Bombay High CourtShah Fabricators Pvt. Ltd vs Excel Metal Processors Pvt. Ltd. And 2 ... on 31 August, 2018Author:R.D. DhanukaBench:R.D. Dhanukaarbp619-17g.doc

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              IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                 ORDINARY ORIGINAL CIVIL JURISDICTION


                     ARBITRATION PETITION NO.619 OF 2017


      Prabhat Steel Traders Pvt. Ltd.           )
      a company incorporated under the          )Indian Companies Act, 1956having its     )
      registered office at Office No.535,       )
      Vyapar Bhavan, 49, P'Dmello Road,         )
      Carnac Bunder Masjid,                     )
      Mumbai - 400 009.                         )         ...Petitioner

                  ....Versus....

      1. Excel Metal Processors Pvt. Ltd.       )
         132/B, Mittal Towers,                  )
         210 Nariman Point,                     )
         Mumbai - 400 021.                      )
                                                )
      2. Shakti International Private Limited   )
         36, Arihant Industrial Estate,         )
         Sakinaka, Andheri (E),                 )
         Yadav Nagar, Chandivali Powai,         )
         Mumbai - 400 072.                      )
                                                )
      3. Arisha Metal Precisions Pvt. Ltd.      )
         48-B, Mittal Towers,                   )
         Nariman Point, Mumbai- 400 021.        )         ...Respondents

                                  WITH
                    ARBITRATION PETITION NO. 633 OF 2017

      Kothari Steel Syndicate                   )
      A proprietary concern,                    )
      having its registered office at 202,      )
      Gupta Bhavan, Carnac Bunder,              )
      Masjjid (East), Mumbai 400 009.           )         ....Petitioner

                  ....Versus....


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1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 642 OF 2017

Shah Fabricators Pvt. Ltd.                )Indian Partnership Act,                   )
having office at 104, Sheraton Classic,   )
A-Wing, 127, Dr.Charat Singh Colony,      )
Road, Chakala, Andheri (E),               )
Mumbai - 400 093.                         )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 621 OF 2017

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Rajendrakumar & Co.                       )
Partnership Firm incorporated under the   )Indian Partnership Act,                   )
having office at 203, Lodha Bhavan PD,    )
P'Dmello Road, Carnac Bunder Masjid,      )
Mumbai - 400 009.                         )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 622 OF 2017

Narmada Iron Associates Pvt. Ltd.         )
a company incorporated under the          )Indian Companies Act, 1956having its     )
registered office at A-802,               )
Nirman Complex, N.R. Stadium Circle,      )
Navrangpura, Ahmedabad - 380 009.         )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )

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   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 623 OF 2017

M.J. Steel                                )
a proprietary concern having office at    )
501, Arihand Building,                    )
Ahmedabad Street, Carnac Bunder,          )
Masjid Bunder (E), Mumbai - 400 009.      )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 668 OF 2017

Neel Trading Co.                          )
a proprietary concern having its          )
registered office at 30, Baroda Street,   )
Off. No.12, Above Vora Streel Traders,    )
Carnac Bunder, Mumbai - 400 009.          )         ....Petitioner

            ....Versus....

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1. Excel Metal Processors Pvt. Ltd.        )
   132/B, Mittal Towers,                   )
   210 Nariman Point,                      )
   Mumbai - 400 021.                       )
                                           )
2. Shakti International Private Limited    )
   36, Arihant Industrial Estate,          )
   Sakinaka, Andheri (E),                  )
   Yadav Nagar, Chandivali Powai,          )
   Mumbai - 400 072.                       )
                                           )
3. Arisha Metal Precisions Pvt. Ltd.       )
   48-B, Mittal Towers,                    )
   Nariman Point, Mumbai- 400 021.         )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 667 OF 2017

True Value Engineering Pvt. Ltd.         )
a company incorporated under the         )Indian Companies Act, 1956having office )
at 203, Loha Bhavan PD, P'Dmello Road, )
Carnac Bunder Masjid,                    )
Mumbai - 400 009.                        )           ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.        )
   132/B, Mittal Towers,                   )
   210 Nariman Point,                      )
   Mumbai - 400 021.                       )
                                           )
2. Shakti International Private Limited    )
   36, Arihant Industrial Estate,          )
   Sakinaka, Andheri (E),                  )
   Yadav Nagar, Chandivali Powai,          )
   Mumbai - 400 072.                       )
                                           )
3. Arisha Metal Precisions Pvt. Ltd.       )
   48-B, Mittal Towers,                    )
   Nariman Point, Mumbai- 400 021.         )         ...Respondents

                                    WITH

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              ARBITRATION PETITION NO. 643 OF 2017

Khushi Alloys Pvt. Ltd.                    )
a company incorporated under the           )Indian Companies Act, 1956having office   )
at 108, Ashirwad Building,                 )
Ahmedabad Street, Carnac Bunder,           )
Masjid Bunder, Mumbai - 400 009.           )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.        )
   132/B, Mittal Towers,                   )
   210 Nariman Point,                      )
   Mumbai - 400 021.                       )
                                           )
2. Shakti International Private Limited    )
   36, Arihant Industrial Estate,          )
   Sakinaka, Andheri (E),                  )
   Yadav Nagar, Chandivali Powai,          )
   Mumbai - 400 072.                       )
                                           )
3. Arisha Metal Precisions Pvt. Ltd.       )
48-B, Mittal Towers,                       )
Nariman Point, Mumbai- 400 021.            )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 646 OF 2017

Viraj Impex Pvt. Ltd.                      )
a company incorporated under the           )Indian Companies Act, 1956having office   )
at 47, P'Dmello Road,                      )
Carnac Bunder Masjid,                      )
Mumbai - 400 009.                          )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.        )
   132/B, Mittal Towers,                   )
   210 Nariman Point,                      )
   Mumbai - 400 021.                       )
                                           )
2. Shakti International Private Limited    )

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   36, Arihant Industrial Estate,           )
   Sakinaka, Andheri (E),                   )
   Yadav Nagar, Chandivali Powai,           )
   Mumbai - 400 072.                        )
                                            )
3. Arisha Metal Precisions Pvt. Ltd.        )
   48-B, Mittal Towers,                     )
   Nariman Point, Mumbai- 400 021.          )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 574 OF 2017

Vsc Steelers Pvt. Ltd.                      )
a company incorporated under the            )Indian Companies Act, 1956having its       )
registered office at 14/8 Lakdi             )
Bunder Road, Darukhana, Reay Road,          )
Mumbai - 400 010.                           )         ....Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.         )
   132/B, Mittal Towers,                    )
   210 Nariman Point,                       )
   Mumbai - 400 021.                        )
                                            )
2. Shakti International Private Limited     )
   36, Arihant Industrial Estate,           )
   Sakinaka, Andheri (E),                   )
   Yadav Nagar, Chandivali Powai,           )
   Mumbai - 400 072.                        )
                                            )
3. Arisha Metal Precisions Pvt. Ltd.        )
   48-B, Mittal Towers,                     )
   Nariman Point, Mumbai- 400 021.          )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 634 OF 2017

Dmson's Metal Pvt Ltd                       )
a company incorporated under the            )Indian Companies Act, 1956having its       )
registered office at 502, Peninsula Heights )
Near BMW Showroom, Juhu Lane,               )

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Andheri (W), Mumbai - 400 058.            )         ....Petitioner

            ....Versus...

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

                            WITH
              ARBITRATION PETITION NO. 620 OF 2017

Vinayaga Marine Petro Ltd.                )
a private limited company having office   )
at Viraj Impex House,                     )
5th Floor, 47 P D'Mello Road,             )
Masjid (East), Mumbai - 400 009.          )         ...Petitioner

            ....Versus....

1. Excel Metal Processors Pvt. Ltd.       )
   132/B, Mittal Towers,                  )
   210 Nariman Point,                     )
   Mumbai - 400 021.                      )
                                          )
2. Shakti International Private Limited   )
   36, Arihant Industrial Estate,         )
   Sakinaka, Andheri (E),                 )
   Yadav Nagar, Chandivali Powai,         )
   Mumbai - 400 072.                      )
                                          )
3. Arisha Metal Precisions Pvt. Ltd.      )
   48-B, Mittal Towers,                   )
   Nariman Point, Mumbai- 400 021.        )         ...Respondents

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Dr.Birendra Saraf with Mr.Rohan Savant, Ms.Nafisa Khandeparkar,
Monisha Mane, Ms.Raksha Thakkar and Mr.Shivam Nimbalkar i/b
ALMT Legal for the Petitioner in the Arbitration Petitions.

Mr.Gautam Ankhad with Mr.Rohan Cama, Mr.Omkar Chandurkar,
Mr.Abhishek Adke, Mr.Nitin Jain and Mr.Lalit Munshi i/b Abhishek
Adke for the Respondent No. 2 in the Arbitration Petitions.

Mr.Javed Hussein, Mr.Mubashir Hussein, Ms.Munibah Iram, Ms.Saba
Shaikh, Ms.Reshma Khatri, Ms.Firdous Khan and Mr.Sagar Tambe i/b
Mr.S.M. Kazi for the Respondent Nos.1 and 3.

                        CORAM         : R.D. DHANUKA, J.
                        RESERVED ON   : 17TH APRIL, 2018
                        PRONOUNCED ON : 31ST AUGUST, 2018
JUDGMENT :-1.           By consent of parties, the matters are heard finally at the

admission stage.2.           Mr.Gautam Ankhad, learned counsel appearing for the

respondent no.2 in the arbitration petition raises a preliminary

objection about the maintainability of these arbitration petitions on the

ground that none of these petitioners were parties to any arbitration

agreement between the respondent no.1 and the respondent no.2 and

thus cannot invokesection 37of the Arbitration & Conciliation Act,

1996. This Court however directed all the parties to address this Court

on the issue of maintainability of the arbitration petitions raised by the

respondent no.2 and also on the merits of these arbitration petitions.

Both the parties have accordingly addressed this Court. Though this

Court had heard the Notice of Motion No.628 of 2017 in Commercial9::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

Suit No.669 of 2017 filed by Karamtara Engineering Private Limited

against Excel Metal Processors Private Limited & others, for sake of

convenience, a separate order is passed in the said notice of motion

and more          particularly in view of there being no issue of

maintainability of suit raised by the defendants therein.3.           By these 13 arbitration petitions filed undersection 37of

the Arbitration & Conciliation Act, 1996 (for short the "Arbitration Act"),

the petitioners have prayed for leave to appeal against the order

passed by the learned sole arbitrator dated 27th December, 2016 and

also prayed for setting aside the said impugned order dated 17 th

November, 2017 granting interim measures against the respondent

no.1 and in favour of the respondent no.2 which is causing prejudice

to the interest of the petitioners.4.           This Court shall first summarize the facts in one of the

arbitration petition which was argued as lead matter and in view of the

statement made by the learned counsel for the parties that the facts in

other petitions are identical, judgment in the lead matter will apply to

the other petitions. The petitioner company is dealing in various steel

items including steel coils. The respondent nos.1 and 3 are

undisputedly sister concerns / group companies. The respondent no.1

is the parent company of the respondent no.3 and have common

directors. The respondent no.2 is the original claimant in the arbitral10::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

proceedings before the sole learned arbitrator Shri Justice Dr.S.

Radhakrishnan (Retd.).5.          It is the case of the petitioner that the petitioner had

purchased 46 HR steel coils from (i) Win Faith Trading Limited and (ii)

M/s.Hyundai Corporation. The petitioner had imported these coils

from the said vendors and possessed the documents of title including

the bills of entries / Mill Test Certificates / Inspection Certificate

issued by the Vendors / Manufacturers. The said certificate bears the

unique coil number on the basis of which each HR coils can be

identified. These coil numbers are also embossed on the respective

coils which makes the identification of the coils certain. The

documents in possession of the petitioner contains various other

details like thickness, grading, length, width, chemical composition

and weight of coils.6.          Insofar as the respondent no.3 is concerned, the said party

undertakes the work of slitting / cutting HR steel coils from various

concerns at the warehouse at Plot No.1-3, MIDC, Taloja, Raigad

District. It is the case of the petitioner that the respondent no.3

represented that the said warehouse was owned by the respondent

no.1. The respondent no.1 and its directors being Mr.Mohammed

Iqbal Khan and Mr.Imran Khan provided a written declaration dated

11th December, 2014 whereby the respondent no.1 declared that they11::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

are the owners of the said warehouse and that the respondent no.1

had allowed the respondent no.3 to conduct its business in the said

warehouse on a no rental basis.7.           On or about 8th December, 2016, the petitioner entered into

a    Conducting Agreement            with the respondent no.3 whereby the

petitioner gave the said coils to the respondent no.3 for storing,

handling and recoiling on job work basis. In some of the petitions, the

arrangement for conducting was oral but in all of the said petitions,

acknowledgements have been issued by the respondent no.3

acknowledging the delivery and receipt of the respective coils from

the petitioner.8.           Between 15th December, 2016 and 5th January, 2017, the

petitioners delivered coils owned by them to the respondent no.3 for

storing, processing and recoiling the same. The respondent no.3

acknowledged the receipt of those coils vide a stock list / letter dated

9th January, 2017. The said stock list / letter issued by the respondent

no.3 records the serial number of the coils, weight, date, CTL number

etc. All these details were written on the said coils by the respondent

no.3 by white paint. The coils at the said warehouse even presently

bear the white paint markings of the respondent no.3.9.           It is the case of the petitioner that on 15th January, 2017,

the petitioner visited the said warehouse to take delivery of the said12::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

coils from the respondent no.3. The petitioner however, noticed that

some of the coils including the said coils of the petitioner were

marked as "SIPL" in yellow paint. At that point of time, the offices of

the respondent no.1 and the respondent no.3 informed the petitioner

about some arbitration proceedings pending between the respondent

no.1 and the respondent no.2 and that the coils of the petitioner were

identified amongst 5092.860 MT HR coils which were purportedly

claimed by the respondent no.2 and have been attached / injuncted

pursuant to an order dated 27th December, 2016 passed by the

learned arbitrator. The petitioner was provided with a copy of the

impugned order dated 27th December, 2016 passed by the learned

arbitrator by the respondent no.310.             It is the case of the petitioner that the petitioner once again

visited the warehouse on 16th January, 2017 and requested the

officers of the respondent no.1 and the respondent no.3 to return the

said coils. It is the case of the petitioner that the officers of the

respondent no.1 and the respondent no.3 assured the petitioner to

return the said coils, however, failed and neglected to return the said

coils.11.             The petitioner thereafter came to know that the respondent

no.2 had invoked the arbitration proceedings against the respondent

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to appear at the hearing of the application undersection 17of the

Arbitration Act filed by the respondent no.2 against the respondent

no.1 before the learned arbitrator. The respondent no.1 however,

failed to appear before the learned arbitrator. By an order dated 27 th

December, 2016, the learned arbitrator appointed the Court Receiver,

High Court, Bombay in respect of the said 5092.860 MT HR coils and

also granted injunction against the respondent no.1 from dealing with

the entire coils at the said warehouse. The Court Receiver thereafter

filed a report bearing C.R.R. No.476 of 2016 before this Court on 28 th

December, 2016, seeking directions from this Court as to whether the

Court Receiver could act pursuant to the order of the learned

arbitrator. In the said report, the respondent no.1 and the respondent

no.2 were parties.12.          The said report appeared before this Court on 29th

December, 2016. The director of the respondent no.1 was present in

the Chamber of Mr.Justice S.J. Kathawalla, where the said report was

heard, made a statement that the respondent no.1 had no objection if

the inventory of the goods lying in Taloja godown were taken on the

same day at 1:00 p.m. by the representative of the respondent no.2

as well as the representative of the respondent no.1. He further made

a statement that the respondent no.1 shall not deal with, sell, alienate,

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rights in respect of any of those goods till next date of hearing. This

Court accepted the statements made by the respondent no.1 and

adjourned the hearing of the said report to 2 nd January, 2017 at 10.00

a.m. in the Chamber.13.          On 2nd January, 2017 the inventory report was submitted on

the basis of the joint inventory carried out by the representatives of

the respondent no.1 and the respondent no.2 on 29 th December, 2016.

