HIGH COURT OF JUDICATURE FOR RAJASTHAN

BENCH AT JAIPUR

S.B. CIVIL MISC. 2nd STAY APPL. NO.9387/2020

IN

S.B. Civil Writ Petition No. 21394/2019

Bhilwara - Jaipur Toll Road (P) Ltd., a Company incorporated

under The Companies Act, 1956 having its Registered Office at
Om Tower, Church Road, M.I. Road, Jaipur And Business Office at
J-28, Subhash Marg, C-Scheme, Jaipur - 302 001 through its
Authorized Representative Shri Nemi Chand Jain.
----Petitioner
Versus
1. State of Rajasthan, through Chief Engineer (Roads),
Public Works Department, Nirman Bhawan, Jacob Road,
Jaipur (Raj.).
2. Punjab National Bank, having its registered office At 7,
Bhikaji Cama Place, Africa Avenue, New Delhi and Mid-
Corporate Branch At M.I. Road, Jaipur (Raj.).
3. ICICI Bank Limited, having its office at 10Th Floor,
Videocon Tower, Jhandewalan Extension, New Delhi.
----Respondents

For Petitioner(s) : Ms. Sakshi Srivastava, Adv.

For Respondent(s) : Mr. Rajesh Maharshi, AAG
Ms. Suruchi Kasliwal, Adv.

HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA

Order

Reserved on 01/10/2020
Pronounced on 12/10/2020

1. The matter comes up on second stay application filed by the

petitioner whereby the petitioner submits that the writ petition has

been preferred challenging the order passed by the learned

Commercial Court No.1, Jaipur whereby it has stayed the order

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (2 of 8) [CW-21394/2019]

dated 30/10/2019 passed by the sole arbitrator under Section 17

of the Arbitration and Conciliation Act, 1996 (hereafter referred to

as 'Act of 1996') vide its order dated 02/12/2019.

2. Learned counsel for the petitioner submitted that the writ

petition has been pending before this Court since 08/01/2020 and

it is likely to take time for decision. However, it is submitted that

due to continuance of the interim order passed by the learned

Commercial Court, the petitioner-company is suffering great

hardship and its account will become NPA resulting in loss to the

public money and even the Banks are loosing money. The arbitral

proceedings are still continuing and it cannot be said that a final

order has been passed by the learned Arbitral Tribunal headed by

Hon'ble Mr. Justice PP Naolekar, Former Judge of the Supreme

Court.

3. Learned counsel for the petitioner further submitted that

power is available under Section 17 of the Act of 1996 to the

learned Arbitrator for passing orders as an interim measure of

protection in respect of securing the amount in dispute of

arbitration as per Section 17(ii)(b) of the Act of 1996. Learned

counsel for the petitioner stated at bar that while the amount may

not be handed over to the petitioner, as an interim protection, the

said amount, as directed by the learned Arbitral Tribunal, be

deposited by the respondent-State authorities with the concerned

Banks so that the same remains secured in Escrow Account with

the Bank so that the public money is not lost. At the same time,

the concerned amount shall not be utilized for any other purpose

till the disposal of the Arbitration proceedings.

4. The respondents have not filed reply to the second stay

application. However, learned Additional Advocate General for the

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (3 of 8) [CW-21394/2019]

respondent-State argued orally and submitted that he has

preliminary objection relating to maintainability of the writ petition

itself. He further submitted that the writ petition under Articles

226 and 227 of the Constitution does not lie against an order

passed by the learned Commercial Court as there is a specific bar

contained under Section 5 of the Act of 1996 and the power being

exercised by the concerned Commercial Court is in the nature of

an interlocutory order passed in appeal preferred under Section

37(2)(b) of the Act of 1996 before the learned Commercial Court.

He relied on judgment of the Apex Court in Deep Industries Ltd.

Vs. ONGC & Ors: 2019(17) SCALE 85; judgment of High Court

of Uttrakhand at Nainital in Delip Singh Adhikari Vs. State of

Uttarakhand & Ors. dt.23/09/2019 and judgment of this Court

in Shri Balaji Industrial Products Ltd. Vs. AIA Engineering

Ltd. & Ors.: 2018(3)WLN 411 (Raj.). He further submitted that

there is no urgency in the present matter and in view of the

directions issued by the Apex Court in Gajendra Sharma Vs. Union

of India & Anr. [Writ Petition(s) (Civil) No(s). 825/2020], the

account would not be declared as NPA.

