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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ALOK ARADHE, CJ, M. S. KARNIK, J
Kapani Resorts Private Limited – Appellant
Versus
Manmohan Kapani – Respondent
JUDGMENT :
M.S. Karnik, J.
1. This Arbitration Appeal under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (‘the Arbitration Act’ for short) challenges an order dated 18.03.2025 passed by the learned Single Judge of this Court in Arbitration Petition No. 119 of 2024. The Arbitration Petition was filed under Section 9 of the Arbitration Act.
2. The agreement has an arbitration clause, and its existence is not disputed. Learned Single Judge for the reasons mentioned in the impugned order has protected the respondent (original petitioner in the Arbitration Petition) through the following measures: -
A) Kapani Resorts, Virendra and Vaibhav shall jointly or severally deposit an Indian Rupee equivalent of USD 1 million (valued at the US Dollar-Indian Rupee exchange rate applicable as of the respective dates of their remittance by Manmohan) along with interest at the statutory interest rate of 12% per annum (on the INR equivalent of USD 350,000 from the expiry of 75 days after February 11, 2022; and on the INR equivalent of USD 650,000 from the expiry of 75 days after February 22, 2022, until the date of deposit) with the Registry of this Court, which deposit shall be made no
The court upheld the interim measures under the Arbitration Act, emphasizing the need for protective reliefs due to misappropriation of funds and failure to allot shares.
The court held that misappropriation of investor funds occurs when benefits are enjoyed without fulfilling corresponding obligations, allowing for protective measures pending arbitration.
Principle of minimum judicial intervention is one of fundamental tenets of arbitration law.
The arbitral tribunal has broad powers to issue interim measures under the Arbitration and Conciliation Act, ensuring protection of claims during ongoing proceedings.
Conflicting orders on securing the award amount and the applicability of Section 9 to restrain a non-party to the arbitration proceedings.
Section 9 of the Arbitration and Conciliation Act allows for interim measures to prevent dissipation of assets pending enforcement of arbitral awards, even before the actual enforcement process.
Only parties to an Arbitration Agreement may be subject to interim measures under Section 9; issues of property transfer and claims must be adjudicated in proper suits.
The court may exercise jurisdiction under Section 9 of the Arbitration and Conciliation Act if the remedy under Section 17 is found to be inefficacious.
The court ruled that interim relief under Section 17 of the Arbitration Act cannot effectively adjudicate final rights or impose substantial financial burdens without trial, emphasizing the importanc....
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