A.S. Naidu, J.
1. In this appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the 'Act', the Appellant seeks to assail the Order dated 23rd September, 2006 passed by the Learned District Judge, Khurda at Bhubaneswar in Arb(P) No. 383 of 2006. The said Arb(P) was initiated on the basis of a petition filed by the Appellant under Section 9 of the Act with a prayer to restrain Respondents 1 and 2, officers of the Orissa Mining Corporation, from invoking a Bank Guarantee furnished by it with the Corporation.
2. Bereft of unnecessary details, the short facts of the case are that Appellant M/s, Visa International Limited, a company incorporated under the Companies Act, 1956 having its registered office at Kolkata is the Indian Agent of M/s. Visa Comtrade AG, Aegeristrasse, ZUG, Switzerland. It had been authorized by the said Company of Switzerland to act and operate on behalf of the said Company in India in the matter of purchase and export chrome concentrate. The Appellant entered into an agreement/contract with the Orissa Mining Corporation Limited, Respondent No. 1, represented by Respondents 2 and 3. The said agreement, it is asserted, was entered into on 20th February, 2006. As per the agreement the Corporation was required to supply 30,000 MT of chrome concentrate of specified quality to the Appellant Company at the rate of 115.00 US Dollars per DMT, FOB, ST, Paradip Port and the shipment was to be done by 7th of March, 2006. As the shipment could not be done by 7th of March, 2006, on the request of the Appellant, the Corporation extended the shipment to 17th March, 2006. In consonance with that extended date, the Appellant's vessel 'MV Alison' arrivedat Paradip Port and tendered its notice of readiness to the Corporation. Thereafter loading of chrome concentrate started. While matter stood thus, on 1st March, 2006 the Corporation issued a letter to the Appellant proposing to amend the contract unilaterally enhancing the price of chrome concentrate from 11 5.00 US Dollars to 141.00 US Dollars per DMT, FOB, ST, Paradip Port and extending the date of shipment to 31st March, 2006. Such enhancement of price having been resisted by the Appellant on the ground that the same was beyond the terms and conditions of the agreement dated 20th February, 2006 disputes cropped up among the parties inter se. Thereafter on 1 st August, 2006 the Appellant received a lawyer's notice on behalf of Respondents 1 and 2 calling upon the Appellant to pay the sum of money equivalent to 6,86,400 US Dollars, failing which the said Respondents would invoke the Bank Guarantee to a tune of 1,72,500 US Dollars furnished by the Appellant and lying with them. Again the Corporation by another notice issued through Respondent No. 2 on 25/26-8-2006 intimated the Appellant that it would invoke the Bank Guarantee furnished by it any day after 4-9-2006 without any further notice. Being aggrieved by the aforesaid action of the Respondents, the Appellant filed a suit on 2nd September, 2006 before the Learned Civil Judge (JD), Bhubaneswar seeking a declaration that the aforesaid notices dated 1-8-2006 and 25/26-8-2006 issued by the Corporation to it as illegal and not to be acted upon, and for permanently injuncting the Respondents from invoking the Bank Guarantee of 1,72,500 US Dollars furnished by the Plaintiff with the Corporation. The said suit was registered as C.S.No.31 3 of 2006. Along with the plaint of the suit, the Appellant also filed an application under Order 39, Rules 1 and 2 read with Section 151 CPC praying for grant of ad interim injunction against Respondents 1 and 2 from invoking the aforesaid Bank Guarantee. The said application was registered as I.A.No.393 of 2006. By Order dated 2nd September, 2006 the Learned Civil Judge (JD) directed issue of notice by special messenger and then by Order dated 4th September, 2006 the Learned Civil Judge (JD) after hearing both sides restrained the Respondents from invoking the Bank Guarantee furnished by the Appellant till 6th of October, 2006 which was subsequently extended till 14th of October, 2006.
3. While matter stood thus, the Appellant filed a petition under Section 9 of the Act before the District Judge, Khurda at Bhubaneswar inter alia praying for issue of interim direction to the Respondents not to invoke the aforesaid Bank guarantee. The said petition was registered as the aforesaid Arb(P) No. 383 of 2006. The Learned District Judge directed issue of notice to the Respondents and posted the Arb(P) to 20th September, 2006 for orders. After the appearance of the Respondents the case was heard, arguments were concluded and the case was posted for delivery of Judgment/orders.
In the meanwhile the Respondent-Corporation filed a Memorandum/Petition before the Civil Judge (JD) in I.A.No.393 of 2006intimating the said Court that as for the self-same relief a petition under Section 9 of the Act had been filed before the District Judge, the suit and interim application were not maintainable. Basing upon the said submission, Learned Civil Judge (JD) dismissed the interim application on 14th October, 2006, as a consequence of which the stay order stood vacated.
4. It is submitted by Mr. Bijon Ray, Learned Senior Advocate appearing for the Appellant that the Learned Civil Judge (JD) dismissed I.A.No.393 of 2006 arising out of C.S.No.313 of 2006. Soon thereafter Respondents 1 and 2 invoked the Bank Guarantee. Relying upon a Memorandum filed by the Respondents before the District Judge intimating him that the Bank Guarantee in question had already been invoked by the Respondents, the latter by Order dated 23rd September, 2006 dismissed the aforesaid Arb(P) as infructuous. The said order, as stated earlier, is assailed in this appeal mainly on the ground that the Learned District Judge totally failed to appreciate the urgency of the matter and without passing an interim order erroneously adjourned the same, thereby giving opportunity to the Respondents to invoke the Bank Guarantee.
