FA/3810/2014 of YOU BROADBAND INDIA PRIVATE LIMITED Vs MADHYA GUJARAT VIJ COMPANY LTD on 24 December 2014

ORAL JUDGMENT

1. This appeal under section 37(1)(a) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the Act”) is directed against the order dated 30.09.2014 passed by the learned Fourth Additional District Judge, Vadodara below Exhibit-4 in Civil Miscellaneous Application No.437 of 2014, whereby the appellant’s application for ad-interim injunction has been rejected.

2. Having regard to the controversy involved in the present case and with the consent of the learned advocates for the respective parties, the matter was heard for final hearing at the admission stage.

3. The facts giving rise to the present appeal are that the appellant herein is a Broadband Service Provider and is one of the leading Internet Service Providers. The appellant floated a tender for HT/LT poles of the respondent electricity company for laying HFC/OFC cables and the said tender was accepted by the respondent vide letter dated 29.09.2005 being ref. No.BCC/TECH-3/Cable/6727. According to the appellant, the terms and conditions of the letter dated 29.09.2005 formed the basis for relationship between the appellant and the respondent. The initial agreement between the appellant and the respondent was for a period of two years and contained a clause which reads as follows :

“Duration of Contract: The contract will be commenced after the 15 days of issue of work order and other Deposition the necessary payment as per terms and conditions attached. The time limit of the above work order is Two years and it will be extended further as per requirement.”

4. The appellant, pursuant to the aforesaid agreement, has installed a huge cable network in the city of Vadodara using the poles of the respondent. According to the appellant, it has a total connected subscriber base of more than 65,000 customers in Vadodara, comprised largely of students, stock brokers, small and medium scale industries and corporates. From time to time the original agreement dated 29.09.2005 was extended by the parties as per the above referred understanding and lastly, it was renewed vide agreement dated 13.03.2013 for the period commencing from 01.10.2012 to 30.09.2014. As per the last agreement, the appellant was to pay annual rent of Rs.19,60,723/- to the respondent which was duly paid by the appellant. According to the appellant, no outstanding amount or any other dues are payable by the appellant to the respondent upto 30.09.2014. The appellant received letter dated 06.08.2014 from the respondent whereby, the respondent had unilaterally and without consulting the appellant, informed that it will not extend the contract with the appellant after 30.09.2014 and called upon the appellant to remove the cables from its poles, failing which, the appellant was threatened that there will be damage or loss to the cable network of the appellant for which the respondent will not be responsible. Pursuant to the said letter, the appellant made a representation dated 21.08.2014 to the respondent explaining the critical nature of extension of the contract after 30.09.2014 so as to enable the appellant to provide uninterrupted internet service to the residents of Vadodara. It is the case of the appellant that it was in constant touch with the officers of the respondent so as to resolve the issue of extension of the contract beyond 30.09.2014. By a communication dated 24.09.2014, the respondent once again reiterated that the contract between the appellant and the respondent will not be extended after 30.09.2014 and reiterated its threat of damaging or causing loss to the cable network of the appellant if the cables are not removed by 30.09.2014. According to the appellant, the threat of the respondent is untenable and infeasible inasmuch as, the appellant cannot remove its mammoth cable network spread across entire city of Vadodara at short notice and that in terms of the contract, the appellant had a right to use the poles of the respondent upto 30.09.2014 as it had paid rent upto that date and therefore, the demand of the respondent to remove cables before 30.09.2014 is illegal and untenable. It is the case of the appellant that the contract between the appellant and the respondent envisages resolution of dispute through arbitration and that non-renewal of the contract unilaterally by the respondent is a dispute that needs to be resolved through arbitration. Since the appellant proposes to initiate arbitration shortly with a prayer for extension of contract, or in alternative, for allowing enough time to the appellant to switch over to a new arrangement, the appellant filed an injunction application under section 9 of the Arbitration Act praying for grant of interim measures for protection and preservation of the appellant’s cable network installed in the city of Vadodara from any coercive action by the respondent and further sought a direction to the respondent to allow the appellant to use its poles as per the terms of the contract dated 13.03.2013 beyond 30.09.2014 till the application is adjudicated. The

Arguments

appellant also prayed that the respondent be restrained from acting as per its letters dated 06.08.2014 and 24.09.2014 respectively, with respect to damage or loss to the property of the appellant during the pendency of the application under section 9 of the Act. By the impugned order, the trial court has refused to grant ad-interim injunction as prayed for by the appellant which has given rise to the present appeal.

