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Power of a Court to Order Interim Measures


Power of a Court to Order Interim Measures
Power of a Court to Order Interim Measures

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Authority of a Court to Order Interim Measures: Section 9


In certain scenarios, resorting to the arbitral tribunal for interim measures might not be feasible or effective. This could arise due to the non-constitution of the tribunal or constraints on its power to grant interim relief. 



In such circumstances, a party retains the right to seek interim measures from the competent court. Section 9 of the Arbitration Act empowers a party to an arbitration agreement to petition the court for interim measures before or during arbitral proceedings, or even after the arbitral award has been rendered but before its enforcement in accordance with Section 36 of the Arbitration Act. 



However, it's noteworthy that individuals who are not party to the arbitration agreement cannot avail themselves of Section 9 for interim measures, although, as elaborated below, interim orders against third parties may be obtained.



If the arbitration agreement is contained within a document requiring stamping under Indian law provisions, no interim measure of protection can be granted until the document is duly stamped.



A significant precedent in SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. emphasised that an application under Section 11 of the Arbitration Act for arbitrator appointment cannot proceed until the arbitration agreement document is properly stamped. The court is obligated to impound an unstamped document, forwarding it for stamp duty payment. 

 
 

However, if a compulsorily registrable document lacks registration, the court may detach the arbitration agreement for independent consideration.



This principle was reinforced in Avantha Holding Ltd. v. Osian’s Connoisseurs of ART (P) Ltd., where the Delhi High Court impounded an arbitration agreement-containing document. It decreed that failure to pay the prescribed stamp duty and penalty would render the agreement unenforceable, thus precluding consideration of an application for interim measures.



Section 9 delineates various interim measures, including appointing a guardian for a minor or incapacitated individual for arbitration purposes, or granting interim protection measures such as:


  • Preserving, temporarily holding, or selling goods subject to the arbitration agreement.


  • Securing the disputed amount in arbitration.


  • Detaining, preserving, or inspecting property relevant to the arbitration, authorising entry into premises, or conducting necessary experiments or observations for evidentiary purposes.


  • Issuing interim injunctions or appointing receivers.


  • Any other interim protection measure deemed just and convenient by the court.




Determining the Competent Court for Interim Measures


Correctly identifying the competent court to entertain an application for interim measures is crucial. Section 2(1)(e) of the Arbitration Act provides the definition of 'court', which helps in ascertaining the appropriate court for granting interim relief:


  • In arbitrations other than international commercial arbitrations: The principal Civil Court of original jurisdiction, which would have jurisdiction over the subject matter of the arbitration if it were the subject of a lawsuit, is competent. This may include a High Court with ordinary original civil jurisdiction.



  • In international commercial arbitrations: A Section 9 petition can only be filed before a High Court with ordinary original civil jurisdiction over the subject matter of the arbitration. In other cases, it can be filed before a High Court with jurisdiction to hear appeals from subordinate courts.



Furthermore, Section 42 stipulates that once an application under Part I of the Arbitration Act is initiated in a specific court, that court retains exclusive jurisdiction over the arbitral proceedings. 



Subsequent applications related to the same arbitration agreement and proceedings must also be made in that court and no other. This is particularly relevant when there are multiple courts with jurisdiction.



If the contract designates exclusive jurisdiction to one of the competent courts, filing a Section 9 petition in another court would not be permissible.



Considering the Conduct of the Parties in Section 9 Petitions


When adjudicating Section 9 petitions, courts may factor in various elements, including the behaviour of the disputing parties and any delay in filing the petition. In S. Raminder Singh v. NCT of Delhi, the petitioner's failure to disclose ongoing legal actions seeking similar reliefs in other proceedings constituted a significant omission.



Despite stating otherwise in the Section 9 petition, the petitioner had indeed pursued relief in other courts, which had been denied. 



The court deemed this lack of transparency as grounds for dismissal, emphasising the importance of approaching the court with candour and honesty. Since Section 9 petitions grant discretionary relief, petitioners are obligated to present their case transparently without concealing pertinent facts.



Similarly, in Uppal Eng. Co. (P) Ltd. v. Cimmeo Birla Ltd., the petitioner's failure to disclose a concurrent application under Section 17 seeking similar relief from the arbitral tribunal led to the rejection of the Section 9 petition. By withholding material facts, the petitioner undermined its entitlement to relief under Section 9.



In Brawn Laboratories Ltd. v. Rhone Poulenc Rorer S.A., despite potential merits in the petitioner's case, the court refused interim relief due to significant delay in filing the Section 9 petition.



Approximately three years had lapsed since the termination of the licence agreement before the petitioner sought injunction against the respondent's marketing activities through other entities. This delay undermined the petitioner's urgency and entitlement to immediate relief.

 
 

Timing Considerations for Section 9 Interim Measures


Timing is a crucial aspect when it comes to applying for interim measures under Section 9 of the Arbitration Act. The amended Section 9 introduces specific timeframes for initiating arbitral proceedings after an order for interim measures is issued by the court. 



If the court grants an order for interim measures before the commencement of arbitral proceedings, the arbitration proceedings must begin within 90 days from the date of the order, or within a further duration as determined by the court.



Failure to initiate arbitration within this timeframe leads to automatic vacation of the interim order, as established in Paton Constructions Private Limited v. Lorven Projects Limited.



In instances where interim orders are made during the arbitration process, the court's power to issue such measures is somewhat limited, especially after the 2015 Amendment. Section 9(3) now restricts the court from entertaining applications under Section 9 once the arbitral tribunal has been constituted, unless specific circumstances render the remedy under Section 17 ineffective. 



This amendment aligns with the enhanced powers of arbitral tribunals under Section 17, which now mirror the authority of the court in ordering interim measures. 



Furthermore, orders issued by arbitral tribunals under Section 17 are considered as court orders and are directly enforceable under the Civil Procedure Code.



However, after the issuance of the arbitral award, Section 9 still allows parties to seek interim measures, provided the application is made before the award's enforcement in accordance with Section 36. 



Notably, the courts have ruled that, during this post-award phase, only the award creditor should be permitted to apply for interim measures.



In Dirk India Private Limited v. Maharashtra State Electricity Generation Company Limited, the Bombay High Court emphasised that allowing an award debtor to seek interim relief after challenging the award under Section 34 would be inappropriate, as it would effectively grant relief that the award debtor would not be entitled to even if successful in challenging the award.

 
 


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