The representative of the Court Receiver was not present at the time

of preparing the said joint inventory by the respondent nos.1 and 2. It

was recorded that there were 815 HR coils in the said warehouse, out

of 217 HR coils of 5092.860 MT were sought to be earmarked and

kept separately as coils claimed by the respondent no.2. The

petitioner was also not a party to the said joint inventory conducted by

the respondent nos.1 and 2. The petitioner has disputed the

correctness of the said alleged joint inventory.14.          On 2nd January, 2017, this Court framed an issue as to

whether undersection 17of the Arbitration Act, Court Receiver, High

Court, Bombay can be appointed as the Receiver or whether private

receivers needs to be appointed in the arbitral proceedings before the

learned arbitrator.15.          On 2nd January, 2017, this Court passed an order by

consent of the respondent nos.1 and 2 without prejudice to the rights15::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

and contentions of those parties. This Court took the said inventory

report dated 29th December, 2016 on file and marked "X". The parties

to the said report agreed that without prejudice to their rights and

contentions, including to seek the same reliefs as also all other reliefs

undersection 17of the Arbitration Act, ad-interim order passed by the

learned arbitrator on 27th December, 2016 be modified by that order

which shall remain in force until final hearing of the application filed by

the respondent no.2 herein undersection 17of the Arbitration Act and

for two weeks thereafter. The respondent no.1 herein agreed to

submit a stock statement of weights/thickness of each of the 217 coils

within a period of one week. It was further agreed that if there was a

shortfall in the weight qua 5092.86 MTs, the respondent no.1 and its

directors undertake to forthwith supplement the same.16.          It was directed in the said order that the said 217 coils

identified HR coils shall be marked by the claimant be painted or

inked and be kept in the existing Taloja godown of the respondent

no.1 in a separate identifiable zone. The respondent no.1 through its

directors also gave their personal undertakings to the Court not to

sell, transfer, alienate, move, part with possession of or create any

third party rights in the said goods 217 HR coils which were as on that

date unencumbered. The respondent no.1 and its directors gave an

undertaking jointly and severally that they shall permit the respondent16::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

no.2 to deploy their / a third party security staff inside the godown, for

the subject goods and will permit the claimant's staff to inspect the

subject goods, twice a day.17.          The respondent no.1 also agreed not to file an appeal

against the order dated 27th December, 2016 passed by the learned

arbitrator. The respondent no.2 herein agreed to give daily inspection

report which was to be countersigned by the respondent no.1 forthwith

with regard to the status of the subject goods. It was further provided

in the said order that all the rights, contentions and issues on merits of

the sustainability / grant of interim reliefs in thesection 17of the

Arbitration Act including the prayers of respondent no.2 for grant of

reliefs granted in the order dated 27 th December, 2016 are expressly

kept open. The respondent no.1 waived its objection to the

appointment / jurisdiction of the learned arbitrator. The undertakings

given by the respondent no.1 were accepted by this Court.18.          It is the case of the petitioner that on the basis of the said

order dated 2nd January, 2017 passed by this Court, the same form of

the markings by way of yellow paint and "X" marked by white chalk

was carried out by the representatives of the respondent nos.1 and 2.

The said markings of coils have been recorded by the arbitrator in its

order dated 13th January, 2017. It was observed in the said order that

there was over lapping of coils with the chalk marks as well as yellow17::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

paint by SIPL. It is the case of the petitioner that the marking done

earlier are completely arbitrary and not on the basis of the documents

of title. Those markings were done in haphazard manner and without

any reasonable basis.19.          On 24th January, 2017, the petitioner through its advocate's

letter to the learned arbitrator recorded that the petitioner was the

owner of the said coils which were the subject matter of the order

dated 27th December, 2016 passed by the learned arbitrator. The

petitioner provided the details of the transaction between the

petitioner and the respondent nos.1 and 3 and also about the

documents of title and other related documents evidencing the

transaction. The petitioner requested the learned arbitrator to issue

appropriate directions to lift the attachment in respect of the said

coils, to permit the petitioner to take possession and/or remove the

said coils from the said warehouse and to give a personal hearing to

the petitioner before any order was passed with respect to the said

coils. Some of the petitioners addressed similar letter on 30th January,

2017 to the learned sole arbitrator.20.          The respondent no.1 filed an affidavit to the said

application filed undersection 17of the Arbitration Act by the

respondent no.2 (claimant). The respondent no.1 contended that the

transaction between the respondent nos.1 and 2 was in essence a18::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:12 :::arbp619-17g.doc

money lending transaction and the purported transaction of sale

between them was sham and bogus. On 25th January, 2017, the

respondent no.2 filed an affidavit in reply before the learned arbitrator

in the said application filed undersection 17of the Arbitration Act

alleging that almost all HR coils which were identified on 29 th

December, 2016, had been replaced by the respondent no.1. It was

alleged in the said rejoinder that the original marked goods were

removed / moved / substituted by the respondent no.1 themselves

with other HR coils in an obvious attempt to defeat the rights of the

respondent no.2 as the owner thereof. It was alleged that as per the

stock statement of the HR coils lying in the said warehouse as on 29 th

December, 2016, there were 815 HR coils overall. The respondent

no.1 company however has gradually over a period of time

systematically removed / replaced HR coils including HR coils of the

respondent no.1 in order to defeat their claim. The respondent no.2's

stand now is that there were only totally of 274 HR coils remaining in

the godown as on 24th January, 2017.21.          On 31st January, 2017, the learned arbitrator directed the

respondent no.2 to furnish the documents and to file affidavit to show

its right and entitlement in respect of 5092 MT coils as claimed by it.

The respondent no.2 filed affidavit dated 4th February, 2017 along with

compilation of documents to prove their alleged right, title and interest19::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

to the said 5092.86 MT of coils. It is the case of the petitioner that the

said documents produced by the respondent no.2 did not prove any

right, title or interest by the respondent no.2 in those coils. According

to the petitioner, the documents produced by the respondent no.2

reflected that the purported contract between the respondent no.1 and

the respondent no.2 was between November, 2015 to April, 2016 and

the invoices produced by the respondent no.2 were also of the period

November, 2015 to April, 2016. It is the case of the petitioner that

since most of the said coils of the petitioner were manufactured on or

after August, 2016 and were delivered to the respondent no.3

between 15th December, 2016 to 5th December, 2017, and thus could

never form part of the alleged transaction between the respondent

no.1 and the respondent no.2.22.          Since the petitioner did not receive any response to the

letter dated 24th January, 2017 from the learned arbitrator, the

petitioner addressed a letter dated 8th February, 2017 to the

respondent nos.1 and 3 calling them to inform the learned arbitrator

that the said coils at the said warehouse exclusively belonged to the

petitioner. It is the case of the petitioner that the respondent nos.1 and

3 assured the petitioner that the said coils shall be returned to the

petitioner at the earliest.23.          On 12th February, 2017, the respondent no.1 filed an20::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

additional affidavit before the learned arbitrator and admitted that the

said coils belonged to the petitioner. The respondent no.1 also

recorded that the coils lying at the said warehouse belonged to the

petitioners and the plaintiff in Arbitration Petition No.619 of 2017 and

Commercial Suit No.669 of 2017 respectively.24.            On 7th February, 2017, the respondent no.2 filed a

Contempt Petition (Lodging) No.9 of 2017 in the Court Receiver's

Report No.476 of 2016 against the respondent no.1 alleging that the

respondent no.1 had breached the order dated 2nd January, 2017

passed by this Court. In the said contempt petition, the respondent

no.2 admitted that the coils lying at the said godown as on the date

did not belong to the respondent no.2 and alleged that the respondent

no.1 had shifted /           removed the coils which were marked by the

parties pursuant to the joint inspection dated 29 th December, 2016. In

the said contempt petition, the respondent no.2 has also submitted

that third parties are now asserting their rights as the owners on some

of the HR coils which are lying in the godown of the respondent no.1

where names were disclosed in the said contempt petition i.e. out of

13 petitioners and also disclosed the name in the notice of motion

claiming rights in 237 coils. It was contended by the respondent no.2

in the said contempt petition that the respondent no.1 had misled this

Court        by giving a false undertaking that HR coils were21::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

unencumbered.25.          On 9th February, 2017 and 13th February, 2017, this Court

passed an order in the Contempt Petition (Lodging) No.9 of 2017

directing the Court Receiver's representative to visit the said godown

forthwith and to make a report.26.          The petitioner thereafter filed a Notice of Motion (Lodging)

No.491 of 2017 in the Contempt Petition (Lodging) No.9 of 2017 in the

Court Receiver's Report No.476 of 2016 for intervening in the Court

Receiver's Report and the Contempt Petition. The other petitioners in

the commercial arbitration petition and the plaintiff in the commercial

suit also filed the notice of motion in the Contempt Petition (Lodging)

No.9 of 2017 for seeking similar reliefs. In the said notice of motion,

the respondent no.2 filed affidavit in reply contending that they had

documents to prove the title of the said coils and that the said

documents were produced before the learned arbitrator. The

respondent no.2 filed affidavit dated 23rd March, 2017 in the Contempt

Petition (Lodging) No.9 of 2017 and once again contended that the

coils were marked pursuant to the joint inventory on 27 th January,

2017 had been removed.27.          The respondent no.2 sought to set out purported

transaction between the respondent no.1 and the respondent no.2 in

the said affidavit. It is the case of the petitioner that the story22::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

concocted by the respondent no.2 in the said affidavit was totally false

and frivolous. It is the case of the petitioner that in the hearing of the

notice of motion held on 3rd March, 2017, this Court orally directed the

Court Receiver to go to the said warehouse for the purpose of

identifying / verifying the HR coils claimed by the petitioner and / or

third parties in their respective notice of motions.28.          On 3rd March, 2017, the representative of the Court

Receiver along with the representatives of the petitioner, the

respondent no.1, respondent no.2, the petitioners in the connected

arbitration petitions and Karamtara Engineering Private Limited

visited the said godown for the purpose of identification of coils. The

parties produced the respective title documents for the purpose of

verifying the title to the coils at the warehouse. The Court Receiver

after verifying the title documents and the coils lying at the godown

came to a conclusion that the ownership of 237 out of 255 coils were

owned by and belonged to the petitioners in those 13 petitions and

Karamtara Engineering Private Limited in the connected suit. The

Court Receiver submitted the report dated 6th March, 2017 identifying

255 HR coils. The details of coils identified and verified by the Court

Receiver in respect of which all these 14 parties were mentioned in

the said report. One of the parties i.e. D.M. Sons Metal Private

Limited did not claim one coil. Two parties did not come forward i.e.23::: Uploaded on - 31/08/2018                     ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

Raviraj Iron Steel and Darukhana Steel Pvt. Ltd. for identification /

verification of seven and three coils respectively.29.          On 21st April, 2017, the petitioner in each of the aforesaid

petitions and Karamtara Engineering Private Limited the applicant in

the notice of motion were permitted to withdraw their respective notice

of motions in the Court Receiver's Report No.476 of 2016 and were

granted liberty to take out appropriate proceedings. The orders

passed by this Court in the Court Receiver's Report were continued

upto 2nd May, 2017.         By the orders dated 27th April, 2017 and 4th May,

2017, this Court clarified the order dated 21st April, 2017 and it was

provided that the order dated 2nd January, 2017 passed in the Court

Receiver's Report No.476 of 2016 would remain unaffected.30.          In the meanwhile by an order dated 17th November, 2017,

the learned arbitrator observed that the arrangement reflected by the

order passed by this Court on 2 nd January, 2017 in the Court

Receiver's Report will continue as an interim arrangement till final

disposal of the proceedings. The director of the respondent no.1 gave

the same undertaking as was given before this Court on 2 nd January,

2017 before the learned arbitrator.31.          The petitioner applied for clarification of the order dated 2nd

January, 2017 in the Court Receiver's Report No.476 of 2016 before

Mr.Justice S.J. Kathawalla. By an order dated 7 th December, 2017,24::: Uploaded on - 31/08/2018                      ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

this Court clarified that the petitioner would not be precluded from

challenging the impugned order dated 17th November, 2017 passed

by the learned arbitrator undersection 17of the Arbitration Act by

filing an appeal undersection 37of the Arbitration Act, in view of the

earlier orders passed by the Court in the Court Receiver's Report

No.476 of 2016. In the meanwhile, the petitioner vide its letter dated

28th April, 2017 addressed to the learned arbitrator reiterated its case

of ownership of the said coils and pointed out that the report dated 6 th

March, 2017 had been filed by the Court Receiver, High Court,

Bombay in this Court wherein the coils lying at the warehouse were

identified to be those of the petitioner in these 13 petitions and the

applicant in the notice of motion. The respondent no.2 however, vide

letter dated 3rd May, 2017 objected to the request of the petitioner for

intervention. Since there was no response from the learned arbitrator

to the applications made by the petitioner, the petitioner filed these 13

petitions undersection 37of the Arbitration Act for seeking leave of

this Court and also thereby impugning the impugned order passed by

the learned arbitrator undersection 17of the Arbitration Act.32.          Dr.Saraf, learned counsel appearing for the petitioner first

dealt with the preliminary objection raised by the respondent no.2 of

maintainability of these petitions filed undersection 37of the

Arbitration Act. Learned counsel made the following submissions :-25::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doca).          Reliance is placed onsection 2(1)(h)which defines "party",sections 3,4,7,8,9,11,17and34. The word "party" has to be read

in the context of its use in each of these provisions. After amendment

of theArbitration Actin the year 2015, extremely wide ranging powers

have been conferred on the arbitrator and exercising all such powers

by the arbitrator would seriously prejudice the rights of the third

parties who are not the parties to the arbitration agreement or

arbitration proceedings. Learned counsel led emphasis onsection

17(1)(a)which contemplates custody or sale of the goods which are

subject matter of the arbitration agreement and would submit that

there can be situations where the goods are in the possession of a

third party who claims rights in respect thereof.b).          Learned counsel led emphasis onsection 17(1)(b)which

provides for securing the amount in dispute in arbitration, may result

in order in the nature of attachment before judgment and may result in

attachment of properties which belong to third parties.Section 17(1)(c) contemplates detention, preservation or inspection of property

which is the subject matter of arbitration and authorizes any person to

enter upon any land or building in the possession of any party,

authorizing samples to be taken, experiments to be done etc. These

powers if exercised by an arbitrator on an application of a party to the

arbitration proceedings may result in affecting the rights of the third26::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

party seriously. A property belonging to the third party can also be

made subject to the arbitration petition. The parties to the arbitration

proceedings may obtain a drastic order in respect of the properties of

a third party collusively.c).           Reliance is placed onsection 17(1)(b)which grants power

of appointment of the Court Receiver. It is submitted that there could

be situation where pursuant to certain disputes between the parties to

the arbitration agreement, the Receiver is appointed in respect of the

properties belonging to the third parties, or which are in possession of

third parties which order would seriously prejudice the rights of such

third parties. Reliance is placed onsection 17(1)(e)of the Arbitration

Act and it submitted that the said provision empowers the arbitrator to

grant such interim measures as the arbitrator may deem fit and

convenient subject to any orders being passed by the learned

arbitrator being appeable undersection 37of the Arbitration Act. The

order passed by the arbitrator undersection 17is deemed to be an

order of the Court and is enforceable under the provisionsof the Code

of Civil Procedure, 1908 in the same manner as if it were an order by

a Court. Now the powers of the arbitrator undersection 17are made

at par with the powers of the Court undersection 9of the Arbitration

Act.d).           If any order is passed by the Court exercising powers27::: Uploaded on - 31/08/2018                ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

undersection 9of the Arbitration Act affecting third party, such third

party can always approach the Court for vacating or modification of

such order passed by the Court. An illustration is given by the learned

counsel that if the Court Receiver is appointed in respect of the

property which is owned or in possession of a third party, such third

party can approach the Court and can seek appropriate relief of

vacating of the said order. Any proceedings filed undersection 9of

the Arbitration Act by the party to the arbitration agreement, a third

party which is likely to be affected by any orders, if passed or if any

relief is sought against such third party are at times made party to

such proceedings undersection 9of the Arbitration Act.e).          This third party can file an appeal undersection 37of the

