R.BANUMATHI, J. - (1.) THIS appeal arises out of the order in A.No.2661 of 2011 [19.09.2011] directing the Appellant to furnish security for a sum of Rs.4,56,22,368/ -.
(2.) RESPONDENT is a Private Limited Company engaged in the business of providing interior design, project management and architectural consultancy services to its customers in India. RESPONDENT had agreed to undertake interior works for Appellant as a contractor for the premises on the ground floor, 9th and 10th floors located at AMBIT IT PARK, Ambattur, Chennai. In this connection, RESPONDENT had executed an agreement with the Appellant on 03.03.2010 detailing the terms of engagement, including the conditions for payment of the consideration. The project involved Interior Fit -outs, Finishes, MEP, Network and Allied Civil Works of the Project Site. Agreement dated 03.03.2010 states that it is a "Design and Build". Case of RESPONDENT is that it was a "lump sum" agreement for consideration of Rs.13,10,97,371/ -. Further case of RESPONDENT is that the total agreed value for the services rendered under the said agreement is Rs.13,98,82,821/ -. Out of the said amount, an amount of Rs.4,56,22,368/ - is outstanding in respect of the work done by the RESPONDENT. Inspite of several reminders, Appellant had deliberately neglected and pay the payments to the RESPONDENT. Alleging that Appellant is enjoying the fruits of the labour done by the RESPONDENT and that Appellant has been unjustly denying the payment and further alleging that the balance of convenience is infavour of the RESPONDENT, RESPONDENT has filed application [A.No.2661 of 2011] under Section 9 of Arbitration and Conciliation Act to direct the Appellant to deposit a sum of Rs.4,56,22,368/ -, failing which to furnish security for the said amount to the satisfaction of the Court. Appellant who was Respondent in Section 9 application has filed the counter contending that the contract price agreed by the Appellant was based on "rate per sq. ft." which includes the entire scope of work as detailed in Clause 4.1 of the agreement. It was never the intention of parties that the consideration of the project was on the basis of "lump sum" contract. In Clause 29 of Part -II - Special Conditions of the Contract, it was clearly stated that payment to the Respondent should be approved by Quantity Surveyor - M/s.DAVIS LANGDON & SEAH CONSULTING INDIA PVT. LTD.,Chennai [DLS] and while so, the Respondent's claim of Rs.13,98,82,821/ - is totally misconceived. Case of Appellant is that the contract is not a "lump sum" contract, but subject to variations, changes to the specifications and payments itself are subject to the Quantity Surveyor - DLS' approving the actual work executed by the Respondent. Appellant has further averred that as per Clause 18.1 of the agreement, the disputes between the parties touching the contract/agreement, interpretation or rights, duties or liabilities under the contract ought to have first been attempted to be reconciled and only after 30 days from the commencement of such informal negotiations, the parties can proceed to arbitration. In this case, neither any dispute has yet arisen between the parties nor is there any necessity for securing the amounts under the dispute that have to be properly claimed. Hence, Appellant prayed for dismissal of the application [A.No.2661 of 2011] filed under Section 9 of Arbitration and Conciliation Act. Upon consideration of the contentions of both sides, learned Judge held that Respondent has made out a prima facie case and the balance of convenience is infavour of the Respondent and Respondent is entitled to get the interim protection. Learned Judge allowed the application [A.No.2661 of 2011] filed under Section 9 of the Act directing the Appellant to furnish security for Rs.4,56,22,368/ -, failing which ordered attachment. Being aggrieved by the direction to furnish security, Appellant has preferred this appeal.
(3.) MR.P.S.Raman, learned Senior Counsel for Appellant has contended that Respondent has not made out any case that there was an apprehension or danger that the amount could not be recovered by them from the Appellant warranting grant of such an order to furnish security. It was further submitted that the learned Judge did not keep in view that Appellant was a reputed concern having financial stability as per their balance sheet. Placing reliance upon [A -1 SOLUTIONS CHENNAI REP. BY ITS CHIEF EXECUTIVE OFFICER UJWAL RAO V. CASCADE BILLING CENTER INCORPORATED REP. BY ITS PRESIDENT DEV ANDERSON], it was contended that in the absence of any pleadings that the attitude of the Appellant is only to obstruct or delay the recovery of money or that the party is about to dispose of the whole or any part of the property, no relief can be claimed. Reliance was also placed upon AIR 2007 SC 2563 [ADHUNIK STEELS LIMITED V. ORISSA MANGANESE AND MINERALS PVT. LTD.]. Countering the arguments and placing reliance upon AIR 2004 BOMBAY 136 [NATIONAL SHIPPING COMPANY OF SAUDI ARABIA V. SENTRANS INDUSTRIES LIMITED], Mr.Vijay Narayan, learned Senior Counsel for Respondent has contended that the provision under Order 38, Rule 5 CPC cannot read into the provision of Section 9 of the Arbitration and Conciliation Act and one need not be bound by the requisites under Order 38, Rule 5 CPC. Learned Senior Counsel would further submit that the power under Section 9 of Arbitration and Conciliation Act is much wider than Order 38, Rule 5 of CPC and that the interim measure of protection under Section 9(ii)(b) of Arbitration and Conciliation Act stands on different footing. Placing reliance upon the decision of the Division Bench of Madras High Court in O.S.A.No.91 of 2002 [02.04.2002] (Ganesh Benzoplast Ltd., Mumbai, Ramkant S.Pilani and Shankarmal G. Pillai v. Sundaram Finance Ltd., Chennai and Oil and Natural Gas Corporation Ltd., Mumbai), learned Senior Counsel further contended that no particular format is required under Order 38, Rule 5 CPC and Section 9 of Arbitration and Conciliation Act does not specifically require any averment in any particular form and taking note of the non -payment of the amount of Rs.4,56,22,368/ -, learned Judge has rightly directed the Appellant to furnish security for Rs.4,56,22,368/ -.;