# M/S Sri Sai Nath Associates v. Babasaheb Bhimrao Ambedkar University & Ors

- **Citation:** (2022) 8 ILRA 1075
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2022-08-08
- **Bench:** Devendra Kumar Upadhyaya, Rajnish Kumar
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-sri-sai-nath-associates-v-babasaheb-bhimrao-ambedkar-university-ors-48714
- **Pages:** 5

## Headnote

Civil Law - Arbitration Act, 1996Section 9-Application u/s 9 for interim
protection rejected-contract for providing
manpower services by the Appellant firmcontract extended from time to timecontract
terminated
by
Respondent
University
and
security
deposited
was
forfeited-giving reason that work of the
Appellant firm was not satisfactory-adinterim injunction sought to the extent it
holds Appellant firm guilty of unsatisfactory
performance
till
disposal
of
arbitral
proceedings-Grant
or
refusal
of
interlocutory
injunction
rest
in
judicial
discretion-Learned Court below has not
determined whether a prima-facie case is
made out-which is not dependent upon any
consequential
or
resultant
eventAppropriate
determination/
consideration
of three cardinal principles of Stay is not
reflected.

Appeal allowed. (E-9)
List of Cases cited:

## Text

8 All. M/S Sri Sai Nath Associates Vs. Babasaheb Bhimrao Ambedkar University & Ors.
1075
----------
(2022) 8 ILRA 1075
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 08.08.2022

BEFORE

THE HON'BLE DEVENDRA KUMAR
UPADHYAYA, J.
THE HON'BLE RAJNISH KUMAR, J.

Appeal U/S 37 of Arbitration And Conciliation Act
1996 No. - 4 of 2022

M/S Sri Sai Nath Associates ...Appellant
Versus
Babasaheb Bhimrao Ambedkar University
& Ors. ...Respondents

Counsel for the Appellant:
Nilaya Gupta

Counsel for the Respondents:
Dr. V.K. Singh, Dr. V.K. Singh

Civil Law - Arbitration Act, 1996Section 9-Application u/s 9 for interim
protection rejected-contract for providing
manpower services by the Appellant firmcontract extended from time to timecontract
terminated
by
Respondent
University
and
security
deposited
was
forfeited-giving reason that work of the
Appellant firm was not satisfactory-adinterim injunction sought to the extent it
holds Appellant firm guilty of unsatisfactory
performance
till
disposal
of
arbitral
proceedings-Grant
or
refusal
of
interlocutory
injunction
rest
in
judicial
discretion-Learned Court below has not
determined whether a prima-facie case is
made out-which is not dependent upon any
consequential
or
resultant
eventAppropriate
determination/
consideration
of three cardinal principles of Stay is not
reflected.

Appeal allowed. (E-9)
List of Cases cited:
1. Hindustan Petroleum Corporation Ltd. Vs
Sriman Narayan & anr., reported in (2002) 5
Supreme Court Cases, 760

(Delivered by Hon'ble Devendra Kumar
Upadhyaya, J.
&
Hon'ble Rajnish Kumar, J.)

1. Heard Sri Nilaya Gupta, learned
counsel representing the appellant and Sri
Rajesh Tiwari, learned counsel appearing
on behalf of the respondent-University.

2. By instituting these proceedings of
appeal under Section 37 of the Arbitration
and Conciliation Act, 1996 (herein after
referred to as ''1996 Act'), the appellant has
laid a challenge to an order dated
11.03.20022, passed by the Commercial
Court, Lucknow in Arbitration Case No. 03
of 2022, whereby the application made by
the appellant under Section 9 of the 1996
Act
praying
grant
of
interim
protection/order has been rejected.

3. A contract was entered into
between the appellant-firm and respondentUniversity on 16.11.2017 for providing
manpower services by the appellant-firm to
the respondent-University. As per Clause 4
of the said agreement period of contract
was initially for one year which was
extendable upto 3 years on year to year
basis at the discretion of the respondentUniversity and basis of such extension, as
spelt out in the contract, was requirement
and performance of the manpower and the
Agency.