5. Mr. H. M. Parikh, learned advocate for the appellant vehemently assailed the impugned order by submitting that the trial court has failed to consider the matter in proper perspective while refusing to grant the ad-interim injunction as prayed for. It was submitted that the trial court has proceeded on the footing that the respondent had informed the appellant of its intention of not extending the contract by a notice dated 06.08.2014 and that the appellant was given time for one week with specific instructions to remove the cables from the poles rented and to make other arrangement from 30.09.2014 and that the appellant had waited till the last day of the agreement, that is, 30.09.2014 seeking that status quo should be granted as many other people would suffer. It was submitted that the trial court has failed to consider the urgency of the matter as well as the facts of the case in proper perspective inasmuch as considering the network established by the appellant, it is not possible for the appellant to remove the cables within a period of one week or to make alternative arrangement within such a short time as stated by the respondent. It was submitted that the trial court has failed to consider that the contract was subsisting till 30.09.2014 and hence, the question of the appellant removing the cables prior thereto would not arise and that assuming for the sake of argument that the respondent has a right to terminate the agreement, it has to be done in a just and proper manner and sufficient time is required to be given to the appellant for making alternative arrangements.

5.1 Reference was made to the provisions of section 63 of the Indian Easements Act, 1882 which bears the heading “Licensee’s rights on revocation” and lays down that where a licence is revoked, the licensee is entitled to a reasonable time to leave the property affected thereby and to remove any goods which he has been allowed to place on such property. It was submitted that in view of the provisions of section 63 of the Easements Act, the respondents are bound to give a reasonable time to the appellant. Therefore, the action of the respondents in insisting upon the appellant to remove the cables put up by them, without giving any breathing time, is arbitrary and unjust. It was submitted that the application under section 9 of the Arbitration Act is pending before the trial court and that the property is required to be preserved till the disputes are resolved and hence, the interim injunction, as prayed for by the appellant, is required to be continued till the application under section 9 of the Act is decided.

6. Opposing the appeal, Mr. Mihir Thakore, Senior Advocate, learned counsel with Mr. Premal Joshi, learned advocate for the respondent submitted that the original agreement which provided for renewal of the contract as per requirement, expired in the year 2007. In the year 2013, there was a new agreement which does not contain any clause for extension. Referring to clause 23 of the agreement dated 13.03.2013, it was pointed out that the said arrangement was valid upto two

years commencing from 1[st] October, 2012 to 30[th] September, 2014. The attention of the Court was invited to clause 24 of the said agreement which provides that, “The MGVCL reserves the right to terminate the agreement even before this expiry of the terms of agreement by giving three months notice in writing if continuance of the agreement is felt to be prejudicial to the interest of the MGVCL.” to submit that therefore, clause 24 confers a right to terminate the agreement before the expiry of the agreement. According to the learned counsel, in the present case, the contract has come to an end on account of efflux of time and hence, the arbitration clause also has expired. It was contended that if the agreement is terminated, the arbitration clause would operate; however, this is not a case of termination as the agreement has come to an end due to efflux of time and hence, the arbitration agreement also comes to an end. It was submitted that clause 24 confers a right to terminate the agreement before the expiry of the agreement and that the dispute involved in the present case is not arbitrable and hence, the arbitration clause goes with the expiry of the agreement and does not remain in force upon renewal of the agreement.

6.1Dealing with the contention raised by the learned advocate for the appellant with reference to section 63 of the Easements Act, it was submitted that the said provision would apply only for the purpose of granting reasonable time to remove cables and not to establish new alternative lines, that is, for the purpose of permitting the appellant to remove the cables, but not for enabling it to make alternative arrangement, which is not contemplated under section 63 of the Easements Act.

