality on the face of the award. xxxxxx

30. What is important to note is that a decision which is perverse, as understood in paragraphs 31 and 32 of Associate Builders (supra), while no longer being a ground for challenge under “public policy of India”, would certainly amount to a patent illegality appearing on the face of the award. Thus, a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be perverse and liable to be set aside on the ground of patent illegality. Additionally, a finding based on documents taken behind the back of the parties by the arbitrator would also qualify as a decision based on no evidence inasmuch as such decision is not based on evidence led by the parties, and therefore, would also have to be characterised as perverse."

50. In the case of Associate Builders vs. Delhi Development Authority, (2015) 3 SCC 49, the Hon‟ble Supreme Court clarified the meaning and scope of „fundamental policy of Indian Law‟ in the context of Section 34 of the Arbitration Act in the following manner:

38. Equally important and indeed fundamental to the policy of Indian law is the principle that a court and so also a quasi judicial authority must, while determining the rights and obligations of parties before it, do so in accordance with the principles of natural justice. Besides the celebrated audi alteram partem rule one of the facets of the principles of natural justice is that the court/authority deciding the matter must apply its mind to the attendant facts and circumstances while taking a view one way or the other. Non-application of mind is a defect that is fatal to any adjudication. Application of mind is best demonstrated by disclosure of the mind and disclosure of mind is best done by recording reasons in support of the decision which the court or authority is taking. The requirement that an adjudicatory authority must apply its mind is, in that view, so deeply embedded in our jurisprudence that it can be described as a fundamental policy of Indian law.

39. No less important is the principle now recognised as a salutary juristic fundamental in administrative law that a decision which is perverse or so irrational that no reasonable person would have arrived at the same will not be sustained in a court of law. Perversity or irrationality of decisions is tested on the touchstone of Wednesbury principle of reasonableness. Decisions that fall short of the standards of reasonableness are open to challenge in a court of law often in writ jurisdiction of the superior courts but no less in statutory processes wherever the same are available. 40. It is neither necessary nor proper for us to attempt an exhaustive enumeration of what would constitute the fundamental policy of Indian law nor is it possible to place the expression in the straitjacket of a definition. What is important in the context of the case at hand is that if on facts proved before them the arbitrators fail to draw an inference which ought to have been drawn or if they have drawn an inference which is on the face of it, untenable resulting in miscarriage of justice, the adjudication even when made by an Arbitral Tribunal that enjoys considerable latitude and play at the joints in making awards will be open to challenge and may be cast away or modified depending upon whether the offending part is or is not severable from the rest.” xxxxxx

31. The third juristic principle is that a decision which is perverse or so irrational that no reasonable person would have arrived at the same is important and requires some degree of explanation. It is settled law that where:

1. a finding is based on no evidence, or

2. an arbitral tribunal takes into account something irrelevant to the decision which it arrives at; or

3. ignores vital evidence in arriving at its decision, such decision would necessarily be perverse. xxxxxx

33. It must clearly be understood that when a court is applying the “public policy” test to an arbitration award, it does not act as a court of appeal and consequently errors of fact cannot be corrected. A possible view by the arbitrator on facts has necessarily to pass muster as the arbitrator is the ultimate master of the quantity and quality of evidence to be relied upon when he delivers his arbitral award. Thus an award based on little evidence or on evidence which does not measure up in quality to a trained legal mind would not be held to be invalid on this score. Once it is found that the arbitrators approach is not arbitrary or capricious, then he is the last word on facts......”

51. It is, therefore, clear that the decisive test is that first, the learned arbitrator had to adopt a judicial approach; second, the principles of natural justice had to be upheld; third, the decision must not have been egregious, or rather, perverse.

