Aluminium Co. Ltd. Vs. Gerald Metals Sa  Insc 134 (27 February 2004)
N Santosh Hegde & B P Singh.
out of SLP(C) No.3202 of 2004) SANTOSH HEGDE,J.
learned counsel for the parties.
appeal arises out of a dispute between the parties to this appeal which under
an agreement between the parties has to be referred to arbitration as
contemplated under Clause 26 of the agreement between the parties.
disposal of the said dispute by the arbitrators the respondent herein moved an
application under section 9(d) of the Arbitration and Conciliation Act, 1996
praying for the grant of ex parte injunction restraining the appellant herein
from transferring or alienating the earmarked alumina lying in the appellant's
Silos in Vishakapatnam Port area to any party other than the respondent herein.
said application was opposed by the appellant herein on various legal and
factual grounds including the maintainability of the application as also the
jurisdiction of the trial court to make any interim order under the said
provision of the Act.
trial court after hearing the parties however considered it appropriate to make
the following interim order :
the result, the application is allowed and the respondent shall allow the despatch
of cargo to the petitioner immediately on payment of original price to the
respondent, and on providing bank guarantee for the difference of price agreed
between the petitioner and the respondent and the price on which Alumna is being
sold in the international market at the latest, and the security shall lie with
the court and the party that wins in arbitral proceedings shall take it after
disposal of arbitral proceedings basing on the direction given therein. The
petitioner is ordered accordingly." An appeal filed by the respondent
against the said order of the trial court under section 37 of the 1996 Act
before the High Court of Judicature Andhra Pradesh at Hyderabad came to be rejected. While doing so
the High Court slightly midified the order of the trial court in the following terms
The Gerald Metals shall be permitted to lift 33,300 MT +/- 5% of Alumnia on
payment of agreed rates,
That in addition to agreed rates, the Gerald Metals shall also give a bank
guarantee of an amount which is the difference between the agreed rate and the
rate of US $ 430 per MT of Alumina in favour of NALCO. The bank guarantee shall
be furnished before the Registrar (Judicial) of this Court to avoid delay in
the matter who shall transmit it to NALCO.
bank guarantee shall be encashable by NALCO if they succeed in the arbitration.
order as to costs." In this appeal various grounds both legal and factual
have been raised by the parties to this appeal in their pleadings as well as the
arguments addressed on behalf of them.
however on facts of this case think it unnecessary to go into those questions
of fact and law even for the purpose of deciding this interlocutory application
filed under section 9(3) of the Act which will ultimately be subject to the
award that may be made in the arbitration proceedings. However we think it
necessary that with a view to protect the interest of both the parties to make
some modifications in the impugned order. We do so because of the fact that the
claim of the respondent herein is yet to be decided by the arbitrators. However
we notice by the impugned order the courts below have directed the compulsory
sale of alumina which according to the appellant is their property to the
respondent which the appellant contends cannot be done at an interlocutory
stage because once their property is sold in the event of they succeeding
before the arbitrator restoration of the property will become impossible.
we are not inclined to accept this argument because it is the case of the
appellant themselves that they were ready and willing to sell the subject
matter of dispute (the Alumina) for the best price in the market. Therefore the
sale of the said goods by itself would not in any manner cause irreparable loss
to the respondent. On the contrary, if the respondent is not allowed to
purchase the said goods there is a possibility of it suffering comparatively a
greater loss than that may be suffered by the appellant by directing it to sell
the goods to the respondent. We however feel since as of today the appellant is
the owner of the property if the respondent is interested in purchasing the
same then without prejudice to the contentions of either party the appellant
may be paid the value of the goods as was prevailing on the relevant date.
Actually this is the purport of the orders of the two courts below by the said
courts instead of directing payment of the market value of the goods have only
directed the payment for the contractual value of the goods which is US $ 430
per MT. However the courts below have directed the respondent to secure the
difference in the value of the goods by directing the respondent to furnish a
bank guarantee. While doing so the High Court has fixed the market value of the
goods at US $ 430 and directed the respondent to furnish a bank guarantee for
the difference in the amount between the agreed rate and the rate of US $ 430
per MT of the goods to be sold by the appellant to the respondent as per the
terms of the agreement.
heard the arguments of the parties we are of the considered opinion if the
respondent should be permitted to take possession of the goods at an interim
stage which the appellant claims it has no right to, we think the appellant's
interest should also be properly secured which can be done by calling upon the
respondent to pay to the appellant the value of Alumina which takes possession
from the respondent @ US $ 430 per MT before they take possession of the said
is a serious dispute between the parties in regard to the actual market value
of the goods at the relevant date while the appellant contends that the same is
US $ 460.80 per MT.
respondent contends it is much less than that since we in this appeal do not
want to go into that disputed question of fact and as an interim arrangement we
direct the respondent to pay @ US $ 430 per MT of the Alumina to be purchased
by the respondents from the appellant because that is the figure tentatively
fixed by the High Court. We further direct the respondent to furnish a bank
guarantee for the balance amount of US $ 31.80 per MT which the appellant
claims to be the market value before taking delivery of the goods in question.
appellant will file an undertaking in this Court that in the event of the
arbitration award fixing a price less than what is fixed by us or making the
appellant liable to pay any sum that may become liable to pay, assuring this
Court to make due payment, the same shall be paid in terms of the award within
the time to be stipulated in the award if any, within 3 months from the date of
the award with interest, if so awarded.
the above modifications this appeal is disposed of.