Calcutta High Court
M/S. Harsha Constructions And Ors vs Vkm Projects Private Limited And Ors on 28 July, 2026
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
RESERVED ON: 22.06.2026
DELIVERED ON: 28.07.2026
PRESENT:
THE HON'BLE MR. JUSTICE GAURANG KANTH
APOT 297 OF 2025
IA NO: GA-COM/1/2025, GA-COM/2/2025
M/S. HARSHA CONSTRUCTIONS AND ORS.
VS
VKM PROJECTS PRIVATE LIMITED AND ORS.
Appearance: -
Mr. Jishnu Choudhury, Sr. Adv.
Mr. Avijit Ghoshal, Adv.
Ms. Sreeja Mukherjee , Adv.
........................... for the Appellants
Mr. Rachit Lakhmani, Adv.
Mr. Aditya Chakraborty, Adv.
Ms. Pooja Sah, Adv.
Mr. Siddharth Makkar, Adv.
.............. for the Respondents
JUDGMENT
Gaurang Kanth, J. :-
1. The appellants have preferred the present appeal under Section 37(2)(b) of
the Arbitration and Conciliation Act, 1996, assailing the order dated
10.06.2025 passed by the learned Sole Arbitrator whereby an application
filed by the respondents (claimants before the learned Arbitral Tribunal)
under Section 17 of the Arbitration and Conciliation Act, 1996 was allowed,
directing the appellants (respondents before the Arbitral Tribunal) to
produce and disclose documents pertaining to a contract entered into
between the appellants and a third party, M/s Rapiscan Systems Pvt. Ltd.
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2. The appellants herein were the respondents before the learned Arbitral
Tribunal, while the respondents herein were the claimants therein. The
facts giving rise to the present appeal are set out hereinafter.
3. M/s Rapiscan Systems Private Limited had entered in to a principal
contract with the Syama Prasad Mookherjee Port Trust, Kolkata, for the
installation of an X-ray based Drive Through Container Scanner (DTCS).
As per the said principal contract, M/s Rapiscan Systems Private Limited
was permitted to engage sub contractors for carrying out various works
associated with it.
4. A joint venture Agreement dated 06.09.2021, was executed between the
appellants, and respondents (M/s VKM Projects Pvt. Ltd and Marketing
Point, a partnership firm in which Respondent Nos. 2-3 are partners).
Pursuant thereto, respondent no. 1, Marketing Point and appellant no. 1
agreed to collaborate for securing and executing civil and structural works
associated with the delivery and installation of DTCS System at the Syama
Prasad Mookherjee Port Trust, Kolkata in terms of its principal contract,
with appellant no. 1 acting as the entity through which quotations would
be submitted. On the same date, the parties also entered into a
Supplementary Agreement recording, inter alia, that the sub-contract, if
awarded, would stand in the name of appellant no. 1 and that respondent
no. 1 and Marketing Point would receive remuneration for their marketing
and consultancy services at the rate of 5% each of the value of every bill
raised under the sub-contract, together with applicable taxes, payable
upon receipt of payment by appellant no. 1.
5. Thereafter, on 16.09.2021, M/s Rapiscan Systems Private Limited issued a
Notification of Award in favour of appellant no. 1. A formal Sub-Contractor
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Contract was also executed on the same date between M/s Rapiscan
Systems Private Limited and the appellants.
6. The respondents have averred that following the execution of the aforesaid
agreements, they participated in various preparatory activities connected
with the project, including establishment of the site office, obtaining
requisite permissions and licences, deployment of security personnel and
engagement of sub-contractors.
7. It is the case of the respondents before the learned Arbitral Tribunal that
from October 2021 onwards, they were not provided with information
concerning the progress and financial status of the project. The
respondents addressed various communications to the appellants seeking
information relating to the project, including particulars of payments
allegedly received under the sub-contract. The parties, however, dispute
the significance and effect of such communications.
8. Disputes having arisen between the parties in connection with the Joint
Venture Agreement and the Supplementary Agreement dated 06.09.2021,
arbitral proceedings were commenced before the learned Sole Arbitrator.
