IN THE HIGH COURT OF DELHI AT NEW DELHI
C. HARI SHANKAR, J.
Zostel Hospitality Pvt. Ltd. – Appellant
Versus R
Oravel Stays Private Limited & Anr - Respondents
OMP (I) (COMM.) 290 of 2021
Decided on : 14-02-2022
Arbitration and Conciliation Act, 1996 - Section 9(1)(ii) 1 - Indian Contract Act, 1872 - Section 70 - Arbitral award - Grant of interim measures of protection - Petitioner, contends that if interim protection, as sought in this petition, is not granted, award, rendered in favour of his client by learned arbitrator, would be rendered unenforceable - According to him, justifies grant of interim protection, premised on above enunciation of law - Learned Senior Counsel for the respondent contends, per contra, again relying on the afore-extracted passage, that post-award protection, under Section 9, is “intended to safeguard the fruit of proceedings” - Award, on basis of which the present petition has been filed by petitioner, according to, grants no “fruits” to petitioner, which could be safeguarded - Went to extent of stating that award grants petitioner, effectively, nothing at all, despite containing various observations favouring petitioner - Final direction in litigation alone is enforceable, submits and not mere observations, howsoever favourable they may appear to be - Absent any enforceable corpus, submits present petition cannot be maintained at all - Whether there was consensus ad idem between the parties on the Draft Definitive Agreements, which had been forwarded by Zostel to Oravel.
Finding of the Court:
Italicised words, in afore-extracted passage from K.S.L. Industries serve not only to erode value of said decision as a precedent in present case; they also highlight why, in present case, the relief sought by petitioner cannot be granted - Unlike contract in K.S.L. Industries, there is no covenant in Term Sheet in present case, binding either party to mandatorily execute draft Definitive Agreements suggested by the opposite party, or foreclosing option of negotiation on draft - Option is clearly available to the parties, including Oravel, in present case - Execution of Definitive Agreements between Zostel and Oravel, in draft form in which they were forwarded by the former to latter cannot, therefore, be regarded as a foregone conclusion in the facts of the present case, in view of the covenants of the Term Sheet - Position also stands recognised by learned Arbitrator - Court, in exercise of its limited jurisdiction under Section 9 of 1996 Act, cannot revisit either the findings, or conclusions, of the learned Arbitrator.
Result : Petition dismissed
JUDGMENT :
(By Video Conference on account of COVID-19)
1. What, exactly, is the “fruit” of an arbitral proceeding?
2. In a somewhat intricate fashion, this question arises for consideration in the present case, which presents an interesting conundrum regarding the scope of Section 9(1)(ii)[ 9. Interim measures, etc., by Court.—
(1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court –
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(ii) for an interim measure of protection in respect of any of the following matters, namely: –
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(d) interim injunction or the appointment of a receiver;
(e) 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.] of the Arbitration and Conciliation Act, 1996 (“the 1996 Act”), when invoked at a postarbitral stage.
3. Section 9 provides for grant of interim measures of protection by a Court. It is well known that the provision is, more often than not, invoked at the pre-arbitral stage, before arbitral proceedings commence. This, however, is a case where an arbitral award stands rendered, and the petitioner, claiming to be the successful litigant before the learned arbitrator, seeks interim protection after the award has been rendered.
4. The vast majority of judgments on Section 9 relate to its scope and ambit at the pre-arbitral stage. The peripheries of Section 9 jurisdiction, when invoked at a post-award stage, stand delineated in the following extract from the judgment of the High Court of Bombay (through Dr Chandrachud, J., as he then was), in Dirk India Pvt Ltd v. Maharashtra State Power Generation Co. Ltd:
“The second facet of Section 9 is the proximate nexus between the orders that are sought in the arbitral proceedings. When an interim measure of protection for sought before or during the arbitral proceedings, such a measure is a step in aid of the fruition of the arbitral proceedings. When sought after an arbitral award is made but before it is enforced, the measure of protection is intended to safeguard the fruit of the proceedings until the eventual enforcement of the award.
Here again the measure of protection is a step in aid of enforcement. It is intended to ensure that enforcement of the award results in a realisable claim that the award is not rendered illusory by dealings that would put the subject of the award beyond the pale of enforcement.”
This passage has received the imprimatur of the Supreme Court, having been cited, approvingly, in Hindustan Construction Co Ltd v. U.O.I., AIR 2020 SC 122, as correctly delineating the scope of Section 9 jurisdiction, when invoked at a post-award stage.
5. Interestingly, both sides, before me, rely on this extract from Dirk India, 2013 (7) Bom CR 493. Mr. Sibal, learned Senior Counsel for the petitioner, contends that if interim protection, as sought in this petition, is not granted, the award, rendered in favour of his client by the learned arbitrator, would be rendered unenforceable. This, according to him, justifies grant of interim protectio
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