52. Now, the Court has to examine the facts of the instant case in light of the foregoing discussions on the law.

53. A relevant portion of the impugned order is reproduced herein to examine whether the order is perverse in nature: “The first prayer in this application is to restrain the respondent from acting upon the Letter of Intent dated 16.11.2021. When we are considering this prayer, already a period of more than one year and three months has passed since then. Not only this, subsequent developments that have taken place after the aforesaid order would go to show that the order has already been acted upon, most important of them being award of the contract for the same facility to a third party. In fact, when petition under Section 9 filed by the claimant before the High Court was disposed of vide judgment dated 11.03.2022, learned Single Judge in its para 32 clearly noted that respondent-CWC has issued a fresh tender on 10.02.2022 for appointment of SAMO at Dronagiri Node and bids received in response thereto were likely to be opened on that date i.e., the date when the judgment was delivered. The Court declined the prayer of the claimant for stay of termination of notice as in its view it would completely upset the entire tender process. No doubt when the claimant filed appeal against the aforesaid order, the Division Bench in para 5 of its order dated 28.03.2022 observed that any steps taken by the respondent-CWC shall be subject to present appeal but eventually when the appeal was disposed of vide judgment dated 18.11.2022, nothing was said about finalized tender process. In any case the Division Bench has not commented upon correctness of the judgment of the Single Bench but considering the pending dispute between the parties proceeded to appoint the Sole Arbitrator. While the learned counsel for the claimant has argued that the Division Bench of the High Court was not informed about the fact that already Letter of Intent has been issued on 16.11.2021 in favour of third party and agreement was executed on 11.10.2022, learned counsel for the respondent-CWC has vehemently disputed this contention by asserting that he argued the matter before the Division Bench, and that all. these developments were brought to the notice of the Division Bench. Therefore, even if the Division Bench has not specifically taken note of this aspect in the judgment, the events that had already been taken place in the past cannot be denied. Further prayer made by the claimant in the petition under Section 17 of the Act to allow them to carry on with the work under the agreement dated 18.04.2020, directing the respondent to render all assistance to them and refund the complete amount of bank guarantee which, according to the claimant, were unlawfully encashed by the respondent and further restraining them from proceeding with auction notice, also, in view of all the aforediscussed subsequent developments, cannot be granted. Coming now to the question as to what bearing the order passed by the Single Bench of the High Court under Section 9 of the Act would have on the power of this Tribunal while considering application under Section 17 of the Act for similar relief, it is sought to be argued on behalf of the claimant by citing six judgments of different High Courts that the view taken by the Single Bench of Delhi High Court was prima facie erroneous. Intention of the parties in the present case was not to make the contract determinable and in fact it was not determinable as Article 10 of the agreement clearly mentions that the contract can be terminated only in particular circumstances and not unilaterally by giving notice to any party. As per respondent-CWC however all the precedents cited on behalf of the claimant arose out of agreements to sell, agreement for transfer of shares, share purchase agreement, and deed of settlement etc., whereas there are contrary judgments according to which the agreements of the present nature. should be held as determinable in nature. I need not discuss in detail the judgments cited by either side on the question whether or not the agreement in the present case is determinable. However, it would be at this stage instructive to notice that nature of some of the determinable contracts which can be culled out from the cited precedents, though not exhaustive, but illustrative, are, contracts of agency, partnerships, contracts to provide service, employment contracts, contracts of personal service, contracts where the standards of performance are subjective, contracts that require a high degree of supervision to enforce, and contracts in perpetuity are, subject to exceptions, in their nature determinable. These contracts can be terminated by either party by a reasonable notice. And this question shall be decided on the plain and express language of the agreement. Even if we proceed on the footing that jurisdiction of the Arbitral Tribunal under Section 17 of the Act is coextensive with that of Court under Section 9 of the Act, the order passed by the Court under Section 9 cannot be ignored altogether. It may not be out of place at this stage to notice the scope of the two provisions. While Section 9 of the Act can be invoked before or during or at any time after making of the Arbitral Award but before it is enforced according to Section 36 of the Act. Prior to commencement of the arbitral proceedings therefore the court has the power to grant or refuse to grant as an interim measure. But once when the arbitral proceedings commences, the court as well as the Arbitral Tribunal both would have the power to grant such interim measures. Section 9 of the Act after commencement of the arbitral proceedings however is qualified by subsection (3) of Section 9 which inter alia provides that once the Arbitral Tribunal has been constituted, the Court shall not entertain the application under Section 9(1) unless it finds that the circumstances exist, which may not render the remedy provided under Section 17 efficacious. However, if the Court is persuaded to direct any interim measures under Section 9 of the Act, its operation granting such interim relief does not remain limited to the period till commencement of arbitral proceeding. In other words, such order would remain operative even after Arbitral Tribunal has been constituted and the arbitral proceedings have commenced. It cannot therefore be argued that converse of such situation i.e. when the Court under Section 9 of the Act has declined to grant any interim measures, would have no bearing on the jurisdiction of the Arbitral Tribunal while it is considering similar prayer under Section 17 of the Act. What has to be therefore considered is whether view taken by the Single Bench of the High Court holding the contract in the present case as determinable, can be in the facts of the present case differed from, by this Tribunal. The Single Bench of the High Court has taken note of Article 10 of SAMO, especially its Article 1 O(ii), which provides that the agreement can be terminated at the discretion of the respondent-ewe for breach on the part of M/s. Shubham HP Security Force (I) Pvt. Ltd., as stipulated in Clause 1 0(2) and 1 0(2)(i), which provides that M/s. Shubham HP Security Force (I) Pvt. Ltd. shall be in breach of agreement in the event of its failure to pay any of the amounts due to the respondent-CWC on time, as required under the agreement, if M/s. Shubham HO Security Force (I) Pvt. Ltd fails to cure the failure within thirty days of receipt of notice of default from respondent-CWC, and further provides for the same consequence of termination of the agreement in sub-clause

(ii) of Article 10.[2] in the event of its failure to maintain bank guarantee as required in the agreement in full enabling CWC to enforce the same at any time. Section 14(1) of the Specific Relief Act specifies in sub-clause (c) the contracts which cannot be specifically enforced, one of which is a contract which in its nature is determinable. If the contract is determinable on a particular contingency or on happening of certain event, it cannot be countenanced that such a contract is not determinable.”

54. It can be inferred from the impugned order that the learned Arbitrator gave careful consideration to the provisions of the Contract and the facts and circumstances of the instant case to decree such an order.

55. It can be inferred from the impugned order that the learned Arbitrator has given due consideration to the existing legal position, to decide on the determinability of the contract.