4. The contract entered into on
16.11.2017 was extended from time to
time, however, by means of an order dated
07.01.2022, passed by the Registrar of the
respondent-University,
the
contract
1076 INDIAN LAW REPORTS ALLAHABAD SERIES
between the parties was terminated w.e.f.
11.01.2022 and consequently the security
deposit made by the appellant-firm was
also forfeited giving the reason that work of
the appellant-firm was not satisfactory.

5. The contract between the parties
contains
an
arbitration
clause
which
provides that in the event of any dispute or
difference arising between the parties in
respect of or under the agreement, the same
shall be referred to the Vice Chancellor of
the respondent-University whose decision
shall be binding on the parties, however, if
the appellant-firm is still not satisfied, then
arbitration
shall
be
conducted
in
accordance with the provisions of 1996
Act.

6. On passing of the order dated
07.01.2022 terminating the contract, the
appellant-firm instituted a petition under
Section 9 of 1996 Act before the Commercial
Court at Lucknow seeking interim injunction
against the respondent-University. The prayer
made in the said petition under Section 9 of
1996 Act was that an ad interim/interim
injunction may be granted to stay the
operation and implementation of the order
dated 07.01.2022 to the extent that it holds
the appellant-firm guilty of unsatisfactory
performance in respect of the agreement
dated 16.11.2017, till disposal of the arbitral
proceedings. It was further prayed that an ad
interim/interim injunction may be granted to
the appellant-firm restraining the respondentUniversity from taking any adverse action
and also from rejecting the bid of the
appellant-firm on the basis of the order dated
07.01.2022 in case the appellant participates
in any future tender process.

7. The appellant-firm before the
learned trial court pleaded, inter alia, that
the order dated 07.01.2022 was passed on
the basis of some report by some
Committee and such a procedure was not
envisaged in the contract. It was further
pleaded by the appellant-firm before the
learned court below that the Committee,
pursuant to whose report the order dated
07.01.2022
has
been
passed,
was
constituted by the respondent-University
and since such a Committee has not been
envisaged in the contract entered into
between the parties, hence it did not have
any legal sanctity and accordingly the
findings based on such a Committee's
report cannot supersede the contractual
obligation between the parties. It was also
pleaded that the order dated 07.01.2022
could not have been passed by the
respondent-University and in fact it has
been passed only to restrain the appellantfirm from participating in future tender
process.
Further
submission
of
the
appellant before the learned court below
was that the order dated 07.01.2022 is
stigmatic and that the same has been passed
with
malafide
on
the
ground
of
unsatisfactory performance.

8. On the basis of the aforesaid and
other submissions, the interim injunction
was prayed for by the appellant, however,
prayer made by the appellant was contested
by
the
respondent-University
on
the
ground, inter-alia, that despite several
opportunities
having
been
given
the
appellant-firm did not appear before the
Committee and in fact there are enough
material
which
established
that
the
appellant-firm had violated certain clauses
of the contract and further on the basis of
such material, it can be inferred that the
performance of the appellant-firm had not
been satisfactory.

9. The learned court below after
discussing the case of the respective parties
8 All. M/S Sri Sai Nath Associates Vs. Babasaheb Bhimrao Ambedkar University & Ors.
1077
has refused the prayer made in the petition
moved by the appellant-firm under Section
9 of the 1996 Act by stating that the
documents available on record clearly
establish that the appellant-firm was given
notice by the Enquiry Committee and
despite service of notice, the appellant-firm
did not appear before the Committee. It has
also been observed by the learned trial
court that the issue as to whether services
rendered
by
the
appellant-firm
were
satisfactory or not, is to be determined by
the Arbitrator and as such in proceedings
under Section 9 of the 1996 Act this
inference cannot be drawn as to whether
the services of the appellant-firm were
satisfactory or not and accordingly there
does not appear to be any justification for
staying the operation of the order dated
07.01.2022
during
pendency
of
the
Arbitration proceedings.

