Livguard Energy Technologies Private Limited vs Shiv Shakti Agencies Through Its Proprietor Mr. Vishal Kumar Goyal

$~83
* IN THE HIGH COURT OF DELHI AT NEW DELHI
# CNR No. DLHC010183472026
+ ARB. A. (COMM.) 31/2026, I.A. 11977/2026 & I.A.
11978/2026

LIVGUARD ENERGY TECHNOLOGIES PRIVATE
LIMITED .....Petitioner
Through: Mr. Gautam Narayan, Sr. Adv.
with Ms. Asmita Singh, Mr.
Amulya Dhingra and Ms.
Anvika Shukla, Advs.

versus


SHIV SHAKTI AGENCIES THROUGH ITS PROPRIETOR
MR. VISHAL KUMAR GOYAL .....Respondent
Through: Mr. Rajeev Kapoor, Mr.
Navneet Kaur and Mr. Sahdev
Sharma, Advs.
CORAM:
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT(ORAL)
% 13.10.2026
1. The present appeal under Section 37(2)(b) of the Arbitration and
1
Conciliation Act, 1996 , has been preferred by the Appellant against the
order dated 13.02.2026 passed by the learned Sole Arbitrator, whereby
its application under Section 17 seeking security for the outstanding
monetary claim was dismissed.

2. Apparently, the dispute arises out of a Distributorship Agreement
dated 18.04.2016. In the said distributorship agreement, the

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“Act” hereinafter
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Respondent was appointed as an authorised distributor of the
Appellant’s batteries, inverters and allied products. According to the
Appellant, the Respondent defaulted in making payments against the
goods supplied, resulting in outstanding dues of approximately Rs.2.40
crore, and for the same, issued a cheque dated 30.01.2024 for
Rs.1,84,27,300/-, which was also subsequently dishonoured.

3. According to the appellant, during discussions concerning
settlement of the outstanding dues, a joint inspection of the unsold
inventory, was conducted on 01.02.2024.

4. The respondent valued the goods recognized during joint
inspection at approximately Rs.1.64 crore.

5. However, the proposed arrangement did not materialise, with
both parties attributing responsibility for its failure to each other.

6. According to the appellant, they are not contractually obliged to
take back the unsold products. Nevertheless, and without prejudice to
its rights, it offered to accept certain unsold goods and adjust their value
against the outstanding dues. However, the arrangement was
conditional and those reciprocal conditions were never fulfilled.

7. In the version of Appellant, there was no binding settlement
which was concluded.


8. The respondent has refuted the version of the appellant, and their
case is that Appellant had agreed to take back the entire inspected
inventory in full and final settlement of the outstanding invoices. In
furtherance of this, it was ready to return the goods and had even sent
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an email dated 5 February 2024, asking appellant to collect the stock.

9.
However, appellant subsequently refused to collect the goods and
insisted upon monetary payment.

10. The Appellant thereafter approached the Delhi High Court under
Section 9, wherein interim protection restraining the creation of third-
party rights in the property concerned was granted on 08.01.2025.

11. Upon constitution of the Arbitral Tribunal, the present Section 9
application was directed to be treated as an application under Section
17 of the Act and this Court vide an order dated 11.03.2025 passed in
OMP(I) (comm) No. 439/2024, has directed the Ld. Sole Arbitrator, to
decide the said application under Section 17 of the Arbitration and
Conciliation Act, 1996.

12. By the impugned order, the learned Arbitrator declined to direct
the Respondent to furnish monetary security, observing that the
Appellant had itself proposed settlement through return of the unsold
inventory and had failed to establish a prima facie entitlement to
recover the monetary claim notwithstanding the said arrangement.

13. The Tribunal also discontinued the earlier restraint concerning
the Respondent’s premises while directing preservation of the unsold
inventory.

14. Aggrieved thereby, the Appellant has preferred the present
appeal.

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15. Mr. Gautam Narayan, learned Senior Counsel appearing for the
Appellant submits that when the tribunal directed preservation of the
unsold stock, it actually went beyond the pleadings and went contrary
to the purpose of Section 9, which is to preserve the subject matter of
the dispute. According to him, the relief granted by the arbitral tribunal
was never prayed for by the appellant.

16. According to learned senior counsel for appellant, if the stock is
restrained from being sold, the value of that stock will go down, and it
will get dissipated.

