IMPORTANT POINT
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.

JUDGMENT :

G. GIRISH, J.

1. This original petition is filed under Sections 2(1)(e), 2(2) and Section 9 of the Arbitration and Conciliation Act, 1996 (for short ‘the Act’) for an interim injunction restraining the respondent and his men or agents from alienating or encumbering the petition schedule properties or creating any document or conveyance in respect of those properties before the satisfaction of the Arbitral Award dated 30.01.2023 in S.C.C. Arbitration V2020/199 of the Arbitral Tribunal, Sweden.

2. The 1st petitioner is a joint stock company incorporated under the laws of Sweden, and the 2nd petitioner is its parent company. The respondent was the erstwhile Managing Director of the 2nd petitioner company who resigned from the directorship of the said company following allegations of misappropriation. It is stated that when the petitioner companies initiated criminal prosecution against the respondent, he approached the petitioner companies and requested to dispense with the criminal prosecution in return for his offer to resign from all the designated posts of the companies and to pay the amount misappropriated immediately. However, the respondent, as claimant, is said to have initiated arbitration proceedings at Sweden against the petitioners as S.C.C. Arbitration V2020/199, which resulted in the arbitral award dated 30.01.2023 dismissing the claims due to lack of jurisdiction, but awarding costs and interest on costs to the petitioners herein who were the respondents in that arbitration proceedings. As per the above award, the petitioners claim to be entitled to an amount of Rs. 8,95,44,507/- as costs and Rs. 1,55,54,963/- or Rs. 21,743.23/- and Rs. 2,272.15/- as costs of arbitration in addition to interest charged on the above amount.

3. Alleging that the respondent is trying to fraudulently dispose of and encumber the petition schedule properties belonging to him to defeat the execution of the above award, the petitioners have filed the present original petition to injunct the respondent from committing any such acts.

4. In the counter filed, the respondent contended that the present proceedings are prima facie not maintainable due to the pendency of a suit instituted by the petitioners before the Munsiff’s Court, Perumbavoor as O.S. No. 53 of 2023 in respect of the same reliefs. It is the further contention of the respondent that the proper course available to the petitioners was to seek enforcement of the arbitral award instead of moving the present petition for interim orders. According to the respondent, the prayer in this petition for an interim injunction against the alienation of the petition schedule properties till the satisfaction of the arbitral award, is a relief of perpetual nature which cannot be allowed under Section 9 of the Act. The respondent also contended that some of the properties scheduled in the petition do not belong to him, and that the amounts are calculated wrongly in the petition. The respondent also stated that the value of the properties scheduled in the petition is far above the amount claimed by the petitioners. Upon the above premises, the respondent seeks a dismissal of this petition.

5. The point to be decided is whether the respondent is liable to be restrained by interim injunction, as prayed for in the petition, from alienating or encumbering the scheduled properties, or creating any documents or conveyance in respect of those properties, pending the enforcement of the arbitral award granting costs and interest on costs to the petitioners.

6. Heard the learned counsel for the petitioners and the learned counsel for the respondent.

7. At the time of arguments, the learned counsel for the respondent mainly relied on a ground which is not stated in the counter affidavit filed, to challenge the maintainability of this petition. Adverting to the observation in Ext.P1 arbitral award that the Tribunal does not have jurisdiction to determine the matters under the settlement agreement, which w