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2016 SCC OnLine Utt 2234

In the High Court of Uttarakhand at Nainital

(BEFORE SERVESH KUMAR GUPTA, J.)

Centre of Excellence in Disaster Mitigation and

Management, IIT, Roorkee, District Haridwar .….
Appellant
v.
M/s. S.K. Dynamics Pvt. Ltd. And Others ndents .….
Respondents
Appeal from Order No. 448/2016
Decided on August 27, 2016
Mr. Sharad Sharma, Senior Advocate, assisted by Mr. Vipul Sharma,
Advocate for the appellant.
Mr. Siddhartha Singh, Advocate, for the respondents.
The Judgment of the Court was delivered by
SERVESH KUMAR GUPTA, J.:— This appeal has been preferred against
the order dated 28.7.2016, rendered by the IInd Additional District
Judge, Roorkee, District Haridwar, accepting the application 42-Ga
moved by M/s S.K. Dynamics Pvt. Ltd. and others directing the
appellant herein to deposit the bank guarantee within a month which it
has encashed. The learned Judge also passed the order for continuation
of the interim stay order, which was passed earlier by the District Judge
on 28.2.2015 restraining the appellant not to encash the bank
guarantee.
2. Having heard learned Senior Counsel for the appellant and learned
Counsel of the respondents, it would be relevant to have a glance on
the backdrop of the present controversy between the parties.
3. Pursuant to a tender notice dated 4.12.2013 for supply of disaster
management instruments and commissioning of the project, a contract
was entered into between the parties for supply of such materials worth
Rs. 6,98,72,166/-, wherefor the bank guarantee to the tune of 110 per
cent of the total value was furnished by the respondent M/s S.K.
Dynamics. One of the stipulations depicted in such contract mandated
that 55 per cent of such guarantee shall be released after supply of all
the materials ordered and rest of the bank guarantee shall be released
after commissioning of the project, wherefor the instruments were
supplied.
4. All the items asked for under the agreement were supplied by the
respondents, but before such instruments could have been used for
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commissioning the project, the dispute erupted between the parties

which had to be referred to the arbitration as per the clause entailed in
the agreement.
5. Even before the matter could be referred to the arbitration, the
respondents moved an application under Section 9 of the Arbitration
and Conciliation Act seeking an order that 50 per cent of the bank
guarantee, which was lying with the bank, be not invoked at the
initiation of the appellant and such interim order was passed by the
learned District Judge on 28.2.2015 to the effect that the Manager of
the Union Bank, Civil Lines, Roorkee will not make the payment of
remaining bank guarantee till 4.3.2015, unless otherwise ordered by
the Court.
6. It is also pertinent to mention that this bank guarantee was only
uptill 10.3.2015 and when the matter was taken by the Court of District
Judge on 4.3.2015 while holding the camp at Roorkee, then the bank
guarantee though was extended up to 9.4.2015, but somehow the
learned Judge failed to pass any order of extension of the stay against
invoking of the bank guarantee at the instance of the appellant.
7. It is also to be noted that this order of learned District Judge,
passed on 4.3.2015 extending the bank guarantee, was on the
application moved by the respondents and the same was moved with
two prayers, i.e. requesting to extend the bank guarantee as well as
praying to extend the stay order simultaneously. Since the learned
District Judge could not make out to read the prayers in the
applications so meticulously, though not willingly or intentionally,
hence this situation arose and the stay order against the invocation of
bank guarantee could not be extended, all the same the bank
guarantee was extended.
8. Taking the above benefit of this omission/gap in the order of the
District Judge, the appellant approached the bank concerned and got
the remaining bank guarantee, lying there, encashed in its favour on
7.3.2015.
9. No sooner did the respondents realised the situation, an
application was moved on 9.3.2015 in the Court of District Judge, who
having heard the parties passed the following order:
“…………..It is true that it was agreed by the parties to the suit that
the bank guarantee be extended till the disposal of application, the
parties had no objection as to extension of stay order/interim order,
but the order could not be passed regarding the extension of the
stay/interim order bearing Paper No. 29Ga by mistake. Hence, in
the interest of justice, application aforesaid 29Ga is hereby allowed.
The stay order/interim order shall remain in force by 8.4.2015.”
10. Since the appellant had already encahsed the remaining 50 per
cent of the bank guarantee on 7.3.2015, hence pursuant to the
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aforestated order of District Judge passed on 9.3.2015, IInd Additional