5. Learned AAG further submitted that the learned Sole

Arbitrator order was completely illegal and direction for

termination of payment could not have been passed and the order

of interim measure was passed on 30/10/2019 i.e. a day prior to

withdrawal of the notification exempting private vehicles. The

termination of concession agreement was done on account of

exemption of levy of toll free of private vehicles plying the State

Highways. Learned AAG has submitted written statement and

stated that the present writ petition is voluminous petition which

cannot be argued through video conferencing and as the question

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (4 of 8) [CW-21394/2019]

of maintainability of writ petition is involved, the interim order

ought not be passed by this Court.

6. Learned counsel appearing for the respondent-Bank

submitted that even the amount is deposited in the Bank, in an

Escrow Account, the Bank would not have any objection as it

would be a protection of public money.

7. I have considered the submissions.

8. This Court in Rajasthan State Mines and Minerals Ltd.

Vs. Ankur Minmine Product Pvt. Ltd. (SB Civil Writ Petition

No.920/2009) vide order dated 07/03/2019 had formulated an

exact question which learned counsel for the respondents had

raised as under:-
"Whether a writ petition under Article 227 of the
Constitution of India will lie against an interlocutory
(2 of 7) [CW-920/2019] order passed by a
Commercial Court, particularly in view of the embargo
contained in Section 8 of Commercial Courts,
Commercial Division and Commercial Appellate
Division of High Courts Act, 2015 ?"

9. In Deep Industries Ltd. Vs. ONGC & Ors. (supra), while

examining the scope of provisions of the Act of 1996 and the

constitutional provisions of Article 227 as also the law laid down

by the Apex Court earlier in SBP & Co. Vs. Patel Engineering

Ltd. & Anr.: (2005) 8 SCC 618 as well as the subsequent

judgment in Punjab Agro Industries Corporation Ltd. Vs.

Kewal Singh Dhillon: (2008) 10 SCC 128 which distinguished

the earlier judgment, the Supreme Court held as under:-

"13. This being the case, there is no doubt

whatsoever that if petitions were to be filed Under
Articles 226/227 of the Constitution against orders

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (5 of 8) [CW-21394/2019]

passed in appeals Under Section 37, the entire

arbitral process would be derailed and would not
come to fruition for many years. At the same time,
we cannot forget that Article 227 is a constitutional
provision which remains untouched by the non-
obstante Clause of Section 5 of the Act. In these
circumstances, what is important to note is that
though petitions can be filed Under Article 227
against judgments allowing or dismissing first appeals
Under Section 37 of the Act, yet the High Court would
be extremely circumspect in interfering with the
same, taking into account the statutory policy as
adumbrated by us herein above so that interference is
restricted to orders that are passed which are
patently lacking in inherent jurisdiction."
(Underline is mine)

10. Hence, keeping in view the law as laid down by Coordinate

Bench of this Court (supra), and the view taken in Deep

Industries Ltd. Vs. ONGC & Ors. (supra), this Court rejects the

preliminary objection raised by learned counsel for the respondent

State and it is held that the writ petition is maintainable under

Articles 226 & 227 of the Constitution of India before the High

Court. However, the High Court would be extremely circumspect in

interfering with the orders passed by the learned Commercial

Court while deciding appeals under Section 37 of the Act.

11. This Court notices that in Deep Industries Ltd. Vs. ONGC

& Ors. (supra), the Supreme Court has observed further as

under:-
"15. It is true that in Punjab Agro Industries
Corporation Limited (supra), this Court distinguished
SBP & Co. (supra) stating that it will not apply to a
case of non-appointment of an Arbitrator. This Court
held:

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (6 of 8) [CW-21394/2019]