6.2Reference was made to the provisions of section 14 of the Specific Relief Act, 1963, which provide for “Contracts not specifically enforceable” to point out that the contracts enumerated thereunder cannot be specifically enforced. The attention of the court was drawn to clause (c) of sub-section (1) of section 14, to submit that a contract which is by its very nature determinable, cannot be specifically enforced. It was submitted that in case where specific performance of the contract cannot be granted, the question of granting injunction would also not arise. Reliance was placed upon the decision of the Supreme Court in the case of Indian Oil Corporation

Ltd. v. Amritsar Gas Service and others, (1991) 1 SCC 533, wherein a contention had been raised that the relief of restoration of the contract granted by the arbitrator is contrary to law being against the express prohibition in sections 14 and 16 of the Specific Relief Act. It was argued that the contract being admittedly revocable at the instance of either party in accordance with clause 28 of the agreement, the only relief which can be granted on the finding of breach of contract by the appellant corporation was damages for the notice period of 30 days and not more. The court held that sub-section (1) of section 14 of the Specific Relief Act specifies the contracts which cannot be specifically enforced, one of which is “a contract which is in its nature determinable”. It was further observed that in the facts of the said case, it was not necessary to refer to the other clauses of sub-section (1) of section 14, which also may be attracted in that case since clause (c) clearly applies on the finding read with reasons given in the award itself that the contract by its nature was determinable. That being so, granting the relief of restoration of the distributorship even on the finding that the breach was committed by the appellant – Corporation was contrary to the mandate in section 14(1) of the Specific Relief Act and there was an error of law apparent on the face of the award which was stated to be made according to “the law governing such cases”. The court held that the grant of such relief in the award cannot, therefore, be sustained. Adverting to the facts of this case, Mr. Thakore submitted that in this case also, clause (c) of sub-section (1) of section 14 of the Specific Relief Act would be clearly applicable since the contract by its nature was determinable and hence, the appellant is not entitled to the relief claimed in the application.

6.3Reference was also made to section 10 of the Specific Relief Act, which bears the heading “Cases in which specific performance of contract enforceable”, to submit that section 14 falls within the exceptions laid down in the explanation to section 10(3) of the Specific Relief Act. It was submitted that by way of ad-interim relief, the appellant seeks continuation of the contract which has come to an end due to efflux of time and was even otherwise determinable in nature and hence, the interim relief as prayed for cannot be granted. It was submitted that when no final relief of such nature can be granted, interim relief also cannot be granted. Insofar as the contention that the action of the respondent is arbitrary and discriminatory is concerned, it was submitted that no such plea has been raised in the application under section 9 of the Act. It was contended that in the proceedings under the Arbitration Act, one cannot invoke constitutional rights and hence, the question of considering whether there is any infringement of the appellant’s rights under Article 14 of the Constitution of India would not arise.

India would not arise.

6.4The attention of the court was drawn to the minutes of the meeting of the Gujarat Electricity Regulatory Commission held on 24[th] January, 2014 as well as on 6[th] August, 2014 (copies whereof has been annexed along with the reply filed by the respondent to the stay application filed by the appellant), to submit that it was in view of the directives issued by the Commission in paragraph 2.1 of each of the above minutes of meeting that the respondent was required to terminate the contract with the appellant and direct it to remove the cables on or before the date when the agreement comes to an end.

7. In rejoinder, Mr. H. M. Parikh, learned counsel for the appellant submitted that section 10 and section 14 of the Specific Relief Act are independent sections. Section 10 deals with the contracts which are specifically enforceable, whereas section 14 deals with those contracts which are not specifically enforceable. Reference was made to sub-clause (a) of clause (ii) of the Explanation to section 10 of the Specific Relief Act, to submit that unless and until the contrary is proved, the court shall presume that the breach of a contract to transfer movable property cannot be adequately relieved except where the property is not an ordinary article of commerce, or is of special value or interest to the plaintiff, or consists of goods which are not easily obtainable in the market. It was submitted that the electric poles for putting up the cables are not easily obtainable in the market, under the circumstances this case would squarely fall within the ambit of said sub-clause. It was submitted that the respondent, a public body, has been discriminatory in its action in respect of different contracts with different persons. It was pointed out that one Pacenet, an internet service provider had an agreement akin to the contract that the respondent had with the appellant. Such contract came to an end in April 2014 and despite termination of the contract of Pacenet, its cables are still lying on the poles of the respondent, whereas in the case of the appellant, it is insisted that the cables should be removed forthwith. It was, accordingly, submitted that if all the cables of the appellant remain on the poles till the disposal of the application under section 9 of the Act, no prejudice would be caused to the respondent.

