A fundamental principle of granting interim relief is to lower the risk of injustice. In this regard, it is profitable to refer to the observation made by Lord Hoffman in Films Rover International Ltd. v. Cannon Film Sales Ltd.1:
"The question of substance is whether the granting of the injunction would carry that higher risk of injustice which is normally associated with the grant of a mandatory injunction. The second point is that in cases in which there can be no dispute about the use of the term 'mandatory' to describe the injunction, the same question of substance will determine whether the case is 'normal' and therefore within the guideline or 'exceptional' and therefore requiring special treatment. If it appears to the court that, exceptionally, the case is one in which withholding a mandatory interlocutory injunction would in fact carry a greater risk of injustice than granting it even though the court does not feel a 'high degree of assurance' about the plaintiff's chances of establishing his right, there cannot be any rational basis for withholding the injunction."
The provision of Section 17 of the Arbitration and Conciliation Act, 1996 is very crucial for the working of arbitration proceeding as the same ensure that even for the purposes of interim measures, the parties can approach the Arbitral Tribunal rather invoking jurisdiction of Court. The Arbitral Tribunal has also been vested with vide powers to issue such other interim measure of protection as may appear to be just and convenient, bringing it at par with the powers of Court under Section 9 of the Act. Prior to the amendment the power of the Arbitral Tribunal was not very much clear and the Tribunal act in a very orthodox manner while granting interim relief. The amendment Act of 2015 based on the recommendation of "246 report of Law Commission of India" made significant changes in power of Arbitral Tribunal while granting interim measure. The objective of the amendment was to equate the Arbitral Tribunal with the power of Court while granting interim relief under Section 9 of the Act. The Law Commission of India in its 246th report categorically mentioned that Section 17 as an important provision for the smooth and efficient working of the arbitration proceeding, since it provide valuable right to the parties to approach Arbitral Tribunal for interim relief. The amended of 2015 brought clarity on the kind of relief that may be granted by the Arbitral Tribunal.
The Amendment Act, 2015 brought significant changes to the wordings of "Section 17" of the Act the wording of Sub-section(1) which said that "unless and otherwise agreed by the parties", "the tribunal may" and "in respect to subject matter of the dispute" were omitted. The newly worded Section 17(1) and exactly similar to Section 9(1) of the Act. the Arbitral Tribunal are now allowed to pass interim measures "during the ongoing arbitral proceeding". The other major changes in the Act is about the scope of relief. In the form of Section 17(1)(ii)(e), the Arbitral Tribunal has now power similar to Court. The provision is further followed by the wording "the arbitral tribunal shall have the same process of making orders, as the Court enjoy for the purpose of any proceedings before it".
In the case of Intertoll ICS Cecons O & M Co. Pvt. Ltd. Vs. National Highways Authority of India2 the Hon'ble Delhi High Court has observed that the powers of the tribunal under Section 17 are not as wide as that of the court under Section 9. It is held that the words 'subject matter of the dispute' in Section 17 should be understood as referring to a tangible 'subject matter of the dispute' different from an 'amount in dispute'. It is held that considering the reliefs sought by the parties in that matter were monetary in nature, even if the language of the words 'subject matter of the dispute' in Section 17 are taken to include monetary claims, the provision of security in relation to such subject matters can perhaps be in the form of providing a bank guarantee. It is however held that the power of the tribunal under Section 17, even if assumed to be a wide as that of the court under Section 9, it cannot extend to directing the provision of security in the form of a bank guarantee in relation to a speculative claim for damages.
However, after amendment of 2015, a mere glance of Section 17(1) of the Act would make it clear that the Arbitral Tribunal has been given discretion to act on the request of a party and direct the other party to take any interim measure of protection in respect of the subject matter of dispute. The power vested in Arbitral Tribunal in terms of Section 17 of the Act is essentially aimed at protecting lis and right of the parties. Such exercise of power may be necessitated, if the refusal to exercise power is likely to render the main dispute in reference infructuous or is likely to cause irreparable loss and injury to the party claiming such measure. Post amendment while granting interim relief the power of Arbitral Tribunal is at par with powers of Court.
In the case of Arvind Constructions Co. (P) Ltd. Vs. Kalinga3 the Hon'ble Supreme Court has held that the intention behind Section 9 of the Act is the issuance of an order or preservation of the subject matter of an arbitration agreement. It is also held that it would not be correct to say that the power under Section 9 of the Act is totally independent of the well known principles governing the grant of an injunction that generally governed the courts.
