Interim Measures Of Protection

Concept of interim measure is an old concept of the rule of law. It is for the protection of parties in a case when the suit is still pending. The 1996 Act has nullified the Arbitration Act, 1940 and also, in the year 2015, the Arbitration and Conciliation (amendment) Act, 2015 was enacted which nullified the amended provisions of 1996 act.

Section 17 of the 1996 act and 2015 act differ from each other. The 2015 amendment act gave the power to grant interim order under section 17 and reduce the same responsibility vested on the courts by section 9 to gain more independency from judicial intervening. Section 9 of the act enables the court to order an interim or protection when an application is given and as per section 17, the arbitral tribunal has the authority to order interim measures unless prohibited by the agreement.

Interim Measure Under Section 9

Section 9 simply indicates that an interim application can be submitted by the parties during to proceeding of arbitration or after the arbitral award as per section 36 and the court may provide for interim measure. "In Leighton India Contractors Private Ltd. vs. DLF Ltd. decided on May 13, 2020, the Delhi High Court has reiterated that the scope of Section 9 of the Act is very broad and that it is an expansive provision which does not curtail the powers of the court".[1]

Some instances of an interim relief are:

• Appointment of guardian for minor or unsound mind person[2]
• In case of perishable goods, preservation or interim custody or sale of goods[3]
• Amount of dispute is to be secured[4]
• Interim injunction or inspectors or receiver to be appointed[5]
• Any interim relief as per the requirements of the case may allow for the court to order to be just and convenient[6]

As per the 2015 Amendment of the Arbitration and Conciliation Act section 9(2) provides that: "Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under sub-section (1), the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine."

In the case of M/s. Sundaram Finance Ltd. v. M/s. NEPC India Ltd., "Supreme Court was to examine the issue whether u/s 9 of the Arbitration and Conciliation Act, 1996, the Court has jurisdiction to pass interim orders even before arbitral proceedings commence and before an arbitrator is appointed. SC held that it is not necessary that arbitral proceedings must be pending or at least a notice invoking arbitration clause must have been issued before an application under Section 9 is filed".[7]

Also, in the case of Wind World (India) Ltd. v. Enercon GmbH and others, it was held that "if an application is made at the instance of such an unsuccessful party under section 9, there will not be any occasion to grant any interim measure which will be in the aid of the execution of the arbitral Award as such a party will not be entitled to seek enforcement under section 36".[8]

Whether an unsuccessful party can claim interim relief
Article 9 of the UNCITRAL Model law provides for the parties to claim interim relief during and before the proceedings but section 9 of the Act adds that one can claim an interim relief after the award has been given but before the enforcement of the same. Section 9 does not bar the party from claiming interim relief in any situation. It was later questioned whether only the winning party can claim the benefits of interim relief or not. This question arose in the case of Home Cares Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi[9], which is currently pending before the Supreme Court of India.

On the basis of the other High Court cases, one can easily conclude that the interim relief must be provided to the successful as well as the unsuccessful party. Since, the limitation to the court to provide any interim measure to the unsuccessful party is simply against the intent of the legislature and it is not a feasible precedent. But it has to be made sure that the same is done judicially and the due process of law is carried on in a justified manner.

Interim Measure Under Section 17

As the subject matter of the case may be, the other party can get interim measures by the order of arbitral tribunal. The tribunal may or may not issues such orders as per it considers the relief necessary or not also, it has to be in accordance with the arbitral agreement of the parties. Section 17 gives the tribunal the power to pass an order regarding interim relief but at the same time does not provide for the power to enforce it.

This is similar to the power given under Article 16 and 21 of the UNCITRAL Model law. On an international level, the orders under the arbitral tribunals are enforceable as per article 17H of the Model Law. But in case of India, the orders by the arbitral tribunal are not enforceable under the Act. But as per the 2015 amendment, it is enforceable under the Code of Civil Procedure.

The orders under section 17 are enforceable under the Code of Civil Procedure[10] and of one does not comply with the order of the court they can be charged under contempt of the Court. Similar to section 9, section 17 also provides interim relief for the same instances. "In another Supreme Court case, the Hon'ble court was inclined to the view that exercise of power under Section 9 of The Act must be based on well recognized principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a receiver".[11]

It is settled by the apex court in MD Army Welfare Housing Organisation v. Sumangal Services (P) Ltd[12]., "an arbitral tribunal, under Section 17 of the Act, has no jurisdiction to pass interim measures against a third party".[13]

Section 9 Vis-A-Vis Section 17

Section 9 and 17 of the Act are significantly the same but provide interim reliefs from courts and arbitral tribunals respectively.

Analyzing both the section would conclude the following:

• The powers provided under section 17 would come into effect post constitution of arbitral tribunal.
• Section 9 provides wider power to attain interim relief as the section includes phrases "before, during or after indicate".
• In comparison to the arbitral tribunals, the courts have greater power to grant interim reliefs.
• The 2015 amendment Act has encouraged the arbitral tribunals to grant interim reliefs. This was not included in the before acts.
• If any party needs to get directions against third parties, it can seek for interim orders in courts
• The tribunal cannot include the interim measure for anything except for during the pendency as the proceedings terminate on an order of section 32(2) of the Act.
• The arbitral tribunal's orders cannot be coerced on the parties while the orders of the court can be enforced.

