7 June 2021| Thar Camps Pvt. Ltd. v. M/s Indus River Cruises Pvt. Ltd | Hari Shankar J | 2021 SCC OnLine Del 3150

The respondent Indus was looking after the Indian river cruising business of the Pandaw group. Two different companies had leased three vessels to Indus. Indus, in turn, had an agreement with the petitioner Thar for operating and managing the ship (“VOMA”). A dispute arose from VOMA, and Thar brought a petition to secure the amount in dispute. Since the remaining respondents were outside India, Thar asserted that the only way to secure the amount was a restraint against the removal of the vessels, which in its view was the subject matter of the arbitration agreement.

Held, citing cases on the meaning of subject-matter and subject-matter of the suit, that the subject matter of the arbitration agreement was not the vessels but the services provided by the petitioner on those vessels. Thus, Section 9 (1) (ii) (a) ACA, which deals with the preservation of goods that is the subject matter of the arbitration agreement, did not apply. But, Section 9 (1) (ii) (b) ACA that provides for securing the amount in dispute in the arbitration applied.

Further, the claim of securing the amount was predicated on (i) a possible terminating of VOMA, (ii) and the argument that the respondent would be liable to pay for termination during the lock-in period. Rejecting the submission, held, the agreement did not specify a consequence of termination, and the court cannot rewrite the contract.

The court also referred to cases analysing the difference between “debt” and “damages”. It said the observations made in those cases applied, i.e., debt is an existing obligation to pay, and damages require adjudication and are payable on the fiat of a court. It held that if the petitioner proves wrongful termination, it would be entitled to damages on proof of loss. Further, Section 9 (ii) (b) ACA cannot be construed to read into it “in rem” jurisdiction.

Usually, in Section 9 ACA, orders against third parties are not made. Still, they can be made to restrain the third party to exercise an independent right vis-à-vis one of the parties to an arbitration agreement. Here, an order to arrest a ship owned by the non-signatories who had an independent right to repossess could not be made.

Lastly, the argument that Paul Strachan (the founder) was the moving spirit behind all the respondents was held a triable issue for arbitration. The court said that the corporate veil is not flimsy, and to lift or pierce it is an intricate exercise neither easily undertaken or accomplished.

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