10. The learned court below has
further stated in the order dated 11.03.2022
that, prima-facie, no ground for grant of
interim protection is made out in favour of
the appellant-firm for the reason that the
the
respondent-University
has
already
appointed a new Agency and as such in
case the order dated 07.01.2022 is stayed,
the same will result in irreparable loss to
the respondent-University.

11. Giving the aforesaid reasons, the
petition under Section 9 of 1996 Act moved
by the appellant-firm has been rejected.

12. The question which falls for our
consideration in this case is as to whether
while passing the order dated 11.03.2022,
which is under appeal herein, the learned
Commercial Court below has exercised its
jurisdiction vested in it under Section 9 of
the 1996 Act on the well settled legal
parameters
and principles which are
applicable for considering a prayer for
grant of interim injunction.

13. It is well settled principle of law
that normal rules governing grant of
interim orders are applicable to the
proceedings drawn and conducted under
Section 9 of 1996 Act as well. It is equally
well settled that three necessary ingredients
which are to be taken into consideration by
any court for granting interim injunction
under Order 39 Rules 1 and 2 of the Code
of Civil Procedure are to be taken into
account by the court while considering an
application or petition under Section 9 of
the 1996 Act. In other words, if a party
seeks any interim measures for protection,
the court needs to consider such an
application or petition on the basis of three
cardinal principles for grant of any relief in
the nature of interim injunction i.e. a
prima-facie case, irreparable loss or injury
or prejudice and balance of convenience.

14. The purpose of grant of
interlocutory order is primarily to preserve
in status-quo, the right of parties which
may appear to the court on the basis of
prima-facie case. The object of grant of
such temporary injunction is to mitigate the
risk of injustice to the plaintiff during the
period a suit or arbitration proceedings are
pending i.e. till the period such proceedings
are concluded.

15. Hon'ble Supreme Court in the
case
of
Hindustan
Petroleum
Corporation Ltd. Vs. Sriman Narayan
and another, reported in (2002) 5
Supreme Court Cases, 760 has held that
grant of an interlocutory injunction is a
matter which requires exercise of discretion
of the court, however, while exercising
such discretion the court should normally
apply the tests of (i) whether the plaintiff
1078 INDIAN LAW REPORTS ALLAHABAD SERIES
has a prima-facie case; (ii) whether the
balance of convenience is in favour of the
plaintiff; and (iii) whether the plaintiff
would suffer an irreparable injury if his
prayer for interlocutory injunction is
disallowed.

16.

Grant
or
refusal
of
an
interlocutory injunction though rests in the
judicial discretion of the court, however,
such discretion is to be exercised in the
facts and circumstances of the case and
exercise of discretion is judicially regulated
by observing the aforesaid three principles,
namely, determination of prima-facie case,
that of irreparable loss or injury and
balance of inconvenience.

17. As to whether the learned court
below in this case while passing the order
under appeal has followed the aforesaid
principles and thereafter exercised its
judicial discretion while passing the order
is, thus, now to be seen by the Court.

18. When we peruse the order dated
11.03.2022, passed by the learned court
below, what we find is that after narrating
the respective cases of the parties, the
learned court below has only observed that
the order dated 07.01.2022 has been passed
by the respondent-University terminating
the contract dated 16.11.2017 and forfeiting
the security amount on the basis of the
report submitted by the Enquiry Committee
which had given notice to the appellantfirm, however, despite service of the notice,
the appellant-firm did not appear before the
Committee. The learned court below has
also recorded in the order under appeal that
the issue as to whether the services
rendered
by
the
appellant-firm
were
satisfactory or not, is an issue which can be
determined only by the Arbitrator in the
arbitration proceedings and not by the court
in the proceedings under Section 9 of the
1996 Act. Another reason recorded by the
learned court below for refusing the grant
of interim protection as prayed for by the
appellant-firm is that since the respondentUniversity has appointed another Agency
as such the claim for grant of stay of the
order dated 07.01.2022 is not made out.

