SANGHI INDUSTRIES LIMITED versus RAVIN CABLES LTD., AND ANR

SANGHI INDUSTRIES LIMITED versus RAVIN CABLES LTD., AND ANR

The Supreme Court held that the orders of the Commercial Court and the High Court directing deposit of amounts of performance bank guarantees were quashed and set aside because the bank guarantees had been invoked and amounts paid prior to the Section 9 order and the pre-conditions of Order XXXVIII Rule 5 CPC were not satisfied; Section 9 relief is interim and requires satisfaction of the CPC pre-conditions before granting such measures to secure potential awards.

Parties
Appellant: Sanghi Industries Limited; Respondent: Ravin Cables Ltd.; Respondent: ANR.
Jurisdiction
India
Judgment Date
30 September 2022
Procedural Posture
Civil Appeal / Appeal From Judgment and Order Dated 11.02.2022 of the High Court of Gujarat at Ahmedabad in Regular First Appeal No. 3253 of 2021; Civil Appeal No. 6908 of 2022 Before the Supreme Court
Outcome
Appeal allowed; impugned High Court judgment and the Commercial Court order under Section 9 quashed and set aside.
Legal Topics
Section 9 Arbitration Act Interim Relief, Order XXXVIII Rule 5 CPC Pre Conditions, Performance Bank Guarantees, Invocation of Bank Guarantees
Arbitration Civil Procedure Commercial Courts Section 9 Arbitration Act Interim Relief Order XXXVIII Rule 5 CPC Pre Conditions Performance Bank Guarantees Invocation of Bank Guarantees

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Parties

Sanghi Industries Limited

Appellant

Ravin Cables Ltd.

Respondent

ANR.

Respondent

Procedural Posture

Civil Appeal / Appeal From Judgment and Order Dated 11.02.2022 of the High Court of Gujarat at Ahmedabad in Regular First Appeal No. 3253 of 2021; Civil Appeal No. 6908 of 2022 Before the Supreme Court

Legal Issues

  1. 1 Whether a Commercial Court can, under Section 9 of the Arbitration and Conciliation Act, 1996, direct deposit of amounts of performance bank guarantees that had already been invoked and paid by the bank
  2. 2 Whether the pre-conditions of Order XXXVIII Rule 5 CPC must be satisfied before passing an order under Section 9 to secure the award/decree
  3. 3 Whether the Commercial Court was justified in passing the order directing deposit in view of serious disputes on amounts to be adjudicated by the arbitral tribunal

Ratio Decidendi

The Supreme Court held that the orders of the Commercial Court and the High Court directing deposit of amounts of performance bank guarantees were quashed and set aside because the bank guarantees had been invoked and amounts paid prior to the Section 9 order and the pre-conditions of Order XXXVIII Rule 5 CPC were not satisfied; Section 9 relief is interim and requires satisfaction of the CPC pre-conditions before granting such measures to secure potential awards.

Court Disposition

Appeal allowed; impugned High Court judgment and the Commercial Court order under Section 9 quashed and set aside.

Orders

  • Impugned judgment and order dated 11.02.2022 of the High Court of Gujarat in Regular First Appeal No. 3253 of 2021 quashed and set aside
  • Order dated 13.10.2021 passed by the Commercial Court under Section 9(ii)(e) of the Arbitration and Conciliation Act, 1996 directing the appellant to deposit the amounts of performance bank guarantees quashed and set aside