In ARB. A.(COMM.) 17/2022-DEL HC- Change in circumstances and undue hardship are grounds for discharge/modification of interim order under Order XXXIX Rule 4 CPC: Delhi HC Justice Sanjeev Narula [01-08-2022]

Read Order: AIRPORTS AUTHORITY OF INDIA (KOLKATA AIRPORT) v. TDI INTERNATIONAL INDIA LTD 

Mansimran Kaur

New Delhi, August 2, 2022:  The Delhi High Court has opined that while considering the issue of vacation/ modification of an interim order, the Court or Arbitral Tribunal would be guided by the principles set out in Order XXXIX Rule 1 & 2, Order XXXVIII Rule 5 or Order XXXIX Rule 4 of the CPC.

The Single Judge Bench of Justice Sanjeev Narula was of the view that in the instant case, the respondent was not seeking a review, but rather, a discharge/modification of the conditions prescribed in the interim order, under Section 17 of the Act in view of the change in circumstances. The Bench said, “There cannot be any dispute on the proposition that change in circumstances and undue hardships are  grounds for discharge/modification of an interim order in terms of Order XXXIX Rule 4 of the CPC.” 

In this matter, Airports Authority of India was challenging the consolidated interim order passed by the Arbitral Tribunal under Section 17 of the Arbitration and Conciliation Act, 1996 allowing an application filed by TDI International India Pvt. Ltd , which, AAI claimed amounted to review of an earlier order of the Arbitral Tribunal.

Facts in brief of the case were that TDI was declared as the successful bidder pursuant to a Notice Inviting Tender floated by AAI in respect of advertising rights for certain sites at the Netaji Subhash Chandra Bose International Airport Estate, Kolkata. A Letter of Award was issued in its favour followed by execution of a License Agreement.  Thereafter, disputes between the parties, concerning rights and obligations arising out of various such license agreements executed between them for various airports, led to appointment of an Arbitral Tribunal at the instance of TDI (the Claimant) in April 2013. 

In 2014, TDI filed an application under Section 17, praying for injunctive relief of restraining AAI from invoking certain Bank Guarantees furnished by TDI as per the terms of the License Agreement. Additionally, an interim prayer for restraining AAI from disallowing TDI to participate in future tenders due to outstanding dues was also sought. Interim relief was granted on August 4, 2014, restraining AAI from encashing the Bank Guarantees, subject to the condition that TDI shall deposit all arrears of license fee and shall continue depositing the same regularly.  Subsequently, in 2015, TDI filed another application under Section 17. The said application was allowed through an interim order.

Thereafter, through an application, TDI sought to be relieved of its obligation to renew the Bank Guarantees furnished by it. The aforenoted application was strongly opposed by AAI, however, the Arbitral Tribunal, through a consolidated interim order dated March 14, 2022 (impugned order) partly allowed the application and directed the return and release of Bank Guarantees furnished by TDI .

The Court opined that the impugned order was not a review or recall of the earlier interim order. It also found merit in the contention of TDI that there is a qualitative difference between the jurisdiction envisaged in a review or recall, as opposed to a vacation/modification as envisaged under Order XXXIX Rule 4 of CPC. 

In the opinion of the Court, the Arbitral Tribunal was entitled to exercise the said option, having regard to the principles enshrined under Order XXXIX Rule 4 of the CPC. It was further noted that the Supreme Court has consistently held that while exercising powers under Section 9 of the Act, the Court is guided by the principles set out in Order XXXIX Rule 1 & 2 of the CPC. Reliance was placed on the case of Adhunik Steels Ltd. v. Orissa Manganese & Minerals Pvt. Ltd.

 Hence, the Court did not find merit in the contention of AAI that the Impugned Order amounts to review of the earlier order dated October 7, 2015. In furtherance of the same, the Court did not find any substance in the contention of AAI that the impugned order was inequitable, incorrect or unfair, on the ground that TDI had taken the benefit of the interim order and cannot be allowed to press for modification of the order as per its own convenience.

Indeed, it cannot be ignored that the order dated October 7, 2015 was passed on an application by TDI, and AAI never filed any application seeking furnishing of a security or any similar protection under Section 17 of the Act. Nonetheless, the  impugned order adequately balances equities as it directs TDI to furnish Personal and Corporate Guarantees, which sufficiently protects the interest of AAI qua the amounts in dispute in arbitration, the Court further remarked.  In light of the aforetasted observations, the Court found no ground to intervene with the impugned order of the Arbitral Tribunal.