7.1Insofar as the contention that the present dispute would not fall within the ambit of the arbitration clause is concerned, reference was made to section 16 of the Arbitration Act, to point out that the Arbitral Tribunal is competent to rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement. Thus, exclusive jurisdiction has been given under the Act to the Arbitral Tribunal and whether the arbitration agreement survives or not, is to be determined by the Tribunal and not under section 9 of the Act. It was submitted that the dispute with regard to the jurisdiction of the Arbitral Tribunal is required to be raised before the Arbitral Tribunal in the proceedings before it and any order passed by the Arbitral Tribunal under section 16 of the Act is appealable under sub-section (6) of section 16 of the Act.

7.2Reliance was placed upon the decision of the Supreme Court in the case of Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd., AIR 2007 SC 2563, for

the proposition that the grant of an interim prohibitory injunction or an interim mandatory injunction is governed by well known rules and it is difficult to imagine that the legislature while enacting section 9 of the Arbitration and Conciliation Act, 1996 intended to make a provision which was dehors the accepted principles that governed the grant of an interim injunction. The court held that when the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and section 9 provides for an approach to the court for an interim injunction, the relevant provisions of the Specific Relief Act cannot be kept out of consideration. For, the grant of that interim injunction has necessarily to be based on the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. Under section 28 of the Act of 1996, even the Arbitral Tribunal is enjoined to decide the dispute submitted to it, in accordance with the substantive law for the time being in force in India, if it is not an international commercial arbitration. So, it cannot certainly be inferred that section 9 keeps out the substantive law relating to interim reliefs. Mr. Parikh submitted that in the present case, the contract in question was extended up till 30[th] September, 2014 and if the same is not extended, irreparable loss will be caused to the appellant. Having regard to the nature of the business of the appellant, who has put up extensive network of cables in the city of Vadodara, the appellant would be put to undue prejudice and hardship if it is required to take down all the cables within a short period. It was submitted that having regard to the nature of business of the appellant and the contract, it is apparent that the same was required to be continued for a reasonable time. That had the appellant known that the contract would be terminated in such an abrupt manner, it would not have entered into the agreement with the respondent. However, if the agreement is brought to an end and the appellant is compelled to remove the cables as directed by the respondent, not only the appellant, but even its subscribers would also be put to undue hardship as their internet connections would stand terminated. Therefore, irreparable loss will be caused not only to the appellant but also to its subscribers. It was submitted that the dispute being an arbitrable dispute, the matter is required to be referred to arbitration and till the application made by the appellant under section 9 of the Act is decided, the appellant is required to be granted protection by way of interim measure by directing the parties to maintain status quo. It was submitted that the appellant has a good prima facie case and if the cables are cut, it would be a breach of contract with its subscribers. It was submitted that having regard to the facts and circumstances of the case, interim relief as prayed for is required to be granted till the final disposal of the application under section 9 of the Act.

7.3In respect of the submission that in an application under section 9 of the Act, it was not permissible for the appellant to raise a question with regard to infringement of the provisions of Article 14 of the Constitution of India, the learned counsel placed reliance upon the decision of the Supreme Court in the case of Ramana Dayaram Shetty v. The International Airport Authority of India and others, AIR 1979 SC 1628(1) for the proposition that it is now well settled as a result of the decisions of the Supreme Court in E. P. Royappa v. State of Tamil Nadu, AIR 1974 SC 555 andMenaka Gandhi v. Union

of India, AIR 1978 SC 597 that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It requires that State action must not be arbitrary but must be based on some rational and relevant principle which is non-discriminatory; it must not be guided by any extraneous or irrelevant consideration, because that would be denial of equality. The principle of reasonableness and rationality which is legally as well as philosophically an essential element of equality or non-arbitrariness is projected by Article 14 and it must characterise every State action, whether it be under authority of law or in exercise of executive power without making of law. The State cannot, therefore, act arbitrarily in entering into relationship, contractual or otherwise with a third party, but its action must conform to some standard or norm which is rational and non-discriminatory. It was submitted that the respondent cannot act arbitrarily in its relationship, contract or otherwise with a third party and has to conform to some standard or norm which is rational and non-discriminatory, whereas the action of the respondent which is State authority, is not rational. Moreover, the respondent has discriminated between different similarly situated parties. It was submitted that in the affidavit-in-reply filed by the respondent, it has been stated that the action of termination of contract has been taken pursuant to the directions by the Gujarat Electricity Regulatory Commission in its meeting held on 24.01.2014 and 06.08.2014. Referring to the minutes of the last meeting held on 24.01.2014, it was pointed out that what the Committee had stated was that Cable T.V. Network Operations being a highly unorganized sector, even if any authority prescribes any rule or guideline, it is impossible to enforce the same. The Commission, therefore, advised the utilities to remove such type of cables from the electricity network and take up this activity on a continuous basis because safety cannot be compromised for facilitating any network operator. It was submitted that therefore, the Committee has directed removal of unauthorized cables from its network whereas the appellant does not belong to unorganized sector and the cables put up by the appellant are not unauthorized cables. That the directions of the Regulatory Commission relate to unauthorized network cables and hence, the same would not be applicable to the facts of the present case.

