Civil Miscellaneous Appeal No. 46 of 2012. Case: Selco International Limited, G.V. Ramakrishna and Smt. G. Radha Vs L.V.R. Infrastructures Pvt. Ltd., [Alongwith Civil Miscellaneous Appeal Nos. 47, 165 and 166 of 2012]. High Court of Andhra Pradesh (India)

Case NumberCivil Miscellaneous Appeal No. 46 of 2012
CounselFor Appellant: Sri. Vedula Srinivas, Adv. And For Respondents: Sri. S. Ravi for Sri. Ch. Chpushyam Kiran, Adv.
JudgesL. Narasimha Reddy and S. V. Bhatt, JJ.
IssueArbitration and Conciliation Act, 1996 - Sections 37, 9; Code of Civil Procedure, 1908 (CPC) - Order XXXVIII Rule 5
Judgement DateJuly 05, 2013
CourtHigh Court of Andhra Pradesh (India)

Judgment:

L. Narasimha Reddy, J.

  1. These four civil miscellaneous appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') arise out of two interlocutory orders passed in two O.Ps., being O.P. Nos. 1352 and 1353 of 2011 on the file of the III Additional Chief Judge, City Civil Court, Hyderabad. While the appellants are common, the respondents are different. Since the nature of the O.Ps. and the interlocutory orders is common, the parties are referred to as appellants and respondents.

  2. The 1st appellant is a company incorporated under the Companies Act, undertaking the activity of treatment of municipal solid waste. Appellants 2 and 3 are its Directors. The 1st appellant was awarded the work of treatment of solid waste by the Municipal Corporation, Pune. To handle that work, the 1st appellant created a special purpose vehicle, by name Selco Green. The respondents expressed their willingness to invest in the 1st appellant-company. Initially, a memorandum of understanding was entered into on 29.11.2007. Thereafter, the investment agreement was entered into on 31.01.2009. This contains a clause for reference of disputes to the arbitration. Thereafter, a deed of assignment was entered into on 31.01.2009. This was followed by the investment into the 1st appellant-company in the form of redeemable debentures on 09.02.2009. The respondent in C.M.A. No. 165 of 2012 has undertaken to invest Rs. 3.5 crores with the condition that appellants 2 and 3 shall furnish their personal properties as security for repayment. It is stated that as against the promised amount of Rs. 3.5 crores, the respondent has invested only Rs. 2.85 crores. Disputes arose between the parties. The respondents invoked arbitration clause and required the appellants to take steps for arbitration.

  3. Having initiated those steps, the respondents filed O.P. Nos. 1352 and 1353 of 2011 before the trial Court under Section 9 of the Act for interim measures. They prayed for a direction to the appellants to furnish bank guarantee for the amounts invested by them. The trial Court passed an ex parte order, dated 13.07.2011, requiring the appellants to furnish the bank guarantee for the amounts specified therein within 48 hours.

  4. Complaining that the appellants did not furnish the bank guarantee as directed by the trial Court in its order, dated 13.07.2011, the respondents filed I.A. Nos. 3390 and 3391 of 2011 for attachment of certain...

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