According to Mr. Ray, Learned Senior Advocate for the Appellant, the Respondents played fraud to frustrate the proceedings of the Courts, inasmuch as the concerned advocate for the Respondents before the Courts below filed a Memo before the Learned Civil Judge (JD) on the basis of which the latter rejected the I.A. Taking advantage of such rejection of the I.A., although the Arb(P) was pending before the District Judge and the Respondents were aware of that, they invoked the Bank Guarantee and thereafter mentioned before the District Judge that the Arb(P) filed under Section 9 of the Act had become infructuous.
Relying upon a decision reported in 1999 AIR SCW 3747 (Hindustan Constructions Company Limited v. State of Bihar and Ors.), Mr. Ray further submitted that the Bank Guarantee in this case could be invoked only when the amount thereunder became payable due to non-fulfilment of the obligations and/or there was a chance of insecurity. According to him, the Appellant is a solvent company having global business and as such invoking its Bank Guarantee in a hush-hus manner was unjust, illegal and contrary to the provisions of the Act and laws. He further submitted that in view of the specific conditions in the agreement with regard to the rate of chrome concentrate, unilateral enhancement of the same and raising demand/invoice on that basis was unjust, illegal and contrary to law. Under such circumstances the Respondents acted in breach of the agreement by invoking the Bank Guarantee and it is a fit case where direction should be issued to the Respondents to return the entire amount covered under the Bank Guarantee.
5. All the aforesaid submissions of Mr. Ray are strongly repudiated by Mr. M.R. Mohanty, Learned Counsel for the Respondents. Taking exception to the submission that the Respondents played fraud to frustrate the proceedings of Court, Mr. Mohanty submitted that in fact the Appellant has not come to Court with clean hands and all through it suppressed the material facts. Further advancing his submission Mr. Mohanty submitted that C.S.No.313 of 2006 and I.A.No.393/06 were filed in the Court of the Learned Civil Judge (JD), Bhubaneswar supressing the fact that there was an arbitration clause in the agreement as per which no suit was maintainable. Further, after the Respondents appeared and filed their counter/objection and all the facts had been placed before the Court, apprehending that the interim order passed by the Civil Judge (JD) might not be extended, the Appellant filed a petition under Section 9 of the Act seeking identical interim relief as sought before the Civil Judge (JD), i.e. to restrain the Respondents from invoking the Bank Guarantee in question. Intentionally the Appellant did not mention in the petition filed before the District Judge that it had filed the aforesaid suit before the Civil Judge (JD) wherein some interim order had been passed. The Respondents after coming to know the fact that the Appellant had moved the District Judge, brought the same to the notice of the Learned Civil Judge (JD) by filing a Memorandum consequent upon which the Learned Civil Judge (JD) rightly, dismissed the interim application on the ground that the matter for self-same relief was pending before the District Judge and vacated the interim order passed by him. As there was no prohibitory order, the Respondents exercised their right and invoked the Bank Guarantee and thus there was absolutely no illegality. The Respondents also intimated the fact of invocation of the Bank Guarantee to the District Judge by filing a Memorandum and the District Judge also rightly dismissed the Arb(P) on the ground that the said petition had become infructuous. According to Mr. Mohanty, for non-disclosure of material facts if any interim order had been passed, when all the facts were brought before the Court and the Court was satisfied that certain material facts were suppressed, it had to reject the petition, and the orders passed by the Courts below are just, proper and do not suffer from any infirmity.
6. I have heard Learned Counsel for the parties at length and perused the materials. There is no dispute that an agreement was in fact entered into between the Appellant and the Corporation on 20th February, 2006 agreeing to the rate of chrome concentrate. There is also no dispute that a Bank Guarantee had been furnished by the Appellant. The dispute cropped up when the Corporation enhanced the price for the material. For deciding such a dispute there is provision for arbitration in the agreement. In view of the said fact. Any observation at this stage with regard to such enhancement would amount to pre-judging the issue and therefore this Court refrains from doing so. Fact remains, the Corporation has invoked the Bank Guarantee. Admittedly on the date the Bank Guarantee was invoked, an application under Section 9 of the Act was pending before the District Judge. It is not a case that the validity of the Bank Guarantee was going to expire or unless the same was invoked it could not be done in future. Thus there was no immediate or pressing urgency. In view of pendency of the Arb(P) before the District Judge who had already heard the parties and had reserved the order, according to this Court, it was not just, proper or fair forthe Corporation, which is state-owned, to invoke the Bank Guarantee in such a hurry. Be that as it may, fact remains that the Bank Guarantee has already been invoked. Whether the amount under the Bank Guarantee was payable to the Corporation or not has to be decided by arbitration in terms of the agreement. Therefore, this Court feels that ends of justice and equity will be better served if pending adjudication of the dispute the money value of the Bank Guarantee should be secured by the Corporation.
7. This Court therefore disposes of this ARBA directing the Corporation/Respondents to invest the money value of the Bank Guarantee in a Fixed Deposit account in any Nationalised Bank of their choice for a period of three months and grants liberty to the Appellant to seek its remedy in the appropriate forum. It is needless to say that if no orders are obtained within the time stipulated above, it would be open to the Corporation to deal with' the amount in question as permissible under law.