Post-Award Claim For Reimbursement Of Municipal Tax Is Not Maintainable U/S 9 Arbitration Act: Calcutta High Court

The Calcutta High Court held that a partner cannot claim reimbursement of municipal tax payments through a post award petition filed under section 9 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) as such issue constitutes substantive monetary dispute requiring adjudication under section 34 of the Arbitration Act. Justice Gaurang Kanth dismissed the petition filed by partners of M/s. Chander Niwas seeking directions for reimbursement from other partners of their share of Kolkata Municipal Corporation (KMC) tax paid by the petitioners. The disputes arose among partners of M/s. Chander Niwas. After the disputes were referred to the arbitration, an award was passed. Subsequently, the award was challenged under section 34. During pendency of the challenge, the petitioner paid Rs. 47.50 lakh to the KMC under a limited period waiver scheme to protect the firm's property. The Receiver appointed by the court reimbursed Rs. 20 lakh but did not adjudicate the remaining liability. Therefore, the petitioners had filed the petition under section 9 seeking reimbursement of the remaining amount from the other partners. The Petitioners contended that the Petitioners had paid the entire Kolkata Municipal Corporation tax from their own funds in order to protect the interest of the partnership firm.By virtue of such payment, the partnership firm as a whole has reaped substantial benefit. It was further argued that since all partners hold equal share, they are liable to contribute equally. Opposing the plea, the respondents argued that the tax liability arose after the arbitral award and is not part of the arbitration. It was further submitted that the issue required fresh adjudication and cannot be decided under section 9 whose scope is limited to interim protection. The court observed that the scope of section 9 is limited and ancillary and is meant to secure the subject matter of the arbitration and not to adjudicate fresh monetary disputes. The reimbursement arose after the award had already been passed and was not contemplated by the tribunal. “The object of Section 9 is to preserve the subject matter of the arbitration, secure the fruits of the award, and prevent frustration of the arbitral process. It is not intended to empower the Court to determine fresh substantive rights or liabilities, or to execute or enforce the award itself. Though the Court may exercise Section 9 powers even after the making of the award, such relief must be strictly in aid of the award and not independent or substantive in nature”, the court held. The court further held that determination of liability among partners required factual findings and accounting scrutiny which must be decided by the court under section 34 where the award has been challenged on merits. The Court observed that “the liability sought to be enforced is not an interim measure “in aid of” the award but a fresh claim requiring factual determination of the partners' respective rights and obligations. The power to apportion such liability does not fall within the ambit of Section 9 proceedings.” It held that permitting reimbursement under section 9 would tantamount to circumventing the pending adjudication and pre-judging issues linked to the arbitral award. Accordingly, the court dismissed the petition holding that the reliefs claimed by the petitioners cannot be granted within the limited scope of section 9. Case Title: RAKESH KUMAR JINDAL AND ANR. VERSUS ANOOP KUMAR JINDAL AND ORS. Case Number: A.P. 117 OF 2022 Judgment Date: 26.11.2025 Mr. Shreyaan Bhattacharyya, Adv. …..for the Petitioners Mr. Sudip Deb, Sr. Adv. Ms. Laxmi Dalmiya, Adv. Ms. Ipsita Ghosh, Adv. …..for the Respondent Nos. 1&2 Click Here To Read/Download Order

Post-Award Claim For Reimbursement Of Municipal Tax Is Not Maintainable U/S 9 Arbitration Act: Calcutta High Court

Mohd Malik Chauhan

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