17. It is also submitted that the relief granted by the learned arbitrator
was never actually prayed for by the respondent or the appellant.

18. In support of his submission, the learned senior counsel for the
appellant relied on the judgment of Indo Spirits v. Pernod Ricard India
2
Pvt. Ltd. & Ors. and Indian Oil Corporation Ltd. v. M/s Fire Ball
3
Engineers , and submitted that the Arbitral Tribunal was bound by the
relief sought in the Section 17 application.

19. Per contra, learned Counsel for the Respondent submits that the
principal interim relief sought by the Appellant in its petition under
Section 9 of the Arbitration and Conciliation Act, 1996, was to restrain
the Respondent from creating any third-party rights or interests in the
property situated at Khanna, Ludhiana, Punjab. This Court, vide order
dated 08.01.2025, had granted the aforesaid interim protection in
OMP(I) (comm) No. 439/2024.

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20. However, during the proceedings before the learned Arbitral
Tribunal, it was brought to light that the said property was not owned
by the Respondent and was merely occupied by it as a tenant.

21. It is submitted that, having regard to the aforesaid overwhelming
circumstances, the learned Arbitral Tribunal discontinued the earlier
restraint concerning the said property and, instead, directed the
Respondent to preserve the unsold inventory identified during the joint
inspection dated 01.02.2024, thereby protecting the subject matter of
the dispute.


22. I have heard both the parties and perused the record.

23. It is well settled that the scope of interference by this Court in an
appeal under Section 37(2)(b) of the Act is extremely limited. This
Court and the Hon’ble Supreme Court, on multiple occasions, have
reiterated that interference is warranted only where the impugned order
suffers from patent illegality, perversity, arbitrariness, or
capriciousness, or where the discretion exercised by the Court is
manifestly unreasonable or contrary to settled principles of law.

24. It is also equally settled that merely because another view is
possible, or this Court may have arrived at a different conclusion on the
same set of facts, would not, by itself, constitute a valid ground for
interference with the impugned order.

25. Thus, keeping in mind the narrow scope of interference available,
this court shall examine whether any interference is warranted.

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26. The learned Arbitral Tribunal, while dismissing the application
under Section 17 observed that the appellant had failed to establish a
prima facie case for grant of interim relief.

27. The Tribunal noted that although this court had earlier granted
interim protection on the basis of a dishonoured cheque, it subsequently
emerged that the parties had conducted a joint inspection of the unsold
inventory on 01.02.2024 pursuant to an understanding whereby the
Appellant had agreed to accept the return of unsold stock in full and
final settlement of the outstanding invoices.

28. The Tribunal observed that the Respondent continued to express
its willingness to return the inventory, valued at approximately Rs. 1.64
crore, whereas the Appellant refused to accept the same. The Tribunal
further noted that the responsibility for the failure of the proposed
settlement remained disputed.

29. The learned Arbitral Tribunal also noted that the appellant has
failed to establish its contention that the goods had deteriorated to scrap
value.

30. In these circumstances, the Tribunal, prima facie , held that the
Respondent’s account could have been settled through the return of
inventory and that the appellant was required to establish the
Respondent’s breach of the settlement before insisting upon monetary
recovery. Consequently, the Tribunal held that the appellant had failed
to establish a prima facie entitlement to secure its monetary claim and
that no justification existed for directing the Respondent to furnish
security.
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31. Having understood the findings rendered by the arbitral tribunal,
this court shall proceed to examine the submission made by the learned
senior counsel for the appellant against the limited scope of interference
available.

32. The learned senior counsel has relied upon Indo Spirit (supra)
and IOCL (supra) to contend that, in the present matter, the learned
arbitral tribunal went beyond the pleadings and created a new
dimension by granting relief restraining alienation of the unsold stock.

33. Although the learned senior counsel is correct on principle that
Arbitral Tribunal cannot go beyond the pleadings and create a new
dimension by granting relief that was never sought by any party.

34. However, this court is of the view that the learned arbitral
tribunal did not travel beyond the subject matter of the dispute nor
introduce any new controversy between the parties. The challenge to
the direction i.e. restraining the Respondent from disposing of the
unsold inventory, and the relief i.e. security of Appellant’s monetary
claim, is intrinsically founded upon the contention that goods had
deteriorated and were reduced to scrap value. This contention has been
expressly rejected by the arbitral tribunal.