9. In the course of the arbitral proceedings, the respondents filed an
application under Section 17 of the Arbitration and Conciliation Act, 1996
seeking, inter alia, directions upon the appellants to disclose particulars of
the running account bills raised upon M/s Rapiscan Systems Private
Limited and the status of payments received there against; to produce the
books of accounts, profit and loss statements and balance sheets
pertaining to the project; and to disclose records evidencing the total
revenue generated under the sub-contract dated 16.09.2021.
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10. By the impugned order dated 10.06.2025, the learned Sole Arbitrator held
that the reliefs sought by the respondents fell within the ambit of Section
17(1)(ii)(a) and Section 17(1)(ii)(c) of the Arbitration and Conciliation Act,
1996 and that the documents sought were relevant to the disputes
pending before the Arbitral Tribunal. Accordingly, the learned Sole
Arbitrator directed the appellants to disclose the particulars of the running
account bills raised upon M/s Rapiscan Systems Private Limited together
with their clearance status, to disclose the relevant books of accounts,
profit and loss statements and balance sheets, and to produce records
relating to the total revenue generated under the sub-contract, within the
timelines stipulated therein.
11. Aggrieved by and dissatisfied with the aforesaid order dated 10.06.2025,
the appellants have preferred the present appeal.
Submission on behalf of the Appellants
12. Mr. Jishnu Choudhury, learned Senior Counsel appearing on behalf of the
Appellants, submits that the application preferred by the Respondents
before the learned Sole Arbitrator under Section 17 of the Arbitration and
Conciliation Act, 1996 was wholly misconceived and that the impugned
order dated 10.06.2025 is ex facie without jurisdiction and is therefore
liable to be set aside. It is submitted that no Joint Venture was ever given
effect to between the parties: Clause 17 of the Sub-Contractor Contract
dated 16.09.2021 between Rapiscan Private Limited and the Appellants
expressly barred sub-contracting without Rapiscan’s prior written consent.
It is contended that no such consent was ever granted in favour of the
Respondents that the proposed joint venture namely “Maharav Infra
Projects” was never formed, and that the entire work was executed solely
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by the Appellants without demur from the Respondents until after the
work had been complete. These facts, going to the root of the Respondents’
claimed entitlement to the documents sought, were never considered in the
impugned order.
13. It is submitted that the jurisdiction of an Arbitral Tribunal under Section
17 is analogous to, and co-extensive with, that of a Court under Section 9,
both being confined to granting interim measures of protection; Section 17
does not empower an Arbitral Tribunal to direct discovery, disclosure or
compulsory production of documents for the purpose of collecting or
preserving evidence. The impugned order, directing disclosure of Running
Account bills, books of accounts, profit and loss statements, balance-
sheets and relating to the total revenue generated records, under the sub-
contract is in substance an order for production of evidence, and any such
direction could only have been issued under Section 19, which governs
admissibility, relevance and production of evidence, read with Section 27
of the Act. The source of the power to order discovery is accordingly not
rooted in Section 17(1)(ii)(c) at all, and any attempt to invoke Section 17 for
this purpose renders Sections 19 and 27 nugatory, as held in Union of
India v. Reliance Industries Limited and Others, reported as 2018
SCC OnLine Del 13018, and in Pennar Aluminium Company Limited
(PALCO) v. Chairman-cum-Managing Director, National Aluminium Co.
Ltd., reported as 2019 SCC OnLine Ori 370.
14. It is further submitted that Section 17(1)(ii)(c) is couched in language
almost identical to Order XXXIX Rule 7 of the Code of Civil Procedure,
1908, and is, therefore, required to be construed accordingly, as held in
Augmont Gold Private Limited v. One97 Communication Limited,
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reported as 2021 SCC OnLine Del 4484. Order XXXIX Rule 7 empowers
the Court to direct detention, preservation and inspection only of the
property which is the subject matter of the suit, and not of documents
which are merely of evidentiary value, as held in Ramswarup v. Mst.
Kesar, reported as AIR 1958 Raj 218 (para 8). It is further submitted
that even where a question may arise relating to the suit, no commission
or order can be issued thereunder for the purpose of collecting evidence
through discovery, as held in Institution of Engineers (India) v. Bishnu
Pada Bag, reported as AIR 1978 Cal 296, and in The Owners and
Parties Interested in the Vessel ‘M.V. Baltic Confidence’ v. The State
Trading Corporation of India Limited, reported as AIR 2000 Cal 91.
