Appeal U/S 37 A&C Act Maintainable Against Order Granting Or Refusing Ex-Parte Interim Measure Even If S. 9 Application Filed Before Commercial Court: Karnataka HC

The Karnataka High Court clarified that an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (A&C Act) is maintainable against an order granting or refusing ex-parte interim measure under Section 9 of the A&C Act even if Section 9 application is filed before the Commercial Court.

The Court was dealing with a commercial appeal preferred by a company seeking setting aside of the order passed by the Sessions Judge and granting ad-interim ex-parte injunction.

A Division Bench comprising Justice Anu Sivaraman and Justice Anant Ramanath Hegde held, “The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is maintainable against an order granting or refusing ex-parte interim measure under Section 9 of the Act, 1996, even if the Section 9 application is filed before the Commercial Court, as defined under Commercial Courts Act, 2015.”

Senior Advocate Dhananjay Joshi appeared for the appellant while Senior Advocate Ashok Haranahalli appeared for the respondents.

Facts of the Case -

The respondents raised a contention that the appeal impugning the order of the Commercial Court, issuing emergent notice, and declining ‘ex-parte’ interim measure on an application under Section 9 of A&C Act is not maintainable. The question that arose in this case was whether an order refusing or granting ex-parte interim measure on an application under Section 9 of A&C Act falling under ‘Commercial Arbitration Dispute’ is appealable order under Section 37 of the said Act or such an appeal, barred under the proviso to Section 13(1A) of the Commercial Courts Act. The senior counsel for the appellant raised the contention that the power to grant interim order under Section 9 also includes the power to grant ex-parte interim order.

It was further contended that such power is expressly recognised in the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001 and thus, an order issuing an emergent notice and declining ex-parte order is also an appealable order under Section 37 of A&C Act. On the other hand, the senior counsel for the respondents argued that in a proceeding under the Act, 1996, in respect of a Commercial Arbitration Dispute, the appeal under Section 37 of the Act, 1996 is maintainable against an interlocutory order, only if, such order falls under Order XLIII of the Code of Civil Procedure (CPC), in view of the proviso to Section 13(1A) of the 2015 Act.

The High Court in the above regard observed, “As a corollary, appeal under Section 37 of the Act, 1996 is maintainable against an order granting or refusing ex-parte interim measure under Section 9 of the Act, 1996, if the Section 9 application is filed before the Court exercising jurisdiction under the Act, 1996.”

The Court added that though the appeal under Section 37 of the Act, 1996 is maintainable against the order refusing ‘ex-parte’ measure, the scope of interference in such appeal is limited as the Appellate Court is only required to consider whether consideration of prayer of ex-parte interim measure can be deferred till the appearance of the respondent.

“In an appeal under Section 37 of the Act, 1996 against the order granting ‘ex-parte’ measure, the appeal may be entertained only in exceptional cases as the aggrieved party will have an efficacious remedy of moving the same Court which passed the order, to vacate the ‘ex-parte order”, it elucidated.

The Court, therefore, overruled the law laid down in the case of Symphony Services Corporation (India) Private Limited, Bangalore v. Sudip Bhattacharjee (2008) 2 KLJ 24.

“Now the question is whether the appellant is entitled to interim protection till the application under Section 9 before the Section 9 Court is considered. The impugned order is passed on 13.02.2024. Thereafter, the appeal is filed. This Court vide interim order dated 22.02.2024 granted interim protection to the appellant. Since then the interim protection has been extended. Now it is stated that the Section 9 application is listed on 29.07.2024 for final disposal”, it noted.

In view of such circumstances, the Court remitted the matter to the Trial Court to consider Section 9 application in accordance with the law extending the interim protection till then. However, it clarified that the interim order should not be construed as an order in favour of the appellant indicating the merit of the appellant’s claim.

“Since the interim order has been operating against the respondents since February 2024, we expect Section 34 Court will hear the objections of the respondents expeditiously and the parties shall co-operate for early disposal of Section 9 application”, it said.

Accordingly, the High Court disposed of the appeal.

Cause Title- M/s KLR Group Enterprises v. Madhu H.V. & Ors.

Appearance:

Appellant: Senior Advocate Dhananjay Joshi and Advocate Shashidhar R.

Respondent: Senior Advocate Ashok Haranahalli, Advocates Prashanth G., and Prasanna B.R.

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