Court Can Grant Interim Relief U/S 9 Of A&C Act When An Arbitral Tribunal Is Constituted If Circumstances So Warrant: Bombay HC

The Bombay High Court held that the Court can grant interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) when an Arbitral Tribunal is constituted if circumstances so warrant.

The Court held thus in a batch of arbitration petitions against the order passed under Section 17 of A&C Act.

A Single Bench of Justice Arif S. Doctor observed, “It is well settled and as held by the Hon’ble Supreme Court in the case of Arcelor Mittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd. that on a harmonious reading of 9(1) and 9(3) of the Arbitration Act the Court is not denuded of its power to grant interim relief when an Arbitral Tribunal is constituted. What the Court has to examine is if the Applicant has an efficacious remedy under Section 17 or that circumstances exist, which may not render the remedy provided under Section 17 of the 1996 Act efficacious. It is in these circumstances that the Court has the discretion to entertain an application for interim relief under Section 9 of the Arbitration Act. Therefore, clearly this Court can grant interim relief under Section 9 if the circumstances so warrant.”

Advocate Rashmin Khandekar appeared for the petitioner while Advocate Uday Warunjikar appeared for the respondents.

Factual Background -

The petitioner and respondents were partners of a firm carrying the business of construction. In 2018, disputes and differences arose between the parties. It was the petitioner’s grievance that the respondents were dealing with the business of the firm to the detriment of the petitioner. It was thus that the petitioner invoked Arbitration under a Retirement Deed and then filed a petition under Section 9 of A&C Act, as also an application under Section 11 for appointment of an Arbitrator.

The Court disposed of the petition and application by appointing a Sole Arbitrator and directed that the previous status quo order would continue to operate until the Arbitrator makes and renders the final award. The petitioner then filed an application under Section 17 of A&C Act before the Arbitral Tribunal and the same was disposed of. The respondent thereafter, sought a review of the order before the Tribunal but the same was dismissed.

The High Court in the above context of the case said, “In the present case, the Petitioner has sought the appointment of the Court Receiver, High Court Bombay since Respondent No.1 has acted in breach of the order of status quo. It is well settled that the Arbitral Tribunal cannot grant an order of appointment of Court Receiver. Thus, what has to be considered is whether the Petitioner has made out a case for the grant of this relief in the present Section 9 Petition.”

As an interim measure of protection to safeguard and preserve the Virar property, the Court ordered the appointment of the Court Receiver High Court, Bombay as the Receiver of the Virar and clarified that such appointment of the Court Receiver shall be on the usual terms.

Accordingly, the Court allowed the commercial arbitration petition.

Cause Title- Ambrish H. Soni v. Chetan Narendra Dhakan & Ors. (Neutral Citation: 2024:BHC-OS:10501)

Appearance:

Petitioner: Advocates Rashmin Khandekar, Pranav Nair, and Anand Mishra.

Respondents: Advocates Uday Warunjikar and Sumit Kate.

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