Ashim Kumar Banerjee. J.
1. The instant appeal would relate to an ad interim order passed by the learned District Judge, Barasat in Miscellaneous Case No. 155 of 2012 u/s 9 of the Arbitration and Conciliation Act 1996 inter alia, staying the notice of termination of the contract. The learned Judge observed as follows :-
No doubt the statute has provided a remedy to the petitioner u/s 9 of the Arbitration and Conciliation Act in the matter of giving an order of interim measure to prevent the loss of money incurred by the petitioner. Since the unilateral decision taken by the respondent no. 1 regarding termination/cancellation of order with petitioner no. 1, the claim as put forward by the petitioner is perfectly bonafide when indeed the respondent no. 1 has committed a breach of condition after ignoring the proposal for Arbitral Reference.
The facts would depict, the appellant Jessop and Company Limited was entrusted by the Bihar Government for renovation of eighty seven number of barrage gates at Sone Barrage, Indra Puri in Rohtas district. The Jessop entrusted a part of the job to M/s. Abhishek Engineering, the respondent as a sub-contractor. Jessop terminated the contract on the ground, Abhishek could not perform their job under the contract in time. They abused the officials in filthy language. They insulted the officials at the site for which complaint was lodged with the local Police Station. Abhishek abruptly withdrew the work force. Consequent upon such breach Jessop terminated the contract and threatened Abhishek for recovery of the damage.
2. Being aggrieved, Abhishek demanded arbitration in terms of the Arbitration Clause stipulated in the agreement and approached the learned District Judge for an order restraining effect of the letter dated September 22, 2012. The relevant extract of the letter is quoted below :-
In the light of above and since you have already withdrawn your work force from site, we are left with no option than to cancel your contract immediately and make alternate arrangement for going ahead with the execution of the project.
Please also note that the losses incurred by Jessop, because of your non-fulfilment of commitment as per terms of the contract, will be recovered from your outstanding payment, if any, and/or from the Plant and Machinery value which you have already placed at our site and in our works.
For the reasons as stated above, our order on you for WAG-9 Loco Shell, where there was hardly any progress was cancelled. You are hereby debarred from entering out site premises and also our workshop which may please be noted.
3. Mr. Ashok Kumar Banerjee, learned Government Pleader appearing for Jessop contended, the learned District Judge could not have stayed the effect of the said letter without appreciating the fact that the contract could not be specifically enforced in law. If the arbitrator would come to conclusion, termination was wrongful, the arbitrator would be well within his competence to award adequate damage to the aggrieved party. He would rely upon an earlier letter dated August 14, 2012 appearing at page 35 where Jessop cautioned Abhishek earlier that they neglected to adhere to, as a result Jessop was compelled to terminate the contract.
4. Per contra, Mr. Subrata Talukdar, learned counsel appearing for Abhishek contended, a sum of rupees sixty-five lacs became due and payable apart from the security deposit. Hence, Abhishek was compelled to slow the process of work. The Plant and Machineries belonged to Abhishek were still lying at the site. Hence, the learned Judge was right in passing the order of stay. He relied on Section 202 of the Contract Act to contend, once Jessop entrusted the job to them as sub-contractor and they submitted undertaking to the State of Bihar they would be held responsible for maintenance and up keeping of the job performed by them. The agreement could not be terminated without taking the State of Bihar in confidence. State of Bihar was never informed. To support his contention he cited the following decisions :-
i) 2007 Volume-VII Supreme Court Cases Page-125 (Adhunik Steels Ltd.-VS-Orissa Manganese & Minerals (P) Ltd.)
ii) 2009 Volume-V Supreme Court Cases Page-182 (N. Srinivasa-VS-Kuttukaran Machine Tools Ltd.
iii) 2012 Volume-I Arbitration Law Reporter Page-341 (Andhra Pradesh) (Hyderabad Cricket Association-VS-Visaka Industries Limited)
5. Jessop entrusted a particular job to be performed on their behalf strictly as per the contract. Jessop in their wisdom cancelled the contract. If the cancellation and/or termination was wrong Abhishek would be entitled to appropriate damage. Abhishek could not compel Jessop to continue with the contract as such contract was not liable to be specifically performed.
6. In the case of Hyderabad Cricket Association (Supra), the agreement was irrevocable. The association issued a communication asking the other company under the contract to forego their rights and privileges that they were entitled to under the agreement. The Apex Court in considering the peculiar facts involved therein retained the order of injunction considering the balance of conveyance. The facts involved herein would completely differ that would keep the proposition at bay.
7. In case of N. Srinivasa (Supra), the contract involved immovable property. Such contract could be specifically enforced. This fact was duly noted by the Apex Court. We wonder how this decision would have any application. Paragraph 31 being relevant herein is quoted below :-
As noted herein earlier, one of the main issues for the purpose of deciding the application for injunction was whether time was the essence of the contract or not. By the impugned order, the High Court had failed to appreciate that in the contract relating to immovable property, time cannot be the essence of the contract. In any event even in such a case the arbitration clause would survive and the dispute would be required to be resolved. That being the position, pending disposal of the arbitration proceeding, interim measure to safeguard the interest was required to be taken.
8. In the case of Adhunik Steel Limited (Supra), the contract was for raising of mineral ore. The lease was for assignment of mining right. Considering such factor the Apex Court retained the order of injunction. In paragraph 27 the Apex Court restrained the company from entering into any contract with any third party pertaining to mining right and lifting of the ore from the mines.
9. Neither of the three decisions would be of any way help to Mr. Talukdar to sustain the order of injunction. His reference to Section 202 of the Contract Act would also not be of any assistance to us. Once the contract stood terminated there would be no further question of performance by the respondent. The undertaking, if any, would at best bind them for the job to the extent they already performed. In case the balance part of the job is performed by Jessop itself or by any other organization on their behalf the liability cannot be foisted upon the respondent for maintenance or up-keeping of the barrage to the extent not done by Abhishek.
10. Appeal thus succeeds.
11. The order impugned is set aside.
12. The application u/s 9 would stand disposed of by treating the same on day''s list by observing, the letter of termination and subsequent act of Jessop relating thereto, would abide by the result of the arbitration.
13. FMAT 1484 of 2012 along with CAN 10815 of 2012 is, accordingly, disposed of without any order as to costs. Urgent photostat certified copy of this judgment, if applied for, be given to the parties on their usual undertaking.
Shukla Kabir (Sinha), J.
I agree.
