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.

JUDGMENT :

Moushumi Bhattacharya, J.

The present Commercial Court Appeal arises out of a docket order dated 11.12.2024 passed by the learned Commercial Court at Hyderabad on an application filed by the appellants under section 9 of The Arbitration and Conciliation Act, 1996 (the 1996 Act) i.e., I.A.No.260 of 2024 in COP.No.100 of 2024. The appellant filed the COP.No.100 of 2024 for restraining the respondent Nos.1 – 7 from causing any changes to the rights of the petitioners in two projects of the respondent No.7 LLP : “SreeSumeru” and “SreeTatva”.

2. The appellants filed the I.A for interim protection in line with the orders passed by this Court on 11.09.2024 as modified by orders dated 27.09.2024 and 01.10.2024. In the alternative, the petitioners sought continuation of the order dated 11.09.2024 till constitution of the Arbitral Tribunal or orders passed by the Arbitral Tribunal.

Submissions made on behalf of the Parties:

3. Learned Senior Counsel appearing for the appellants relies on the Supreme Court decision in Arcelor Mittal Nippon Steel India Limited Vs. Essar Bulk Terminal Limited , [ (2022) 1 SCC 712 ] to submit that the interim protection granted by this Court in Civil Revision Petitions filed by the petitioners should continue till constitution of the Arbitral Tribunal or till the orders are passed by the Arbitral Tribunal as the Court has applied its mind to the merits of the matter. Counsel submits that the Commercial Court allowed the parties to file pleadings with extensive documents and that the I.A. filed by the petitioners was ripe for final disposal. Counsel submits that the Arbitral Tribunal was constituted on 26.11.2024 pursuant to an order dated 22.11.2024 under section 11(6) of the 1996 Act. Counsel assails the impugned order dated 11.09.2024 to urge that the Commercial Court should not have closed the appellants’ application under section 9 on the ground of an efficacious remedy being available to the appellants before the Arbitral Tribunal. Counsel submits that there is every likelihood that the respondents would withdraw money from the respondent No.7 LLP and render the arbitration infructuous unless the appellants continue to remain protected.

4. Learned Senior Counsel appearing for the respondent Nos.1 - 4 and 7 opposes the contentions of the appellants/petitioners and submits that the prayers in the I.A. are untenable and contrary to law. Counsel submits that the appellants failed to make out a case for interim protection before the Commercial Court and that the Commercial Court is yet to entertain the matter as per the dictum in Arcelor Mittal (supra). Counsel submits that there was no question of the Commercial Court continuing to adjudicate the section 9 application in the absence of having entertained the merits of the dispute.

Decision:

5. We have heard learned Senior Counsel appearing for the parties and carefully considered the material placed before us. We organize the decision under the following heads.

6. Line up of facts leading to the Impugned Order: