Filing Of Application For Arbitrator Appointment Cannot Be Construed As Commencement Of Arbitral Proceedings: Rajasthan HC
The Rajasthan High Court observed that filing an application under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act) is a step in furtherance of securing the appointment of an arbitrator and cannot to be construed as the commencement of arbitral proceedings.
The Jodhpur Bench explained that Sub-section (2) of Section 9 of the Act unequivocally empowered the Court to extend an order of interim measure. The Court stated that the opening words of Section 9 clothed the Court with the power to extend the order of interim measure even beyond 90 days.
A Division Bench of Justice Dinesh Mehta and Justice Rajendra Prakash Soni observed, “According to section 21 of the Act of 1996, once the notice of appointment of Arbitrator has been given by either party, the arbitral proceedings should be deemed to have commenced. The step for filing the application under section 11 of the Act of 1996 is a step in furtherance of securing appointment of Arbitrator and the same cannot be construed to be commencement of arbitral proceedings.”
Advocate Pushkar Taimini represented the appellant, while Advocate Sandeep Saruparia appeared for the respondents.
Riddhi Siddhi Infraproject Pvt. Ltd. (the appellant) initiated proceedings under Section 9 of the Act following a dispute arising from an agreement with M/s Anil Industries (respondent). Opting for arbitration, they appointed an arbitrator. However, facing reluctance from the respondent, the appellant sought interim measures to prevent alterations to the disputed land until arbitration concluded. Given the respondent's lack of interest, arbitration proceedings as per the agreement, were likely to be delayed.
The appellant prayed for interim measures restraining the respondent from alienating or developing the land until arbitration concluded, maintaining status quo. Initially, the Commercial Court granted the interim order for maintaining the status quo, but later, the appellant's request for an extension of the interim order under Section 9 of the Act was declined.
The appellant had preferred an appeal under Section 13 of the Commercial Courts Act, 2015 to call in question the decision of the Commercial Court dated 24.01.2024, which denied the extension of an interim order.
The Court observed, “...The notice for appointment of Arbitrator had been issued on 12.07.2023 and hence, the arbitral proceedings had commenced. As such the view taken by the Commercial Court is contrary to law. The reasons given by the Commercial Court that as the appellant took up proceeding under section 11 of the Act of 1996 after passing of 90 days’ time from the date of interim order, no order can be passed is also unsustainable in the eye of law.”
The Bench explained that while passing an interim order, the Court was required to have a prima facie grasp of the dispute and claim of the parties. “The Court should look at the nature of controversy and consider the relief claimed or amount claimed. If the dispute is in relation to monetary claim or the same can be measured in terms of money, then, in place of passing blanket orders of maintaining status quo qua the property, the Court should secure the amount likely to be awarded to the claimant or as claimed,” the Bench added.
Accordingly, the High Court disposed of the appeal.
Cause Title: Riddhi Siddhi Infraproject Pvt. Ltd. v. M/s Anil Industries & Ors. (Neutral Citation: 2024:RJ-JD:24579-DB)
Appearance:
Appellant: Advocates Pushkar Taimini and Sanjay Nahar
Respondents: Advocates Sandeep Saruparia and Nikhil Ajmera