Object Of Section 9 A&C Act Is To Support Arbitration & Not To Permit Parties To Detract From The Very Process Of Arbitration: Bombay HC
The Bombay High Court elucidated that the object of Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) is to support arbitration and not defeat or permit parties to detract from the very process of arbitration.
The Court elucidated thus in a commercial arbitration petition filed under Section 9 of A&C Act seeking some reliefs.
A Single Bench of Justice Arif S. Doctor observed, “… there can be no dispute that the grant of relief under Section 9 of the Arbitration Act is a discretionary relief and is to be exercised keeping in mind the well settled principles for the grant of such interim relief. However, equally, the object and intention of Section 9 of the Arbitration Act is to support Arbitration and not defeat and/or permit parties to detract from the very process of arbitration.”
Senior Advocate Sharan Jagtiani appeared on behalf of the petitioners while Advocate Mayur Khandeparkar appeared on behalf of the respondents.
Facts of the Case -
The disputes between the parties arose out of a Shareholders Agreement (SHA) in 2017 by and under which the respondents were to purchase the shareholding of the petitioner in a company in the manner more particularly set out in the clauses of the SHA. The SHA also contained an arbitration clause that provided for arbitration in accordance with the Singapore International Arbitration Chamber (SIAC) Rules in the event of any disputes and differences arising between the parties. As the disputes arose, the petitioner terminated the SHA and the respondent did not comply with its obligations. It was thus that an Arbitral Tribunal was constituted as per SIAC Rules. The Tribunal upheld the termination of SHA and the obligation of the respondents to purchase the shares of the petitioner. It also awarded a sum of Rs. 9 crores to the petitioners and thereafter, the petitioners filed two petitions under Section 49 of A&C Act before the Delhi High Court for enforcement of the First Award and Cost Award.
The Court passed an order of status quo qua the assets of the respondents and since the respondents refused to make payment to the petitioners, the petitioners invoked arbitration and applied for emergency interim relief. The Court allowed both the petitions and the Emergency Arbitrator (EA) ordered the respondents to furnish an irrevocable bank guarantee of Rs. 145 crores within 14 days. The respondents made various representations/assurances to the petitioners indicating that they were making efforts to comply with the decision, however, they represented to they were unable to furnish a bank guarantee. They thus made an application for modification of the order which was allowed by the High Court. Thereafter, a detailed hearing was held before the Arbitral Tribunal by which it rejected the respondents’ request for modification of the decision and directed them to provide security to the petitioners. Since the respondents did not comply even with the Tribunal’s order, the petitioners sought reliefs before the Bombay High Court.
The High Court in view of the facts and circumstances of the case, remarked, “… party autonomy being the bedrock of arbitration, this would necessarily apply from the agreement to the rendering of the final arbitral award. In the present case, the Parties having agreed to arbitration under the SIAC Rules, and procedure contemplated thereunder would therefore be bound by the EA Decision.”
The Court added that, crucially no dispute and/or grievance has been raised by the respondent in the reply filed qua either the EA Decision and/or the fairness of procedure of the Emergency Arbitrator and that the only ground taken in the Affidavit in Reply to oppose the petition is maintainability.
“The Respondents have not so much has attempted raise any grievance qua the merits of the EA Decision before me. Hence, I find no reason not to accept the findings as recorded in the EA Decision. I find that it is such an approach that will support arbitration and ensure its effectiveness”, it further said.
The Court reiterated that the party is bound by the EA's award and must comply with it immediately, as they have explicitly agreed to its binding nature and the obligation to carry out the Interim Order without delay.
“Sixth, I find that in the facts of the present case, even without placing reliance upon the EA Decision the Petitioners have made out a very strong case for the grant of interim reliefs given the obstructionist stand/conduct of the Respondents which is clearly only to defeat and/or delay the enforcement of the orders passed in the arbitration”, it observed.
Accordingly, the High Court disposed of the petition and listed the case for compliance on October 22, 2024.
Cause Title- Ashok Kumar Goel & Ors. v. Ebixcash Limited & Ors. (Neutral Citation: 2024:BHC-OS:15701)
Appearance:
Petitioners: Senior Advocate Sharan Jagtiani, Advocates Nitesh Jain, Juhi Mathur, Sonia Dasgupta, Ananyaa Jagirdar Surbhi Agarwal, and Atul Jain.
Respondents: Advocates Mayur Khandeparkar, Chetan Yadav, Allen Mathew, and Pratibha Tiwari.
