Court Empowered To Grant Money Claim Under Section 9 Of A&C Act On Basis Of Admitted Claim: Bombay High Court

The Bombay High Court has reiterated that the power of the Court under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) to grant interim measures of protection, is wider than the power under the provisions of the Code of Civil Procedure, 1908 (CPC). It ruled that procedural provisions enumerated in the CPC cannot be invoked to defeat the grant of interim relief, while deciding an application under Section 9 of the A&C Act. The bench of Justice Bharati Dangre concluded that the Court is empowered to pass an order under Section 9 of A&C Act granting the applicant's money claim, on the basis of an admitted claim or acknowledged liability. It noted that the Court, while considering a relief under Section 9, is not strictly bound by the provisions of Order 38 Rule 5 of CPC. The respondent- Naseem Qureshi, engaged the services of the petitioner firm- JP Parekh & Son, as an Architect, for the redevelopment of his property. Subsequently, Letters of Appointment were issued in favour of the petitioner. After the respondents failed to clear the bills raised by the petitioner and terminated its services by appointing a new Architect, the petitioner filed an application under Section 9 of the A&C Act before the Bombay High Court, seeking a direction to the respondents to pay the fees payable under the Letters of Appointment. The petitioner- JP Parekh & Sons, while relying upon the arbitration clause contained in the Letter of Appointment, submitted before the High Court that the respondents had breached the terms and conditions of the Agreement. It added that the respondents terminated the appointment of the petitioner as an Architect, to evade their obligation to pay the petitioner's professional fees. Referring to Section 9(1)(ii)(b) of the A&C Act, the petitioner contended that interim measures can also be issued by the Court for the specific purpose of securing the amount in dispute. Thus, the petitioner averred that since the amount due and payable under the bills issued by it, was admitted by the respondent, there were good chances of succeeding in the arbitral proceedings. Therefore, it argued that the same justified the grant of interim measures pending the arbitration proceedings, even if no case was strictly made within the purview of Order 38, Rule 1 and 2 of the CPC. The respondent Naseem Quresh contended that the contract between the parties was in the nature of a service contract and the claim raised by the petitioner in the Section 9 application was in the form of a monetary claim. It added that since the contract between the parties was determinable, the Court cannot grant specific performance. The High Court ruled that the power to grant interim measures under Section 9 of the A&C Act must be guided by the underlying principles which govern the exercise of analogous power under the Code of Civil Procedure (CPC). The Court added that exercise of power under Section 9 cannot be carried out in an uncharted territory, ignoring the basic principles of procedural law contained in the CPC. However, it ruled that procedural provisions enumerated in the CPC cannot be invoked to defeat the grant of interim relief, while deciding an application under Section 9 of the A&C Act. Further, the bench held that the Court, while exercising its power to issue interim measures, must ascertain the manifest intention of the applicant to take recourse to the arbitral proceedings at the time of filing the Section 9 application. It added that the said intention can be gathered from the surrounding circumstances, including from the issuance of notice under A&C Act, so as to establish the applicant's manifest intention to refer the dispute to arbitration. The High Court added that the power conferred upon the Court under Section 9 is not unbridled and that it is subject to certain restrictions; firstly, it can be exercised by the Court to the same extent and manner as it could be exercised in relation to any proceedings before it. Secondly, such exercise of power to make interim arrangements should not militate against any power which might be vested in the arbitral tribunal. The bench referred to the decision of the Bombay High Court in Jagdish Ahuja & Anr. versus Cupino Ltd. (2020), where the High Court had ruled that the Court, while considering a relief under Section 9 of the A&C Act, is not strictly bound by the provisions of Order 38, Rule 5 of CPC. Further, the Court noted that the Division Bench of the Bombay High Court in Valentine Maritime Ltd. versus Kreuz Subsea Pte Limited & Anr. (2021) has held that the arbitral tribunal is empowered to make an interim Award granting money claim on the basis of the admitted claim and/ or acknowledged liability of the opposite party. Noting that the power of the Court under Section 9 of the A&C Act is wider than the power under the provisions of CPC, the bench observed...

Court Empowered To Grant Money Claim Under Section 9 Of A&C Act On Basis Of Admitted Claim: Bombay High Court

Parina Katyal

Tags