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Interim order can go beyond arbitration

The Supreme Court has held that an interim order made before, during or even after an award by an arbitrator will continue in force till the award is enforced.

Interpreting Section 9 of the Arbitration and Conciliation Act, the court stated so in the appeal of UltraTech Cement Ltd against the judgment of the Rajasthan High Court which had ruled in favour of the state Vidyut Utpadan Nigam Ltd. In this case, the two parties signed an agreement by which UltraTech was allowed to take away fly ash free for five years and thereafter at the rate fixed by the Nigam.

After a few years, the Nigam invited tenders for sale of fly ash. The cement company moved the civil court seeking a restraint. The judge allowed it. But the Rajasthan High Court set it aside.  The cement company moved the Supreme Court, pointing out that arbitration was pending and therefore the rate should not be changed. The court passed an interim order restricting the sale of fly ash. After the award, the question arose whether the interim order survived. The court ruled that the interim order lasted till the enforcement of the arbitral award as prescribed in law.

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