Arbitration Act in the Court defined undersection 2(1)(e)of the

Arbitration Act. Such third party, who is affected by an order passed

by the arbitrator cannot be allowed to make an application before the

learned arbitrator to modify and/or vacate such an order passed undersection 17of the Arbitration Act since such a third party is not a party

to the arbitration agreement.f).          The petitioner in this case had brought these facts to the

notice of the learned arbitrator and had applied for modification /

vacating the order passed by the learned arbitrator undersection 17of the Arbitration Act. The said application was opposed by the28::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

respondent no.2. Learned arbitrator did not give any response to the

application / letter addressed by the petitioner.g).          Though while various other provisions includingsections 8,9,17and34of the Arbitration Act expressly contemplated an

application being made by a party, no such condition is placed undersection 37of the Arbitration Act which is open ended and merely

states that "An appeal shall lie from the following orders ......."The

Arbitration Actthus surely entitled a third party who is aggrieved by an

order passed         by the learned arbitrator undersection 17of the

Arbitration Act to invoke the remedy undersection 37of the Arbitration

Act for seeking modification / vacating the order of interim measures

passed by the learned arbitrator undersection 17of the Arbitration

Act. A party cannot be without any remedy.h).          It is a fundamental rule of law that any order in any

adjudication between two parties which affects the rights of a third

party cannot be done without offering a hearing to the third party.Merely because in the arbitration, third party cannot intervene, it

cannot lead such party to remedy less. No restriction is thus imposed

undersection 37of the Arbitration Act for a third party who is affected

by the impugned order passed undersection 17of the Arbitration Act

to file an appeal undersection 37of the Arbitration Act.i).          If such third party who is affected by an order of interim29::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

measures granted by the learned arbitrator is not allowed to challenge

such an order by way of an appeal undersection 37of the Arbitration

Act, the arbitration proceedings can be used as instrumentally to

abuse and can cause grave prejudice to such third parties and would

lead to great injustice to such third party. A third party has a right to

file an appeal with the leave of the Court if his rights are prejudiced by

any order passed in the proceedings in which such third party was not

a party. Such rights of the third party to apply for leave to file an

appeal from the paragraph are recognized under the provisionsof the

Code of Civil Procedure, 1908. In support of this submission, reliance

is placed on the following judgment :(i).            The judgment of the Supreme Court in case ofHarvinder

Singh vs. Paramjit Singh & Ors.(2013) 9 SCC 261 (paragraphs 17,

18 and 22).(ii).            The judgment of the Supreme Court in case of Smt.Jatan

Kumar Gollcha vs. M/s.Golcha Properties Limited, (1970) 3 SCC

573 (paragraphs 3 and 4),(iii).          This Court in case ofProvince of Bombay vs. Western

India Automobile Association, 1948 (LI) BLR 58,(iv).           The Division Bench of the Delhi High Court in case of

Bhisham Sawhney & Anr. vs. Union of India & Ors., 1994 (30)

DRJ 318 (paragraphs 4, 10 and 11) and30::: Uploaded on - 31/08/2018               ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc(v).           This Court in case of Narayan Manik Patil & Ors.

Jayawant Patil, (2009) 2 BCR 247 (paragraphs 18, 20, 21, 26 to 28,

30, 35 and 37).j).            A right to grant leave to file an appeal can be exercised by

this Court under the provisionsof the Code of Civil Procedure, 1908

and such a right is absolute right. Such leave can be granted by this

Court ex-parte and notice can be given to other parties only if the

Court is of the view that other parties would be prejudiced. If a third

party is prejudiced, leave has to be granted by the Court hearing an

appeal.k).            Learned counsel for the petitioner also made the following

submissions on right of a third party to intervene and/or file appeals.

Learned counsel placed reliance on the following judgments :(i).           In the matter of Mohammad Ishaq Bhat vs. Tariq Ahmad

Sofi & Anr. (2010) 3 Arb.LR 107 (paragraph 9, internal page 3) in

support of the submission that the stranger to the arbitration

agreement was allowed to intervene in the proceedings undersection

9of the Arbitration Act by the High Court,(ii).          The Kerala High Court in case of Muthoot Leasing &

Finance Ltd. vs. N.P. Asiya, (2013) 3 Arb.LR 42 (paragraphs 10 and

15, internal page 4 and 5) in support of the submission that Kerala

High Court allowed a third party to file an appeal,31::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc(iii).          This Court in case ofBharat Sanchar Nigam Limited vs.

Siemens Financial Services Limited, 2016 SCC Online Bom. 5317

(paragraph 6, internal page 3),(iv).           The Supreme Court in case ofMunicipal Council, Hansi

vs. Mani Raj & Ors.(2001) 4 SCC 173 (paragraphs 5 and 6, pages

174 and 175).l).             Relying upon the aforesaid judgments, it is submitted that

if a preliminary objection raised by the respondent no.2 about

maintainability of an appeal by a third party undersection 37of the

Arbitration Act is accepted, it would be contrary to the legislative

intent or the purpose of theArbitration Act.The Actshall be

interpreted in such a manner that it would prevent abuse of process of

law and prompt justice. When the literal construction of the statue

leads to absurdity or mischief, such an interpretation should be

avoided and the interpretation which would make the statute rational

and sensible must be eschewed.m).             Reliance is placed on the judgment of the Supreme Court

in case ofSanjay Dutt vs. State, (1994) 5 SCC 410, the judgment of

the Supreme Court in case ofOxford University Press vs.

Commissioner of Income Tax, the judgment of this Court in case of

Fullerton India Credit Company Limited in the matter of Prithipal

Chadha vs. Jitendra Chadha in Chamber Summons No.993 of 200732::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

in Execution Application No.765 of 2015 in Award No.83 of 2014.n).          Insofar as the merits of the arbitration petition is

concerned, Dr.Saraf, learned counsel invited my attention to some of

the documents which were forming part of the arbitral proceedings

and also the documents and pleadings annexed to the compilation

filed by the parties. Learned counsel also submitted a comparative

chart showing the issues raised by the respondent no.2 in each of the

petitions and the response of the petitioner to those issues raised by

the respondent no.2 in detail. It is submitted that the petitioner had job

work contract with the respondent no.3. The respondent no.3 was the

sister concern of the respondent no.1. Some job work was carried out

in the premises of the respondent no.1. The petitioner had purchased

all these coils from a supplier from Korea. Learned Court Receiver

has verified these goods and had submitted a report which would

indicate that the petitioners in the arbitration petition as well as the

applicant in the notice of motion were the owners of different

quantifies of such coils.o).          The respondent no.2 has admitted in the pleadings before

the learned arbitrator as well as in these proceedings that the coils in

respect of which the respondent no.2 was claiming rights are not now

available and the same are alleged to have been moved or shifted by

the respondent no.1 from the said warehouse to some other place. In33::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

view of the interim measures granted by the learned arbitrator in the

impugned order, the respondent no.1 is not able to comply with its

obligations to the petitioner by returning those coils which were

handed over to the respondent no.1 for job work. If those coils of

which the respondent no.2 claimed certain alleged rights are already

allegedly removed by the respondent no.1, the respondent no.2

cannot be allowed to claim any rights in respect of the coils now kept

in the custody of the Court Receiver and/or lying in the warehouse of

the respondent no.1.p).          The statement, if any, made by the respondent no.1 before

the learned arbitrator or before this Court not to deal with or remove

those coils which belongs to the petitioner does not bind the

petitioner. Since it is established beyond reasonable doubt that all

such coils which are lying in the warehouse of the respondent no.1

are owned by the petitioner and Karamtara Engineering Private

Limited respectively in respect of different quantities as set out in the

Court Receiver's Report, injunction granted by the learned arbitrator

against the respondent no.1 deserves to be set aside and/or modified

to enable the respondent no.1 to comply with its obligation.q).          After the respondent no.1 has allegedly committed breach

of the orders passed by the learned arbitrator or by this Court, the

respondent no.2 cannot be allowed to make any claim over the goods34::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

of the petitioner. The respondent no.2 has not produced any

documents in respect of claiming any lien or ownership in those coils

lying in the warehouse of the respondent no.1. At the most the

respondent no.2 may have money claim, if any, against the

respondent no.1 and cannot claim any lien or ownership over those

coils which exclusively belong to the petitioner in these 13 petitions

and the applicant in the notice of motion.33.          Learned counsel for the respondent nos. 1 and 3 made

following submissions:-a).          The learned arbitrator has already disposed of an

application undersection 17filed by the respondent no.2.               The

learned arbitrator has permitted the respondent no.2 to file a fresh

statement of claims and application undersection 17of the Arbitration

Act for interim measures and has directed the respondent no.1 to file

its reply in the said application. The learned arbitrator has by its oral

order has set aside the entire arbitration proceedings. There is thus

no bar or obstruction from any judicial order by this court or by the

learned arbitrator against the respondent nos. 1 and 3 to enable them

to return the HR Coils belonging to the petitioners to them.b).          The respondent no.1 had borrowed money from the

respondent no.2 i.e. unsecured loan at the rate of interest

approximately 24% to 30% per annum with penal additional interest35::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

for delayed payment in the range of 2% to 2.5% per month. The

respondent no.1 obtained term loan and working capital from bank

against security of the plant and machinery. The sister concern of the

respondent no.1 M/s.Arisha Metal Precisions Pvt. Ltd. had the

processing facility to carry out job work processing of third party coils.Western India Metal Processors Ltd., another sister concern is in the

business of trading of metal and chemicals and has also stored HR

Steel Coils at the same premises in Taloja.c).          The respondent no.2 had borrowed funds from their

bankers as working capital loan and since the said bank did not

permit the money to be lent for further lending purposes the

respondent no.2 structured a transaction of loan from respondent no.2

to the respondent no.1. The commercial purchase transaction was

structured with respondent no.3 and was sold further to respondent

no.1. Such transactions of purported sale and purchase were merely

transactions to enable respondent no.2 to raise finance with its

bankers and lend the same to the respondent no.1. The respondent

no.2 would raise funds at an interest rate of approximately 12% to

13% per annum and lend at approximately 24% to 30% to the

respondent no.1 or any party.d).          The transaction of sale and purchase between the

respondent no.1 and the respondent no.2 remained only on paper and36::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

there was never any physical movement of the goods either by

Western India Metal Processors Limited to the respondent no.2 or by

the respondent no.2 to the respondent no.1. The ownership of the

goods lying at Taloja plant were never a matter of contention as the

respondent no.2 only required equivalent amount of quantity of the

goods to be shown to their bankers at the time of stock audit and bank

visits. There was never any monitoring of inventory by the respondent

no.2 or its surveyors in normal course while the loan was being

furnished with interest.e).          The constituents of a genuine sale transaction, inter alia,

include minimum a purchaser order and excise cum tax invoice, a

product quality certificate, a weigh bridge receipt etc. which are

absent in the sale and purchase transaction between the respondent

no.1 and the respondent no.2. The exact quality, specification and

size of the goods sold and purchased under a genuine transaction are

expressly setout in the invoice raised by the supplier. However, in this

case there are simple and summary commercial tax invoices raised

by Western India Metal Processors Limited on the respondent no.2

and then by the respondent no.2 on respondent no.1 which merely

state the product, but not its specification, origin etc.f).          No personal guarantee is normally insisted in case of a

business or a regular business transactions wherein in this case for37::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

such purported sale and purchase transaction, personal guarantee of

the respondent no.1 was insisted which would indicate that there was

a money lending transaction between the respondent nos.1 and 2 and

not a sale and purchase transaction. No surveyor was ever appointed

by the respondent no.2 to monitor stock and the quality and quantity of

the said HR Goods.g).          The respondent no.1 vide their e-mail dated 22nd

December,2016 had already informed the respondent no.1 that the

respondent no.1 did not have any stock of any nature whatsoever

belonging to the respondent no.2 at their premises. The respondent

no.2 did not purchase any goods from the sister concern of the

respondent no.1 and they do not hold any inventory which belongs to

the respondent no.2. The statement was given to the respondent no.2

for their bankers audits by the respondent no.2.h).          In e-mail dated 19th November,2016, there is specific

mention that it was being provided specifically for their bank audit

purposes and there was mention of only 192 coils in the sheet relied

upon by the respondent no.2.         The respondent no.2 prepared a

handwritten report claiming 217 coils which is not more than what they

purportedly claim to have bought and marked more than 217 coils and

is in sharp contrast to the inventory relied upon by the respondent

no.2 in their prayer before the learned arbitrator which was 192 coils.38::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doci).          A fraudulent case of the respondent no.2 is that there was

a trade finance between the respondent no.1 and the respondent no.2

as against the earlier stand of genuine sale and purchase transaction.

The stand now taken before this Court by the respondent no.2 is

contradictory to the earliest stand.j).          Since the respondent no.2 is unable to prove its claim and

its ownership over the coils, the respondent no.2 has now come out

with a case that all the coils have been systematically removed by the

respondent no.1 from the warehouse.k).          A reliance placed on the invoice by the respondent no.2

which mentions HR Coils without any indication of size, thickness,

grade etc. Reliance is placed by the respondent no.2 on the invoice

of the Western India Metal Processors Limited.           None of those

invoices state about the quality and the grade the there are no

agreements or sale or purchase invoices tender in support of their

claim before the learned arbitrator or even in these proceedings.l).          The case of the respondent no.2 is that it had purchased

the coils in January, February and April 2016 which is ex-facie false in

view of the fact that several of of the HR Coils identified and marked

by the respondent no.2 claiming ownership on them were indeed

manufactured post August 2016.m).          The respondent no.2 had deployed their own security in the39::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

premises of the respondent no.1 and the respondent no.2 inspects

respondent no.1 premises on daily basis.                 His allegation of whole

sale removal/replacement of HR Coils is not supported by its own

daily reports and complaint from their security. The Court Receiver's

report dated 10th February, 2017 confirmed availability of 233

respondent no.2 marked coils marked by the respondent no.2 in the

premises of the respondent no.1.n).          The respondent no.1 is not in a position to return the said

coils which were handed over to the respondent no.1 by the petitioner

as well as the applicant in the notice of motion for job work in view of

the impugned order passed by the learned arbitrator and this Court. If

any   order      is   passed         by   this   Court   in   these      proceedings

vacating/modifying of the impugned order passed by the learned

arbitrator and if the respondent no.1 is directed to return any part of

the coils to the petitioner or the applicant. The respondent no.2 is

ready and willing to comply with the said order.34.          Mr.Ankhad, learned counsel for the respondent no.2 in the

arbitration petitions vehemently opposed the arbitration petitions on

the ground of maintainability and also on merits. Learned counsel

submits as under :a).          The respondent no.2 has no privity of contract with the

petitioner or the applicant.The Arbitration Actis self-contained code.40::: Uploaded on - 31/08/2018                            ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

