Arbitration and Conciliation Act, 1996 – ss. 9, 11 and 17 – Appellant and respondent entered into an agreement for cargo handling – Disputes arose between the parties – Appellant invoked arbitration clause and gave notice to respondent – Appellant filed application u/s.11 of the Act, for appointment of an Arbitral Tribunal before the High Court – Respondent replied to arbitration notice stating that the dispute was not arbitrable and there was an amount due and payable by the appellant – Both appellant and respondent filed separate applications u/s.9 before the Commercial Court – In pursuance to the earlier application u/s.11, the High Court appointed three member Arbitral Tribunal – Thereafter, the appellant filed application for reference of both the applications filed u/s.9 to the Tribunal – The Commercial Court dismissed the application for reference – The order of the Commercial Court was challenged before the High Court – The High Court held that the Commercial Court has the power to consider whether the remedy u/s.17 of the Arbitration Act is inefficacious and pass necessary orders u/s.9 of the said Act – Before the Supreme Court, the appellant contended that s.9(3) of the Act restricts the power to entertain an application under sub-section (1) of s.9 of the Act once an Arbitral Tribunal has been constituted – Held: s. 9(1) enables the parties to an arbitration agreement to approach the appropriate Court for interim measures before the commencement of arbitral proceedings, during arbitral proceedings or at any time after the making of an arbitral award but before it is enforced and in accordance with s.36 of the Arbitration Act – The bar of s. 9(3) operates where the application u/s. 9(1) had not been entertained till the constitution of the Arbitral Tribunal – If an application u/s. 9 had been entertained before the constitution of the Tribunal, the Court always has the discretion to direct the parties to approach the Arbitral Tribunal, if necessary by passing a limited order of interim protection, particularly when there has been a long time gap between hearings and the application has for all practical purposes, to be heard afresh, or the hearing has just commenced and is likely to consume a lot of time – The High Court has rightly directed the Commercial Court to proceed to complete the adjudication – It is clarified that it shall not be necessary for the Commercial Court to consider the efficacy of relief u/s. 17, since the application u/s. 9 has already been entertained and considered by the Commercial Court.
Arbitration and Conciliation Act, 1996 – s. 9(3) – Expression ‘entertain’ – Held: the expression “entertain” means to consider by application of mind to the issues raised – The Court entertains a case when it takes a matter up for consideration.
Partly allowing the appeal, the Court
HELD: 1. The bar of Section 9(3) operates after an Arbitral Tribunal is constituted. There can therefore be no question of usurpation of jurisdiction of the Arbitral Tribunal under Section
17 before the Arbitral Tribunal is constituted. The Court is obliged to exercise power under Section 9 of the Arbitration Act, if the Arbitral Tribunal is yet to be constituted. Whether the Court grants interim relief or not is a different issue, for that would depend on the facts of the case - whether the Applicant has made out a good prima facie case, whether the balance of convenience is in favour of relief being granting to the applicant, whether the applicant would suffer irreparable injury by refusal of interim relief etc. [Para 88][1049-G-H; 1050-A-B]
2. It is now well settled that the expression “entertain” means to consider by application of mind to the issues raised. The Court entertains a case when it takes a matter up for consideration. The process of consideration could continue till the pronouncement of judgment. Once an Arbitral Tribunal is constituted the Court cannot take up an application under Section
9 for consideration, unless the remedy under Section 17 is inefficacious. However, once an application is entertained in the sense it is taken up for consideration, and the Court has applied its mind to the Court can certainly proceed to adjudicate the application. [Para 93][1052-D-E]
3. On a combined reading of Section 9 with Section 17 of the Arbitration Act, once an Arbitral Tribunal is constituted, the Court would not entertain and/or in other words take up for consideration and apply its mind to an application for interim measure, unless the remedy under Section 17 is inefficacious, even though the application may have been filed before the constitution of the Arbitral Tribunal. The bar of Section 9(3) would not operate, once an application has been entertained and taken up for consideration, as in the instant case, where hearing has been concluded and judgment has been reserved. Appellant may be right, that the process of consideration continues till the pronouncement of judgment. However, that would make no difference. The question is whether the process of consideration has commenced, and/or whether the Court has applied its mind to some extent before the constitution of the Arbitral Tribunal. If so, the application can be said to have been entertained before constitution of the Arbitral Tribunal. [Para 95][1052-F-H; 1053A-B]
