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2021 Supreme(Del) 599
IN THE HIGH COURT OF DELHI AT NEW DELHI
C. Hari Shankar, J.
Mr. Sanjay Arora & Anr. – Petitioners
Versus
Mr. Rajan Chadha & Ors. - Respondents
ARB.A. (COMM.) 15 of 2020 & IA 6815, IA 6816, IA 6817 of 2020
Decided On : 05-10-2021
Advocate Appeared:
For the Petitioner: Mr. Jayant K. Mehta, Ms. Madhavi Khare, Mr. Apoorva Bhumesh and Mr. Pranay Chitale, Advs.
For the Respondent: Mr. Rajshekar Rao, Mr. Rohan, Jaitley, Mr. Bhuvanesh Sehgal, Mr. Akshay Sharma, and Mr. Kartik Sundar, Advs.
Point of Law : Interim measures ordered by arbitral tribunal - Section 17 which is contained in Chapter IV of the said Act presupposes the pendency of "arbitral proceedings before the interim measures/reliefs as contained in the said section can be granted and these powers are within the domain of the Arbitrator".
Headnote:
Arbitration and Conciliation Act, 1996 – Sections 17, 37(2)(b) and 21 – Civil Procedure Code, 1908 - Orders XXXVIII and XXXIX - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 - Non Performing Asset - Arbitral proceedings - Interim measures, etc. by Court - Commencement of arbitral proceedings - Scope of interference, under Section 37(2)(b) of the 1996 Act - Whether finding of the learned Arbitral Tribunal, regarding prima facie liability, on the part of the appellant, to continue to pay EMIs into the loan account of RBT, was, or was not, sustainable in law - Whether a case denotes sufficient urgency, as would justify grant of interlocutory protective orders under Section 17, is undoubtedly a matter of discretion.
Finding of the court : Once the possibility of the loan account of RBT being declared NPA, and SARFAESI proceedings, being initiated in that regard, loomed large, if the learned Arbitral Tribunal sought to grant interim protection in order to avoid such an exigency, Court can hardly interfere with the exercise of such discretion, in exercise of my appellate jurisdiction under Section 37(2)(b) of 1996 Act - Unlike the course of action, which it follows while dealing with petition under Section 9, the Court, when seized with an appeal against an interlocutory order of learned Arbitral Tribunal under Section 17 of the Act, is constrained to return findings on merits, on the issues in controversy, as Court is effectively sitting in judicial review over the findings of the learned Arbitral Tribunal - It is not an impossible interpretation, in any event. What the Court, examining the sustainability of an arbitral order or award, is concerned with, is the possibility, rather than the probability, of reasoning of the Arbitral Tribunal. A reasoning which is possible, and which does not militate against any other provisions of the contract or appear patently unreasonable, is immunized from interference. In such a situation, in my view, the Court should stay its hands.
Result : Appeal dismissed
JUDGMENT :
1. This appeal, under Section 37(2)(b), [37. Appealable orders –
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(2) An appeal shall also lie to a Court from an order of the arbitral tribunal –
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(b) granting or refusing to grant an interim measure under section 17]. of the Arbitration and Conciliation Act, 1996 (the 1996 Act), is directed against the order dated 1st July, 2020, passed by the learned sole arbitrator.
2. Before proceeding to advert, in detail, to the facts of the case, I deem it appropriate to dispose, at the outset, of one of the objections raised by the appellant to challenge the impugned order.
Re. contention regarding absence of “urgency”
3. The dispute pertains to the respective liabilities of Appellant No. 1, Sanjay Arora vis-a-vis Rajan Chadha and Rajiv Chadha (Respondents 1 and 2, referred to, hereinafter, as “the Chadhas”) and Sumit Gupta and Shilpa Gupta (Respondents 3 and 4, referred to, hereinafter, as “the Guptas”) qua a loan availed by Appellant No. 2, M/s RBT Pvt. Ltd. (“RBT”) from South Indian Bank (“the Bank”), against which a property located at C-11/4, Arjun Marg, DLF City, Phase-1 - 122002 (“the Gurgaon property”), belonging to Rajan Chadha and his wife, stood mortgaged. (For sake of convenience, Sanjay Arora would hereinafter be referred to as “the appellant”)
4. The impugned order has been passed on a petition, filed by Respondents 1 and 2, before this Court, under Section 9(1)(ii) of the 1996 Act [“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 –
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(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;
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(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, any proceedings before it.”] , treating it as an application under Section 17(1)(ii)[ “17. Interim measures ordered by arbitral tribunal. – (1) A party may, during the arbitral proceedings, apply to the arbitral tribunal –
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(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;
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(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient,
and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.” ]. An objection has been raised, by the appellant, regarding the jurisdiction and authority of the learned Arbitral Tribunal to do so; however, I will deal with that objection somewhat later in this judgment. Suffice it to state, at this stage, that, of the various prayers contained in the Section 17 application of Respondents 1 and 2, the only prayer which was pressed, and which has been granted by the learned Arbitral Tribunal vide the impugned order, is for a direction to the appellant to continue to pay, into the loan account of RBT, the equated monthly instalments (EMIs) payable against the loan advanced to RBT.
5. Having held that a prima facie case of liability, of the appellant, to pay the said EMIs during the pendency of proceedings existed, the learned Arbitral Tribunal has directed the appellant to continue to do so during the pendency of the arbitral proceedings. The following r