None of the petitioners are parties to the arbitration agreement with

the respondent no.2 and thus these appeals thus filed undersection

37of the Arbitration Act by the petitioners are not maintainable. The

objects and the reasons of theArbitration Actis to monitor the

supervisory role of Courts. Reliance is placed onsection 5of the

Arbitration Act         in support of the submission that only such

proceedings which are provided in theArbitration Actcan be filed and

that also only by the parties to the arbitration agreement and not a

third party. In view of such minimum intervention permissible under

theArbitration Act, this Court can neither grant any leave in favour of

the petitioners nor can entertain these appeals filed by these third

parties.b).          There is no scope of any interference by a third party in the

arbitration process. The entire scheme of theArbitration Actand more

particularly Chapter V to VII relates to the arbitration process between

two parties to the arbitration agreement and thus there is no question

of invocation ofsection 37of the Arbitration Act by a third party.c).          Since none of the petitioners or the applicant were

admittedly parties to the arbitration agreement, none of them could be

party to the arbitration proceedings before the learned arbitrator and

thus none of them could invoke the provisions ofsection 37of the

Arbitration Act by way of an appeal against any order passed by the41::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

learned arbitrator in this Court. The remedy of the petitioner, if any,

would be to wait for the out come of the arbitral proceedings and if

any application for execution of the arbitral award is made by the

respondent no.2, the petitioner at that stage can be permitted to

oppose the execution application as and when filed by the respondent

no.2. If any intervention by a third party in the arbitral process is

allowed, it would destroy the arbitral process.d).          There is a statutory bar against a third party from entering

in the arbitral proceedings since beginning . This Court thus cannot

entertain these appeals in the            middle of that process. The

supervisory role of the Court is very limited in view ofsection 5of the

Arbitration Act. If an appeal by a third party is permitted by this Court

undersection 37of the Arbitration Act, it would open the flood gate of

litigation.Section 17applies only qua the parties and thussection 37of the Arbitration Act can be invoked only by such parties and not a

third party. This Court cannot set aside the order granting or refusing

interim measures undersection 17of the Arbitration Act at the

instance of a third party.e).Section 37(2)of the Arbitration Act is to be read withsection 17of the Arbitration Act. Sincesection 17can be invoked only

by a party to the arbitration agreement,section 37of the Arbitration

Act also can be invoked by a party to the arbitration agreement. The42::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

scope ofsection 37of the Arbitration Act cannot be expanded. Though

the powers of the arbitral tribunal are expanded undersection 17of

the Arbitration Act, the remedy undersection 37of the Arbitration Act

is not expanded and has been retained as it was earlier.f).          The petitioners in all the arbitration petition are strangers to

the arbitration agreement between the respondent no.1 and the

respondent no.2. The third parties have alleged to have job work

arrangement with the respondent no.3 who is the subsidiary of the

respondent no.1. The petitioners thus have a claim against the

respondent no.3 and has no privity of contract of whatsoever nature

with the respondent no.2. Out of 13 petitions, there is no written

contract between all the third parties with the respondent no.3. No

particulars of the oral agreement by and between those parties have

been disclosed in the petitions by these third parties. The arbitration

petitions are full of discrepancies. This Court will have to decide the

issue of maintainability first before hearing the parties on merits. In

support of this submission, learned counsel placed reliance on the

following judgments :-i).T.K. Lathika vs. Seth Karsandas Jamnadas(1999) 6

SCC 632 (Paragraph 9),ii)          Mukesh Nanji Gala vs. Heritage Enterprises (2015) 5

MHLJ 620 (Paragraphs 6, 28 and 35) and43::: Uploaded on - 31/08/2018                     ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.dociii).Masusmi SA Investment LLC vs. Keystone Realtors

Pvt. Ltd.(2012) SCC Online Bom 1688/2013 (7) Bom CR 264

(Paragraphs 2, 3, 60 and 61).g).            Since there are disputes on title and several disputed

questions of facts arise, the correct remedy of the petitioners as well

as the applicant is that of the civil suit. It is not the case of the

petitioners or the applicant that the civil suit is not maintainable. The

only argument of the petitioners as well as the applicant is that the

petitioners are not required to wait for 20 years in a civil litigation

whensection 37(2)appeal option is available.Section 37(2)appeal

is not the remedy for the petitioners in this case. The civil suit and the

arbitration petition are mutually destructive and cannot co-exists.h).            Any stranger to the arbitration processes cannot be

granted any relief undersection 37of the Arbitration Act. There is no

concept of leave to appeal available to the stranger under theArbitration Act. No power is available to a Court to set aside any

order passed undersection 17of the Arbitration Act by the learned

arbitrator. Undersection 5of the Arbitration Act, a Court has limited

power of intervention only in the proceedings permitted under the

provisions of theArbitration Act.          Such limited role and judicial

intervention has been repeatedly accepted by various Courts.Arbitration Actis a complete and self contained code on matters44::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:13 :::arbp619-17g.doc

pertaining to the arbitration.i).           Reliance is placed on the following judgments :-(i)                   The judgment of Supreme Court in case
      ofFuerst Day Lawson Limited vs. Jindal Exports
      Limited(2011) 8 SCC 333 and more particularly
      paragraphs 89 and 90.


      (ii)                  The judgment of Supreme Court in caseofChandra Prakash Agarwal vs. Bhagirath Agarwal,
      (2008) 17 SCC 700 (paragraphs 1 to 3)(iii)                 The judgment of this Court in case ofMukesh Nanji Gala vs. Heritage Enterprises(2015) 5
      Mh.L.J. 620, (Paragraphs 10 to 34)(iv)                  The judgment of this Court in case ofMasusmi SA Investment LLC vs. Keystone Realtors
      Pvt. Ltd., (2012) SCC OnLine Bom 1688, (paragraphs
      41 to 52)(v)                   The judgment of Supreme Court in case
      ofPrema Gera vs. Co-operative Bank Ltd., (2017)
      SCC OnLine 72 (Paragraphs 72 to 74)(vi)                  The judgment of this Court in case ofNHAI vs. You One Maharia J.V.in Arbitration Appeal
      No.6 of 2010 (paragraphs 1 to 10, 21 to 27)(vii)                 The judgment of Supreme Court in case45::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

      of IndusInd Bank Limited vs. NHAI (2009) SCC
      OnLine Del 1352 (paragraphs 13, 14, 17, 18, 40 & 42)(viii)                The judgment of Supreme Court in case
      ofIndusInd Bank Limited vs. Ram Laxman Hotels
      Ltd.,(2009) SCC OnLine Del 1951(ix)                  The judgment of Supreme Court in case
      ofB.D. Bhanot vs. Narmada Enterprises, (2007) SCC
      OnLine MP 575 (Paragraphs 10 and 13).j).            There is no provision permitting a stranger to intervene in

the pending arbitration and the arbitral processes between two parties

who had contracted for arbitration. A party who is not a party to the

arbitration agreement cannot enter the Court for protection undersection 9of the Act. The same principles would apply tosection 37as well. An appeal is maintainable undersection 37against an order

passed undersections 8,9,16,17and34. If a stranger cannot enter

the Court undersection 9and cannot challenge an order undersection 37, it is not permitted for a third party to challenge an order

undersection 17. Reliance is placed on the judgment of Supreme

Court in case of Firm Ashok Traders vs. Gurmukhdas Saluja and

Chennai Container Terminal.k).            Appeal undersection 37is also stipulated as a part and

parcel of the arbitration. The appeal is limited only to parties to the46::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

arbitration agreement. Though in some cases such as bank guarantee

furnished by a bank who is though not party to the arbitration

agreement, is added as a party respondent and if such third party is

aggrieved by an order undersection 9, an appeal can be preferred

undersection 37in view of such third party having been implemented

undersection 9. The said remedy however cannot be exercised by

the third party who is not a party to the arbitration agreement and also

not party to the proceedings before the learned arbitrator.l).Section 37(1)(a)of the Arbitration Act operates qua parties

to an arbitration contract. Admittedly in this case, none of the

petitioner as well as the applicant were parties to any arbitration

agreement with the respondent nos. 1 to 3. Admittedly, none of the

petitioner as well as the applicant were parties to the proceedings

undersection 17before the learned arbitrator and thus even if any of

them are aggrieved by any order passed by the learned arbitrator

undersection 17, such party cannot be permitted to file an appeal

undersection 37(1)(b)of the Arbitration Act.m).          Appeal undersection 37(2)lies to the Court i.e. defined

undersection 2(1)(e)from an order of arbitral tribunal which would

indicate that the said remedy is intended to operate only in presence

of arbitration agreement.Section 37(2)(b)would also operate where

the interim measures are granted or refused during the course of47::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

arbitral proceedings only to a party under the arbitration agreement. If

a stranger cannot invoke the jurisdiction undersection 17, it certainly

cannot invoke the appellate power and the jurisdiction of the Court

undersection 37(2)(b).section 37(3)prohibits a second appeal.n).          The absence of the word 'party' or 'parties' undersection

37does not indicate any wider legislative intent nor does it permit

strangers to enter into the arbitral process or seek protection under

the Act. The 2 sub-sections ofsection 37are manifestly a part of a

single legislative pattern. It is limited only to arbitration process and

arbitration agreement.          The absence of word 'party' undersection

37(2)makes no difference because the word 'party' is already covered

and provided for insection 16andsection 17of the Arbitration Act.

The appellate power to apply for reliefs has to be read in the context

of who can apply for reliefs undersection 16orsection 17i.e. only

parties to the arbitration agreement.o).Section 37extends the legislative scheme of minimum

judicial interference and cannot be extended in favour of a stranger to

the arbitration contract.Section 37can be invoked only by the parties

and does not permit any person aggrieved who is not a party to the

arbitration agreement or the parties. Such third party has to wait till

the final award is passed and cannot obstruct the arbitral process.

Reliance is placed on the judgment of Supreme Court in case of SBP48::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

&Co. vs. Patel Engineering Limited, (2005) 8 SCC 618 [paragraphs

5, 45 and 47(vi)] and in case ofS.N. Prasad vs. Monnet Finance

Limited & Ors., (2011) 1 SCC 320 (paragraphs 25)p).          There are several disputed questions of fact including on

the title of the goods in these proceedings. Even underCode of Civil

Procedure, 1908, a stranger cannot file an application in a suit or even

appeal proceedings to challenge a consent decree as he is not a party

to the suit. Reliance is placed on the judgment of this Court in case ofKhalil Haji Salar vs. Parveen(2013) 3 Mh.L.J. 182 (paragraphs 16

and 17) and also judgment of this Court in case of Mahavji Kotak vs.

Jayalakshmi, (2007) 5 Mh.L.J.797 (paragraph 4).q).          The respondent no.2 distinguishes the judgment of this

Court in case ofGirish Mulchand Mehta vs. Mahesh Mehta and

Anr., 2010(2) Mh.L.J. 657 on the ground thatthe said judgmentwould

not apply to the facts of this case. In that case, there was a

development agreement between the developer and the society. The

appellants were impleaded as parties undersection 9proceedings.

Rule 803E of the Bombay High Court Original Side Rules were also

relied upon.r).          Reliance is placed on the judgment of Madhya Pradesh

High Court in case ofDhulabhai & Ors. vs. State of Madhya

Pradesh & Anr., AIR 1969 SC 78 in support of the submission that49::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

the jurisdiction of a civil Courts and scope of civil suit is extremely

wide. Every civil suit is cognizable unless it is barred. Civil Court

shall have jurisdiction to try all suits of civil nature unless expressly or

impliedly barred. Reliance is placed onsection 9of the Code of Civil

Procedure, 1908. The minimum Court interference and supremacy to

arbitral process is further strengthened by theArbitration and

Conciliation (Amendment) Act, 2015.s).          The legislature is deemed to be aware of all the laws in

existence and the consequences of the laws enacted by him.                   The

Parliament was conscious when it expanded the scope of arbitrator's

powers undersection 17of the Act. However, it has consciously not

expanded the powers or scope of interference by way of appeals

againstsection 17order. The Parliament has thus inserted limited

amendment tosection 37i.e.section 37(1)(a)by providing an appeal

against an order passed by the judicial authority undersection 8and

only to mirrorsection 50(1)(a)of the Arbitration Act.          Right of an

appeal is neither natural nor an inherent right vested in a party.            An

appeal is a continuation of the original proceedings. An appeal only

reviews and corrects the proceedings in a cause already instituted but

it does not create a cause. The appeal Court rehears the fact that are

on record before the trial Court.t).          If the argument of the petitioner is accepted, then a50::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

stranger will challenge the trial Court order without any record of the

arbitration papers which is not permissible. A right of appeal is a

statutory right and cannot be either assumed or can be interfered in

favour of the stranger. The Court cannot interpret a statute in different

manner only because of harsh consequences arising therefrom and

more particularly were a statute is plain and unambiguous. Permitting

strangers to file undersection 37(2)appeals will adversely affect the

legislative intent of theArbitration Actand will result in rewriting or

recasting theArbitration Actwhich prohibits strangers from entering

into the arena of arbitral process.           In support of this submission,

reliance is placed on the following judgments :-(i)                   The judgment of Supreme Court in case
      of Competition Commission of India vs.SAIL, (2010)
      10 SCC 744, (Paragraphs 45 to 56)(ii)                  The judgment of Supreme Court in case
      ofPrincipal Committee, Hoshiarpur vs. Punjab
      Electricity       Board,       (2001)   Volume   13   SCC       216
      (paragraphs 13 to 16)(iii)                 The judgment of Supreme Court in case
      of Nasseeruddin vs. Sitaram Agarwal, 2003 Volume II
      SCC 577 (paragraphs 35 to 37, 41).u).           The respondent no.2 distinguished the judgments relied

upon by the petitioners in the arbitration petitions on various grounds51::: Uploaded on - 31/08/2018                      ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

which would be dealt with by this Court in the later part of this

judgment while dealing with those judgments.v).            Without prejudice to the rights and contentions of the

respondent no.2 that none of the arbitration petitions are maintainable

undersection 37, learned counsel for the respondent no.2 submitted a

chart to buttress the submission that the respondent no.2 has clear

title in respect of HR Coils in question. The ownership in respect of

those HR Coils claimed by the petitioner are seriously disputed by the

respondent no.2.w).            In some of the arbitration petitions, there were no

agreements in writing produced by the petitioner. No particulars of

any alleged consideration is provided for by most of the petitioners.

