- INTRODUCTION
Arbitration, as is the case with all major facets of Civil Law is to a great extent moulded and influenced by the interim reliefs sought by parties to the arbitration, before the National Courts and even before the Arbitral Tribunal. In this article we will seek to analyse the powers of the Appellate Court while dealing with order’s passed by the Arbitral Tribunal in Section 17 of the Arbitration and Conciliation Act, 1996, granting or refusing to grant interim relief.
II- SCOPE OF INTERIM RELIEF UNDER SECTION 17 OF THE ARBITRATION AND. CONCILIATION ACT, 1996.
As per Section 17 of the Arbitration and Conciliation Act, 1996, the Tribunal is empowered to grant interim relief in the following circumstances, which are as follows:-
a). Preservation, interim custody, or sale of any goods which are the subject-matter of the arbitration agreement.
b). Securing the amount in dispute in the arbitration proceedings.
c). For appointment of guardian for a minor or a person of unsound mind for the purpose of arbitration proceedings.
d). Detention, preservation and inspection of any property or thing which is the subject-matter of arbitration, or as to which any question might arise therein and authorizing for any of the aforesaid purposes any person to enter any land or building in the possession of any party or authorizing any samples to be taken or any observation to be made or any experiment to be tried which may be necessary for the purpose of evidence or new information.
III- SCOPE OF SECTION 37 OF THE ARBITRATION AND CONCILIATION ACT, 1996.
As per Section 37 of the Arbitration and Conciliation Act, 1996, appeal can lie from an order passed under Section 17 of the Arbitration and Conciliation Act, 1996, wherein the Arbitration Tribunal has granted the interim relief as sought by the parties or declined to grant the same. A catena of judicial decisions has conclusively now laid down the Law that the Court in its powers under Section 37 of the Arbitration and Conciliation Act, 1996 will only intervene when there is patent illegality or a glaring legal error.
IV:- Q DECISIONS VIS A VIS THE ROLE OF THE COURT UNDER SECTION 37 OF THE ARBITRATION AND CONCILIATION ACT, 1996 WHILE DEALING WITH ORDER , REFUSING OR GRANTING INTERIM RELIEF UNDER SECTION 17 and 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996.
The National Court’s in a catena of judgements have laid down the Law that in order to get relief under Section 17 or 9 of the Arbitration and Conciliation Act, 1996 , the parties have to demonstrate that if interim relief is not given under these provisions, then there is a danger of the Award being frustrated or the subject-matter of the arbitration proceedings, i.e, goods, being vitiated. In addition the National Courts have also maintained that the 3 pronged requirements of interim injunction have to be present, in order to secure interim relief under Section 9 or 17 of the Arbitration and Conciliation Act, 1996, which are prima-facie case, balance of convenience and irreparable injury. Now let us examine through Case-Law as to how National Courts exercising power under Section 37 of the Arbitration and Conciliation Act, 1996 deal with orders granted under Section 17 and 9 of the Arbitration and Conciliation Act, 1996.
QUADRET OF DECISIONS ON THE ARBITRABILITY OF FRAUD UNDER THE ARBITRATION ACT OF 1996.
In the recent case of GLS Foil Products Pvt Ltd vs FWS Turnit Logistics Park LLP[Arb. A( Comm) 43/2022] the Delhi High Court was dealing with the Joint Venture Agreement of an industrial land, Appellant paid part sale consideration for the said land to the Respondent’s, who started colluding with each other , and attempted to alienate the property amongst themselves, despite the Appellant having a valid legal title to the same. The Ld. Arbitrator in an application under Section 17 of the Arbitration and Conciliation Act, 1996 ordered Status-Quo to be maintained in respect of the said properties, till the arbitral proceedings were terminated. The Hon’ble Delhi High Court sitting in Appeal in Section 37 of the Arbitration and Conciliation Act, 1996 opined that it could only interfere when the reasoning was patently illegal, the Hon’ble Court opined that the Arbitration had passed a well-reasoned order, and the order restraining the third parties from disposing the properties was essential to protect the subject-matter of the proceedings, hence the Hon’ble Delhi High Court declined to interfere with the finding of the Arbitrational Tribunal.
