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1999 Supreme(SC) 37

B.N.KIRPAL, SUJATA V.MANOHAR
Sundaram Finance LTD. – Appellant
Versus
Nepc India LTD. – Respondent


Judgement Key Points

Certainly. Based on the provided legal document, here are the key points:

  1. A party to an arbitration agreement can approach the court for interim relief both before the commencement of arbitral proceedings and during the proceedings. The court has the authority to pass interim orders in either stage (!) (!) .

  2. The initiation of arbitral proceedings is marked by the receipt of a request for dispute resolution by the respondent, and proceedings are considered to commence on that date (!) (!) .

  3. Notice to the opposite party invoking the arbitration clause is not a mandatory requirement for filing an application under Section 9 of the Arbitration and Conciliation Act, 1996. The application must, however, manifest the applicant's intention to pursue arbitration (!) (!) .

  4. The language "before or during arbitral proceedings" in Section 9 allows courts to grant interim relief at two distinct stages: prior to the initiation of arbitral proceedings and during ongoing proceedings. The interpretation of "before" is to be taken literally, permitting courts to issue interim orders even before the arbitration process begins (!) (!) .

  5. The court's jurisdiction under Section 9 is not limited by the absence of an ongoing arbitration or appointment of an arbitrator at the time of the application. The court can exercise its power to grant interim relief to protect the interests of the parties (!) (!) .

  6. While exercising jurisdiction under Section 9, the court must ensure that there is a valid arbitration agreement and that the applicant demonstrates an intention to arbitrate. The court can also impose conditions to ensure the effective initiation of arbitral proceedings (!) .

  7. The provisions of the 1996 Act are to be interpreted independently of the earlier 1940 Act, with reference to the UNCITRAL Model Law, to promote uniform understanding and application of arbitration law (!) (!) .

  8. The High Courts are encouraged to formulate rules to streamline procedures under Section 9 to facilitate quick and effective resolution of arbitration-related applications (!) .

  9. The court's power to grant interim relief is not restricted to ongoing arbitration; it extends to proposed arbitrations where no proceedings have yet commenced, provided the applicant intends to arbitrate (!) (!) .

  10. The court's ability to pass interim orders before arbitral proceedings begin ensures the protection of parties' interests, especially in situations where service or notice might be difficult or delayed (!) .

These points collectively clarify that courts have broad authority to grant interim relief related to arbitration both before and during arbitration proceedings, emphasizing the importance of the applicant's manifest intention to arbitrate and the need for procedural rules to support this process.


Judgment

Kirpal, J.-Leave granted.

2. An important question which arises for consideration in these cases is whether under Section 9 of The Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the 1996 Act’) the Court has jurisdiction to pass interim orders even before arbitral proceedings commence and before an arbitrator is appointed.

3. The relevant facts which are necessary for the consideration of the point in issue are that the respondent had entered into a hire-purchase agreement with the appellant herein in respect of supply of two wind turbine generators along with all accessories. The terms of the agreement contemplated payments being made in instalments by the respondent, the first instalment was payable on 29th September, 1995 and the last was due by 25th August, 1998. In all the payment was to be made by 36 instalments.

4. According to the appellant the respondent paid the first fifteen instalments and thereafter committed default and payment was not made in spite of several demands being made by the appellant. The hire-purchase agreement contained an arbitration clause which reads as follows:

“All disputes, differences and/or claims, arising out of this hire















































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