No particulars of oral agreements have been provided for in some of

the petitions by the petitioners, invoices produced by the petitioners

do not identify the coils claimed by the petitioners. The corresponding

Mill Test Certificate states that the coils were not purchased by the

petitioners from G.S.Global name of the YE Steel Trading Company

Limited and Khanna Delta Private Limited, nor the petitioner's name is

mentioned in the Mill Test Certificate in Arbitration Petition No.667 of

2017.      Similar defence is raised in almost all the matters by the

respondent no.2.52::: Uploaded on - 31/08/2018               ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc35.          Learned counsel for the petitioner in rejoinder submits as

under :-a).          The submission of the respondent no.2 that the petitioner

will have to wait till the execution proceedings are filed by the

successful party in the arbitration proceedings and can obstruct the

execution proceedings and cannot file an appeal undersection 37on

that ground is concerned, it is submitted that an execution of order to

the Court is necessary only if there is any need to do so.               The

execution proceedings may not take place in all the situation. The

respondents in collusion with each other may implement the order

passed by the learned arbitrator and thus the successful party may

not even apply for execution. If these submissions of the respondent

no.2 are accepted by this Court, the petitioner will have no remedy in

law in this situation.b).          It is open to the learned arbitrator to pass an order of

appointing private receiver to take possession and if necessary with

the help of the police which order is placed on the same status as the

order of the Court. In this eventually, there would be no occasion to

the third party to oppose any execution proceedings as the order

would be already implemented by the receiver with the help of the

police.c).          It is not the case of the respondent no.2 that the order53::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

passed by the learned arbitrator undersection 17or undersection 34can be set aside by a civil Court. A civil Court has no supervisory

jurisdiction over the arbitral proceedings outside the scheme of the

Act. This in fact runs contrary to thesection 5of the Arbitration Act. If

the arguments of the respondent no.2 are accepted, the order of the

arbitrators and the proceedings in arbitration can be disturbed by the

Civil Courts entertaining suits which is neither the intent nor the

purpose of the statute and is in fact contrary to the scheme thereof.d).             In such an event, the arbitration proceedings can be used

as an instrumentality of abuse and can cause grave prejudice to third

parties. The respondent no.2 has not replied to the submission that

the powers vested with the arbitral tribunal now undersection 17afterArbitration and Conciliation (Amendment) Act, 2015may affect a third

party drastically in various situation and thus such parties would be

without a remedy.             Such third party cannot be allowed to appear

before the learned arbitrator and seek modification and/or vacating

such order which would cause prejudice to the rights of such third

party.e).             There is a specific provision inthe Code of Civil Procedureempowering the appellate Court to grant leave to a third party to file

an appeal in an appropriate case. Reliance is placed on the following

judgments in support of the submission that that the Court has ample54::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

power to grant leave to a third party to intervene/file an appeal :-(i)              The judgment of Supreme Court in
           case ofHarvinder Singh vs. Paramjit Singh &
           Ors., (2013) 9 SCC 261 (Paragraphs 17, 18 and
           22)


           (ii)             The judgment of Supreme Court in
           case       of     Smt.Jatan        Kumar     Golcha      vs.
           M/s.Golcha Properties Ltd., 1970 (3) SCC 573
           (paragraphs 3 and 4).(iii)            The judgment of this Court in case ofProvince         of       Bombay    vs.    Western    India
           Automobile Association, 1948(LI) BLR 58
           (Page 65 last paragraph)


           (iv)             The judgment of Delhi High Court in
           case of Bhisham Sawhney & Anr. vs.Union of
           India & Ors., 1994(30) DRJ 318 (paragraphs 4,
           10 and 11)


           (v)              The judgment of this Court in case ofNarayan Manik Patil & Ors. vs. Jayawant Patil,
           (2009) 2 BCR 247 (paragraphs 18, 20, 21, 26, 27,
           28, 30, 35 and 37).
f).          In series of judgments, various Courts have held that athird party who is likely to be affected by any order in proceedings

undersection 9may intervene in those proceedings and oppose the55::: Uploaded on - 31/08/2018                         ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

grant of reliefs and/or apply for vacating of any orders passed therein.The appellate Court has entertained such appeals filed by such third

party undersection 37of the Arbitration Act. Reliance is placed on

the judgment of Jammu and Kashmir High Court in case of

Mohammad Ishaq Bhat vs. Tariq Ahmad Sofi & Anr., (2010) 3

Arb.LR 107 (paragraph 9), the judgment of Kerala High Court in case

ofMuthoot Leasing and Finance Ltd. vs. N.P.Asiya, (2013) 3

Arb.LR 42 (Paragraphs 10 and 15).g).            There is no total bar for the maintainability of an arbitral

appeal by a third party and it had to be decided in the facts of each

case.In support of this submission, reliance is placed on the

judgment of this Court in case of Bharat Sanchar Nigam Ltd. s.

Siemens Financial Services Ltd., 2016 SCC OnLine Bom 5317

(paragraph 6) and also judgment of Supreme Court in case ofMunicipal Council, Hansi vs. Mani Raj & Ors.,(2001) 4 SCC 173

(paragraphs 5 and 6).h).            It is submitted that though the petitioner as well as this

Court had repeatedly enquired from the respondent no.2 as to

whether the respondent no.2 was willing to implead the petitioner as

parties before the learned arbitrator so that all the disputes could be

resolved once for all, the respondent no.2 deliberately did not agree to

implead the petitioners though petitioners were agreeable to become56::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

parties to the arbitration proceedings with a view to resolve all the

disputes between all the parties amicably. The sole intention of the

respondent no.2 is to harass the third party and to compel the third

party to file a civil suit.i).           The petitioner does not dispute the proposition that the Act

was intended for expeditious resolution of dispute between the parties

to arbitration agreement with least intervention of the Court. However

that by itself does not exclude an appeal undersection 37by a third

party. The remedy of a third party is provided insection 37itself. The

submission of the respondent no.2 that the suit can be filed in such

fact situation runs contrary tosection 5of the Arbitration Act and the

scheme of the Act which contemplates a remedy of appeal provided

under the Act.j).           There is no rule which requires that the issue of

maintainability must be decided first and that the hearing of the facts

ought to take place only after the maintainability is decided. This

Court can hear both the parties on maintainability as well as on merits

and if this Court comes to the conclusion that those appeals filed

undersection 37are maintainable, the Court can decide the matters

on its own merits. Since several issues are raised by the parties, the

Court has to render a finding on all the issues in order to avoid

multiplicity of the proceedings.57::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.dock).          It is not the case of the petitioner that the appeal undersection 37is by implication. The petitioner has placed reliance onsection 37which according to the petitioner can be invoked even by

an aggrieved third party against the order passed by the learned

arbitrator undersection 17. Learned counsel distinguished the

judgment relied upon by the learned counsel for the respondent no.2

on various grounds which will be dealt with by this Court in the later

part of the judgment.l).          Insofar as submission made by the respondent no.2 on

merits of the petitions and more particularly by submitting a chart is

concerned, learned counsel for the petitioner also submitted a table

thereby summarizing the objection of the respondent no.2 with

response of the petitioner in great detail and would submit that each

and every objection raised by the respondent no.2 is totally frivolous

and in any event afterthought.m).          It is the case of the respondent no.2 itself that all the HR

Coils on which the respondent no.2 had claimed the alleged rights

and interest are already removed/replaced by the respondent no.1.

The Court Receiver's report would clearly indicate that the HR Coils

purchased by the petitioner have been identified by the learned Court

Receiver after considering the documents produced by the petitioner.

Since the respondent no.2 is not able to even prima facie prove their58::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

right, title or interest of whatsoever in those coils, this Court has

ample power to set aside the order passed by the learned arbitrator

and to direct handing over possession of those HR Coils to the

petitioner.    The respondent no.2 having money claims against the

respondent no.1 in the arbitration proceedings, even otherwise cannot

claim any title right, title or interest in those HR Coils. Reliance is

placed on various photographs taken by the Court Receiver to

demonstrate that the number of coils embrossed on each of the coil

which can be related to the coil number mentioned in the Mill Test

Certificate and other title documents as produced by the petitioner.n).           The document produced by the respondent no.2 in support

of its title even prima facie does not disclose that the coils now

admittedly lying in the warehouse in any manner belongs to the

respondent no.2. The purchase and sale agreement have not been

produced by the respondent no.2 in these proceedings.                     The

purported receipts issued by the respondent no.1 in favour of the

respondent no.2 does not refer to any identity of any coils.             The

transaction between the respondent no.1 and the respondent no.2 is

ex-facie fraudulent and false. If the respondent nos.1 and 2 could not

agree upon the supplier and if the respondent no.1's own sister

concern viz. Western India Metal Processors Ltd. was in a position to

supervise the coil, there was no reason to involve respondent no.2 in59::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

the entire transaction.o).          The respondent no.2 has no role whatsoever to play in this

purported transaction for sale of the HR Coils.        The coils never

exchanged and all along were lying with the respondent no.2 at its

warehouse. The respondent no.1 has already admitted before the

learned arbitrator and before this Court that the transaction for sale

and purchase of coils between the respondent nos.1 and 2 was a

sham transaction and in fact a money lending transaction.p).          The learned arbitrator though was aware of the dispute as

regard title of the respondent no.2, both by the respondent no.1 as

well as the petitioner, in the final order passed undersection 17on

17th November,2017, has not even prima facie rendered a finding that

those HR Coils belong to the respondent no.2. The impugned order

passed by the learned arbitrator which affects the rights of the

petitioner is illegal and contrary to law. The learned arbitrator could

not have passed any order in respect of the goods of the third party.q).          Insofar as the submission of the learned counsel for the

respondent no.2 that the goods have been converted is concerned, it

is submitted that the order dated 2nd January,2017 was an ad-interim

order and the inspection carried out on 29th December,2016 was also

done at an interim stage to secure the purported claim of the

respondent no.2 which cannot be construed to be in any form of60::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

conversion of coils. This contention of the respondent no.2 is clearly

an afterthought and is not pleaded in their pleadings and runs contrary

to the contentions raised in various affidavits. The respondent no.2

has not claimed the ownership rights in respect of these coils which

are presently lying in the warehouse and the ownership is claimed till

such time till the amounts are paid.r).            The impugned order passed by the learned arbitrator is

causing grave and irreparable prejudice to the petitioner who are

deprived of their goods which legitimately belongs to them. Balance

of convenience is in favour of the petitioner and not the respondent

no.2.REASONS AND CONCLUSIONS :36.            I shall first decide the issue as to whether these 13 appeals

numbered as arbitration petitions filed undersection 37of the

Arbitration & Conciliation Act, 1996 filed by third parties arising out of

the interim measures granted by the learned arbitrator and are

aggrieved by those orders are maintainable or not.37.            It is an admitted position that none of these petitioners in

these 13 petitions were parties to the arbitration agreement entered

into between the respondent nos.1, 2 and 3.Section 37(1)and (2) of

theArbitration & Conciliation Act, 1996reads thus :-"37. Appealable orders.--61::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

             (1) An appeal shall lie from the following orders (and
             from no others) to the Court authorised by law to
             hear appeals from original decrees of the Court
             passing the order, namely:--(a) granting or refusing to grant any measure undersection 9;(b) setting aside or refusing to set aside an arbitral
             award undersection 34.(2) An appeal shall also lie to a Court from an order
             granting of the arbitral tribunal.--(a) accepting the plea referred in sub-section (2) or
             sub-section (3) of section 16; or(b) granting or refusing to grant an interim measure
             undersection 17."38.Section 2(1)(h)defines "party" means a party to an

arbitration agreement.Sections 2(1)(h)to36refers the "party" for

different purposes. However,section 37does not provide that an

appeal under the said provision can be filed only by the parties to the

arbitration agreement. By virtue of the amendment inserted by the Act

2 of 2016 with effect from 23rd October, 2015 thereby amendingsection 17of the Arbitration & Conciliation Act, 1996, powers which

are available with the Court undersection 9for grant of interim

measures, identical powers are now also granted to the arbitral

tribunal.39.          A perusal ofsection 17(1)(ii)clearly indicates that though

such interim measures undersection 17can be applied only by a62::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

party to the arbitral tribunal and more particularly specified insection

17(1)(ii)(a)to (e), such reliefs may in some of the cases affect even

third parties.40.          The said provision clearly indicates that a party to the

arbitration agreement who is permitted to apply for interim measures

to the arbitral tribunal under the said provision and seek interim

measures of protection in respect of any goods which are subject

matter of the arbitration agreement or even to enter upon any land or

building in possession of any party. Undersection 17(1)(d)such party

to the arbitration agreement can even apply for interim measures for

appointment of a Court Receiver or for such interim measures or

protection as may be appeared to the arbitral tribunal to be just and

convenient. There may be a situation that a property or goods may

belong to a third party who is not a party to the arbitration agreement

but still a relief may be applied in respect of such goods or properties

belonging to a third party and more particularly if a party to the

arbitration agreement is either in possession or custody thereof

claiming any right therein in any manner whatsoever.41.          In such a situation, where third party who is the owner of

such goods or properties or claiming any right, title or interest in

respect of such goods or properties but may not be in physical

possession thereof and such goods or properties being in possession63::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

of one of the party to the arbitration agreement, such a third party is

obviously going to be affected if any order is passed by the arbitral

tribunal for interim measures undersection 17of the Act. There is no

dispute about the proposition of law that a third party cannot appear

before the arbitral tribunal and seek any interim measures undersection 17of the Arbitration & Conciliation Act, 1996 or seek any

modification or variation of the interim measures if granted by the

arbitral tribunal against such third party though he may be aggrieved

by such interim measures granted by the arbitral tribunal.42.          The question therefore arises for consideration of this

Court is whether a third party who is aggrieved by any such order of

interim measures granted by the arbitral tribunal can file an appeal

undersection 37of the Arbitration & Conciliation Act, 1996 after

obtaining the leave of the Court or otherwise and whether can impugn

such order of the arbitral tribunal in respect of any goods or properties

in respect of any such right, title or interest claimed by such third party

or in any other manner affected by such interim measures or not.43.          This Court in case ofNarayan Manik Patil & Ors.(supra)

in the notice of motion filed by a third party who was affected by an

order of the Court appointing the Court Receiver in respect of his

property held that such third party aggrieved by the appointment of

the Court Receiver himself can approach the Court and have the64::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

Court Received discharged. It is held that the power of the Court to be

justified to a third party who is adversely affected by an order passed

without affording him an opportunity of being heard could in any event

be traced tosection 151of the Code of Civil Procedure, 1908.44.          This Court held that where the Court finds that any order

appointing the Court Receiver affects the rights of a third party and

the circumstances discloses that such third party ought to have been

impleaded or proceeded against in accordance with law before

affecting its rights, it is open to the Court to discharge the Court

Receiver and to leave it to the parties to the proceedings to adopt

appropriate proceedings against the third party and to apply therein

for interlocutory reliefs against such third party including by

appointment of a Court Receiver.Inthe said judgment, it is held by

this Court that even as a matter of practice, the Courts refuses to pass

interlocutory orders which would adversely affect third party in the

matters where it is brought to the notice of the Court that the third

party rights have been created and are in existence. The principleslaid down bythis Court inthe said judgmentin my view would apply to

the facts of this case. Even in this matter, the respondent no.1 had

placed before the learned arbitrator that the goods in respect of which

the relief or interim measures was sought by the respondent no.2 did

not belong to the respondent no.1, but belong to the third parties.65::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

Learned arbitrator however, did not go to the said crucial aspect and

appointed the Court Receiver in respect of various Coils which were

admittedly claimed by these petitioners in the arbitration petitions and

the plaintiffs in the suit.45.          The only distinction which can be drawn inthe said

judgmentof this Court in case ofNarayan Manik Patil & Ors.(supra)

is that the third party who is not a party to an arbitration agreement,

cannot apply before the arbitral tribunal for modification and for

vacating the order of interim measures passed by              such arbitral

tribunal. However, in case of a party to the arbitration agreement

applying for interim measures undersection 9of the Arbitration &

Conciliation Act, 1996 before a Court defined undersection 2(1)(e)of

the Arbitration & Conciliation Act, 1996, if any third party is likely to

be affected if any such order of interim measures is granted as prayed

by a party to the arbitration agreement or directly or indirectly any

interim measures are prayed against such third party, no such interim

measures can be granted by a Court against such third party unless

such party is impleaded as a party to the said application undersection 9of the Arbitration & Conciliation Act, 1996.46.          Be that as it may, even if such third party is not impleaded

as a party to such application filed undersection 9of the Arbitration &

Conciliation Act, 1996, such third party can certainly apply for66::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

impleadment or intervention in such proceedings filed undersection 9of the     Arbitration & Conciliation Act, 1996 and can apply for

modification and/or variation of the order of interim measures passed

by a Court. In my view, such third party cannot be asked to file a civil

suit and to challenge the order of interim measures granted by the

arbitral tribunal. The validity of the order passed by the arbitral

tribunal undersection 17of the Arbitration & Conciliation Act, 1996

cannot be challenged in a civil suit. The Civil Court does not sit in an

appeal against an order of the arbitral tribunal passed undersection

17of the Arbitration & Conciliation Act, 1996.47.          The question thus arises for consideration of this Court is

that whether the remedy of an appeal undersection 37of the

Arbitration & Conciliation Act, 1996 can be availed off by such a third

party who is affected by an order of interim measures granted by the

arbitral tribunal undersection 17of the Arbitration & Conciliation Act,

1996. Learned counsel for the respondents did not dispute the

proposition that if a third party is impleaded in the proceedings undersection 9of the Arbitration & Conciliation Act, 1996 filed by a party to

the arbitration agreement or the rights of any third party is affected by

an order passed by a Court in an application undersection 9of the

Arbitration & Conciliation Act, 1996 filed by a party to the arbitration

agreement, such third party can apply for impleadment or intervention67::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

in such proceedings and to apply for modification and/or for variation

of such order. If such third party does not succeed in such application

for modification or variation of the order passed by a Court in favour

of a party to the arbitration agreement affecting the right, title and

interest of such third party, such third party can file an appeal undersection 37of the Arbitration & Conciliation Act, 1996 before the Court

undersection 2(1)(e)of the Act.48.           The Division bench of this Court in the case of Girish

Mulchand Mehta and               Durga Jaishankar Mehta vs. Mahesh S.