56. The impugned order is well-reasoned and considers every specific objection raised by the appellants in a detailed manner, correlating it with the existing legal position.

57. A relevant portion of the order is reproduced below: “Contention of the claimant that third party rights have been created by respondent-CWC subsequent to commencement of arbitral proceedings also cannot be countenanced. The fact that fresh tender process was initiated and the bids were to be opened on the day judgment on application under Section 9 was rendered, was duly taken note of by the Single Bench of the High Court. The third party interest was already created when the Letter of Intent was issued in favour of M/s. Budget CFS Terminals Pvt. Ltd. on 07.09.2022. Not only that, the agreement was also executed in their favour by respondent-CWC on 11.10.2022 and communication was sent to the custom authorities on 12.10.2022 itself for granting permission in favour of the new contractor for allowing them to operate the facility. This Tribunal cannot at this stage when the request has been acceded to by the custom authorities on 20.01.2023 granting such permission and the facility has been taken possession of by the new operator M/s. Budget CPS Terminals Pvt. Ltd. on 09.02.2023, put the clock back by requiring the respondent- CWC to restore the possession of facility to the claimant. Judgments of the Supreme Court in M/s. Cheran Properties Limited Vs. Kasturi and Sons Limited (20 18) 16 SCC 413 and of Bombay High Court in Prabhat Steel Traders Pvt. Ltd. V s. Excel Metal Processors Pvt. Ltd. & Others, MANU/MH/2545/ 2018 do not support their argument that this Tribunal can pass an order of mandatory injunction in the present case restoring back the possession of facility to them even against third party. Argument that even if injunction order cannot be passed against third party "on the group of companies doctrine", it can be passed in the present because third party is direct beneficiary and agent of one of the parties to the arbitral dispute i.e. respondent- CWC, cannot be accepted. In the present case, interest of third party has been created much subsequent to termination of agreement in favour of the claimant. Here at the juncture, it would be useful to take note of the observation made by the Supreme Court in para 76.2.(2) of the report in Vidya Drolia Vs. Durga Trading Corporation, (2021) 2 SCC 1, wherein it was held that "when cause of action and subject matter of the dispute affects third party rights; have erga omnes effect; require centralized adjudication, and mutual adjudication would not be appropriate and enforceable" such a dispute is not arbitral. Interim relief/measures, as have been prayed for, also cannot be granted by invoking doctrine of lis pendens, which has been sought to be argued on behalf of the claimant. The judgment of Bombay High Court in Prabhat Steel Traders Pvt. Ltd. V s. Excel Metal Processors Pvt. Ltd. & Others, MANU/MH/254512018, rather supports the case of respondent-CWC because in that case the High Court set aside the order of the Arbitral Tribunal passed against a third party, by granting relief in appeal filed by such third party, who directly approached the High Court on this aspect, however, it has been rightly argued on behalf of respondent-CWC, that interest of claimant has been sufficiently safeguarded in the aforesaid letter of permission granted by the custom authorities in favour of the new operator where they made this permission conditional by explicitly stating "that M/s. CWC D'Node and M/s. Budget CFS Terminals Pvt. Ltd., 'will abide by the orders issued by the Hon'ble Court or the Hon'ble Arbitrator in their dispute with M/s. "Shubham HP Security Force (I) Pvt. Ltd." In any case, Article 4.[1] of SAMA clearly stipulates that agreement shall be subject to custom's approval, which explains this condition. In view of above, this Tribunal is not persuaded to take a different view than the one taken by the Single Bench of the High Court, not only on the question of agreement being determinable, but also because in totality of the circumstances, balance of convenience cannot be said to lie in favour of the claimant. Moreover, if, after the evidence is led by the parties, the Tribunal is eventually persuaded in favour of the claimant, the loss which the claimant would suffer, would not be such which cannot be compensated in terms of money and in that sense, the claimant, cannot be held to have made out a case of irreparable loss, which is not capable of being compensated in terms of money. In the light of the view that I have taken of the matter, no case is made out for grant of interim measures as prayed for.”

58. The learned Arbitrator has taken the Contractual provisions into account and considered the circumstances and facts, to declare that the appellant failed to make out a case of irreparable loss for the grant of interim relief under Section 17 of the Act, 1996.

59. Therefore, the learned Arbitrator has accurately observed that the appellant failed to prima facie make out a case in his favour.

60. In the light of the circumspect approach mandated by the aforesaid judgments, this Court does not find any reason to interfere with the decision of the Tribunal in the facts and circumstances of the present case. The Tribunal‟s findings cannot be said to be arbitrary or perverse.

CONCLUSION

61. For the aforesaid reasons, the Court is of the view that the impugned order is not liable for interference by this Court in the exercise of jurisdiction under Section 37(2) of the Act. The appeal, along with pending applications are, therefore, dismissed.

62. It is made clear that the observations in this judgment are only for the purposes of disposal of this interlocutory appeal and will not prejudice the parties in the final adjudication of their respective contentions before the Tribunal.

63. Accordingly, the instant petition stands dismissed along with pending applications, if any.

64. The order be uploaded on the website forthwith.