No Interim Relief Under Section 9 Of Arbitration Act Against Terminable Contract

Cause Title : M/s Suryapushpa Distributors vs Rail Land Development Authority, Delhi High Court, O.M.P.(I) (COMM.) 213/2022 and I.A. No. 14394/2022

Date of Judgment/Order : 13.01.2023

Corum : Hon’ble Mr. Justice Chandra Dhari Singh

Citied: M/S Inter Ads Exhibition Pvt Ltd vs. Busworld International Cooperatieve Vennotschap Met Beperkte Anasprakelijkheid, 2020 SCC Online Del 2485

Background

An application under Section 9 of the Arbitration and Conciliation Act, 1996 was filed by the Petitioner in view of threats issued by respondent vide letter dated 1st July 2022 to terminate the Letter of Acceptance (“LoA”) dated 9th February 2022 executed by Petitioner and the Respondent. 

The Petitioner alleged that the instant matter was listed on 11th July 2022 where the counsel for the respondent sought time to file a reply to the petition but in utter malice instead of filing the said reply the respondent terminated the LoA vide communication dated 19th July 2022.

Consequently, through this Interim application, the Petitioner sought to amend the prayer and  pray for  Interim relief of status-quo ante qua the termination LOA dated 09.02.2022 and land admeasuring 35,127 sq. mtr., which is subject matter of LOA, be directed to be maintained till disposal of the Section 9 Petition.

The Respondent opposed the amendment and submitted that the instant relief sought by way of amendment is not maintainable under Section 9 of the Arbitration Act.

Judgment

The High Court observed that at this stage it is crucial to examine that the termination already made final by the respondent cannot be challenged by the petitioners by way of a Section 9 petition.

The High Court held that where the LoA was in fact terminated, no relief lies in favour of the petitioners/applicants for challenging the order of termination on merits. The court referred to the judgment in M/s Suryapushpa Distributors (supra) where it has been held that since the contract in the present case was terminable and as the issue of the legality of the action of termination has yet to be determined and further, since wrongful termination can be restituted by awarding of damages, in the event the appellant is able to establish that the said termination was illegal and invalid, the learned Single Judge has rightly declined the reliefs prayed for by the appellant in the Section 9 petition.

The High Court decided that this Court, exercising its powers under Section 9 of the Arbitration Act, cannot go into the merits of the termination order and adjudicate upon a challenge to the same.