35. It is made out from the record that the entire controversy between
the parties is pertaining to outstanding invoices and the failed settlement
through return of unsold inventory. Had the settlement been reached,
the present situation would not have arisen at all.

36. It is an admitted position that a joint inspection of the unsold
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stock was conducted. Additionally, the Respondent has consistently
maintained that it is ready and willing to return the inspected inventory.
In these circumstances, the condition and return of the said inventory
have therefore been extensively pleaded and argued before the learned
Arbitral Tribunal.

37. The deterioration in the condition of the goods and the question
of taking them back was one of the contention and reasons as to why
the Appellant sought monetary relief to secure its monetary claim.


38. In such circumstances, it cannot be contended that preservation
of the very same inventory introduces any new dimension to the
dispute.

39. Section 17(1)(ii)(a) of the Act, expressly empowers an Arbitral
Tribunal to order the preservation, or sale of goods forming the subject
matter of the arbitration agreement. Section 17(1)(ii)(c) empowers the
Tribunal to direct inspection of any property or thing. The unsold
inventory in the present case is directly connected with the disputed
settlement arrangement and the parties’ competing monetary claims.
Consequently, the direction for its preservation in the present matter
falls within the protective jurisdiction expressly contemplated under
Section 17 of the Act.


40. The judgment in Indo Spirits (supra) is distinguishable on the
peculiar facts of the present case, as in the present case, the restraint is
confined to specifically identified inventory forming an integral part of
the dispute, and the Respondent, upon whom the obligation of
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preservation has been imposed, does not object to the same. In any case,
no liability has been created against the Appellant, nor has any new
substantive claim been adjudicated.

41. Insofar as the Appellant’s submission concerning depreciation of
the unsold inventory is concerned, the Appellant had already contended
before the learned Arbitral Tribunal that the inventory had deteriorated
to scrap value. The Tribunal expressly considered this contention in
paragraphs 48 and 53 of the impugned order and observed that no
sufficient evidence had been placed on record to establish the alleged
diminution in value. This court is of the view that whether the goods
have subsequently deteriorated, are disputed questions requiring
evidence. This court exercising 37 jurisdiction cannot substitute its
view.

42. Additionally, direction for preservation of inventory does not
permanently prohibit its sale or disposal in all circumstances. Section
17(1)(ii)(a) itself contemplates sale of goods as an available interim
measure. Therefore, in any case, it remains open to the parties to
approach the learned Arbitral Tribunal for appropriate modification of
the existing arrangement upon any subsequent change of circumstances.

43. The learned Arbitral Tribunal, specifically observed that the
Appellant had failed to substantiate its contention regarding the alleged
deterioration of the inventory, which was valued at approximately Rs.
1.64 crore at the time of the joint inspection dated 01.02.2024. The
Tribunal further observed that the Respondent continued to express its
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willingness to return the said inventory and that the question of its
alleged deterioration required evidence. In these circumstances, the
learned Arbitral Tribunal, after considering the entire factual
controversy, exercised its discretion to direct preservation.

44. This Court exercising section 37 jurisdiction cannot substitute its
own view for a plausible view taken by the Arbitral Tribunal merely
because another view may be possible. The Appellant has failed to
demonstrate that the discretion exercised by the learned Arbitral
Tribunal cannot be sustained on the present factual foundation.


45. Even assuming arguendo that the direction for preservation of
inventory requires reconsideration, the same is distinct and severable
from the Tribunal’s independent findings declining monetary security
and discontinuing the restraint concerning the rented premises

46. Accordingly, this Court is of the view that the impugned order
does not warrant interference in the exercise of appellate jurisdiction
under Section 37(2)(b) of the Act.

47. The appeal is, accordingly, dismissed.

48. It is clarified that, in the event of any subsequent change in
circumstances, including deterioration in the condition, if any or
depreciation of value of the unsold inventory, it shall be open to the
Appellant to approach the learned Arbitral Tribunal under Section
17(1)(ii)(a) and (c) of the Act, seeking appropriate directions for
inspection, valuation or sale of the said inventory and the same shall be
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decided by the learned Arbitral Tribunal in accordance with law.

49. Pending application(s), if any, also stand disposed of.

OM PRAKASH SHUKLA, J
OCTOBER 13, 2026/ gunn
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