The High Court of Delhi has held that the arbitral tribunal would be guided by the principles of O. 39 R. 1&2 of CPC while considering the issue of vacation/modification of an interim order.
The Bench of Justice Sanjeev Narula held that the tribunal does not have the power of substantive review of its order, however, it does have the power to vacate or modify the conditions of the interim order.
The parties entered into a License Agreement dated 31.08.2010 for advertising rights for certain sites at the Netaji Subhash Chandra Bose International Airport Estate, Kolkata [hereinafter, 'Kolkata Airport'] . A dispute arose between the parties, concerning rights and obligations arising out of various such license agreements executed between them. Accordingly, an arbitrator was appointed to adjudicate the dispute between the parties.
The respondent claimed damages and the petitioner filed its counter-claims before the arbitrator. In 2015, the respondent filed an application under Section 17 of the A&C Act for certain interim reliefs in the form of issuance of NOC by the petitioner so that it could participate the in future tenders of the petitioner.
The arbitral tribunal vide the order dated 07.10.2015 allowed the application of the respondent and directed the petitioner to issue NOC subject to the respondent issuing a Bank Guarantee for 50% of the outstanding amount in respect of dispute.
After a lapse of 6 years, the respondent filed another application under Section 17 of the A&C Act for a direction to the petitioner to return the bank guarantees or in alternative relieve it of its obligation to renew the bank guarantees furnished pursuant to the order dated 07.10.2015.
The arbitral tribunal allowed the application of the respondent subject to the respondent providing a combination of personal and Corporate Guarantees in lieu of the bank guarantees.
Aggrieved by the order of the tribunal the petitioner preferred an appeal under Section 37 of the A&C Act.
The Contention Of The Parties
The petitioner challenged the order on the following grounds:
- The arbitral tribunal does not have the power to review order under Section 17 of the A&C Act.
- The tribunal has effectively reviewed its earlier order vide the impugned order.
- The tribunal could not have exercised powers under O. 39 R. 4 of CPC for modifying the interim order dated 07.10.2015.
- The impugned order is inequitable, incorrect and unfair insofar as the interim order dated 07.10.2015 remained in force for more than 6 years, therefore, the respondent having reaped its benefit could not be permitted to seek modification of the same as per its own convenience.
- Substantial amount of money is involved in the arbitration, therefore, the amount in dispute is required to be secured through bank guarantees.
The respondent countered the submissions of the petitioner on the following grounds:
- The arbitrator did not exercise the power of review but only modified the interim order under O. 39 R. 4 of the CPC.
- The vacation/modification of the interim order dated 07.10.2015 was sought as there was a change in circumstance and the interim order was causing undue hardship to the respondent.
Analysis By The Court
The Court held that there is a qualitative difference between review of an order and vacation/modification of an order.
The Court held that the respondent did not take the benefit of the interim order dated 07.10.2015 as it did not participate in any tender process, therefore, the condition precedent of the interim order lost its significance, therefore, the respondent was justified in seeking the modification/vacation of the interim order as it was being made to bear the bank guarantee charges.
The Court held that the tribunal does not have the power of substantive review of its order, however, it does have the power to vacate or modify the conditions of the interim order.
The Court held that the arbitral tribunal would be guided by the principles of O. 39 R. 1&2 of CPC while considering the issue of vacation/modification of an interim order.
Accordingly, the Court dismissed the appeal.
Case Title: Airport Authority of India (Kolkata Airport) v. TDI International Ltd.
Citation: 2022 LiveLaw (Del) 750
Counsel for the Appellant: Ms. Padma Priya, Ms. Akanksha Das and Mr. Shreyansh Rathi, Advocates
Counsel for the Respondent: Mr. Ashish Mohan, Ms. Gargi Sethee and Ms. Sagrika Tanwar, Advocates.