M/S Gail(I) Limited Vs.
Bal Kishan Agarwal Glass Industries Ltd.  INSC 1326 (7 August 2008)
IN THE SUPREME COURT
OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4918 OF 2008 (Arising
out of S.L.P. (C) No. 24175 of 2007) M/s. GAIL (I) Ltd. .....Appellant Versus
Bal Kishan Agarwal Glass Industries Ltd. ....Respondent
Dr. ARIJIT PASAYAT.
in this appeal is to the judgment of a Division Bench of the Allahabad High
Court disposing of appeal (FAFO No. 1339-D of 2007) which was preferred by the
appellant against the order dated 31.8.2007 passed by learned Judge ofSmall Causes
Court/Civil Judge (Senior Division) Agra, in Suit No. 285 of 2007. By the said
order the application for interim mandatory injunction was disposed of with
facts as projected by the appellant giving rise to the appeal in a nutshell are
On 17.9.1996 an
agreement was entered into between the appellant and the respondent for supply
of gas. The agreement was valid upto 31.3.2002 and was further extended from
time to time upto 31.3.2006. On 3.12.2004 officials of the appellant inspected
the factory premises of the respondent and found that gas supply has been
tampered with. Similar incidents were noticed on 15.1.2005 and 17.3.2005.
28.5.2005 gas supply was discontinued.
Respondent filed writ
petition No. 44679 of 2005 before the Allahabad High Court. By order dated
18.7.2005 the High Court dismissed the writ petition on the ground that
alternative remedy of arbitration was available under Section 9 of the
Arbitration and Conciliation Act, 1996 (in short the `Arbitration Act'). The
order was not challenged by the 2respondent. On 10.8.2005 proposal was given
for restoration of gas supply on the respondent furnishing undertakings, which
was in fact done. Thereafter gas supply was reconnected on 22.2.2006. It was
again found that the gas meter was tampered with, which lead to disconnection
on 28.2.2006. On 27.3.2006 an order was passed by the District Judge, Agra to
continue gas supply till 31.3.2006. On 3.4.2006 gas supply was stopped. Again a
writ petition was filed by the respondent i.e. Writ petition No. 2283 of 2006.
By order dated 1.11.2006 the Allahabad High Court disposed of the writ petition
holding that the proper remedy for the respondent was to make a representation
to the appellant since no mandamus can be issued for extension of contract or
for giving benefit to any proposed contract. On 29.3.2007 appellant indicated
the terms for re-connection namely deposit of 50% of the outstanding amount of
Rs.8,10,79,057/- and security for balance through mortgage of immovable
property and clearance of all outstanding dues in respect of the gas supply.
Civil Suit No.285 of 2007 was filed by the respondent with inter alia a prayer
for directing the appellant 3to execute the deed of renewal of gas supply without
demanding any payment or security. An application was filed by the appellant in
terms of Order VII Rule 11 of the Code of Criminal Procedure, 1908 (in short
the `CPC') and Section 8 of the Arbitration Act. Learned Civil Judge directed
that the fresh proposal dated 9.2.2006 should be given effect to without any
further terms and conditions. As noted above an appeal was preferred which was
disposed of by the impugned order dated 18.9.2007 on certain terms. The terms
read as follows:
1. The Plaintiff-Respondent
shall deposit a sum of two crores with the respondent and a security to the
tune of six crores in the form of second charge of the immovable property along
with bond for payment with the Defendant-Appellant.
2. Out of two crores,
the plaintiff-respondent shall deposit a sum of Rs.50 lac with the defendant-
appellant within a period of one month. The 4 security to the tune of six
crore will also be deposited within a month.
3. They will further
continue to deposit a sum of Rs.5 lac per month with the plaintiff-respondent
in the first week of every month till entire Rs. two crores are deposited. The
first installment of Rs.5 lac will start from the month of November, 2007 i.e.,
the first installment of 5 lac has to be paid by 7th of November, 2007. These
deposits will be in addition to the charges of the gas to be supplied to the
Plaintiff-Respondent. They will be kept by the Defendant-Appellant in fixed
deposit in any nationalised bank and will abide the Arbitration proceedings and
subject to final decision of the case.
Defendant-Appellant will resume gas supply of the Plaintiff-Respondent after
deposit of Rs. 50 lac and the security for 6 crores.
5. It will be open to
the Defendant-Appellant to stop the gas supply in case of default in depositing
the 5 payment within the above stipulated time.
Defendant-Appellant will also be entitled to inspect the meters and any if
tampering in meter is found, it will be open to the Defendant-Appellant to stop
the supply of gas after giving notice to the Plaintiff- Respondent.
to Mr. G.E. Vahanvati learned Solicitor General what in essence the respondent
sought for in the suit is relief in terms of Section 10 of the Specific Relief
Act, 1963 (in short the `Act'). In order to bring application of the said
provision there must be a contract. Section 39 of the said Act relates to an
obligation flowing from a contract upon mutually agreed upon terms. There was
no question of any automatic renewal. As a matter of fact the extension of the
period of contract is not automatic and has to be done on mutually agreed upon
terms. In the instant case, there was no contract in existence, and therefore
there is no question of granting any relief in the suit. Additionally, there
was a specific clause relating to arbitration. It is pointed out that the Civil
court was aware of the earlier order of the High Court. It is, 6therefore,
submitted that the learned Civil judge could not have passed the order which
was impugned before the High Court. Unfortunately the High Court disposed of
the appeal before it without taking note of the fact that earlier in Writ
Petition No. 44679 of 2005, the court had dismissed the writ petition on the
ground of alternative remedy. The said order was not challenged. It is accepted
that an arbitrator has in fact been appointed.
T.R. Andhyarujina, Learned Senior Counsel appearing for the respondent on the
other hand submitted that the appellant's conduct was not above board.
Initially, it had suggested certain terms for reconnection. But backed out of
it and even it was not keen on the early disposal of the proceeding before the
arbitrator. The question whether any amount is payable as penalty as claimed by
the appellant can be the subject matter of adjudication by the arbitrator. Since
unreasonable terms were indicated for resumption of gas supply, the respondent
had no alternative but to avail the civil suit. It was suffering huge losses
and there were human 7problems like unemployment of a large number of employees
who earn their livelihood from their employment in the respondent's factory. A
proposal has also been filed by the respondent during the hearing of the
Vahanvati, submitted that since the matter is pending before the Arbitrator,
the Civil Court should not have passed any order and the High Court was not
justified in practically affirming the order of the trial court except
variation of certain conditions.
the proceedings are pending before the arbitrator. Under Section 17 of the Act,
interim orders can be passed by the Arbitrator.
the circumstances we dispose of the appeal with the following directions:
1. Within a period of
ten days from today the respondent shall make an 8 appropriate application for
interim arrangement before the Arbitrator;
2. Within a period of
three days from the date of receipt of copy of the application, the appellant
shall file the response/objection, if any;
3. Within a period of
ten days thereafter the Arbitrator is requested to dispose of the application
in accordance with law. It is open to the respondent to place the proposal
which was filed in the Court.
Needless to say, the
Arbitrator shall consider the matter in proper perspective.
make it clear that we have not expressed any opinion on the terms of the
conditions, if any, which can be imposed and/or whether any interim order is
called for in the matter.
The appeal is
accordingly disposed of without any order as to costs.
........................................J. (Dr. ARIJIT PASAYAT)