Mehta and Harini Cooperative Housing Society Ltd. (supra) has

dealt with an issue whether the appeal          undersection 37of the

Arbitration and Conciliation Act, 1996 could have been filed by the

third party arising out of the order passed undersection 9of the

Arbitration Act. It is held by the Division bench that there is no room

to hold that by an interim measure undersection 9, the rights of third

party holding possession on the basis of Court sale could be

interfered with, injuncted or subjected to proceedings undersection 9of the Act.49.           The Division bench construed Rule 803E of the Bombay

High Court (Original Side) Rules and has held thatsection 9is distinct

fromSection 17in as much as Petition undersection 17is moved

before the Arbitrator for an order against a party to the proceedings,68::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

whereassection 9vests remedy in a party to arbitration proceedings

to seek interim measure of protection against a person who need not

be either party to the arbitration agreement or to the arbitration

proceedings. In the said proceedings undersection 9, third party was

also    impleaded          since the grant of the proposed relief was to

incidentally affect those third parties. This Court entertained                     an

appeal undersection 37of the Arbitration Act filed by such third party

who was affected by the order passed by the learned Single Judge

undersection 9though dismissed the said appeal on merit.50.           In view of the fact that powers of Court undersection 9to

grant interim measures                and powers of the arbitral tribunal undersection 17of the Arbitration Act                are identical    in view of the

amendment tosection 17with effect from 23rd October 2015, in my

view, even a third party who is directly or indirectly affected by interim

measures granted by the arbitral tribunal will have a remedy of an

appeal undersection 37of the Arbitration Act. The principles of law

laid down by the Division bench of this Court in the case of Girish

Mulchand Mehta and Durga Jaishankar Mehta vs. Mahesh S.

Mehta and Harini Cooperative Housing Society Ltd. (supra) can

be extended to this situation.51.           The Jammu               and Kashmir   High Court in the case of

Mohammad Ishaq Bhat vs. Tariq Ahmad Sofi & Anr. (supra) has69::: Uploaded on - 31/08/2018                         ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

held that     if a person is materially and substantially interested in

subject matter of the arbitration agreement and is likely to be

materially affected by the order,section 9cannot be interpreted to

forbid impleadment of a person, not a party to arbitration agreement,

to the proceedings undersection 9. A person having vital interest in

the subject matter of arbitration agreement can not be asked to watch

proceedings from the fence and leave the arena for the parties to the

arbitration agreement to cut swords, when the victim of the out come

of the dispute is non else but the person pushed to the fence.52.          The Jammu and Kashmir High Court in the said judgment

has held that the Court is required to arrive at just conclusion and do

justice between the parties. In order to enable the Court to discharge

its mandate, it is necessary to a person who is interested in the

subject matter of arbitration agreement and is in a position to render

assistance to the Court is allowed to become a party to the

proceedings. Jammu and Kashmir High Court in that matter had

considered a situation where the person though stranger to arbitration

agreement, was not allowed to become a party to the proceedings

undersection 9of the Act. The petitioner claimed to be running

business in the suit shop, in tenancy of his father for decades together

and now in possession as a tenant thereof whereas the respondent

had claimed to have entered into a partnership with the another party70::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

to the arbitration agreement. The Court without hearing the petitioner

in that matter passed an order which caused disastrous consequence

for the petitioner.53.          The Jammu and Kashmir accordingly has held that though

a stranger to an arbitration agreement cannot be allowed to seek

interim measures undersection 9of the Arbitration and Conciliation

Act, 1997, a stranger may be impleaded as a party where the Court is

convinced that the applicant is a proper and necessary party to the

proceedings and his presence is bound to enable the Court to arrive

at a just and proper conclusion. I am in respectful agreement with the

views expressed by the Jammu and Kashmir High Court in the case

of Mohammad Ishaq Bhat vs. Tariq Ahmad Sofi & Anr. (supra).54.          Though a stranger to an agreement cannot be allowed to

be impleaded as party to the arbitral proceedings before the arbitral

tribunal and more particularly undersection 17of the Arbitration Act

nor can such third party seek impleadment to the proceedings before

the arbitral tribunal, he is however not precluded from challenging

the said order before the arbitral tribunal undersection 17if he so

aggrieved by such order by invoking the remedy of an appeal undersection 37of the Arbitration Act.55.          The Division Bench of this Court in the case ofBharat

Sanchar Nigam Limited vs. Siemens Financial Services Limited71::: Uploaded on - 31/08/2018               ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

(supra) after adverting to the judgments of the Supreme Court in the

case of Taiyo Membrane Corporation Pty.Ltd. vs. Shapoorji

Pallonji & Company Ltd., (2016) 1 SCC 736 and in the case ofChloro Controls (I) Pvt. Ltd. vs. Severn Trent Water Purification

Inc., (2013) 1 SCC 641 has held that depending upon the facts of

the case, even the third party can be added or joined as party for

appropriate reliefs and for it's effective implementation, specially insection 9Petition. There is no total bar, but subject to the

interconnected and interdependent facts and the contract conditions

between the parties, a third party can be impleaded. Division bench

of this Court entertained the appeal filed by a third party           undersection 37of the Arbitration and Conciliation Act, 1996 arising out of

an order passed by the learned Single Judge undersection 9of the

Arbitration Act however dismissed the said appeal on merit.56.          The Supreme Court in the case ofMunicipal Council,

Hansi, District Hissar, Haryana vs. Mani Raj & Ors.(supra) while

considering the provisions of Order I Rule 8-Aof the Code of Civil

Procedure, 1908 has held that a party was in possession of the

disputed property and was not party in the award case and the earlier

two orders passed by the Court on the basis of which direction was

given to such third party to deliver possession of the disputed

property. Application for intervention made by such third party ought72::: Uploaded on - 31/08/2018                ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

to have been allowed when the direction adversely and seriously

affected the valuable rights of such third party over the immovable

property in dispute.The principles of lawlaid down bythe Supreme

Court in the case ofMunicipal Council, Hansi, District Hissar,

Haryana vs. Mani Raj & Ors.(supra) can be extended to this case

where admittedly the petitioners in all these arbitration petitions

were adversely affected in view of the interim measures granted by

the learned arbitrator in the proceedings between the respondent

nos.1, 2 & 3.57.          This Court by an order dated 7th December, 2017 in the

Notice of Motion (Lodging) No.491 of 2017 and other companion

matters filed by these petitioners in Court Receiver's Report No.476

of 2016 has clarified that in view of earlier orders passed by this

Court in the said Court Receiver's Report, the applicants were not

precluded from impugning the order dated 17th November, 2017 i.e.

the order of interim measures passed by the learned arbitrator undersection 17of the Arbitration and Conciliation Act, 1996. None of the

respondents has impugned             the order dated 17th November 2017

passed by this Court in this group of notices of motion.58.          This Court in the case of Mukesh Nanji Gala & Ors. vs.

M/s.Haritage Enterprises, Mumbai & Anr. (supra) had considered

an issue as to whether a stranger to an arbitration agreement could73::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

challenge the arbitral award undersection 34of the Arbitration Act or

not.   This Court interpretedsection 34read withsection 2(1)(h)of

Arbitration and Conciliation Act, 1996 and has held that an arbitral

award can be challenged only by a party to an arbitration agreement

unless covered bysections 40and41of the Act. It is held that

however if a person is wrongly impleaded as party to the arbitration

proceedings and is aggrieved by arbitral award, he can invokesection

34of the Act. This Court has also held that the proceedings undersection 34of the Arbitration and Conciliation Act, 1996 are not by

way of an appeal.           This Court has also adverted to the judgment

Division bench of this Court in the case of Girish Mulchand Mehta

and Durga Jaishankar Mehta Vs. Mahesh S. Mehta and Harini

Cooperative Housing Society Ltd. (supra).59.           In my view,section 34of the Arbitration and Conciliation

Act, 1996 also refers to the expression "party" which is absent insection 37of the Arbitration Act. The fact that the expression "party"

is absent insection 37of the Arbitration Act makes the legislative

intent clear that the said expression "party" is deliberately not inserted

so as to provide a remedy of an appeal to a third party who is affected

by any interim measures granted by the arbitral tribunal or by the

Court in the proceedings filed by and between the parties to the

arbitration agreement. There is a possibility of the collusive74::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:14 :::arbp619-17g.doc

proceedings and the collusive order of interim measures being filed

and obtained by the parties to the arbitration agreement which may

affect the interest of those third parties.60.          A perusal ofsection 17andsection 9which provide for

interim measures which can be granted by the arbitral tribunal or the

Court respectively clearly indicates that very exhaustive powers are

given to the arbitral tribunal as well as to the Court        for granting

interim measures which may affect a third party. Such party whose

interest is prejudiced by such interim measures obtained by the

parties to the arbitration agreement cannot be forced to wait till the

outcome of the arbitration proceedings culminating into an award and

till such time, an execution application is filed by a successful party

after the other party exhausting all his remedies provided under theArbitration Actand fails. In my view, submission of the learned

counsel for the respondent no.2 that the remedy of the petitioners

would be to wait and watch till the entire arbitration proceedings

culminating into an arbitral award and as and when the application

for execution of such arbitral award is made by successful party, such

third party would be only to resist the execution proceedings by

obstructing the execution of such award is without any merit and is

ex-facie contrary to the plain reading ofsection 37and the legislative

intent.75::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc61.          In my view, this argument of the learned counsel for the

respondent no.2 also cannot be accepted for the simple reason that

such a party to arbitration agreement may obtain collusive award or

interim measures and may not apply for execution of the award by

resorting to the provisions ofsection 36of the Arbitration Act read

withOrder XXI         of the Code of Civil Procedure, 1908          and may

implement       such collusive       award or collusive   order of interim

measures. In such a situation, an application for execution of the

award may not be even warranted.62.          This Court in the case ofSmt.Prema Amarlal Gera vs.

The Memon Co-operative Bank Ltd. & Anr.(supra) has entertained

the petition undersection 34of the Arbitration and Conciliation Act,

1996 filed by an aggrieved third party stranger to the arbitration

agreement and to challenge an arbitral award in view of the fact that

the learned arbitrator had allowed such third party to intervene in

the arbitral proceedings and passed an order seriously affecting the

rights of such third party in the arbitral award. This Court has held that

if a person is wrongly impleaded as a party to the arbitration

proceedings and is aggrieved by an arbitral award, he can invokesection 34of the Arbitration Act. In this case, each of these petitioners

had brought to the notice of the learned arbitrator their alleged right,

title and interest in the coils in respect of which an order of interim76::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

measure was passed by the learned arbitrator and had requested

the learned arbitrator to vacate the order of interim measure against

the petitioners. The said application was opposed by the respondent

no.2. The learned arbitrator however ignored these facts and passed

the impugned order.63.          The learned arbitrator even did not vacate his order which

seriously affected right, title and interest of the petitioners in those

coils which were subject matter of the arbitral proceedings before the

learned arbitrator. These petitioners in the arbitration petition and the

plaintiffs in the suit were allowed to participate in the report submitted

by the Court Receiver in this Court who was appointed by the learned

arbitrator in those proceedings undersection 17of the Arbitration Act.

The respondent no.2 at that stage did not oppose that the petitioners

being not parties to the arbitration agreement could not have been

allowed to intervene in those proceedings before this Court on the

ground that they were strangers to the arbitration agreement.64.          This Court itself granted liberty to the petitioners to

challenge the interim measures granted by the learned arbitrator

which order has not admittedly impugned by any of these petitioners.

The principles of lawlaid down           bythis Court in the case ofSmt.Prema Amarlal Gera vs. The Memon Co-operative Bank

Ltd. & Anr.(supra) can be extended to this fact situation where third77::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

parties are admittedly affected by an order of interim measures

passed by the learned arbitrator.65.Insofar as interpretation ofsection 36of the Arbitration

and Conciliation Act, 1996 is concerned, Supreme Court in the case

ofSanjay Dutt Vs. StatethroughC.B.I., Bombay (II) (supra) has

held that it is the duty of courts to accept a construction which

promotes the object of the legislation and also prevents its possible

abuse even though the mere possibility of abuse of a provision does

nor affect it's constitutionality or constitution. Abuse has to be checked

by constant vigilance and monitoring of individual cases and this can

be done by screening of the cases by a suitable machinery at a high

level.66.             In this case also, a perusal of the record before the arbitral

tribunal and also before this Court clearly indicates that the

respondent no.1 had made various statements and had given an

undertaking         not to part with possession of coils      in which these

petitioners had claimed right, title and interest. Similar undertaking

came to be rendered by the respondent no.1 also before this Court in

the Court Receiver's report as well as in the contempt proceedings

filed by the respondent no.2. In view of such order obtained by the

parties to the arbitration agreement directly affecting the independent

rights to the petitioner, such third parties cannot be made to suffer on78::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

the ground that the remedy of appeal undersection 37could not be

availed of by such third parties though the said provision does not

specifically bar the appeal filed by the third parties. This Court cannot

accept the interpretation ofsection 37as canvassed by the learned

counsel for the respondent no.2 which if accepted would amount to a

gross abuse        of the said provision and      would invite harsh          and

unreasonable result. I am thus inclined to accept the interpretation

canvassed by the learned              counsel for the petitioners that the

expression "party" having been            absent undersection 37of the

Arbitration Act, the third party who is affected by an order of interim

measures is entitled to avail of the remedy of appeal provided

therein.67.          The Supreme Court in the case ofOxford University

Press Vs. Commissioner               of Income Tax(supra) has held that

statutory provision must be so construed, if possible, that absurdity

and mischief may be avoided and makes the provision rational,

sensible, unless of course, the hands of the Court are tied and it

cannot find any escape from the tyranny of literal interpretation. It is

held that where the plain literal interpretation of a statutory provision

produces a manifestly absurd and unjust result which could never

have been intended by the legislature, the Court may modify the

language used by the legislature or even "do some violence" to it79::: Uploaded on - 31/08/2018                     ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

so as to achieve the obvious intention of the legislature and produce

a rational construction. In such a case, the Court may read into the

statutory provision a condition which, though not express, is implicit in

construing the basic assumption underlying the statutory provision.In my view, the principles of lawlaid down bythe Supreme Court in

the case ofOxford              University Press vs. Commissioner            of

Income Tax(supra) can be pressed in service in this matter for the

purpose of interpretation ofsection 37of the Arbitration Act so as to

achieve the obvious legislative intent.68.          If submission of the learned counsel for the respondent

no.2 that even if the petitioners are aggrieved by an order of interim

measures granted by the learned arbitrator, such parties would have

no remedy of appeal undersection 37of the Arbitration Act but will

have to wait till the application for execution of the award, if any,

made by the successful party are accepted, the same would lead to

absurdity and would produce manifestly absurd and unjust result

which could not be the intention of the legislature while enacting the

remedy undersection 37of the Arbitration Act by intentionally not

inserting the word "party" insection 37of the Arbitration Act. In my

view, with a view to avoid any absurd and unjust result, a third party

has to be permitted to file an appeal if he is aggrieved by an order

passed by the learned arbitrator undersection 17of the Arbitration80::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

Act. The remedy of an appeal to a third party will have to be read insection 37of the Arbitration Act with leave of the Court.69.           Learned counsel for the petitioners also placed reliance on

several judgments of the Supreme Court and Delhi High Court in

support of the submission that this Court has ample power to grant

leave to the petitioners to file an appeal undersection 37of the

Arbitration Act in view of the fact that the petitioners were not the

parties to the arbitration agreement or to the arbitral proceedings

before the learned arbitrator            and in view of the fact that the

petitioners     are seriously prejudiced          with the order of interim

measures passed by the learned arbitrator.70.           The Supreme Court in the cases ofSmt.Jatan Kumar

Golcha vs.        Golcha        Properties    (P) Ltd.(supra), Hardevinder

Singh vs. Paramjit Singh & Ors.(supra), this Court in the case of

Province of Bombay Western India Automobile Association vs.

