NATIONAL GASES LTD. and another vs BOC PAKISTAN LTD.
This matter concerns a petition for leave to appeal against a High Court order maintaining the recovery of equipment by the respondent from the petitioners following the termination of supply agreements. The petitioners and respondent had entered into agreements stipulating that the respondent's equipment would remain its property, with provisions for termination upon payment default or material breach. After the petitioners failed to make payments and rectify breaches despite notice, the respondent terminated the agreements and filed applications under the Arbitration Act, 1940, seeking both arbitration and the return of its equipment. The High Court allowed the recovery of the equipment. The Supreme Court dismissed the petitions, holding that the pending nature of the main arbitration application did not preclude the court from granting interim relief regarding the recovery of equipment. The Court affirmed that upon the admitted termination of the agreements, the respondent was entitled to recover its property, finding no illegality or perversity in the lower court's decision to maintain the interim order.
- Can a court grant interim relief for the recovery of equipment pending the resolution of an application under Section 20 of the Arbitration Act 1940?
- Does the pendency of an arbitration application under Section 20 of the Arbitration Act 1940 bar the court from issuing interim orders regarding property recovery?
- Is a party entitled to recover its equipment upon the termination of a supply agreement where the agreement explicitly stipulates that the equipment remains the property of the supplier?
- Section 20, Arbitration Act 1940
' GULZAR AHMED J.---By these petitions, petitioners have challenged the common order dated 19-1- 2012 by which two High Court Appeals respectively filed by the petitioners were dismissed. Learned counsel for the petitioners was heard at length.
2. It appears that petitioners and respondent had entered into agreements where the respondent had agreed to supply to the petitioners their product. Under the said agreements respondent has provided its own equipment's for use by the petitioners with specific stipulation that such equipment's shall remain the property of respondent at all times. The agreements provided for their termination, inter alia, if the petitioner fails to make any payment when due or commits any material breach of any of the provision of the agreements and fails to rectify the breach within thirty days of respondent written notice. The agreements further provided that on its termination respondent will be entitled to recover the possession of its equipment's and that the dispute will be resolved through arbitration in accordance with Arbitration Act, 1940.
3. It appears that petitioners, failed to make payment of supplies made by the respondent. The respondent gave notice of thirty days which too was not complied with, upon which agreements were terminated. Applications under section 20 of the Arbitration Act, 1940 were filed by the respondent against the petitioners in the High Court. In the said application the respondent filed applications for return of its equipment's installed at the petitioners' premises. Such applications were allowed by the learned Single Judge and by the impugned order such has been maintained by learned Division Bench of High Court.
4. Mr. Abdul Kadir Khan learned counsel for the petitioners has contended that the very application under section 20 of the Arbitration Act being not maintainable, no interim order could justifiably be passed by the Court and in any case the contract being for a period of ten years, the same could not have been terminated by the respondent.
5. We are not impressed by such arguments of the learned counsel for that on counsel's own admission, application under section 20 of the Arbitration Act is still pending in the High Court and whether the contract could have been terminated or not such aspect has to do with the merits of the case. We are concerned here only with regard to the recovery of the equipment's by the respondent which on termination of the agreements, the respondent apparently is entitled to recover as it was admitted before us that the agreements were terminated by the respondent.
6. We do not find any illegality or perversity in the impugned order nor the same in any manner call for interference by us. These petitions for leave to appeal have no merits. The same are therefore dismissed.