7.4Insofar as the contention raised on behalf of the respondent that when the contract stands terminated on account of efflux of time, the arbitration agreement also comes to an end, is concerned, the learned counsel placed reliance upon the decision of the Supreme Court in the case of M/s

Reva Electric Car Co. P. Ltd. v. M/s Green Mobil, AIR 2012 SC 739 wherein, a contention was raised before the court that the MOU having come to an end by efflux of time, there was no question of any termination as claimed by the petitioner therein. Such contention came to be turned down by the Supreme Court by holding that it would be for the Arbitral Tribunal to decide as to whether the claims made are within the arbitration clause. The Arbitral Tribunal would also have to decide the merits of the claim put forward by the respective parties. The court, accordingly, did not accept the submissions made by the learned counsel that the disputes were beyond the purview of the arbitration clause.

8. Mr. Premal Joshi, learned counsel for the respondent submitted that the decision of the Supreme Court in the case of M/s Reva Electric Car Co. P. Ltd. v. M/s Green Mobil (supra) would not be applicable to the facts of the present case, inasmuch as, in the facts of the said case, the dispute related to the period prior to the termination, whereas in the present case the dispute does not relate to any period prior to the termination of the contract and the dispute which is sought to be raised relates to the period subsequent thereto.

9. This court has considered the submissions advanced by the learned counsel for the respective parties and has perused the record of the case as produced before the court.

10. The record of the case reveals that the appellant and the respondent executed a contract for HT/LT poles on rental basis for laying of HFC/OFC cable to the Broad Band Internet Service provider at Baroda City Circle. The duration of the contract was two years from the date of the work order and was to be extended further as per requirement. Such contract came to be entered on or about 29[th] September, 2005. The said agreement came to be extended from time to time and lastly, came to be extended by a “Facilitation Agreement” made on 13[th] March, 2013. Clause 23 of the said agreement provided thus: “This arrangement shall remain valid up to 2 year commencing from October 1, 2012 to September 30, 2014 with the provision that the terms and conditions including rates will be reviewed every year, if necessary”. Clause 24 thereof provides thus: “The MGVCL reserves the right to terminate the agreement even before this expiry of the terms of agreement by giving three months notice in writing if continuance of the agreement is felt to be prejudicial to the interest of the MGVCL.” Clause 25 thereof provides that: “In case of any difference or dispute relating to or arising out of this agreement, the same shall be referred to the MD of the MGVCL, whose decision will be final and binding on the parties. - This should ideally be referred to an Arbitrator.”

11. In the light of the clause 23 of the above referred agreement, the respondent issued a notice dated 6[th] August, 2014 to the appellant requesting it to remove the cables lying on their poles within a week, that is, from 30.09.2014 and to make another arrangement at their end, otherwise their cable will be removed by their company and for any damages or loss to the appellant’s property, it would not be responsible at all. In response to the said notice, the appellant addressed a communication dated 21[st] August, 2014 calling upon the respondent to renew the contract for a further period as per the understanding between the parties and requested the respondent to revoke the notice for removal of its cables from the MGVCL poles. The respondent by a communication dated 24[th] September, 2014, informed the appellant that the competent authority has not accepted its request and it has been decided that no further extension would be granted. The request to remove the cables from the poles before 30.09.2014 was again reiterated. The appellant was, therefore, required to move the trial court by way of the application under section 9 of the Act seeking interim measures of protection.

12. The trial court, by the impugned order, has rejected the request of the appellant for grant of ad-interim injunction on the ground that the appellant had moved the application at the last moment though the notice for removal had been given on 6[th] August, 2014. As can be seen from the impugned order, the trial court has not gone into the merits of the case and merely on the basis that the appellant had approached at a belated stage, has turned down the application for grant of ad-interim injunction.

