• Need payment by govt during arbitration against bank guarantee

We have filed a case against the govt. for imposing penalties of 30 crores in our contract. we are still proceeding with execution of the contract while the arbitration hearings are still going on. since the govt has held back so much payment we are facing a lot of trouble meting our day to day expenses and the execution of the contract is becoming difficult. can we ask the arbitrator to pass an order for giving us the payments held back against a bank guarantee, pending te final outcome of the arbitration? are there any precedents in a case like this?
Asked 4 years ago in Civil Law

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11 Answers

You can make application before arbitrator to direct govt to release some amount against bank guarantee

2) there must be some amount admitted by govt as due and payable to you

Ajay Sethi
Advocate, Mumbai
87947 Answers
6207 Consultations

5.0 on 5.0

Sir you can file an interim application before the Arbitration tribunal for release of the funds against bank guarantee under section 17 of Arbitration act. The arbitration tribunal has the authority to pass such an order but in case they fails to pass order or reject application an application under section 9 of the Act can be filed before court for Interim relief.

17. Interim measures ordered by arbitral tribunal.—

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.

(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).

9. Interim measures, etc. by Court.—A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court—

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure of protection in respect of any of the following matters, namely:—

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

Shubham Jhajharia
Advocate, Ahmedabad
25516 Answers
179 Consultations

5.0 on 5.0

Dear Sir,

Kindly note that in the facts and circumstances mentioned above by you, in your case as the arbitration proceedings are going on before the arbitral tribunal already, then in such a case for the relief you are seeking you may file an application under section 17 of the arbitration act as an interim measure.

Mayank Sapre
Advocate, New Delhi
256 Answers

5.0 on 5.0

Dear Client,

Conditional orders subject to final outcome of proceeding permitted and as an interim relief, order will grant subject to balanace of convinience and no doubt you are most effected party.

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

Dear client

Paymnt held back against the bank guarantee cannot be realeased until the contract is fully executed or at a stage as agreed in the contractual agreement. Arbitrator has no power to release it pre-maturely.

Adv vikas

Vikas Khatri
Advocate, Delhi
179 Answers

Not rated

Hello,

Yes you can file an application for interim relie to this effect. You may get in touch with a local lawyer who after perusing the entire file may help you with some judgment in your favour.

Regards

Anilesh Tewari
Advocate, New Delhi
17940 Answers
377 Consultations

5.0 on 5.0

1. Well, it appears that there is arbitration clause and if that is so then the arbitration proceeding may be pending.

2. if that is so and there is provision for release of fund as per progress of work then you can apply before the arbitral tribunal to pass interim award on the basis of work so far finished.

3. the arbitrator in certain circumstances is competent to pass interim award and if it is satisfied with the completion of part work then you can direct the govt to release fund for the work so far done.

4. So file an application before the arbitrator for passing an interim award. it is permissible.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

Of course you can claim part payment not full please go through (DDAV/S Bhai Sardar Singh and Sons decided by the Hon'ble High Court of Delhi decided on 16.03.2009).

Koshal Kumar Vatsa
Advocate, Gurgaon
2283 Answers
3 Consultations

5.0 on 5.0

Dear client,

1. You can make application before arbitrator to direct govt to release some amount against bank guarantee.

2. Make an application to the arbitration tribunal under section 17: Interim measures ordered by arbitral tribunal.— which says

(1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party to take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject-matter of the dispute.

(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub-section (1).

Koushalya Pattan
Advocate, Bangalore
174 Answers

Not rated

If the arbitration agreement does not prohibit, Arbitral Tribunal at the request of a party, may order the other party to take such interim measures of protection as it may deem necessary in respect of subject matter of dispute. In the process, it can order for providing appropriate security in exercise of its power.

T Kalaiselvan
Advocate, Vellore
78104 Answers
1543 Consultations

5.0 on 5.0

This can be accomplished by filing an application for “interim measures” with the the arbitral tribunal before which the arbitration proceedings are pending under Section 17 of the Arbitration and Conciliation Act.

But please note that what you are seeking is extraordinary as far as injunctive reliefs go. Any court or tribunal has to weigh where the balance of convenience lies when adjudicating such an application for interim relief. In case of a purely monetary relief, it’s particularly hard to convince a court or tribunal that irreparable harm would ensue if the interim relief being sought were to be denied.

Be that as it may, it would help if your application for interim measures is centered around a substantial sum of money that is not in dispute (i.e., sum the other party has admitted that it owes you). You are unlikely to succeed if it’s a claim involving an indeterminate sum (say for unliquidated damages). Of course, you will also have to show that your business is likely to suffer irreparably if the interim measures aren’t granted.

The amended Section 17 gives ample powers to an arbitral tribunal to grant interim measures, including such measures as may appear “just and convenient” to it. This wasn’t the case until a couple of years back, when the powers of an arbitral tribunal to grant interim measures seemed to pale in comparison to the powers of a court to grant such measures under Section 9.

I was recently consulted by a colleague on a matter of a similar nature, albeit under the The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act. In that case, the claimant had been allowed to withdraw the admitted portion of the claim subject to the giving of security. (Ironically, in that case the claimant wasn’t happy with that order and challenged it all the way up to the Supreme Court).

I hope you have your answer. Follow-up queries welcome.

Pulkit Chandna
Advocate, New Delhi
191 Answers
5 Consultations

4.9 on 5.0

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