In the case of Nimbus Communications Limited v. BCCI4 Bombay High Court held as under:-
"24. A close reading of the judgment of the Supreme Court in Adhunik Steels would indicate that while the Court held that the basic principles governing the grant of interim injunction would stand attracted to a petition under Section 9, the Court was of the view that the power under Section 9 is not totally independent of those principles. In other words, the power which is exercised by the Court under Section 9 is guided by the underlying principles which govern the exercise of an analogous power in the Code of Civil Procedure 1908. The exercise of the power under Section 9 cannot be totally independent of those principles. At the same time, the Court when it decides a petition under Section 9 must have due regard to the underlying purpose of the conferment of the power upon the Court which is to promote the efficacy of arbitration as a form of dispute resolution. Just as on the one hand the exercise of the power under Section 9 cannot be carried out in an uncharted territory ignoring the basic principles of procedural law contained in the Code of Civil Procedure 1908, the rigors of every procedural provision in the Code of Civil Procedure 1908 cannot be put into place to defeat the grant of relief which would subserve the paramount interests of justice. A balance has to be drawn between the two considerations in the facts of each case. The principles laid down in the Code of Civil Procedure 1908 for the grant of interlocutory remedies must furnish a guide to the Court when it determines an application under Section 9 of the Arbitration and Conciliation Act, 1996. The underlying basis of Order 38 Rule 5 therefore has to be borne in mind while deciding an application under Section 9(ii)(b)."
In the case of K.G. Ratish Kumar Vs. NPR Finance Limited5, the Kerala High Court held that under Section 17 of the Act, any interim measure or protection can be ordered by the Arbitral Tribunal which may include an order for appropriate security in connection with the measure ordered under Section 17(1) of the Act.
In the case of Baker Hughes Singapore Pte Vs. Shiv-Vani Oil and Gas Exploration Services Ltd.6 the Bombay High Court held as under:
"50. Interim reliefs are in aid of final relief. The arbitral tribunal while deciding such application for interim measures ought to have considered the material on record including affidavits for taking a prima facie view. In my view application under section 17 could not have been rejected on the ground that the rival claims could not be considered at all since evidence was yet to be led. For the purpose of considering interim measures, the arbitral tribunal has to consider whether the claimant has made out a prima facie case that he would succeed finally in the arbitration proceedings and whether had made out a case for grant of interim measures. In my view, the arbitral tribunal has failed to exercise that power and duty to even look into the matter for the purpose of taking a prima facie view which is mandatory while considering an application for interim measures.
51. Since the arbitral tribunal is also empowered to make an interim award and to grant money claim on the basis of admitted claim and/or acknowledged liability, in my view the arbitral tribunal has also power to grant interim measures so as to secure the claim which is subject matter of the dispute before the arbitral tribunal if such case is made out by the applicant. The provisions under sections 9 and 17 of the Arbitration and Conciliation Act are meant for the purpose of protecting the subject matter of the dispute till the arbitration proceedings culminates into an award."
In the case of National Shipping Company of Saudi Arabia Vs. Sentrans Industries Limited7 the Bombay High Court held as under:
"10………..In a special provisions of the nature like Section 9(ii)(b), we are afraid, exercise of power cannot be restricted by importing the provisions of Order 38, Rule 5 of the Code of Civil Procedure as it is. The legislature while enacting Section 9(ii)(b) does not seem to us to have intended to read into it the provisions of Order 38, Rule 5 of the Civil Procedure Code as it is. It is true and as has been held by the Supreme Court in ITI Ltd. (supra), that for want of specific exclusion of the Code of Civil Procedure in the Act of 1996, it cannot be inferred that the Code was not applicable but that would not mean that provisions of Code have to be read into as it is when the Court exercises its powers as prescribed in the Act of 1996…….The obstructive conduct of the opposite party may be one of the relevant considerations for the Court to consider the application under Section 9(ii)(b). The party seeking protection order under Section 9(ii)(b) ordinarily must place some material before the Court, besides the merits of the claim that order under Section 9(ii)(b) is eminently needed to be passed as there is likelihood or an attempt to defeat the Award, though as indicated above, the provisions of Order 38, Rule 5, CPC are not required to be satisfied. The statutory discretion given to the Court under Section 9(ii)(b) must be exercised judicially in accordance with established legal principles and having regard only to relevant considerations. In our view, this is the proper approach for consideration of the application for interim relief under Section 9(ii)(b) and we hold that the provisions of Order 38, Rule 5 of the Civil Procedure Code cannot be read as it is and imported in Section 9 of the Act of 1996."