13. For the purpose of appreciating the controversy between the parties it would be germane to refer to the agreements entered into between the parties from time to time. A perusal of the agreement dated 13[th] March, 2013 entered into between the appellant and the respondent reveals that by virtue of clause 25 thereof which has been reproduced hereinabove, the parties have agreed that any dispute relating to or arising out of the agreement shall be referred to MD of the MGVCL whose decision shall be final and binding and that this should ideally be referred to an Arbitrator. Evidently, therefore, the agreement between the parties contains an arbitration clause. On behalf of the respondent, it had been contended that the agreement has not been terminated by the respondent by resorting to clause 24 of the agreement, but has come to an end due to efflux of time and hence, the arbitration agreement also ceases to exist, and consequently, resort cannot be made to the arbitration clause.

14. In this regard, it may be germane to refer to the decision of the Supreme Court in the case of M/s Reva Electric Car Co. P. Ltd. v. M/s Green Mobil (supra), wherein the MOU executed between the parties had been extended till its termination on 25[th] September, 2009. It was also evident that the parties had failed to reach any fresh agreement with regard to sale of REVA cars in Europe by the respondents. The

court was of the opinion that the pleadings and the material on record had clearly established that there was a valid arbitration agreement incorporated in clause 11 of the MOU. The court observed that the disputes that had arisen between the parties clearly relate to the MOU dated 25[th] September, 2007 and it would be for the Arbitral Tribunal to decide as to whether claims made are within the arbitration clause. The Arbitral Tribunal would also have to decide the merits of the claim put forward by the respective parties. The court, accordingly, turned down the plea of the learned advocate that the disputes were beyond the purview of the arbitration clause and held that section 16(1)(a) of the Arbitration and Conciliation Act, 1996 provides that an arbitration clause which forms part of the contract shall be treated as an agreement independent of the other terms of the contract. The plain meaning of the aforesaid clause would tend to show that even on the termination of the agreement/contract, the arbitration agreement would still survive. It was further held that accepting the submission that the arbitration clause came to an end as the MOU came to an end by efflux of time on 31[st ]December, 2007, would lead to a very uncertain state of affairs, destroying the very efficacy of section 16(1) of the Act. The court further held thus:

“34. The aforesaid provision has been enacted by the legislature keeping in mind the provisions contained in Article 16 of the UNCITRAL Model Law. The aforesaid Article reads as under:- "Article 16 - Competence of arbitral tribunal to rule on itsjurisdiction -

(1) The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

(2)..............................................................

(3)..............................................................."

Under Section 16(1), the legislature makes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, the arbitration clause which formed part of the contract, has to be treated as an agreement independent of the other terms of the contract. To ensure that there is no misunderstanding, Section 16(1)(b) further provides that even if the arbitral tribunal concludes that the contract is null and void, it should not result, as a matter of law, in an automatic invalidation of the arbitration clause. Section 16(1)(a) presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. By virtue of Section 16(1)(b), it continues to be enforceable notwithstanding a declaration of the contract being null and void. In view of the provisions contained in Section 16(1) of the Arbitration and Conciliation Act, 1996, it would not be possible to accept the submission of Ms. Ahmadi that with the termination of the MOU on 31st December, 2007, the arbitration clause would also cease to exist. As noticed earlier, the disputes that have arisen between the parties clearly relate to the subject matter of the relationship between the parties which came into existence through the MOU. Clearly, therefore, the disputes raised by the petitioner needs to be referred to arbitration. Under the arbitration clause, a reference was to be made that the disputes were to be referred to a single arbitrator. Since the parties have failed to appoint an arbitrator under the agreed procedure, it is necessary for this Court to appoint the Arbitrator.”

15. The above referred decision would be squarely applicable to the facts of the present case. Therefore, merely because the agreement had come to an end on account of efflux of time, the arbitration clause would not cease to exist and it is still open for the parties to invoke the arbitration clause and it would be for the arbitrator to decide whether or not the dispute is an arbitrable one.

