Court Is Not Appropriate Forum To Seek Interim Relief During Arbitration Proceedings: Calcutta High Court

The Calcutta High Court bench of Justice Shampa Sarkar has held that the appropriate forum for seeking interim relief after the constitution of the Arbitral Tribunal is the Tribunal itself under Section 17 of the Arbitration Act. Recourse to the court under Section 9 is permitted during the arbitration proceedings only if the remedy under Section 17 is found to be inefficacious. Brief Facts: This application has been filed under Section 9(1) of the Arbitration and Conciliation Act, 1996. The petitioner seeks to secure an interim award of Rs. 5,85,00,000/- from Respondent No. 1 by ordering the respondent to provide security of the same amount, either by cash or bank guarantee. The petitioner also requests injunctions restraining Respondent No. 1 from operating the bank account without reserving the sum, disposing of or encumbering specified assets, and an order for disclosure of all movable and immovable assets. The Petitioner submitted that the amendment to Section 17, removing the phrase “or at any time after the making of the arbitral award but before it is enforced under Section 36,” strips the arbitrator of the power to grant interim reliefs. Consequently, the arbitrator becomes functus officio regarding interim measures. As the petitioner lacks an effective remedy before the arbitrator, they are compelled to approach this Court under Section 9(1) of the Act for security and injunction. It was further submitted that An award includes an interim award. Therefore, by the amendment of Section 17, the arbitrator has lost the legal authority to grant an injunction to secure the amount awarded under Section 31(6) of the Act. Per contra, the Respondent submitted that the application should not be entertained in view of the bar under Section 9(3) of the said Act. He submits that the arbitral proceeding is continuing and as such, all prayers made before this Court can be made before the learned arbitrator. It was further submitted that The flats sought to be secured were released by the bank upon payment, and the purchasers named in the bank's letter are group companies of Respondent No. 1. The offer to secure these two flats was valid, legal, and a genuine effort to comply with the Court's order. The flats are unencumbered. Observations: The court observed that a post-award injunction application under Section 9(1) allows a party to seek interim relief from the Court after the arbitral award but before its enforcement under Section 36. However, per Section 9(3), once the arbitral tribunal is constituted, the Court will only entertain such applications if remedies under Section 17 are ineffective. It further added that the arbitral tribunal holds the power to grant interim relief during the arbitration, including after an interim award but before enforcement. This power ends when the arbitral proceedings terminate, and the arbitrator becomes functus officio. This legal position has been effective since August 30, 2019. Based on the above, it observed that the Court's power under Section 9(1) continues after the award until execution, while the arbitrator's power under Section 17 exists only during ongoing proceedings. Section 32 states arbitration terminates upon the final award or tribunal order under subsection (2). The court opined that Mr. Mitra's contention that the learned arbitrator becomes functus officio after passing an interim award on part of the dispute is incorrect. Section 17 allows interim measures to be sought from the arbitral tribunal during the ongoing arbitration. Section 32 defines when the arbitration proceeding is considered terminated. The court concluded that given the clear and unambiguous provisions of Sections 9(1), 9(3), 17, and 32, this Court holds that the prayers made here can be addressed by the learned arbitrator. The respondents' conduct, pointed out by Mr. Mitra, can also be presented before the arbitrator to support the interim relief requests. Matters such as furnishing cash security, asset disclosure, and injunctions fall within the arbitrator's jurisdiction. Accordingly, the present application was disposed of. Case Title: Mittal Technopack Private Limited Vs Ideal Real Estate Private Limited And Anr. Case Number: AP-COM/413/2025 Judgment Date: 21/05/2025 Mr. Aniruddha Mitra, Adv. Mr. Debraj Sahu, Adv. Mr. Bhaskar Dwivedi, Adv. Ms. Jyoti Rauth, Adv. Mr. Hareram Singh, Adv. … for petitioner. Mr. Rishad Medora, Adv. Mr. Romendu Agarwal, Adv. … for respondent no.-1. Mr. Samriddha Sen, Adv. Ms. Rishika Goyal, Adv. Ms. Sonia Das, Adv. … for respondent No..2 Click Here To Read/Download The Order

Court Is Not Appropriate Forum To Seek Interim Relief During Arbitration Proceedings: Calcutta High Court

Mohd Malik Chauhan

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