The books of account and RA bills sought by the Respondents cannot, in
any event, be construed as “property or thing” which is the subject matter
of dispute, as held in Padam Sen and Another v. State of Uttar
Pradesh, reported as 1960 SCC OnLine SC 77.
15. It is submitted that an Arbitral Tribunal, being a private adjudicatory
forum, is not vested with the coercive powers of a civil court to compel
production of documents. Even before a civil court, failure to produce
documents results only in the drawing of an adverse inference under
Section 114(g) of the Indian Evidence Act, 1872, and not in the issuance of
a mandatory direction to produce such documents, as held in Rajesh
Bhatia v. G. Parimala & Ors., reported as 2005 SCC OnLine AP 970,
and in Krishan Dayal v. Chandu Ram, reported as 1969 SCC OnLine
Del 134. It is further submitted that under Section 27 of the Act, a party
is entitled to an opportunity of being heard and to contend that no such
order ought to be made before a Court renders assistance in taking
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evidence, a safeguard which according to the Appellants was denied to
them. It is also submitted that the underlying dispute being a pure money
claim, the money claimed cannot by itself constitute the “subject matter of
the arbitration” within the meaning of Section 17. At the highest, a party
may seek attachment or security in respect of the claim, but no order for
disclosure or production of documents can be justified on this footing,
since documentary evidence can never assume the character of the subject
matter of the dispute.
16. Finally, it is submitted that the impugned order contains no discussion of
the facts of the case and records no finding as to why the Respondents
would be entitled to the documents sought, thereby rendering the
impugned order perverse on this ground alone. For the reasons set out
above, the impugned order dated 10.06.2025 is wholly unsustainable in
law, having been passed without jurisdiction and without consideration of
the relevant facts, and is accordingly liable to be set aside.
Submission on behalf of the Respondents
17. Mr. Rachit Lakhmani, learned Counsel for the Respondents submits that
the impugned order dated 10.06.2025 passed by the learned Sole
Arbitrator is a well reasoned order passed after due application of mind to
the facts and circumstances of the case, and does not warrant any
interference by this Court in exercise of its jurisdiction under Section 37 of
the Arbitration and Conciliation Act, 1996. It is submitted that the
question as to whether the documents sought to be produced and
disclosed form part of the subject matter of the arbitration is essentially
one which depends upon a careful interpretation of the various clauses of
the agreements entered into between the parties, requiring a detailed and
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comprehensive analysis of the contractual terms. The learned Sole
Arbitrator has undertaken precisely such an exercise by carefully
examining the relevant clauses of the Joint Venture Agreement and the
Supplementary Agreement dated 06.09.2021, and has arrived at a
considered finding that the documents in question constitute the subject
matter of the present arbitration. It is submitted that this Court, while
exercising its appellate jurisdiction under Section 37 of the Act, is neither
required nor expected to interfere with such findings of fact and law
arrived at by the learned Arbitral Tribunal, which fall squarely within the
domain of the Tribunal’s jurisdiction.
18. It is further submitted that the Joint Venture Agreement dated 06.09.2021
was entered into between all the parties herein, whereunder appellant no.
1 holds a 34% share in the joint venture, respondent no. 1 holds a 33%
share, and respondents nos. 2 to 4, being partners of the partnership firm
Marketing Point, collectively hold the remaining 33% share. It is submitted
that prior to the formation of the joint venture, all three entities were
already actively associated with and working on the project in connection
with M/s. Rapiscan Systems Private Limited. On the same date, the parties
also executed a Supplementary Agreement. Since the formation of a new
legal entity would have taken considerable time, an interim arrangement
was mutually agreed upon by all the parties, whereby appellant no. 1 was
permitted to submit the bid and receive the sub-contract in its own name
as a temporary measure pending the constitution of the joint venture
entity. Learned Counsel for the respondents draws the attention of this
Court to Clause 5.2 of the Joint Venture Agreement, which according to
him expressly creates a right in favour of the respondents to inspect the
9
records of the joint venture and correspondingly imposes a duty upon the
appellants to disclose all details pertaining to the operations of the joint
venture, including the books of accounts. It is therefore submitted that the
obligation of disclosure cast upon the appellants is not merely a
procedural requirement but a substantive contractual right vested in the
respondents as joint venture partners.