District Judge, Roorkee vide his order dated 28.7.2016 (impugned
herein) has directed the appellant to deposit such bank guarantee
again in the bank.
11. Learned Senior Counsel for the appellant argued that as per
Section 19 of the Act, the provisions of Civil Procedure Code could not
have been made applicable by the Court below. I am unable to agree
with this contention for the reason that the stage of setting up an
arbitral tribunal had not arrived at between the parties. So, there was
no question of making out the provisions of Civil Procedure Code non-
applicable. Use of Section 9 can be invoked by the Court even before
the arbitration proceedings kick of, and that is why the orders were
being passed by the learned District Judge on 28.2.2015, 4.3.2015 and
9.3.2015.
12. Contention of the learned Senior Counsel is that deeming of
continuation of the stay order by the Court below even without any
express extension, is not sound in itself. Learned Court below has
deemed the continuation of stay order on the strength of the precedent
rendered by the Hon'ble Rajasthan High Court in Kanahiya Lal v.
Thakurji Shri Keshoraiji, 2004 (3) Civil Court Cases 294 (Rajasthan).
Learned Senior Counsel has relied upon the another precedent of
Allahabad High Court rendered in Iqbal Husain v. District Judge,
Moradabad, 2003 (94) RD 104, wherein it was held that if the interim
order passed was in the nature of “in the meantime”, then it would
expire on the date fixed by the Court; interim order till the next date of
listing or till a particular date of expiry on the date when it is listed,
cannot be deemed to be extended or treated to be operative from
earlier date; time bound stay order for a particular period cannot be
deemed to be extended unless another order is passed extending it
before expiry of the period.
13. On this controversy, it would be quite germane to refer the
judgment of this very Court passed on 9.8.2016 in Civil Revision No.
42/2016 & connected matters, wherein a number of precedents have
been discussed, like Ram Abhilakh Misra v. Cane Commissioner, ARC
1998 (1) 526; Ashiq Ali v. Mohammad Shakeel, 1985 LCD 363 and
Vishnu Dutt Sharma v. Regional Joint Director of Education, Agra, 2001
Supreme (ALL) 33, and it was held that time bound stay orders do not
cease to be effective by efflux of time. The result in law is that time
bound order has the same effect as an order till further orders of the
Court. In other words, it continues to operate till it is recalled, vacated
or modified or specifically mentioned by the Court “not extended.
14. So, I am unable to agree with the contention of learned Senior
Counsel for the appellant on this score, and more so when the learned
District Judge, realising its lapse, passed another order dated 9.3.2015
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continuing the stay order up to 8.4.2015.

15. Lastly, learned Senior Counsel has argued that the impugned
order dated 28.7.2016 could not have been passed by the Court of IInd
Additional District Judge because for the purposes of exercising the
powers under Section 9 of the Arbitration Act, “definition of the Court”
as envisaged under Section 2(1)(e) of the Act has to be looked. It
reads as under:
“Court” means the principal Civil Court of original jurisdiction in a
district, and includes the High Court in exercise of its ordinary
original civil jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same had been
the subject-matter of a suit, but does not include any civil court of a
grade inferior to such principal Civil Court, or any Court of Small
Causes.”
16. I feel that the phrase “grade inferior” would lead to infer the
meaning Judge/Court, which is below the Court of District
Judge/Additional District Judge; for example, the Civil Judge, may it be
the Senior Division or the Junior Division. But it is difficult to accept
that the Additional District Judge, who exercises the same powers
which are conferred to the Court of District Judge, is grade inferior and,
particularly in such an eventuality when the District Judge does not
remain available all the time and camps at Roorkee Outline Court only
for few days in a month.
17. In view of what has been set forth above, I feel that the action
of the appellant to encash the bank guarantee is highly arbitrary and in
disregard of law. I refuse to interfere with the impugned order. This
appeal has no force and it is dismissed at the very threshold.
18. It is ordered that the bank guarantee shall remain extended till
the matter is finally decided by the arbitrator. Such bank guarantee
shall remain invested as TDR in the bank.
———
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