9. We have already noticed that though

the order Under Section 11(4) is a judicial order,
having regard to Section 11(7) relating to
finality of such orders and the absence of any
provision for appeal, the order of the Civil Judge
was open to challenge in a writ petition Under
Article 227 of the Constitution. The decision in
SBP & Co. does not bar such a writ petition. The
observations of this Court in SBP & Co. that
against an order Under Section 11 of the Act,
only an appeal Under Article 136 of the
Constitution would lie, is with reference to the
orders made by the Chief Justice of a High Court
or by the designate Judge of that High Court.
The said observations do not apply to a
subordinate court functioning as designate of
the Chief Justice.
What is important to note is that the observations of
this Court in this judgment were for the reason that no
provision for appeal had been given by statute against
the orders passed Under Section 11, which is why the
High Court's supervisory jurisdiction should first be
invoked before coming to this Court Under Article 136.
Given the facts of the present case, this case is
equally distinguishable for the reason that in this case
the 227 jurisdiction has been exercised by the High
Court only after a first appeal was dismissed Under
Section 37 of the Act."

12. In SBP & Co. Vs. Patel Engineering Ltd. & Anr. (supra),

the Supreme Court observed as under:-

"46. The object of minimizing judicial intervention

while the matter is in the process of being arbitrated
upon, will certainly be defeated if the High Court
could be approached Under Article 227 or Under
Article 226 of the Constitution against every order
made by the arbitral tribunal. Therefore, it is
necessary to indicate that once the arbitration has
commenced in the arbitral tribunal, parties have to
wait until the award is pronounced unless, of course,
a right of appeal is available to them Under Section
37 of the Act even at an earlier stage."

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (7 of 8) [CW-21394/2019]

13. Keeping in view the aforesaid judgments, this Court is of the

view that the primary object of the Act of 1996 is for providing

speedy and effective alternate dispute resolution system and there

should be least interference in arbitral proceedings at interim

stage.

14. Although first appeal under Section 37 of the Act of 1996 lies

against an order passed under Section 17 of the Act of 1996, it is

to be noted that under Section 29-A of the Act of 1996, which was

inserted by Amendment Act, 2016, a time limit has been made

within which the arbitral awards must be passed. Thus, while

hearing appeals under Section 37 of the Act of 1996 against an

order passed under Section 17 of the Act of 1996, if an interim

stay order is passed, it would definitely affect the arbitral

proceedings pending before the Sole Arbitrator. Therefore, the

Court while hearing appeal under Section 37(2) of the Act of 1996

against an order passed under Section 17 of the Act of 1996, must

circumspect and ought not pass interim orders specially ex-parte.

Therefore, this Court prima-facie is of the view that the interim

order passed by the Court, which has been continuing since

December, 2019 has definitely resulted in delaying the

proceedings before the Arbitral Tribunal and would definitely affect

the final verdict.

15. On merits of the case, this Court notices that the learned

Sole Arbitrator passed order as under:-

"The claim of the claimant on account of default
payment of Rs.191.79 crores need to be protected, as
regards possession of the State Highway by the State
it would be of common knowledge that after the
termination of contract by the claimant and after the
lapse of 120 days there is slender possibility of

(Downloaded on 14/04/2021 at 09:16:33 PM)

 (8 of 8) [CW-21394/2019]

claimant would invest money over maintenance of

road. In the interest of public in general and public
safety it would be appropriate for the State to take
possession of the completed project. Accordingly, it is
directed to the respondent No.1 to deposit an amount
of Rs.191.79 crore in Escrow Account as per Clause
37.3.3 for the payment to be made in accordance with
the terms and conditions of the Escrow Account.
Similarly, the Government shall take steps to take
actual possession of the project Highway in
accordance with terms laid in Article 38 and Article
39.1 of the concession agreement."

16. Taking into consideration the aforesaid direction of the

Arbitral Tribunal, this Court is of the view that the rights of the

parties can be protected by directing the State to take over

possession of the project highway as directed by the learned Sole

Arbitrator. The amount of Rs. 191.79 crore shall be deposited with

the Respondent-Banks equally in the Escrow Account by the State

and shall not be released to the petitioner. It shall be kept with the

Bank and would not be utilized for payment to the petitioner till

final disposal of the appeal pending before the learned Commercial

Court.

17. It is informed that the learned Commercial Court is ceased

with the matter and is continuing to hear the case.

18. In view of the above, this second stay application is disposed

of accordingly.

(SANJEEV PRAKASH SHARMA),J

Raghu/

(Downloaded on 14/04/2021 at 09:16:33 PM)

Powered by TCPDF (www.tcpdf.org)