16. As to what are the parameters which are to be taken into consideration while considering an application under section 9 of the Arbitration Act, has been stated by the Supreme Court in the case of Adhunik Steels Ltd. v. Orissa Manganese and Minerals Pvt. Ltd. (supra) as follows:

“10. It is true that Section 9 of the Act speaks of the court by way of an interim measure passing an order for protection, for the preservation, interim custody or sale of any goods, which are the subject matter of the arbitration agreement and such interim measure of protection as may appear to the court to be just and convenient. The grant of an interim prohibitory injunction or an interim mandatory injunction are governed by well known rules and it is difficult to imagine that the legislature while enacting Section 9 of the Act intended to make a provision which was de hors the accepted principles that governed the grant of an interim injunction. Same is the position regarding the appointment of a receiver since the Section itself brings in, the concept of 'just and convenient' while speaking of passing any interim measure of protection. The concluding words of the Section, "and the court shall have the same power for making orders as it has for the purpose and in relation to any proceedings before it" also suggest that the normal rules that govern the court in the grant of interim orders is not sought to be jettisoned by the provision. Moreover, when a party is given a right to approach an ordinary court of the country without providing a special procedure or a special set of rules in that behalf, the ordinary rules followed by that court would govern the exercise of power conferred by the Act. On that basis also, it is not possible to keep out the concept of balance of convenience, prima facie case, irreparable injury and the concept of just and convenient while passing interim measures under Section 9 of the Act.”

17. Thus, while considering an application under section 9 of the Arbitration Act, the court has to consider the principles governing its grant emanating out of the relevant provisions of the Specific Relief Act and the law bearing on the subject. Therefore, the common principles with regard to the grant of interim injunction, namely, prima facie case, balance of convenience and irreparable injury are the factors which are required to be kept in mind while passing interim measures under section 9 of the Act. Accordingly, the facts of the present case are required to be examined in the light of the above principles.

18. The facts as emerging from the record reveal that by virtue of the agreement entered into between the appellant and the respondent, the appellant has been permitted to put up cables for providing broad band internet service to its consumers. The appellant has, accordingly, laid down a wide cable network in the city of Vadodara and in turn, has entered into contracts with its subscribers for providing internet services. The contract which has been entered into in the year 2005 has been renewed from time to time and lastly, came to

be renewed on 13[th] March, 2013. Having regard to the nature of the agreement between the appellant and the respondent, it is evident that the appellant has invested considerable funds and its entire infrastructure is based upon the cables put up by it on the poles of the respondent. Considering the wide network of cables put up by the appellant, it is inconceivable that it would be possible for the appellant to take down such cables and make alternative arrangement within the short time as granted by the respondent. While it is true that the contract has come to an end on account of efflux of time as contemplated under the last agreement dated 13.03.2013; however, having regard to the fact that the respondent has time and again has renewed the contract between the parties and considering the nature of the agreement, this court is of the view that the appellant is entitled to form a legitimate expectation that such agreement would continue. The least that could be expected of the respondent is to grant reasonable time to the appellant to remove its internet cables and for making alternative arrangement. As to what can be said to be a reasonable time has to be gauged from the fact that the appellant pursuant to the contract has laid down wide network of cables and is providing internet services in the city of Vadodara. To remove such cables and to provide for an alternative arrangement so that the subscribers are not inconvenienced, (having regard to the fact that internet services can now be said to be in the nature of essential services) the respondent was required to put the appellant to notice well in advance. On the facts and in the circumstances of this case, this court is of the opinion that the action of the respondent in issuing the notice dated 6[th] August, 2014 calling upon the appellant to remove its cables within a week from 30.09.2014 smacks of arbitrariness. It cannot be expected of the appellant to be able to remove all its cables within the period specified in the said notice. Moreover, insofar as the appellant is concerned, it would not only need to remove its cables, but also to establish a new cable network, failing which its entire business would come to a grinding halt, which would also cause undue inconvenience and hardship to its subscribers. While it is true that in terms of the agreement dated 13.03.2013, the same comes to an end on account of efflux of time, however, in view of the first agreement entered into between the parties, which provides for extension of time as per requirement, as noted hereinabove, the appellant is entitled to have a legitimate expectation that the agreement would be continued for a further time. In any case, the time granted by the respondent to the appellant could not be stated to be a reasonable time. The respondent cannot expect the appellant to undo the infrastructure created over a decade, overnight. Further, the outcome of removal of such cables within a short time would also amount to denying to the public at large the internet facility provided by the appellant.

19. Insofar as the contentions based on the provisions of section 14 of the Specific Relief Act are concerned, more particularly, clause (c) of sub-section (1) of section 14 of the Specific Relief Act, namely, “a contract which is in its nature determinable”, cannot be specifically enforced, in the opinion of this court, considering the nature of the agreement between the parties, prima facie the contract cannot be termed to be determinable, as is sought to be contended on behalf of the respondent. By virtue of the first contract entered into between the parties, the appellant is required to renew the agreement in terms of the requirement of the appellant. If at all the respondent desires to terminate the contract, reasonable time is required to be given to the appellant prior thereto. Therefore, the provisions of clause (c) of sub-section (1) of section 14 of the Specific Relief Act would not come to the aid of the respondent.