Western India Automobile Association (supra) and Delhi High

Court in the case ofBhisham Sawhney and Anr. vs. Union of

India & Ors.(supra) has dealt with an issue as to when a party who

is not a party to the proceedings to the lower Court can be granted

leave to file an appeal if he is aggrieved by such order or he is

prejudicially affected by it.        It has been held by the Supreme Court,

this Court and Delhi High Court in the aforesaid judgments that it81::: Uploaded on - 31/08/2018                      ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

would be a travesty of justice if a party is driven to file a suit which

would involve long and cumbersome procedure when an order has

been made directly affecting that party and redress can be had by

filing an appeal which is permitted by law. It is held that a person who

is not a party to the suit may prefer an appeal with the leave of the

appellate court and such leave should be granted if he would be

prejudicially affected by the judgment.71.           The petitioners have prayed for such leave in each of the

arbitration petitions from this Court for filing an appeal. Though the

aforesaid judgments referred to         and relied upon    by the learned

counsel for the petitioners have dealt with powers of appellate Court

for granting leave to file an appeal under the provisionsof Code of

Civil Procedure, 1908, in my view, since the power to grant such

leave under the provisionsof the Code of Civil Procedure, 1908 are

procedural in nature can be exercised by this Court for granting leave

to file an appeal undersection 37of the Arbitration Act. In view of

the fact that the petitioners are admittedly affected by the impugned

order of interim measures granted by the learned arbitrator, the

petitioners are entitled to seek leave of this Court for filing an appeal

undersection 37of the Arbitration and Conciliation Act, 1996. This

Court has ample power to grant such leave to the petitioners and to

hear    the arbitration petitions     filed undersection 37on its own82::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

merits. The principles of lawlaid down bythe Supreme Court, this

Court and the Delhi High Court in the aforesaid judgments can be

extended to the facts of this case while granting leave to file appeal

undersection 37of the Arbitration and Conciliation Act, 1996. The

petitioners have made out a case for grant of such leave and it is

ordered accordingly.72.          The Kerala High Court         in the case of M/s.MuthootLeasing and Finance Ltd. vs. N.P. AsiyaW/o. Mammootty,

Naduviledath (supra) has dealt with the right of a third party to

intervene in the proceedings undersection 9of the Arbitration Act

and to apply for vacating such order of interim measures if he is

affected and cannot be driven to institute a suit questioning the

legality of the order of attachment. The Kerala High Court considered

the situation where a third party         was aggrieved by an order of

attachment of his property who claimed ownership right in respect of

such property by way of registered sale deed and had applied for

lifting the attachment before the Court which has passed an order

undersection 9in favour of the party to the arbitration agreement. A

party to the arbitration agreement had filed an appeal challenging

the said order passed by the learned Judge passing an order undersection 9against the third party on the ground that the District Court

could not have entertained the application for vacating the order of83::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

attachment on the application of a third party. The Division Bench of

the Kerala High Court had rejected the said appeal on the ground that

such third party who is affected by an order passed undersection 9by a Court cannot be driven to institute a suit questioning the

legality of the order of attachment.I am respectfully in agreement

with the views expressed by the Kerala High Court in the case of

M/s.MuthootLeasing          and Finance Ltd. vs. N.P. AsiyaW/o.

Mammootty, Naduviledath (supra).73.          I am not inclined to accept the submission of the learned

counsel for the respondent no.2 that the remedy of the petitioners

would be to file a civil suit in addition to the remedy to obstruct the

execution application if made by the successful party. In my view, the

validity   of the order of interim measures           passed by the learned

arbitrator even otherwise cannot be challenged before a Civil Court.

On this ground also, the petitioners cannot be driven to institute a

civil suit questioning the legality and validity of the order of interim

measures passed by the learned arbitrator. Learned counsel for the

respondent no.2 could not dispute the proposition of law that the

order of interim measures simplicitor could not have been challenged

by the petitioners by challenging the validity of such order before a

Civil Court.74.Insofar as the Delhi High Court in the case of National84::: Uploaded on - 31/08/2018                       ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

Highways Authority of India vs. M/s.YouOne Mahria J.V. & Ors.(supra) relied upon by the learned counsel for the respondent no.2 is

concerned, Delhi High Court has considered an appeal undersection

37(2)of the Arbitration and Conciliation Act, 1996 filed by the party to

the arbitration agreement impugning an order passed by the arbitral

tribunal allowing a third party to make an application for the purpose

of seeking release of equipment claimed by it as its equipment and

machinery. With these facts at hand, Delhi High Court has held that

stranger to the arbitration agreement     could not have applied           for

interim measures before the learned arbitrator undersection 17and

could not have been permitted to seek any interim measures by the

arbitral tribunal. Delhi High Court accordingly allowed the appeal filed

by the party to the arbitration agreement on that ground. Admittedly,

in this case, none of the petitioners were allowed to intervene in the

arbitral proceedings filed by the respondent        no.2 against           the

respondent nos.1 and 3 nor the petitioners had applied for any

interim measures or had filed any application for vacating order of

interim measures granted by the learned arbitrator.The judgment of

the Delhi High Court in the case of National Highways Authority of

India vs. M/s.YouOne Mahria J.V. & Ors.(supra) would be of no

assistance to the respondent no.2 and is clearly distinguishable in

the facts of this case.85::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc75.Insofar as the judgment          of the Madhya Pradesh High

Court in the case ofB.D. Bhanot   & Sons vs. Narmada

Enterprises & Ors.(supra) relied upon by the learned counsel for

the respondent no.2             is concerned, the issue before the Madhya

Pradesh High Court was whether a writ petition could be filed by a

third party challenging the arbitral award by invoking the inherent

and extraordinary jurisdiction of the writ Court underArticle 226of

the Constitution of India. Madhya Pradesh High Court has held that

even a party to the agreement would not be in a position to challenge

the award in a writ petition. There was no issue before the Madhya

Pradesh High Court as to whether an appeal undersection 37could

be filed by stranger to the arbitration agreement or not.Be that as it

may,    I am       not in agreement         with the views expressed by the

Madhya Pradesh High Court in the case ofB.D. Bhanot & Sons

Vs.    Narmada         Enterprises        & Ors.(supra) for various reasons

rendered aforesaid on the issue as to why a third party is entitled to

avail of the remedy of appeal undersection 37of the Arbitration and

Conciliation Act, 1996.The judgment of Madhya Pradesh High Court

in the case ofB.D. Bhanot & Sons Vs. Narmada Enterprises &

Ors.(supra) thus would not assist the case of the respondent no.2.76.Insofar as the judgment           of this Court in the case ofMasusmi SA Investment LLC vs. Keystone Realtors Pvt. Ltd.&86::: Uploaded on - 31/08/2018                      ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.docOrs.(supra) relied upon by the learned counsel for the respondent

no.2 is concerned, the question before this Court in the said matter

was whether an appeal filed undersection 10Fof the Companies

Act,   1956 against the order passed by the Company Law Board

allowing the application made by a party undersection              8of the

Arbitration and Conciliation Act, 1996       who was a party to the

arbitration agreement and referring a dispute between the parties

filed undersection 397and398of the Companies Act, 1956 to the

arbitration was maintainable or not. The question arose before this

Court whether the said order is appealable undersection 37of the

Arbitration and Conciliation Act, 1996 or not. After referring to the

pleadings and documents, this Court has held that the order passed

by the Company Law Board was undersection 8of the Arbitration

and Conciliation Act, 1996 and not under theCompanies Act, 1956. It

is held that       since theArbitration Act, 1996is a self contained,

complete and exhaustive code in all respects, all the remedies from

the orders passed and action taken inArbitration Act, 1996must flow

from the said statute itself.The said judgment of this Court in the

case ofMasusmi SA Investment LLC vs. Keystone Realtors

Pvt. Ltd. & Ors.(supra) would not apply to the facts of this case.77.Insofar as the judgment of Delhi High Court in the case ofIndusind Bank Ltd. vs. National Highways Authority of India&87::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

Anr. (supra) relied upon by the learned counsel for the respondent

no.2 is concerned, the appeal filed by a third party undersection 37of the Arbitration and Conciliation Act, 1996 challenging an order

passed by the learned arbitrator rejecting an application filed by such

third party for its impleadment underOrder I Rule 10 of the Code of

Civil Procedure,        1908 read withsection 17of the Arbitration and

Conciliation Act, 1996 was dismissed. Delhi High Court held that a

party who is not a party to the arbitration agreement cannot be

impleaded as a party to the arbitral proceedings and thus the learned

arbitrator had rightly rejected the said application filed underOrder I

Rule 10 of the Code of Civil Procedure, 1908 read withsection 17of

the Arbitration and Conciliation Act, 1996.      The said appeal before

the Delhi High Court was admittedly filed by a third party. The said

appeal undersection 37filed by a third party was not rejected by the

Delhi High Court as not maintainable but was entertained by the

Delhi High Court and was rejected on merit. The said judgment

would in fact assist the case of the petitioners and not the case of the

respondent no.2.78.Insofar as the judgment of the Delhi High Court in the case

ofIndusind Bank Ltd. vs. Ram Laxman Hotels Ltd. & Ors.(supra) relied upon by the learned counsel for the respondent no.2 is

concerned, Delhi High Court has considered an issue as to whether88::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

a third party who was not a party to the arbitration agreement or the

arbitration proceedings could file a petition undersection 34of the

Arbitration & Conciliation Act, 1996 with respect to an arbitral award

on the ground of the same affecting the said third party. Delhi High

Court held that a petition undersection 34of the Arbitration Act could

not have been filed by a stranger to the arbitration agreement and

who was not a party to the arbitration proceedings.             There is no

dispute about the proposition of lawlaid down bythe Delhi High Court

inthe said judgment. These proceedings are filed by the petitioners,

who were not the parties to the arbitration agreement and were not

parties to the arbitral proceedings, and have filed the proceedings

undersection 37of the Arbitration and Conciliation Act, 1996 and not

undersection 34of the Arbitration and Conciliation Act, 1996.The

judgment of the Delhi High Court in the case ofIndusind Bank

Ltd. vs. Ram Laxman Hotels Ltd. & Ors.(supra) thus would not

assist the case of the respondent no.2.79.Insofar as the judgment of the Supreme Court in the case

ofChandra Prakash Agarwal              vs. Bhagirath Agarwal           & Ors.(supra) relied upon by the learned counsel for the respondent no.2 is

concerned, a third party had applied for interim relief before the

Supreme Court directly seeking direction against a party to the

arbitration agreement.           Hon'ble Supreme Court has held that such89::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

third party cannot be allowed relief either by way of intervention or by

way of any substantive relief in those proceedings either by that Court

or by directing the arbitrator to entertain its prayer. Such applicant

would be at liberty to pursue such remedy as may be available to it

under the law for vindicating its grievance raised in the application

filed before the Hon'ble Supreme Court. The applicant before the

Hon'ble     Supreme Court in that matter had also applied                for    a

direction    from the Supreme Court          against the order of interim

measures passed by the learned arbitrator. Supreme Court has held

that once an arbitrator has been appointed by the Court any party

feeling aggrieved by any interim order or direction made by the

arbitrator is at liberty to pursue such remedy as may be available to

him under the law.The judgment of the Supreme Court in the case ofChandra Prakash Agarwal vs. Bhagirath Agarwal & Ors.(supra)

is not applicable            to the facts of this case and is clearly

distinguishable in the facts of this case.80.Insofar as the judgment of the Supreme Court in case ofFuerst Day Lawson Limited(supra) relied upon by the learned

counsel for the respondent no.2 is concerned, the Supreme Court inthe said judgmenthas held that theArbitration Actis self-contained

code and thus Letters Patent Appeal is excluded by examining the

scheme defined by the provisions ofsections 49and 50 of the90::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.docArbitration Act. No Letters Patent Appeal will lie against the order

which is not appealable undersection 50of the Arbitration &

Conciliation Act, 1996. The petitioners in this case have invokedsection 37of the Arbitration Act for filing these appeals against an

order of interim measures granted by the learned arbitrator.The

judgment of the Supreme Court in case ofFuerst Day Lawson

Limited(supra) thus would not assist the case of the respondent

no.2.81.Insofar as the judgment of the Supreme Court in case ofSBP & Co.(supra) is concerned, the Supreme Court has held inthe

said judgmentthat once the matter reaches the arbitral tribunal or the

sole arbitrator, High Court would not interfere with the orders passed

by the arbitrator or the arbitral tribunal during the course of the

arbitration proceedings and the parties could approach the Court only

in terms ofsection 37of the Arbitration Act or in terms ofsection 34of

the Arbitration Act. It is held that the party aggrieved by any order of

the arbitral tribunal, unless has a right of appeal undersection 37of

the Arbitration Act, has to wait until the award is passed by the arbitral

tribunal. There is no dispute about the proposition of lawlaid down bythe Supreme Court inthe said judgment.Since this Court is of the

view that the petitioners have a right of appeal undersection 37of the

Arbitration Act, the judgment of the Supreme Court in case of SBP &91::: Uploaded on - 31/08/2018                ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.docCo.(supra) would assist the case of the petitioners and not the

respondent no.2.82.Insofar as the judgment of the Supreme Court in case ofS.N. Prasad, Hitek Industries (Bihar) Limited(supra) relied upon by

the respondent no.2 is concerned, the Supreme Court has held that

since there was no arbitration agreement between the parties i.e.

before the Hon'ble Supreme Court, impleadment of the appellant as a

respondent in the arbitration proceedings and the award against the

appellant in such arbitration cannot be sustained and accordingly the

arbitration awards were liable to be set aside. It was held that if the

first respondent wanted to enforce the alleged guarantee of the

appellant, it would be open to the first respondent to do so in

accordance with law.In my view the judgment of the Supreme Court

in case ofS.N. Prasad, Hitek Industries (Bihar) Limited(supra)

would not assist the case of the respondent no.2. In this case, the

petitioners were neither impleaded as parties to the arbitration

proceedings nor the learned arbitrator entertained the application of

the petitioner to modify / vacate the order of interim measures.

