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Hearing for interim relief heard by court even after constitution of Arbitral Tribunal

Cause Title : Jaya Industries Vs. Mother Dairy Calcutta & Anr., AP 85 of 2023, Calcutta High Court

Date of Judgment/Order : 20.07.2023

Corum : Hon’ble Justice Moushumi Bhattacharya

Citied: Arcelor Mittal Nippon Steel India Limited vs. Essar Bulk Terminal Limited; (2022) 1 SCC 712

Background

After filing of the application on 10th February, 2023, a Co-ordinate Bench passed an order on 15th March, 2023 directing the respondents to show-cause as to why the respondents should not be directed to deposit a sum of Rs. 5,95,40,498.60/-. Affidavits were exchanged between the parties and recorded in the orders passed by the Court on 10th April, 2023, 1st May, 2023 and 14th June, 2023. 

The petitioner has filed the present application for interim relief under section 9 of The Arbitration and Conciliation Act, 1996.

Counsel appearing for the petitioner wants this Court to continue to hear the petition for interim relief while counsel appearing for the respondents relies on section 9(3) of the Act to put emphasis on the bar on the Court from entertaining an application under section 9(1) of the Act subject to the efficacy of the remedy under section 17 before the arbitral tribunal.

Judgment

The High Court observed that Section 9(1) permits a party before or during arbitral proceedings or at any time after making of the arbitral award but before enforcement of the award to apply to a Court for interim measures while Section 9(3) puts certain conditionality to the relief under Section 9(1) and states that the Court shall not entertain an application under sub-section (1) once the arbitral tribunal has been constituted, unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious.

The Supreme Court in Arcelor Mittal (supra) considered the expression “entertain” and held that if the Court had already applied its mind to the issues raised, then the Court can proceed to adjudicate the application under section 9(1) notwithstanding the bar of section 9(3).

In light of the dictum in Arcelor Mittal, the Court has to determine whether the present application can continue to be entertained despite the arbitral tribunal being constituted on 17th May, 2023. This would depend on whether the Court has applied its mind to the present application which is required to circumvent the mandate of section 9(3) of the Act.

Section 9(3) aims to prevent multiple levels of hearing for the same relief. The section envisages a clockwise motion of considerations of the matter after an arbitral tribunal has been constituted. The hands of the clock however stop to tick where the Court has already gone into the matter. Permitting the parties to re-agitate the matter in such cases before the arbitral tribunal would in effect rewind the clock which is not what section 9(3) intends.

This Court is of the view that the Court has already entertained the matter and thought it fit to direct affidavits to consider the dispute further. This, hence, is certainly a case where the Court has applied its mind to the matter and consequently “entertained” the application filed by the petitioner. The process of consideration has indeed commenced and the subsequent constitution of the Arbitral Tribunal will not act as a fetter on the Court to continue hearing the application.

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