19. It is also submitted that the Supplementary Agreement expressly
acknowledges the efforts and contributions of the respondents towards the
project and categorically records that the sub-contract was awarded by
M/s. Rapiscan Systems Private Limited as a direct result of the combined
marketing efforts of respondent no. 1 and the partnership firm represented
by respondents nos. 2 to 4. The appellant was merely authorised to obtain
the sub-contract in its name as an interim measure. The Supplementary
Agreement further reflects that the respondents had already rendered
services in connection with the project prior to its formal award. Under the
terms of the said agreement, the appellant was obligated to raise bills upon
M/s. Rapiscan Systems Pvt. Ltd and the respondents were entitled to
receive their respective shares within 10 days from the receipt of each
payment from M/s. Rapiscan systems Pvt. Ltd. It is therefore submitted
that the respondents are not mere sub-contractors engaged by the
appellant for the execution of work under the appellant’s instructions but
are joint venture partners entitled to profit sharing. The Joint Venture
Agreement having been incorporated by reference into the Supplementary
Agreement, the appellant is under a clear contractual obligation to disclose
all accounts and details of the bills raised to the respondents in their
capacity as joint venture partners.
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20. It is submitted that Section 17(1)(ii)(c) of the Arbitration and Conciliation
Act, 1996 expressly empowers an Arbitral Tribunal to pass an order for 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. It is further authorises any person to enter upon any
land or building in the possession of any party, or authorises any samples
to be taken, or any observation to be made, or any experiment to be tried,
which may be necessary or expedient for the purpose of obtaining full
information or evidence. It is submitted that the expression “thing” as used
in Section 17(1)(ii)(c) is a deliberate and significant addition, going beyond
the language of Order XXXIX Rule 7 of the Code of Civil Procedure, 1908,
which does not employ the said expression. This addition reflects the
legislative intent to confer wider powers upon an Arbitral Tribunal so as to
encompass any property or thing which constitutes the subject matter of
the dispute. Learned Counsel submits that the correct legal position,
which is also supported by the decision of the Hon’ble Delhi High Court in
Reliance Industries Ltd. (supra), is that where the documents or records
in question relate to the subject matter of the dispute in arbitration, an
order directing their production and inspection can competently be passed
under Section 17 of the Act. It is only where the documents sought do not
relate to the subject matter of the dispute that recourse to Section 19 of
the Act would be appropriate. In the present case, the learned Sole
Arbitrator has, after a thorough examination of the contractual documents,
arrived at a finding that the running account bills, books of accounts, and
revenue records sought by the respondents are directly referable to and
form part of the subject matter of the arbitration. Learned Counsel also
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places reliance upon the definition of “subject matter” as contained in
Black’s Law Dictionary in support of the submission that the documents
sought fall squarely within the ambit of the said definition and that the
impugned order is therefore well within the jurisdiction conferred upon the
learned Sole Arbitrator under Section 17 of the Act.
21. Learned Counsel for the Respondent also sought to distinguish the
judgments cited by the Appellant. It is accordingly prayed that the present
appeal be dismissed with costs.
Legal Analysis
22. This Court has heard the arguments advanced by the learned Senior
Counsel for the appellant and learned counsel for the respondent,
examined the documents placed on record, and perused the judgments
cited at the Bar.
23. The present appeal under Section 37(2)(b) of the Arbitration and
Conciliation Act, 1996 arises out of the order dated 10.06.2025 passed by
the learned Sole Arbitrator, whereby an application filed by the
respondents under Section 17 of the Arbitration and Conciliation Act,
1996 was allowed, directing the appellants to disclose the particulars of
running account bills raised against M/s. Rapiscan Systems Private
Limited, to produce their books of accounts, profit and loss statements and
balance sheets, and to submit duly validated records relating to the total
revenue generated under the sub-contract dated 16.09.2021.