Learned arbitrator however, has passed interim measures which

would affect the petitioners. The petitioners are thus entitled to invoke

the remedy undersection 37of the Arbitration Act.83.Insofar as the judgment of this Court in case of Madhavji92::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.docJeyram Kotal & Ors.(supra) relied upon by the respondent no.2 is

concerned, this Court has considered the issue as to whether a third

party to the suit could file an application underOrder 39 Rule 4 of the

Code of Civil Procedure, 1908 or not. The expression "party" is not

defined inthe Code of Civil Procedure. The counsel for such third

party made a statement before this Court inthe said judgmentthat his

client had no intention to be joined as party defendant to the suit. In

these circumstances, this Court did not allow the third party to invoke

provisions ofOrder 39 Rule 4 of the Code of Civil Procedure, 1908.In

my view,the said judgmentof this Court in case ofMadhavji Jeyram

Kotal & Ors.(supra) would not even remotely apply to the facts of

this case.84.Insofar as the judgment of this Court in case ofKhalil Haji

Bholumiya Salar & Anr.(supra) relied upon by the learned counsel

for the respondent no.2 is concerned, this Court while dealing with the

provisions of Order 43 Rule1-Aof the Code of Civil Procedure, 1908

held that the stranger to the suit is obviously a stranger to the

agreement of compromise. He cannot file an application either in the

suit or in the appeal proceedings to challenge a compromise decree

as he is not a party to the suit. This Court considered the bar under

Order 23 Rule 3-Aof the Code of Civil Procedure, 1908 and held that

the said bar cannot be extended to such third party. It is held that the93::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

said provision under Order 23 Rule 3-Aof the Code of Civil

Procedure, 1908 must confine to a party to the suit which are the

parties to the agreement of compromise. In these circumstances, this

Court dismissed the application filed by a third party as not

maintainable. In my view,the said judgmentof this Court does not

even remotely apply to the facts of this case and would not assist the

case of the respondent no.2.85.Insofar as the judgment of the Supreme Court in case ofMunicipal Committee, Hoshiarpur(supra) relied upon by the

learned counsel for the respondent no.2 is concerned, the Hon'ble

Supreme Court has held that the right of appeal undersection 100of

the Code of Civil Procedure, 1908 is creation of statute and it cannot

be created by acquiescence of the parties or by the order of the

Court. This Court is of the view that since the petitioners are entitled

to invoke the right of appeal undersection 37of the Arbitration &

Conciliation Ac, 1996 which is a statutory right, the judgment of the

Supreme Court will not assist the case of the respondent no.2.86.Insofar as the judgment of the Supreme Court in case ofCompetition Commission of India(supra) relied upon by the

learned counsel for the respondent no.2 is concerned, the Supreme

Court inthe said judgmenthas held that right of appeal is a creation

of statute and it does require an application of rule of plain94::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

construction. Such provisions are neither be construed too strictly nor

too liberally, if given either of these extreme interpretations, it is

bound to adversely affect the legislative object as well as hamper the

proceedings before the appropriate forum. The Supreme Court held

that in absence of any provision creating right in a party to file an

appeal, such right can neither be assumed nor acquired in favour of a

party. In my view, since the word "party" is absent insection 37though

specifically inserted insection 2(1)(h)tosection 36, it is clear that it

was the legislative intent to provide the remedy of appeal to a third

party who is not a party to the arbitration agreement.The judgment of

the Supreme Court in case ofCompetition Commission of India(supra) thus would not assist the case of the respondent no.2.The

judgment of Madhya Pradesh High Court in case ofBhulabhai &

Others(supra) is of no assistance to the respondent no.2.87.          Insofar as reliance placed by the learned counsel for the

respondent no.2 onsection 5of the Arbitration Act is concerned, since

this Court is of the view that the remedy of appeal undersection 37would be available even to the stranger to the arbitration agreement,

who is seriously prejudiced by the interim measures passed by the

learned arbitrator, reliance placed onsection 5of the Arbitration Act

by the respondent no.2 is misplaced. In my view, there is no

interference of these third parties in arbitration process as sought to95::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

be canvassed by the respondent no.2.88.          Insofar as the submission of the learned counsel for the

respondent no.2 that since the petitioners      or the applicants were

admittedly not the parties to the arbitration agreement, none of them

could be a party to the arbitration proceedings before the learned

arbitrator is concerned, there is no dispute about this proposition.

However, since the order passed by the learned arbitrator for interim

measures at the behest of one of the parties to the arbitration

agreement which would prejudice the right, title and interest of a third

party, such third party who is not allowed to seek impleadment in the

arbitration proceedings or to apply for modification and/or vacating the

order of interim reliefs, will have a right of appeal undersection 37of

the Arbitration & Conciliation Act, 1996 against such order. I am not

inclined to accept the submission made by the learned counsel for the

respondent no.2 that there is any statutory bar against a third party

from filing an appeal undersection 37of the Arbitration Act though an

order is passed by the arbitral tribunal in the proceedings filed by the

parties to the arbitration agreement under the provisions of theArbitration & Conciliation Act, 1996would affect the rights of such

third party. It is not the case of the respondent no.2 that even a party

to the arbitration agreement could not have filed an appeal undersection 37of the Arbitration & Conciliation Act, 1996, before the Court96::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

defined undersection 2(1)(h)on the ground that such appeal would

be in the middle of the arbitration process.89.          This Court having taken a view that the appeals filed by the

petitioners undersection 37of the Arbitration & Conciliation Act, 1996

are maintainable against the order of interim measures passed by the

learned arbitrator, this Court shall now decide as to whether any of the

petitioners are entitled to any reliefs as prayed or not.90.          Insofar as the petitioners in the arbitration petitions are

concerned,the petitioners had produced various documents in respect

of their case that they had purchased huge quantity of HR steel coils

from various parties and produced the documents of title including all

the bills of entries, Mill Test Certificates / Inspection certificates issued

by the vendors / manufacturers. A perusal of the photographs annexed

to various pleadings filed by the petitioners indicates that those

certificates bears the unique coil number on the basis of which each

HR steel coils can be identified. Those coil numbers are also

embossed on the respective coils which mentioned the identification

of the coils certain. Each of the petitioners has also produced the

documents which contained various other details like thickness,

grading, length, width, chemical composition and weight of coils.91.          It is the case of the petitioners that most of these

petitioners had entered into a Conducting Agreement with the97::: Uploaded on - 31/08/2018                    ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

respondent no.3 whereby they had given their respective coils to the

respondent no.3 for storing, handling and recoiling on job work basis.

Some of the petitioners have alleged oral arrangement for conducting

with the respondent no.3 and have produced the documents

acknowledging the delivery and receipt of the respective coils from

those petitioners. It is the case of the petitioners that those coils were

delivered to the respondent no.3 during the period between 15 th

December, 2016 and 5th January, 2017 for the purpose of storing,

processing and recoiling the same. A perusal of the record indicates

that the respondent no.3 had acknowledged the receipt of those coils

vide a stock list / letter dated 9th January, 2017. The said list issued by

the respondent no.3 also indicates the serial number of the coils,

weight, date, CTL number etc. All these details were written on the

said coils by the respondent no.3 by white paint.92.          It is not in dispute that pursuant to the visit of the

representative of the Court Receiver as directed by this Court, all the

parties were allowed to produce their respective documents before

the Court Receiver. The Court Receiver has submitted a report before

this Court which also indicates that various quantities of those coils

belonged to the petitioners. The respondent no.2 has also admitted in

the affidavit in reply as well as during the course of arguments before

this Court that at least those coils lying in the warehouse as on date98::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

did not belong to the respondent no.2 and has alleged that either the

coils on which the respondent no.2 had claimed certain alleged rights

are either replaced by the respondent no.1 or have been removed

from the warehouse of the respondent no.1.93.          A perusal of the record further prima-facie indicates that

there was money lending transaction between the respondent no.1

and the respondent no.2. I am inclined to accept the submission of the

learned counsel for the petitioners and also the respondent no.1 that

for the purpose of availing the loan by the respondent no.2 from the

bankers and for the purpose of advancing the loan to the respondent

no.1, the alleged transactions between the respondent no.1,

respondent no.2 and the respondent no.3 were reflected as the

transaction of sale of those coils. The respondent no.2 could not give

any details as to when those goods were purchased by the

respondent no.2 either from the respondent no.1 or from the

respondent no.3 or from the third party and for what purposes those

coils were handed over to the respondent no.1.94.          On the other hand, it is the case of the respondent no.2

that the respondent no.2 had allegedly purchased those goods from

the respondent no.3 and sold those goods to the respondent no.1.

The respondent no.2 could not explain before this Court as to why

such transactions were carried out between the respondent no.1 and99::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

the respondent no.3 by the respondent no.2 though the respondent

no.1 and the respondent no.3 were admittedly the sister concern of

each other. Be that as it may, the facts remains that as on date, none

of the goods on which the respondent no.2 claimed their alleged

rights, title and interest are found in the custody of the Court Receiver

or are available in the warehouse of the respondent no.1.95.          Insofar as the respondent no.1 and the respondent 3 are

concerned, it is the case of the respondent no.1 and the respondent

no.3 that the respondent no.1 had borrowed the money from the

respondent no.2 at the rate of interest approximately 24% to 30% per

annum with penal additional interest. The sister concern of the

respondent no.1 had processing facility to carry out job work

processing of the third party coils. The respondent no.2 had borrowed

the funds from their borrowers as working capital and since the said

bank did not permit money lending for further lending purpose, the

respondent no.2 structured the transaction of loan from the

respondent no.2 to the respondent no.1. Such transaction of purported

sale and the purchase were merely the transactions to enable the

respondent no.2 to raise the finance with its bankers and to loan the

same to the respondent no.1 at much higher rate of interest.96.          In my view, there is substance in the submission made by

the learned counsel for the petitioners and the respondent nos.1 and 3100::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

that the transaction of the alleged sale and purchase between the

respondent no.1 and 2 remained only on paper and there was no

physical movement of the goods either by Western India Metal

Process Limited to the respondent no.2 or by the respondent no.2 to

the respondent no.1. In my prima-facie view, since the transaction

between the respondent no.2 and the respondent no.1 was money

lending transaction which was camouflaged as sale transaction, the

respondent no.2 could not claim any right, title or interest of any

nature whatsoever in respect of such coils which belongs to the

petitioners to the extent claimed by the petitioners.97.          The respondent nos.1 and 3 never admitted the claim of

the respondent no.2 that those coils which were in the custody of the

respondent no.1 ever belonged to the respondent no.2. The

respondent no.2 did not purchase any goods from the sister concern

of the respondent no.1 and they did not hold any inventory which

belongs to the respondent no.2. The respondent no.2 itself has

admitted in the arbitral proceedings and also before this Court that

there was a trade finance between the respondent nos.1 and 2. In my

view, the respondent no.1 thus could not be prevented from complying

with its obligation to deliver those coils which were handed over to the

respondent no.1 by the petitioners. There is no merit in the case of the

respondent no.2 that this Court is bound to decide the issue of101::: Uploaded on - 31/08/2018                  ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

maintainability of these petitions first. Be that as it may, this Court has

decided the issue of maintainability first and having held that petitions

filed undersection 37are maintainable has decided the matter on

merits.98.          Learned counsel for the respondent nos.1 and 3 have

made the statement in the affidavits as well as before this Court that

the coils belongs to the petitioners and         Karamtara Engineering

Private Limited and did not belong to the respondent no.2 and that

the respondent no.1 was always ready and willing to hand over

possession of those coils to the petitioners as well to the said

Karamtara Engineering Private Limited however in view of the order

of injunction granted by the learned arbitrator, the respondent no.1 is

unable to comply with its obligation to        return those coils to the

petitioners and the applicant respectively.99.          Insofar as the submission of the learned counsel for the

respondent no.2 that no particulars of the oral agreements have been

provided though pleaded in some of the petitions or that the invoices

produced by the petitioners did not identify the coils claimed by the

petitioners is concerned, there is no substance in this submission of

the learned counsel for the respondent no.2. The identity of the coils

claimed by each of the petitioners has been established in the reports

submitted by the learned Court Receiver. Be that as it may, it is the102::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

case of the respondent no.2 itself that none of those coils now lying in

the custody of the learned Court Receiver or in the godown or in the

warehouse of the respondent no.1 are the coils in respect of which the

respondent no.2 claims the ownership in view of the alleged sale

transaction between the respondent no.2 and other two respondents.

The contention of the respondent no.2 that the coils are converted into

other form is without any pleadings, afterthought and is without any

merit.100.            The petitioners have produced a chart showing the title in

respect of the coils, the details of the agreements entered into

between the petitioners and the third parties, the names of sellers

from whom the petitioners had purchased, the names of the

manufacturers, the dates of issuance of inspection certificate / Mill

Test Certificate etc. Several photographs are produced before this

Court which were taken by the learned Court Receiver while taking

the inventory of those coils showing various marks on those coils

which would tally with the details furnished by the petitioners on the

title documents in respect of those coils. In my prima-facie view, each

of the petitioners have produced sufficient material before this Court

to demonstrate that the petitioners are the owners of those coils and

are entitled to those coils. All such coils were admittedly purchased by

the petitioners and the delivery was taken by the petitioners much103::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

after the alleged transaction of sale between the respondent no.2 and

the respondent no.1. The question of the respondent no.2 thus

claiming right, title and interest in respondent of such coils based on

the alleged sale transaction between the respondent no.2 and the

respondent no.1 does not arise.101.          Insofar as the prayers in the arbitration petition are

concerned, the petitioners have prayed for setting aside the order

dated 27th December, 2016 passed by the learned arbitrator, the order

dated 17th November, 2017 passed by the learned arbitrator and for

leave to file appeals undersection 37of the Arbitration & Conciliation

Act, 1996. The petitioners have also prayed for an order and

directions against the respondents, their agents, servants, employees

and the learned sole arbitrator to permit the petitioners to take

possession and/or removal of such coils from the said warehouse

which belonged to the petitioners without any hindrance from the

respondents and the learned sole arbitrator. This Court with a view to

do substantial justice to the petitioners who are seriously prejudiced

and affected by the impugned orders in the matter and in view of the

petitioners proving their case has granted reliefs to the petitioners.102.          In my view, since the petitioners have demonstrated before

this Court their right, title and interest in those coils, the respondent

no.1 and the respondent no.3 have also admitted before the learned104::: Uploaded on - 31/08/2018                 ::: Downloaded on - 01/09/2018 02:49:15 :::arbp619-17g.doc

arbitrator and also before this Court that those coils belonged to the

petitioners as well as Karamtara Engineering Private Limited

respectively and in view of the fact that the respondent no.2 has also

admitted that those coils have been allegedly removed / replaced by

the respondent no.1 which were alleged to have been purchased by

the respondent no.2, the impugned order passed by the learned

arbitrator granting injunction against the respondent no.1 and the

respondent no.3 from handing over possession thereof to any third

party deserves to be set aside. The injunction order against the

respondent no.1 and the respondent no.3 granted by the learned

arbitrator is set aside. The petitioners would be at liberty to call upon

the respondent no.1 and the respondent no.3 to hand over the custody

of those coils to the petitioners.          In my view, the petitioners are

entitled to grant of leave to file appeal against the impugned order

dated 27th December, 2016 and others orders causing prejudice to the

interest of the petitioners. The petitioners have also made out a case

for setting aside the order passed by the learned arbitrator insofar as

the injunction granted by the learned arbitrator against the respondent

nos.1 and 3 is concerned.103.          I therefore, pass the following order :-a).           Leave to file appeal is granted to the petitioners against the
impugned order passed by the learned arbitrator on 27 th December,
2016 and the order dated 17th November, 2017.105::: Uploaded on - 31/08/2018                      ::: Downloaded on - 01/09/2018 02:49:16 :::arbp619-17g.docb).           The impugned order dated 27th December, 2016 passed by
the learned arbitrator granting an injunction against the defendant
no.1 and the defendant no.3 in respect of the coils reflected in the
Court Receiver's Report claimed by each of the petitioners is set
aside. The defendant no.1 is relieved         from all the undertakings
rendered by it in the arbitral proceedings as well as before this Court
not to hand over possession of the coils to anybody.c).           The petitioners would be at liberty to ask for delivery of
those coils from the defendant no.1.d).           All the aforesaid arbitration petitions are made absolute in
aforesaid terms. Parties to act on the authenticated copy of this
judgment.e).           There shall be no order as to costs.

                                                     (R.D. DHANUKA, J.)104.          Mr.Ankhad, learned counsel for the respondent no.2 seeks

continuation of ad-interim order passed by this Court for a period of

12 weeks from today. Learned counsel for the petitioner states that

the order passed by this Court will not be executed for a period of 6

weeks from today. The statement is accepted. If any Special Leave

Petition is filed by the respondent no.2, a copy thereof shall be served

upon the petitioner's advocate in advance.(R.D. DHANUKA, J.)106::: Uploaded on - 31/08/2018                   ::: Downloaded on - 01/09/2018 02:49:16 :::