Another case succinctly highlights the limited role played by the Courts sitting in appeal under Section 37 of the Arbitration and Conciliation Act, 1996 over Section 17 applications, which is the case of World Window Infrastructure Private Limited vs Central Warehousing Corporation Pvt Ltd. The Respondent has floated a bid, and the bid was won by the Appellant Company. As per the terms and conditions of the bid, supplies’ were to be made with certain timelines to the Respondent Corporation, the Appellant made defaults on its obligations and arbitration was resorted to. The Appellant Company preferred an application under Section 17 of the Arbitration and Conciliation Act, 1996 , and sought exemption under Covid-19. The Ld. Arbitration dismissed the Application. The Hon’ble Delhi High Court sitting in Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 dismissed the Appeal and opined that the window of interference under Section 37 of the Arbitration and Conciliation Act, 1996 is severely limited, and unless there is material or gross irregularity, the same will not be entertained.
The Delhi High Court in the case of Splendour Build well Private Limited vs Rajesh Kumar Pasricha[( Arb. A. Comm. 78 of 2021] was hearing an appeal from an order passed by the Ld. Arbitrator under Section 17 of the Arbitration and Conciliation Act, 1996 wherein the Ld. Arbitrator had directed amount to be secured by furnishing of fixed deposit receipts. The Ld. Arbitrator had directed the same in an application under Section 17 of the Arbitration and Conciliation Act, 1996 in order to preserve the subject-matter of the MOU between the parties, also the Ld. Arbitrator noted that the Appellant had trying to frustrate the MOU by disposing of the subject-matter of the proceedings. The Court sitting in Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 observed that the triplet conditions for sustaining injunction as per Raman Tech stood satisfied, that is prima-facie case, balance of convenience/inconvenience and irreparable injury, and declined to interfere with the same.
Now let us examine and analyse those cases wherein the Courts have interfered under Section 37 of the Arbitration and Conciliation Act, 1996, while dealing with application under Section 17 of the Arbitration and Conciliation Act, 1996.
In the case of Splendor Buildwell Pvt Ltd vs Rajesh Kumar Pasricha[( Arb. Comm 78 of 2021]- there was a real estate project which was to be developed. One of the parties to the arbitration, moved an application under Section 17 of the Arbitration and Conciliation Act, 1996 for securing the amount in dispute in arbitration. The Ld. Arbitrator directed for securing the amount in dispute. The Hon’ble Delhi High Court set-aside the Award of the Ld. Arbitrator and said that there was no finding that the Award was to be rendered nugatory, and hence an order for securing the amount in dispute was not correct.
In the case of recent case of M/S Oasis Projects Pvt Ltd vs National Highway and Infrastructure Development Corporation[( Arb. A. Comm. 39 of 2023] the Delhi High Court set aside the order passed by the Ld. Arbitration under Section 17 of the Arbitration and Conciliation Act, 1996 by virtue of which the Ld. Arbitration had refused to interfere with a Government black-listing despite there being no show-cause notice and hearing before the said black-listing. The Hon’ble High Court set-aside the order of the Ld. Arbitration and set-aside the black-listing order, observing that it is trite Law that an order for black-listing passed by a State entity must show reasons for disbarment, and must give opportunity of explanation.
CONCLUSION:- We therefore see that the Courts are reluctant to interfere with order passed by the Arbitration Tribunal under Section 17 of the Act unless there is a violation of natural justice or erroneous interpretation of Law like in the case of Splendor. The limited interference of the National Courts in in synchronization with the objectives of the Arbitration and Conciliation Act, 1996 which envisages limited interference of the National Court’s in arbitration proceedings.