24. The main dispute between the parties centres around the interpretation
and enforceability of two agreements dated 06.09.2021, namely a Joint
Venture Agreement and a Supplementary Agreement, executed between
the appellants and the respondents. The respondents contend that
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pursuant to the said agreements, they rendered marketing and
consultancy services which resulted in the award of the sub-contract by
M/s. Rapiscan Systems Private Limited in favour of the appellants,
entitling them to receive 10% of the value of each running account bill. The
appellants dispute the enforceability of both agreements, contending that
the Joint Venture Agreement was never acted upon and was consciously
abandoned, that the Supplementary Agreement was void for want of prior
written consent of M/s. Rapiscan Systems Private Limited as required
under Clause 17 of the sub-contract, and that the documents sought
pertain exclusively the contractual relationship between the appellants and
M/s. Rapiscan System Private Limited, a third party. It is therefore
contended that the impugned order directing production of such
documents has been passed without jurisdiction and in excess of the
powers conferred under Section 17 of the Act.
25. Before analysing the core issue involved in the present appeal, it is
necessary to set out Section 17(1) of the Act:
Interim measures ordered by arbitral tribunal.
(1) A party may, during the arbitral proceedings [***], apply to the
arbitral tribunal-
(i) for the appointment of a guardian for a minor or 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
13samples 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
arbitral tribunal to be just and convenient, and the arbitral
tribunal shall have the same power for making orders, as the
court has for the purpose of, and in relation to, any proceedings
before it.”
26. Two features of this provision merit immediate attention. First, the powers
conferred are interim and protective in nature, designed to preserve the
status quo pending the conclusion of the arbitral proceedings. Secondly,
the provision is confined to property or things which are the subject matter
of dispute, or as to which a question may arise therein. On a plain reading,
Section 17 does not contemplate or authorise an Arbitral Tribunal to
compel a party to produce documents as evidence in support of the other
side’s claim. Matters relating to procedure and evidence are governed by
Section 19 of the Act. This distinction between preservation of subject
matter and compelled production of evidence is fundamental and goes to
the root of the jurisdictional question.
27. The scope of Section 17 was examined by the Hon’ble Delhi High Court in
Reliance Industries Ltd. (supra), a decision relied upon by both parties.
That judgment draws a clear distinction between (a) orders preserving and
protecting documents that constitute the subject matter of the dispute
itself, which fall within the ambit of Section 17, and (b) orders requiring a
party to affirmatively produce or disclose documents to enable the other
side to establish or quantify its claim, which are, in substance, orders for
discovery and production of evidence properly governed by Section 19 of
the Act. It is the character and purpose of the order, not the label attached
14
to it, that determines which provision applies. This Court respectfully
adopts this position.
28. Learned Senior Counsel for the appellants has additionally submitted that
Section 17(1)(ii)(c) is couched in language substantially similar to Order
XXXIX Rule 7 of the Code of Civil Procedure, 1908, and that the principles
governing that provision furnish a useful interpretative aid, as recognised
in Augmont Gold Private Limited (Supra). It has been submitted, relying
on Ramswarup (supra), that Order XXXIX Rule 7 authorises detention,
preservation and inspection only of property which is the subject matter of
the suit, and does not extend to documents which are merely of
evidentiary value. This Court finds the said analogy to be instructive: as it
reinforces, from a parallel statutory provision, the very distinction already
drawn in Reliance Industries Ltd. (supra) between preservation of subject
matter and production of evidence.
29. It has further been submitted, relying upon Institution of Engineers
(India) (Supra), and The Owners and Parties Interested in the Vessel
‘M.V. Baltic Confidence‘ (Supra), that even where a question may arise
relating to the suit, no commission or order can be issued for the purpose
of collecting evidence through discovery. This Court accepts that this
principle applies with equal, if not greater, force to an Arbitral Tribunal
exercising an analogous power under Section 17(1)(ii)(c) of the Act: a
provision permitting inspection of the subject matter cannot be stretched
into a general discovery mechanism, whether the forum is a civil court
acting under Order XXXIX Rule 7 of the Code of Civil Procedure, 1908 or
an Arbitral Tribunal acting under Section 17 of the Act.
