Pendency Of Conciliation Proceedings Under MSME Act Does Not Bar Interim Relief U/S 9 Of A&C Act To Preserve Subject Matter: Calcutta HC

The Calcutta High Court has held that pendency of conciliation proceedings does not bar the grant of limited interim relief under section 9 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act"), where such relief is essential to preserve the subject matter of the dispute. Justice Gaurang Kanth held while allowing a Section 9 application filed by Rishi Chemical Works Pvt. Ltd. (“Petitioner”), appointing a Special Officer to inspect, measure, and document the existing status of works and materials at a clean room laboratory set up by the respondent contractor. Background: The petitioner engaged the respondent for execution of clean room laboratory works at its Haridwar manufacturing unit pursuant to a price quotation and final price agreement. Substantial payments of more than Rs. 1.01 crore were made. Although the possession of the laboratory was handed over in May itself, the petitioner alleged that the work remained incomplete which resulted in losses. The petitioner accepted the handover expressly reserving its right to inspect the facility and to communicate any deficiencies to the respondent. Meanwhile, the proceedings before the MSME Council were pending at the conciliation stage. The Petitioner argued that the petition under section 9 is maintainable and that unless a receiver is appointed, the petitioner would suffer irreparable loss and injury. The respondent raised objections to section 9 petition contending that once proceedings are initiated under the MSMED Act, reliefs under section 9 of the Arbitration Act cannot be granted. Findings: The court, while rejecting the contention of the respondents, observed that the object of providing relief under section 9 is to preserve the subject matter of arbitration and prevent prejudice. It held that “the object and scope of Section 9… permit a party to seek interim measures of protection, including measures that facilitate preservation of the subject-matter of the dispute and relevant material, pending arbitral proceedings.” On plea that section 9 could not be invoked during the pendency of conciliation proceedings under the MSMED Act, the court distinguished the judgments in Silpi Industries and Khyaati Engineering holding that the judgments concerned the statutory scheme under section 18 of the MSME Act and did not rule out the grant of interim measures to preserve the subject matter of the dispute without impeding the ongoing conciliation process. The court further observed that the reliefs sought in the present case relating to inspection and documentation of the existing status of the premises do not amount to impermissible evidence gathering. It held that “this Court is of the prima facie view that appointment of a Special Officer would be appropriate for the limited purpose of preserving the subject matter of the dispute pending adjudication. The relief sought is confined to inspection and documentation of the existing status of the premises, the works carried out, and the materials supplied, and cannot be construed as an attempt to collect evidence, as contended by the respondent.” Relying on the Delhi High Court's judgment in Prima Developers, the court concluded that interim reliefs under section 9 can be granted even before the commencement of the arbitral proceedings. Accordingly, the court allowed the present application holding that pendency of conciliation proceedings under the MSME Act does not bar the grant of interim reliefs under section 9 of the Arbitration Act if the preservation of the subject matter of the dispute is essential. Case Title: Rishi Chemical Works Private Ltd. Vs Enviro Cleanroom Projects Private Ltd. Case Number: AP-COM/828/2025 Order Date: 15/12/2025 For Petitioner: Mr. Sarvapriya Mukherjee, Adv. Mr. Souradeep Banerjee, Adv. Ms. Moumita Dhar, Adv. For Respondent: Mr. Debanik Banerjee, Adv. Mr. Krishnendu Bhattacharya, Adv. Mr. Steven S. Biswas, Adv. Click Here To Read/Download Order

Pendency Of Conciliation Proceedings Under MSME Act Does Not Bar Interim Relief U/S 9 Of A&C Act To Preserve Subject Matter: Calcutta HC

Mohd Malik Chauhan

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