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IN THE HIGH COURT OF DELHI AT NEW DELHI
Najmi Waziri, Sudhir Kumar Jain, JJ.
Morgan Securities And Credits Pvt. Ltd. – Appellant
Versus
Ganesh Benzoplast Limited – Respondent
FAO (OS) (COMM) 17 of 2021 & CM APPL. 3583 of 2021 (stay)
Decided On : 28-06-2023
Arbitration & Conciliation Act - Interim Measures - Section 9 - [ARBITRATION & CONCILIATION ACT, 1996, SECTION 9, SECTION 37(1)(B)] - The court examined the maintainability of an appeal seeking to set aside an interim order passed in a section 9 petition. The court held that the appeal was maintainable as it sought to challenge the non-grant of the relief sought under section 9. The court also discussed the limited jurisdiction of the Commercial Appellate Courts and the principles of interpretation in relation to the appealable orders under section 37(1) of the Act. The court further emphasized the need for clear authority of law for the maintainability of an appeal. The judgment also highlighted the prohibition on appreciating fresh evidence and the limited grounds for setting aside an arbitral award under section 34 of the Act. The court concluded that the extensive inquiry directed in the impugned order was not germane to the petition under section 9 and that the information sought would not be warranted.
Fact of the Case:
The appellant sought to set aside an interim order passed in a section 9 petition under the Arbitration & Conciliation Act, 1996. The respondent had challenged the maintainability of the appeal, arguing that it did not seek to grant or refuse any measure under section 9 of the Act. The appellant contended that the relief sought under section 9 had not been granted, making the appeal maintainable.
Finding of the Court:
The court found that the appeal was maintainable as it sought to challenge the non-grant of the relief sought under section 9. The court also emphasized the limited jurisdiction of the Commercial Appellate Courts and the need for clear authority of law for the maintainability of an appeal. The court further held that the extensive inquiry directed in the impugned order was not germane to the petition under section 9 and that the information sought would not be warranted.
Issues: The main issue was the maintainability of the appeal under section 37(1)(b) of the Arbitration & Conciliation Act, 1996. The court also addressed the scope of the Commercial Appellate Courts' jurisdiction and the principles of interpretation in relation to the appealable orders under section 37(1) of the Act.
Ratio Decidendi: The court's decision was based on the interpretation of the appealable orders under section 37(1) of the Act, the limited grounds for setting aside an arbitral award under section 34, and the prohibition on appreciating fresh evidence. The court also emphasized the need for clear authority of law for the maintainability of an appeal.
Final Decision: The court held that the appeal was maintainable and allowed it. The court also disposed of the pending application, if any, in terms of the above.
JUDGMENT
Najmi Waziri, J. The present appeal under section 37(1)(b) of the Arbitration & Conciliation Act, 1996 (`the Act') read with Section 13 of the Commercial Courts Act, 2013 seeks to set aside the impugned interim order dated 21.01.2021 passed this section 9 petition by the learned Single Judge of this Hon'ble Court in OMP (I) (COMM) No. 363 of 2020.
2. The reliefs sought by the appellant were as under:
"A. Restraining the Respondent Company from acting in furtherance to the Resolutions passed in the Board meeting dtd. 07.10.2020 and the special resolutions passed by way of Postal ballot on 06.1 1.2020, with respect to the preferential allotment of shares of Respondent Company pursuant to proposed Share Sale and purchase Agreement (SSPA) with Stolt Rail Logistic Systems Limited, in any manner, whatsoever; directly or indirectly.
B. Direct the Respondent Company to make a Full and complete Disclosure of the terms of the proposed Share Sale and purchase Agreement (SSPA) with Stolt Rail Logistic Systems Limited by the Respondent Company to the Claimant, by way of Affidavit.
C. Pass any other orders that this Hon'ble Court may deem fit in the facts of the present case;
D. Pass ex-parte; ad-interim orders, in terms of Prayer A above."
3. Section 9 of the Act reads as under:
Section 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-
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(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.
[(2) Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.
(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious.]
4. The learned Senior Advocate for the respondent submits that the maintainability of this scheme is questionable, inasmuch as it seeks this court to virtually monitor the manner in which the section 9 petition and the related section 34 petition are to be considered and/or adjudicated by the learned Single Judge. He further submits that in terms of the principles of interpretation, each word of the statute has to be given effect to. He submits that this petition is purported to be an appeal under section 37 of the Act, which could be entertained only if the impugned order had granted or refused to grant any measure under section 9 of the Act. The section 37 of the Act reads as under:
"37. Appealable orders.-(1) [Notwithstanding anything contained in a
Once an Arbitral Tribunal is constituted, Section 9 of the Arbitration Act prohibits further applications for interim relief unless the party shows that the remedy under Section 17 is ineffective.
The court established that while Section 9 allows for court intervention in arbitration matters, it can only do so if the remedy under Section 17 is found to be ineffective, particularly when third p....
Sub-section (3) of Section 9 provides for restriction of exercise of powers by the Court and it has to decide whether the remedy provided under section 17 is efficacious or not.
The court emphasized the need to balance equities between the parties and highlighted the importance of following contractual provisions for submission of the final bill and processing thereof.
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, particularly regarding third parties not party....
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