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30. The learned Senior Counsel for the appellants has also placed reliance
upon Rajesh Bhatia (supra), which reinforces that the powers of an
Arbitral Tribunal under Section 17 are analogous to those of a Court under
Section 9, and are confined to granting interim measures of protection. An
Arbitral Tribunal, being a private adjudicatory forum, does not possess the
coercive powers of a civil court to compel production of documents or
leading of evidence; the only consequence of a party’s failure to produce
documents is the drawing of an adverse inference, a principle also reflected
in Krishan Dayal (Supra), and consistent with Section 114(g) of the Indian
Evidence Act, 1872. It would be incongruous if an Arbitral Tribunal were
held to possess wider powers to compel production of evidence than a civil
court itself.
31. Reliance has also been placed upon Padam Sen and Another (Supra), for
the proposition that the power judicial or quasi judicial forum to direct
production or collection of evidence cannot be assumed as an incident of a
general or residuary power where the statute does not specifically confer
such authority. The said decision lends further support to a narrow,
textual construction of Section 17(1)(ii)(c). The power of “detention,
preservation or inspection” of the subject matter cannot, in the absence of
an express statutory sanction, be read to include a free-standing power to
direct affirmative disclosure, validation and production of financial records
such as books of accounts, profit and loss statements and balance sheets,
which are, at best, evidentiary material and not themselves the “property
or thing” in dispute.
32. In this background, it is relevant to examine the operative portion of the
impugned order. Learned Sole Arbitrator recorded a prima facie
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satisfaction in paragraphs 19 to 21 of the impugned order, holding, in
effect, that having regard to the pleadings and the Supplementary
Agreement, an interim measure directing preservation and inspection of
the running account bills submitted by the appellants to M/s. Rapiscan
Systems Private Limited, being prima facie the subject matter of dispute,
would be just and convenient, and accordingly the application under
Section 17 of the Act was allowed.
33. Pursuant to that finding, the learned Sole Arbitrator passed operative
directions in paragraph 22 requiring disclosure of particulars of the
running account bills and their clearance status; disclosure of books of
accounts, profit and loss statements and balance sheets; validation of all
records relating to the total revenue generated under the sub-contract; to
submit such validated records before the learned Arbitral Tribunal with
copies to the respondents; and completion of “inspection and discovery” by
23.06.2025.
34. A plain reading of these operative directions reveals four distinct directions,
disclosure of RA bill particulars, disclosure of accounting records,
validation revenue records, and submission/forwarding of the same with a
further direction for “discovery” requiring the appellants to produce,
disclose, validate and furnish the entire array of financial and accounting
documents pertaining to their sub-contractual dealings with M/s.
Rapiscan Systems Private Limited.
35. Upon a careful analysis of the impugned order in light of the statutory
provisions and the judicial precedents discussed above, including the line
of authorities of the Code interpreting Order XXXIX Rule 7 and the
principle laid down in Padam Sen (Supra) , this Court is of the opinion
17
that the impugned order suffers from a fundamental legal infirmity in its
operative directions, even though the prima facie satisfaction recorded in
the reasoning portion is, to a limited extent, legally defensible.
36. The prima facie finding that the RA bills form part of the subject matter of
the present arbitration is a finding of fact arrived at after examining the
pleadings and the Supplementary Agreement, which on its face ties the
respondents’ remuneration to the RA bills and incorporates the Joint
Venture Agreement by reference. This Court, while exercising limited
appellate jurisdiction under Section 37, is not required to interfere with
such prima facie finding, particularly since it rests on a plausible reading
of the contractual documents.
37. The critical difficulty, however, arises from the operative directions
themselves. An order restraining the appellants from destroying, damaging
or disposing of the RA bills pending final adjudication would constitute a
legitimate exercise of Section 17(1)(ii), falling within detention and
preservation of the subject matter of the dispute, and would be consistent
with an analogy drawn from the Order XXXIX Rule 7 of the CPC, 1908 as
pressed by the appellants. However, a direction to affirmatively disclose the
particulars of the running account bills, to disclose books of accounts and
balance sheets, validate revenue records, and submit and forward the
same is a different matter altogether. Such directions do not preserve the
subject matter of the dispute; rather they compel production and
disclosure of evidentiary material to enable the respondents to establish
and quantify their claim, precisely the species of order that Reliance
Industries Ltd (Supra)., Rajesh Bhatia (Supra), Institution of Engineers
(supra), and the M.V. Baltic Confidence (Supra) line of authority hold falls
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outside the ambit of Section 17 (and outside Order XXXIX Rule 7 on the
civil side), and within the domain of Section 19 of the Act.
