Vishal Krishna v. M/S Tridents Arts

IN THE HIGH COURT OF JUDICATURE AT MADRAS

DATED: 04.02.2021 CORAM :

THE HON'BLE MR.SANJIB BANERJEE, CHIEF JUSTICE AND THE HON'BLE MR.JUSTICE SENTHILKUMAR RAMAMOORTHY O.S.A.Nos.304 and 305 of 2020 Vishal Krishna ...

Appellant/ Respondent Vs.

M/s.Trident Arts, rep. by its Sole Proprietor Mr.R.Ravichandran, having office at No.1C and 1D, Hari Mansion, J.P.Avenue Dr.Radhakrishnan Road, Mylapore, Chennai 4.

...

Respondent/ Appellant Prayer: Appeals filed against the Fair and Decretal order passed in A.No.2110 of 2012 and O.A.No.434 of 2020 dated 15.10.2020. Prayer in A.No.2110 of 2012:

Judges Summons under order XIV Rule 8 of the Rules R/W under section 9(2)(a)(e) of the Arbitration and Conciliation Act 1996 this Hon'ble Court may not be pleased to direct the Respondent to furnish security for a Sum of rs.8,29,57,468/-(Rs.Eight Crores Twenty Nine Lakhs Fifty Seven Thousand Four Hundred and Sixty Eight Only).

Prayer in O.A.No.434 of 2020:

Judges Summons under order XIV Rule 8 of the Rules R/W under section 9(2)(a)(d) of the Arbitration and Conciliation Act 1996 this Hon'ble Court may not be pleased to grant an order of interim injunction restraining the respondent by themselves or by partners or successors of business, servants,agents, representatives,assignees and all other persons from releasing the film "Chakra"in any OTT platforms including Amazon Prime,Netflix, zee 5,Sun NXT etc or through direct theatrical release or through any satellite TV,pending disposal of the Arbitration.

For Appellant ::

Mr.A.Chidambaram For respondents ::

Mr.Sathish Parasaran, Senior Counsel, for Mr.Vijayan Subramanian

JUDGMENT

(Delivered by the Hon'ble Chief Justice) These appeals arise out of an order by which security has been required to be furnished in respect of a claim proposed to be carried to an arbitral reference by the respondent herein. The appellant says that no grounds were made out for directing any security to be furnished.

2. Since the parties, at the request of the Court, have agreed to the form of the order as suggested by the Court, it is not necessary to dilate much into the issues or to confuse the matter even further. It may only be recorded that the parties have agreed to Mr.Justice K.Ravichandrabaabu (Retired) to take up the reference in terms of the arbitration agreement contained in the contract dated June 7, 2019.

3. It is also recorded that at the suggestion of the court, the parties have agreed to accept that the appellant herein will invest a sum of Rs.1,00,00,000/- (Rupees One Crore only) by way of a fixed deposit with any nationalized bank and make over the fixed deposit receipt therefor to the Registrar-General of this court within a fortnight from date. The Registrar-General will hold the fixed deposit receipt and, in effect, the fixed deposit together with interest accrued thereon, which will abide by the result of the arbitral proceedings.

4. There is one word that needs to be said in the context. Section 9 of the Arbitration and Conciliation Act, 1996, does provide for an order of security to be made by way of an interim measure. Though the Act of 1996 is a Code by itself since it is an amending and consolidating Act, the effective words used in the provision is "securing the amount in dispute in the arbitration". An amount may come to be disputed upon a demand being made and it not being met; or upon a demand being made and it being denied or in any like manner. The provision does not give unbridled authority to a Court exercising jurisdiction under Section 9 of the Act to willy-nilly order security to be furnished merely because an amount has been claimed and the claimant proposes to carry the claim to arbitration.

5. Two aspects have always to be kept in mind before any order for furnishing security can be made: the unimpeachable character of the claim; and, the genuine apprehension, and

resultant finding, that the defendant or respondent may not be in a position to pay the amount by the time the likely award ripens for implementation. Indeed, an order without taking into consideration both aspects of the matter and expressing an opinion thereon may not pass muster in law as one made under Section 9(1)(ii)(b) of the said Act.

6. Even though, strictly speaking, the Code of Civil Procedure, 1908 may not govern every aspect of arbitration, but such code is the general law pertaining to all matters civil and the underlying principles recognized therein continue to remain as guiding factors. Though provisions in the Arbitration Act indicate that the Code of Civil Procedure and the Evidence Act, 1872 would not be binding, but such provisions do not indicate that such principal statutes should be disregarded altogether.

7. Since, in fine, the resolution at this stage has been arrived at by consensus, nothing further need be said. It is only put on record that an order in the nature of attachment before judgment, which a direction for furnishing security amounts to, must meet very exacting tests and such a high order has to be regarded as an exception rather than the rule. O.S.A.Nos.304 and 305 of 2020 are disposed of by recording the consensus between the parties as above. This limited agreement for the purpose of the present appeals will be completely without prejudice to the rights and contentions of the parties in course of the arbitral reference. As a consequence, the judgment and order impugned are set aside. C.M.P.No.14577 of 2020 is also closed. There will be no order as to costs.

Sd/- Assistant Registrar(insp cell) //True Copy// Sub Assistant Registrar tar To, The Sub Assistant Registrar, Original Side, High Court,Madras.

+1cc to Mr.A.Chidambaram , Advocate SR.No. 6418 O.S.A.Nos.304 and 305 of 2020 A.SK(18.02.2021).