20. Moreover, the present case would also fall within the exception carved out under section 10 of the Specific Relief Act, inasmuch as, in the present case, the properties in question, viz., the electric poles of the respondent, are not easily available in the market and hence, the present case would squarely fall within the ambit of clause (a) of sub-section (ii) of the Explanation to section 10 of the Specific Relief Act.

21. On behalf of the respondent, reliance has been placed upon the Minutes of the Meeting of the Gujarat Electricity Regulatory Commission for the purpose of contending that all cables of every type which have been placed on the poles of the respondent are to be removed in public interest. In the affidavit-in-reply filed on behalf of the respondent, it had been stated that in terms of the directives of the Commission, laying cables on electricity poles is not permissible and have to be removed forthwith and hence, peremptory action has been taken by the respondent. In this regard, reference was made to the Minutes of the Meeting of the Commission held on 24.01.2014, wherein it has been recorded that CEI and the members of the Forum felt that Cable TV Network Operations being a highly unorganized sector, even if any authority prescribes any rule or guideline, it is impossible to enforce the same. The Commission advised the utilities to remove such type of cables from the electricity network and take up this activity on a continuous basis because safety cannot be compromised for facilitating any network operator. It was further directed that all the DISCOMs shall keep the Forum informed by reporting the activities carried out for removal of unuathorized cables from it’s network. In its meeting held on 6[th] August, 2014, the Co-ordination Forum of the Commission observed thus: “Chairman reviewed the progress made about illegal cables removal activities. DISCOMs stated that the Cable Operators are used to reinstall the cables hence cable removal activity is continuous process. TPL informed that they are removing the cables from the network and seize such cables. The Forum recognized that installing cable on electricity poles is not a permissible activity and in no way, can be regularized. The Forum decided to enhance awareness amongst public and Cable Operators. It is also decided to carry out cable removal activity in coordination with District Magistrate and concerned Commissioner of Police, Home Department personnel. CEI was entrusted to expedite respective departments of the State Government and issue a guideline for the procedure to be adopted for removal of such cables on permanent basis.”

22. On a close reading of the above referred Minutes of the Meetings, it is apparent that what the Regulatory Commission seeks to do is to remove the Cable TV Network Operations as being highly unorganized sector. The Chairman reviewed the progress made in respect of removal of illegal cables. In the present case, cable network established by the appellant is a broad band internet service and not a cable TV network. The cables have been installed by the appellant in terms of the agreement arrived at with the respondent and by no stretch of imagination, can the network established by the appellant be stated to be illegal so as to fall within the ambit of the directives issued to the Regulatory Commission. Under the circumstances, the stand taken by the respondent that such action has been taken pursuant to the directives of the Regulatory Commission does not merit acceptance.

23. In the light of the above discussion, the appellant has made out a prima facie case for grant of interim relief. The balance of convenience also lies in favour of the appellant inasmuch as undue prejudice and hardship would be caused to it if the interim relief as prayed for is not granted, whereas the respondent is not put to any inconvenience if the cables put up by the appellant are continued for a reasonable period of time. Moreover, irreparable injury as discussed hereinabove would be caused to the appellant if interim relief as prayed for is not granted as the same would result into undue hardship not only to the appellant but would cause a lot of inconvenience to its subscribers. The appeal, therefore, succeeds and is, accordingly, allowed. The impugned order dated 30.09.2014 passed by the learned Fourth Additional District Judge, Vadodara below Exhibit-4 in Civil Miscellaneous Application No.437 of 2014, is hereby quashed and set aside. The application for ad-interim injunction is hereby allowed. The respondent is restrained from taking any coercive action for removal of the cables of the appellant or from in any manner damaging or causing loss to the property of the appellant till the pendency of the application under section 9 of the Arbitration and Conciliation Act, 1996.

24. At this stage, Mr. N. R. Koyani, learned advocate for Mr. Premal Joshi, learned advocate for the respondent has prayed that this order be stayed for a period of six weeks for the purpose of approaching the higher forum.

25. Having regard to the facts of the present case, the request is turned down.

parmar*

(HARSHA DEVANI, J.)