Court's Power To Grant Interim Relief U/s. 9 Of Arbitration Act Not Curtailed By Rigours Of Every Procedural Provision In CPC: SC

The Supreme Court has observed that the power of Court to grant interim relief under Section 9 of the Arbitration and Conciliation Act is not curtailed by the rigours of every procedural provision in the Code of Civil Procedure.

"In deciding a petition under Section 9 of the Arbitration Act, the Court cannot ignore the basic principles of the CPC. At the same time, the power Court to grant relief is not curtailed by the rigours of every procedural provision in the CPC. In exercise of its powers to grant interim relief under Section 9 of the Arbitration Act, the Court is not strictly bound by the provisions of the CPC.", the Bench of Justice Indira Banerjee and Justice AS Bopanna observed.

Section 9 of the Arbitration Act 1996 provides that a party may apply to a Court for an interim measure or protection inter alia to (i) secure the amount in dispute in the arbitration; or (ii) such other interim measure of protection as may appear to the Court to be just and convenient, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

The Court further observed that "If a strong prima facie case is made out and the balance of convenience is in favour of interim relief being granted, the Court exercising power under Section 9 of the Arbitration Act should not withhold relief on the mere technicality of absence of averments, incorporating the grounds for attachment before judgment under Order 38 Rule 5 of the CPC."

The Court held that in order to assess the balance of convenience, the Court should examine and weigh the consequences of refusal of interim relief to the applicant for interim relief in case of success in the proceedings, against the consequence of grant of the interim relief to the opponent in case the proceedings should ultimately fail.

These observations were made by the Court while dealing with an appeal challenging the order passed by a Division Bench of Bombay High Court, dismissing the appeal filed by the Appellant-Essar House Private Limited, under Section 37 of the Arbitration and Conciliation Act, 1996, and confirming an order passed by the Single Bench of the High Court and directing Essar House Private to deposit an amount of Rs.35.5 crores with the Prothonotary and Senior Master of the High Court or, in the alternative, to furnish bank guarantee of any nationalised bank for the entire amount along with interest thereon.

Senior Advocate Shyam Divan appeared for appellants-Essar Services India Private Limited whereas Senior Advocate Neeraj Kishan Kaul appeared for Respondent-Arcellor Mittal Nippon Steel India Limited.

While dismissing the appeals filed by Essar Services India Private Limited, the Court observed thus "It is not in dispute that a sum of about Rs.35 crores odd was paid by Essar Steel to Essar House Private and Rs.47 crores odd to Essar Services, being the appellants in the respective appeals, by way of security deposit which is a refundable security deposit. Prima facie, the refundable security deposit is not being released to Arcellor on the purported ground of a convoluted series of internal arrangements between group companies for diversion of the security deposits towards liquidation of alleged dues of Essar Steel to third parties."

Cause Title- Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited

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