In the case of Firm Asok Traders Vs Gurumukhdas Saluja[14], it was observed by the Supreme Court that interim orders under section 17 can only be applicable when an arbitral tribunal exists. The powers vested under section 9 and section 17 may be overlapping each other due to this reason but if the parties need to get interim relief pre and post the arbitral proceeding, they have to approach the court. "As is evident from the section itself, the Delhi High Court has held that Section 9(3) of the Act does not operate as an ouster clause insofar as the court's powers are concerned and the court's jurisdiction under Section 9 is not reduced or curbed.

It has further held that if an application is filed under Section 9, the court is required to examine if the applicant has an efficacious remedy under Section 17 of getting immediate interim relief from the arbitral tribunal".[15] "Since there was absence of arbitral tribunal, the Delhi High Court held that the remedy under Section 17 was not efficacious and it would be necessary for it to entertain the petition under Section 9 of the Act".[16]

Case Laws
In the case of Smt. Baby Arya vs Delhi Vidyut Board[17], it was held by the High Court of Delhi that, "A party/person is entitled to interim relief if action of other party is either in breach of the terms of agreement or militates against equity, fair play or the principles of natural justice." And the same was referred in the case, Vishal v Kataria in para 6.2. furthermore, it has been provided that, "scope of Section 9 of the Arbitration Act only deals with the interim measure by the Court"[18].

This highlights that the principle of Natural Justice prevails in each and every condition. It is irrespective of the nature of suit but of there is a breach of any promise, the party needs to be compensated for the same. "In case of Narain Sahai Aggarwal Vs. Santosh Rani, The trial Court, while considering application under Sec. 9(ii)(b) of the Arbitration Act, is given power and jurisdiction securing the amount in dispute in the arbitration and also to pass any direction as interim measure of protection as may appear to the Court to be just and convenient."[19]

"The Supreme Court in case of Sunderam Finance Ltd. v. NEPC India Ltd.[20] , held that Section 9 is available even before the commencement of the arbitration. It need not be preceded by the issuing of notice invoking the arbitration clause. This is in contrast to the power given to the arbitrators who can exercise the power under section 17 only during pendency of arbitral proceedings before the Arbitral Tribunal. Once the mandate of the arbitral tribunal terminates, Section 17 cannot be pressed into service.

The Madras High Court while interpreting Section 9 had ruled that in cases of prior referral under section 9 at least a notice for commencement of Arbitration was necessary. Justice B.N. Kripal ruling on behalf of the Court overruled the judgment of the High Court and held that an application under section 9 could be made even prior to sending notice for commencement of the Arbitration to the other party".[21]

Conclusion
Under the arbitration and conciliation Act, 1996 the interim relief has been discussed majorly in section 9 and 17. It points out there is a keen understanding that although the parties got to arbitral proceeding to get resolution quickly but sometimes, things do not go on so handy and the court and tribunals have to play their roles and provide for interim reliefs which are there until the dispute is completely resolved to protect the other party.

It is done so in order to provide justice and prevent the party from undergoing irreversible damages. "The Working Group of the UNCITRAL acknowledged that the Model Law was silent in respect of the standards to be adopted by arbitral tribunal, though interim reliefs have far reaching consequences.

It noted that arbitral tribunals were given a broad mandate to determine whether a relief was necessary."[22] The 1996 act has given dual agency to provide for interim relief. And both are important. There have been efforts by the 1996 Act to focus on getting the intervention by judiciary less and hence, in the 2015 amendment, it emphasised on the powers of arbitral tribunals.

There are loopholes and lacunas on part of the Act as, the presence of dual agency to provide interim measure is not proving to be a good solution. It needs to be abolished and one good system must be provided for interim measures. Also, due to the difference in the powers of courts and arbitral tribunals, interim measures are taken from the courts are it provides a wider scope.

Also, "A party/person is entitled to interim relief if action of other party is either in breach of the terms of agreement or militates against equity, fair play or the principles of natural justice" has rightly pointed out and the provisions have been discussed regarding interim measures.

End-Notes:

1. MANU/DE/1351/2021
2. The Arbitration And Conciliation Act, 1996, s 9(1)(i)
3. The Arbitration And Conciliation Act, 1996, s 9 (1)(ii)(a)
4. The Arbitration And Conciliation Act, 1996, s 9(1)(ii)(b)
5. The Arbitration And Conciliation Act, 1996, s 9(1)(ii)(c) and Section 9(1)(ii)(d)
6. The Arbitration And Conciliation Act, 1996, s 9(1)(ii)(e)
7. AIR 1999 SC 565
8. 2017 SCC online Bom 1147 (para 18)
9. MANU/SCOR/18158/2015
10. The Arbitration And Conciliation Act, 1996, s 17(2)
11. (2007) 6 SCC 798.
12. (2004) 9 SCC 619
13. 2016 SCC OnLine Bom 1404
14. AIR 2004 SC 1433
15. Shashank Garg, Pragya Chauhan, 'Interim relief by courts in an Arbitration: The battle of Section 9', (Bar and Bench, 15 June 2020), accessed 22 February 2022
16. MANU/DE/3987/2019
17. AIR 2002 Del 50
18. MANU/GJ/0247/2010
19. 1997 (2) Arb LR 322.
20. 1999 (1) SCR 89
21. Kripal J.
22. United Nations Commission on International Trade Law Working Group II, Arbitration and Conciliation 36th session (New York, 4-8 March 2002)