In the case of Huawei Technologies Co. Ltd. Vs. Sterlite Technologies Ltd.8 the Hon'ble Delhi High Court held as under:
"58……However, if the petitioner has been able to make out a strong case against the respondent, particularly, when the respondent has received the amount from the employer and it is avoiding to clear the due amount and is raising flimsy reasons and when it appears to the Court to be just and convenient, then the Court has ample power to exercise its discretion to secure the amount even when the condition of the company is solvent, under Sections 9(1)(ii)(b) and (e) of the Arbitration and Conciliation Act, 1996. The amount, under these circumstances, should be secured, once the dispute is of commercial in nature. The present case of the petitioner falls within the range of exceptional one where the amount is liable to be protected
60. The interim relief in the present case is sought on the respondent's admitted obligation under the contract. The interim relief claimed in the present case is nothing but an admitted obligation on the part of the respondent and such an obligation can be enforced under Section 9 of the Act by way of interim relief"
In the case of Friends Motel Pvt Ltd Vs. Supertrack Hotels Pvt. Ltd9 the Hon'ble Delhi High Court directed the payment of rent by the lessee to the lessor as per lease and also directed to continue to pay the future rent regularly without any failure till the vacant possession is handed over. The aforesaid finding of Ld. Single Judge was upheld by the Division Bench in the appeal – Supertrack Hotels Pvt Ltd Vs. Friends Motel Pvt Ltd10. The Hon'ble Division Bench held that in a petition under Section 9 of the Act the court is empowered to direct payment of money. In Kal Airways Pvt. Ltd. Vs. Spicejet Limited11 the Hon'ble Delhi High Court directed to secure the amount towards the debenture warrant and shares. In National Highway Authority of India Vs. Punjab National Bank12 the Hon'ble High Court directed to secure the amount under the Concession Agreement on termination of the agreement. The court exercising power under Section 9 of the Act held that the power is wide enough to protect the interest of the affected parties. The Hon'ble court has further held that the court has power to issue and direct other interim measures of protection as may appear to court to be just and convenient.
The Law Commission has discussed the issue of enforcement of interim measure/order passed by the Arbitral Tribunal. The said issue was also highlighted by the Hon'ble Delhi High Court in the case Sri Krishshan Vs. Anand13 and the Supreme Court in the case Sundaram Finance Ltd. Vs. NEPC India Ltd.14. The Commission therefore, prescribe various amendments to the Section and provided for the statutory enforcement of such orders in the similar manner as they were orders of the Court. By way of amendment Act of 2015, Sub-Section (2) was added to Section 17 which gives teeth to the Arbitral Tribunal to enforce the order of interim measures which empowered the Arbitral Tribunal interim order enforceable as it is order of Court. The Hon'ble Supreme Court in the case of Alka Chandeswar Vs. Shamshul Ishrar Khan15 held that any party found guilty of non-complaince of any order of Arbitral Tribunal the same will amount to contempt.
In the case of Yusuf Khan Vs. Prajita Developers Pvt. Ltd.16 the Bombay High Court has held that before granting any interim relief by the Arbitral Tribunal, at least in relation to granting any injunction or securing the claim in the arbitration or for appointing a receiver, the Tribunal has to be satisfied that a prima facie case has been made out to examine that there is a serious question to be tried at the hearing and there is a probability that the party seeking the interim relief is entitle to it, that the interference of the Tribunal is necessary to protect the party are established at the trail, and see that the comparative mischief or inconvenience which is likely to arise from withholding the grant of interim relief will be greater than which is likely to arise from granting it. The Arbitral Tribunal while considering the interim relief must consider whether a denial of such relief would result in a grave injustice to the party seeking a protection.
Section 17 of the Act is couched in broad language and confers power on the Arbitral Tribunal to pass all interim order as may be considered necessary just and fair.
Mr. Niraj Singh is a Partner at RNS Associates. Views are personal.
- (1986) 3 All ER 772
- (2013) ILR 2 Delhi 1018
- (2007) 6 SCC 798
- 2013 (1) MHLJ 39
- 2015 (1) Arb. LR 155 (Bom)
- AIR 2014 Bom 136
- 2016 SCC Online Del 604
- 2016 SCC Online Del 2547
- 2017 SCC Online Del 11662
- 2016 SCC Online Delhi 4202
- 2017 SCC Online Delhi 11312
- (2009) 3 Arb.LR 447 (Delhi)
- (1999) 2 SCC 479
- Civil Appeal No.8720 of 2017
- 2019 SCC Online Bom 505