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 importance of maintaining the arbitration process's integrity.

JUDGMENT :

HARISH VAIDYANATHAN SHANKAR, J.

1. The present Appeal under Section 37 (2)(b) of theArbitration and Conciliation Act, 1996 , A&C Act has been preferred by the Appellant- Society assailing theOrder dated 16.09.2025 , Impugned Order passed by the learned Sole Arbitrator in arbitral proceedings titled ―Smt. Shashi Bala v. Khurana Educational Society (Regd.)", whereby certain interim measures under Section 17 of the A&C Act came to be granted in favour of the Respondent-Claimant, including directions for deposit of usage charges and ancillary protective reliefs.

BRIEF FACTS:

2. Shorn of unnecessary details, the facts germane to the institution of the present Appeal are as follows:

I. The Respondent-Claimant asserts ownership over land bearing Khasra No. 13/7 admeasuring approximately 4840 sq. yds. situated in Village Goyla Khurd, New Delhi, Subject Property, on the basis of a registered sale deed executed in her favour. It is averred that a registered lease deed dated 02.05.2000 came to be executed between the parties whereby the Subject Property was let out to the Appellant-Society at a monthly rent of Rs. 1,000/-, the property being utilized by the Appellant for purposes connected with the functioning of the educational institution run by it.

II. Subsequently, disputes arose inter se the parties concerning the validity of termination of the lease, the nature of possession of the Appellant after issuance of Termination Notice dated 09.04.2018, and the entitlement of the Respondent to damages or mesne profits for continued occupation of the Subject Property.

III. The Respondent thereafter instituted a commercial suit before this Court, being CS(COMM) 10/2023, seeking possession and other allied reliefs. By Order dated 14.09.2023, the said suit was referred to arbitration pursuant to an application filed by the Appellant herein under Section 8 of the A&C Act, read with Order VII Rule 11 and Section 151 of the Code of Civil Procedure, 1908, CPC. Consequent thereto, the learned Arbitrator entered upon reference.

IV. During the arbitral proceedings, the Respondent filed an Application under Section 17 of the A&C Act seeking interim measures, inter alia, for payment of usage charges/mesne profits, permission for inspection of the Subject Property, and restraint against the creation of third-party rights.

V. The Appellant contested the said Section 17 Application by placing reliance upon its Statement of Defence, disputing the Respondent‘s entitlement to ownership and asserting rights arising out of alleged family arrangements, subrogation pursuant to proceedings before the Debt Recovery Tribunal, and the alleged invalidity of the termination notice.

VI. Upon consideration of the rival pleadings and material placed on record, the learned Arbitrator, by the Impugned Order, directed the Appellant to deposit usage charges at the rate of Rs. 3,00,000/- per month with effect from 15.10.2018 during the pendency of the arbitral proceedings, with the amount to be secured in a joint interest-bearing arrangement, and further permitted monthly inspection of the Subject Pr