4. Even after an Arbitral Tribunal is constituted, there may be myriads of reasons why the Arbitral Tribunal may not be an efficacious alternative to Section 9(1). This could even be by reason of temporary unavailability of any one of the Arbitrators of an Arbitral Tribunal by reason of illness, travel etc. [Para 96][1053-B-C]
5. Applications for interim relief are inherently applications which are required to be disposed of urgently. Interim relief is granted in aid of final relief. The object is to ensure protection of the property being the subject matter of Arbitration and/or otherwise ensure that the arbitration proceedings do not become infructuous and the Arbitral Award does not become an award on paper, of no real value. [Para 97][1053-C-D]
6. The principles for grant of interim relief are (i) good prima facie case, (ii) balance of convenience in favour of grant of interim relief and (iii) irreparable injury or loss to the applicant for interim relief. Unless applications for interim measures are decided expeditiously, irreparable injury or prejudice may be caused to the party seeking interim relief. [Para 98][1053-D-E]
7. It could, therefore, never have been the legislative intent that even after an application under Section 9 is finally heard relief would have to be declined and the parties be remitted to their remedy under Section 17. [Para 99][1053-E-F]
8. When an application has already been taken up for consideration and is in the process of consideration or has already been considered, the question of examining whether remedy under Section 17 is efficacious or not would not arise. The requirement to conduct the exercise arises only when the application is being entertained and/or taken up for consideration. As observed above, there could be numerous reasons which render the remedy under Section 17 inefficacious. To cite an example, the different Arbitrators constituting an Arbitral Tribunal could be located at far away places and not in a position to assemble immediately. In such a case an application for urgent interim relief may have to be entertained by the Court under Section 9(1). [Para 100][1053-F-H]
9. It is reiterated that Section 9(1) enables the parties to an arbitration agreement to approach the appropriate Court for interim measures before the commencement of arbitral proceedings, during arbitral proceedings or at any time after the making of an arbitral award but before it is enforced and in accordance with Section 36 of the Arbitration Act. The bar of Section 9(3) operates where the application under Section 9(1) had not been entertained till the constitution of the Arbitral Tribunal. Ofcourse it hardly need be mentioned that even if an application under Section 9 had been entertained before the constitution of the Tribunal, the Court always has the discretion to direct the parties to approach the Arbitral Tribunal, if necessary by passing a limited order of interim protection, particularly when there has been a long time gap between hearings and the application has for all practical purposes, to be heard afresh, or the hearing has just commenced and is likely to consume a lot of time. In this case, the High Court has rightly directed the Commercial Court to proceed to complete the adjudication. [Para 107][1055-D-F]
Amazon.com NV Investment Holdings LLC v. Future Retail Limited & Ors. 2021 SCC Online SC 557; Chloro Controls India Private Limited v. Severn Trent Water Purification Inc (2013) 1 SCC 641 : [2012] 13 SCR 402; Vidya Drolia and Ors. v. Durga Trading Corporation (2021) 2 SCC 1 : 2021 (6) JT 460 – relied on. State Bank of India and Ors. v. S. N. Goyal (2008) 8 SCC 92 : [2008] 7 SCR 631 AIR 2008 SC 2594; Deep Chand & Ors v. Land Acquisition Officer & Others (1994) 4 SCC 99 : [1994] 1 SCR 530 AIR 1994 SC 1901; A.V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani & Anr AIR 1961 SC 1506 : [1962] SCR 753; Manbhupinder Singh Atwal v. Neeraj Kumarpal Shah 2019 GLH (3) 234; Firm Ashok Traders and Anr. v. Gurumukh Das Saluja and Ors (2004) 3 SCC 155 : [2004] 1 SCR 404;
Lakshmi Rattan Engineering Works Ltd. v Asstt. Commissioner Sales Tax, Kanpur and Anr. (1968) 1 SCR
505 : AIR 1968 SC 488; Hindustan Commercial Bank Ltd. v Punnu Sahu (1971) 3 SCC 124; Martin & Harris Ltd. v VIth Additional District Judge and Others (1998)
1 SCC 732 : [1997] 6 Suppl. SCR 380; Union of India and Ors. v. Uttar Pradesh State Bridge Corporation Limited (2015) 2 SCC 52 : [2014] 13 SCR 1180 – referred to.
Energo Engineering Projects Limited v. TRF Lt 2016 SCC Online Del 6560; Tufan Chatterjee v. Sri. Rangan Dhar 2016 SCC Online Cal 483; Benara Bearings and Pistons Limited v. Mahle Engine Components India Private Limited (2017) SCC Online Del 7226; Kundan Lal v. Jagan Nath Sharma AIR 1962 All 547; Anil Kunj Bihari Saraf v. Namboodas S/o Shankarlal and Ors. (1996) SCC Online MP 112; M. Ashraf v. Kasim V.K (2018) SCC OnLine Ker 4913; Srei Equipment
Finance Limited (Sefl) v. Ray Infra Services Private Limited & Anr. (2016) SCC OnLine Cal 6765; Avantha Holdings Limited v. Vistra ITCL India Limited 2020 SCC OnLine Del 1717 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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