38. This Court also finds a telling internal inconsistency within the impugned
order. The reasoning portion employs the language of “preservation and
inspection,” yet the operative directions go well beyond that, extending to
disclosure, validation, submission and “discovery.” The operative directions
thus exceed not only what is contemplated in the reasoning portion of the
impugned order but also the jurisdiction conferred upon the learned
Arbitrator under Section 17 of the Act, and are, to that extent liable to be
set aside.
39. There is also merit in the submission that, in the context of a money claim,
mere quantification evidence does not constitute the “subject matter of the
dispute” so as to attract Section 17 of the Act. The RA bills are relied upon
principally for the purpose of computing the respondents’ alleged 10%
share, and to that extent function as evidence bearing on quantum rather
than as the res of the dispute. As submitted by the appellants relying on
Padam Sen (Supra), the books of accounts, profit and loss statements and
balance sheets sought cannot in any event be construed as “property or
thing” in dispute; treating quantification material as invariably
constituting the “subject matter” would risk converting Section 17 into a
general discovery provision in every money claim, a construction which
this Court is not inclined to adopt.
40. The respondents’ argument that Clause 5.2 of the JV Agreement creates a
specific contractual right of inspection, and that the impugned order
merely enforces it, does not assist them. Any such right, if it exists, must
be asserted as part of the substantive claim or pursued through interim
19
relief framed as an injunction against destruction of records, not through a
direction compelling production. The sweeping directions in paragraph 22
travel well beyond the enforcement of any contractual inspection right and
constitute a general direction for disclosure and production of evidence,
which falls beyond the scope of Section 17, of the Act.
41. The appellants have further submitted, by reference to Section 27 of the
Act and the safeguard contained therein before a Court renders assistance
in taking evidence, that they were denied an equivalent opportunity to
contest the production of these documents before the impugned order
came to be passed. This Court finds force in the submission to the extent
that it reinforces, rather than displaces, the conclusion already arrived at.
Where production or discovery of documents is genuinely required for the
purpose of the arbitration, the appropriate course is for the respondents to
proceed under Section 19, where such safeguards and procedural
regularity are built into the process, and not under Section 17.
42. This Court is conscious that its jurisdiction under Section 37(2)(b) is
limited, and it is neither required to re-appreciate facts nor to substitute
its own prima facie satisfaction for that of the Tribunal. The challenge in
the present appeal is confined to the narrow question of law, as to whether
the operative directions travel beyond the jurisdictional limits of Section 17,
and it is on this ground alone that interference with the impugned order is
warranted.
43. In view of the foregoing analysis, and having considered the additional
authorities cited on behalf of the appellants, this Court is of the considered
opinion that the impugned order dated 10.06.2025 deserves to be set aside
to the extent indicated. The directions in paragraph 22 of the impugned
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order insofar as they direct affirmative disclosure of RA bill particulars,
disclosure of books of accounts, profit and loss statements and balance
sheets, validation and submission of revenue records, and forwarding of
copies to the respondents, are beyond the scope of Section 17 and are
accordingly set aside. If the respondents seek production and inspection of
such documents for the purposes of the arbitral proceedings, they shall be
at liberty to take appropriate steps before the learned Sole Arbitrator in
accordance with law.
44. The appeal is accordingly allowed and disposed of.
45. It is clarified that any expression of opinion or observation made in this
judgment is confined to the determination of the present appeal arising out
of an interim measure and shall not be construed as an expression of
opinion on the merits of the disputes pending adjudication before the
learned Sole Arbitrator, who shall adjudicate the same independently and
uninfluenced by any observation made herein.
46. All pending application accordingly disposed of.
(GAURANG KANTH, J.)
SAKIL AMED P.A