19. If we analyze the reasons given by
the learned court below for refusing to
grant the prayer made by the appellant-firm
in its application/petition under Section 9
of 1996 Act, what we find is that the
learned court below has not determined as
to whether the appellant-firm was able to
make out a prima-facie case. Merely by
mentioning that since the respondentUniversity has appointed another Agency
and, therefore, the appellant-firm does not
have prima-facie case, in our considered
opinion, does not qualify to be a justifiable
reason for arriving at the conclusion that
the appellant-firm had failed to establish
prima-facie case. Prima-facie case in the
context of grant of temporary injunction is
not dependent upon any consequential or
resultant event which is consequential or
resultant to the action which forms the
cause of action for taking any legal action
such as instituting a suit or initiating the
arbitration proceedings. The prima-facie
case has to be inferred on the basis of
pleadings and material available on record
in respect thereof regarding the main
subject matter of the proceedings and not in
respect of any consequences.

20. The submission of the learned
counsel for the appellant-firm is that so far
as termination of the contract dated
16.11.2017 by means of order dated
07.01.2022 is concerned, whether it was
bad or otherwise, is an issue which will be
determined in the arbitration proceedings
8 All. Smt. Sunita Devi Vs. State of U.P. & Anr.
1079
finally, however, since the order dated
07.01.2022 also records that work of the
appellant-firm was not satisfactory as such
occurrence of such a phrase in the order
dated 07.01.2022 would affect participation
of the appellant-firm in any other tender
process, if floated by not only the
respondent-University
but
by
other
Government
Departments
/Institutions/
Agencies as well. It is in this context that
the learned Court below was required to
consider as to whether by not granting
interim injunction, as prayed for by the
appellant-firm, it would suffer irreparable
loss and injury or prejudice. We do not see
any such consideration/determination by
the learned court below while it passed the
order dated 11.03.2022.

21. As to whether balance of
convenience lies in favour of grant of
interim protection as prayed for or it lies in
not granting the same is another issue,
determination of which was required to be
made by the learned court below while
deciding the application/petition moved by
the appellant-firm under Section 9 of the
1996
Act.
Appropriate
determination/
consideration even of this issue is not
reflected from the order dated 11.03.2022,
passed by the learned court below which is
under appeal before us.

22. For the reasons aforesaid, we find
that the appeal deserves to be allowed.

23. Accordingly, the instant appeal is
allowed and the order dated 11.03.2022,
passed by the learned Commercial Court,
Lucknow in Arbitration Case No. 03 of
2022 is hereby set aside.

24. The matter is remitted to the
learned Commercial Court, Lucknow for
decision of the application/petition under
Section 9 of the 1996 Act afresh in
accordance with law.

25. It is further directed that the
parties to the proceedings before the
learned Commercial Court shall not seek
any adjournment and adjournment shall be
permissible
only
in
exceptional
circumstances, that too, with the leave of
the court concerned.

26. It is further directed that the
proceedings of the petition under Section
9 of the 1996 Act shall be expedited by the
learned
court
below
and
shall
be
concluded within a maximum period of
three months from the date certified copy
of this order is produced before it.

27. We make it unequivocally clear
that any observations made in this order
shall not in any manner be construed to be
observations on the merit of the claim of
the respective parties and the Commercial
Court while deciding the application
/petition under Section 9 afresh shall not
be influenced by these observations as
these observations are confined only to
decision of this appeal.

28. There will be no order as to
costs.
----------
(2022) 8 ILRA 1079
ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 02.08.2022

BEFORE

THE HON'BLE VIKRAM D. CHAUHAN, J.

Transfer Application (Crl.) No. 282 of 2021

Smt. Sunita Devi ...Applicant
Versus
State of U.P. & Anr. ...Opp. Parties