Abstract

 

The power to grant interim relief is essential for any adjudicating body since it aids in preserving the subject matter of dispute along with its independence and competency This power is bestowed upon the arbitral tribunal through the Arbitration and Conciliation Act, 1996[1]. However, the quandary regarding the definitive powers of the arbitral tribunal has been constant. This paper traces the judicial development on the powers of the arbitral tribunal to grant interim relief, specifically with regard to property through cases. It concludes that the present position regarding the matter provides similar powers to the arbitral tribunal as the courts to grant interim relief in matters of property, the applicability of Order XXXVIII decided on a case-to-case basis.

 

Introduction

 

The grant of interim relief is crucial in an arbitration proceeding, as in any other, since it seeks to preserve the subject matter of the same, withholding actions that can render the whole process futile. The power to grant interim relief is available to both the courts and the tribunals through Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996 (‘the Act’) respectively[2]. However, for a long time, the said power was only available definitively to the courts and the arbitral tribunals failed to exercise their power to grant interim relief due to perplexity regarding the scope of Section 17 of the Act. The specific point of quandary related to whether arbitral tribunals would also be guided by general provisions of India, that are applicable to courts, for an example, the Code of Civil Procedure, 1908 (‘CPC, 1908’).

 

Tribunals and Alternative Dispute Resolution mechanisms are quasi-judicial bodies that were established inter alia to reduce the burden of the courts. The incapacity of the arbitral tribunals to grant interim relief, thus defeats the purpose of its establishment since the aggrieved parties have to approach the courts for the same. The judicial developments on this matter reflect a certain restraint on the part of courts to widen such powers. Not only does it increase litigation and defeat the purpose of tribunals, but it also creates procedural hardship for the aggrieved parties in an arbitration.

 

This paper seeks to explore the power of the arbitral tribunal to grant interim relief with regard to property under Order XXXVIII Rule 5 of the CPC, 1908. It attempts to delineate some key concerns regarding the hierarchy and overlap between Sections 9 and 17 (of?) which deal with powers to grant interim measures of the court and the arbitral tribunal respectively. It offers two ways to interpret the cases towards a resolution, that is, through the amended Section 17 and Section 9 of the Act. Further, this paper concludes that the present position regarding the matter provides similar powers to the arbitral tribunal as the courts to grant interim relief in matters of property, the applicability of Order XXXVIII decided on a case-to-case basis.

 

Statutory Provisions

 

Interim relief is available to a party through Sections 9 and 17 of the Act, delineating the power exercisable by the court and the arbitral tribunal respectively. The power of the latter was further strengthened through an amendment to Section 17 via the Arbitration and Conciliation (Amendment) Act, 2015[3] following the recommendations of the 246^th report of the Law Commission of India.[i] The Arbitration and Conciliation (Amendment) Act, 2019[4]

amended Section 17 to make it applicable during the entirety of “arbitral proceedings”. However, the quandaryregarding the definitive powers of the arbitral tribunal has been constant, despite the amendments. This paper traces the judicial development through cases on the powers of the arbitral tribunal to grant interim relief, specifically with regard to property under Order XXXVIII Rule 5 of CPC, 1908, providing rules for arrest and attachment before judgement. (repetition- already stated in Introductory paragraph)

 

Judicial Developments

 

The power of the arbitral tribunal to grant interim relief can be traced and interpreted from the judicial developments through two ways mentioned in the following parts. The first part highlights the cases that deal with the nature and scope of Section 17[5], the second part highlights the cases that draw parallels between both Sections 9[6] and 17, the third illustrates whether the arbitral tribunals have power of enforcement under Section 17 and the fourth attempts to depict the overlap between the Sections.

 

1. The Scope of Section 17

 

One of the first cases to scrutinize the scope of Section 17 was Intertoll ICS Cecons O & M Co. Pvt. Ltd. v. National Highways Authority of India,[ii] wherein it was held that the power of the Courts under Section 9 is much wider than the power of the Arbitral Tribunal under Section 17, due to which any principle applicable to Section 9 would not be ipso facto applicable to Section 17. Similarly, it was also noted that while Order XXXVIII Rule 5 of the CPC, 1908 would only guide the Courts under Section 9, the Tribunal would have to mandatorily comply with the requirements under the same. Hence, a hierarchy was created with regard to Sections 9 and 17 wherein, Section 9 was given an upper hand. Further, it was held that Section 17 relates to tangible “subject matter of dispute” and not otherwise, such as monetary claim, which could be included in the same under Section 9. While further scrutiny of “subject matter of dispute” in both Sections 9 and 17 is beyond the scope of this paper, however, it is pertinent to mention that various judgements in line with the above-mentioned have noted that Section 9 is much wider than Section 17.[iii]

 

This created an obvious problem, inasmuch as it restricted the Arbitral Tribunal to grant interim relief as it deemed fit, consequentially increasing litigation in courts. The Arbitration and Conciliation (Amendment) Act, 2015[7] attempted to resolve the confusion. After the amendment, the nature of the power of Section 17 of the Act has been widened to match that of the Courts.

 

Section 17[8]  states that “and the Arbitral Tribunal shall have the same power for making orders, as the Court has for the purpose of, and in relation to, any proceedings before it.” which imply that the general provisions that guide Courts shall also be applicable to an Arbitral Tribunal.

 

Following the resolution of this issue, further scrutiny was required in the extent to which CPC, 1908 shall be applicable to the act, including both Sections 9 and 17. In the case of Lanco Infratech Ltd. v. Hindustan Construction Company Ltd.,[iv] Order XXXVIII Rule 5 was strictly applied under Section 17 of the Act.

 

The position was explained further in the case of Reliance Communications Ltd. v. State Bank of India,[v] wherein the reliance was placed upon the case of Steel Authority of India Ltd. v. AMCIPTY Ltd.,[vi]. The latter held that Section 9 is not wholly independent of CPC, 1908.(should be placed at the end of the paragraph) Similarly, in the former, the Court held that the provisions of CPC, 1908 shall be applied in Section 17 as per requirements.

 

Further, in the case of Sundaram Finance Ltd v. P.Sakthivel,[vii] the Court noted that after the amendment of 2015, interim orders of the Arbitral Tribunals shall be deemed to be the orders of the Court under CPC, 1908. It was also noted that post-amendment Section 17 and Section 9 shall be read alike(citation). In the above case, the Court also held that the interim order of the Arbitral Tribunal for attachment of properties shall be deemed to be the order of the Court and shall be enforceable.

 

In the recent case of ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd.,[viii] the Hon’ble Court commented on the quandary over the overlap of Section 9 and Section 17 of the Act. It opined that,

 

“With the law as it stands today, the Arbitral Tribunal has the same power to grant interim relief as the Court and the remedy under Section 17 is as efficacious as the remedy under Section 9(1). There is, therefore, no reason why the Court should continue to take up applications for interim relief, once the Arbitral Tribunal is constituted and is in session of the dispute between the parties, unless there is some impediment in approaching the Arbitral Tribunal, or the interim relief sought cannot expeditiously be obtained from the Arbitral Tribunal.” (emphasis added)

 

It can be inferred from the above case that Section 9 and Section 17 confer similar powers to the Court and the Arbitral Tribunal respectively, in terms of enforceability and nature. The difference lies in the scope of the power which is wider in the case of Section 9 inasmuch as it relates to pre-arbitral, arbitral or post-arbitral period.

 

2. Drawing Parallels Between Sections 9 And 17

 

Now that it is established that Section 9 and Section 17 of the Act shall be read alike, it is necessary to trace the cases related to the former that delineate its relationship with Order XXXVIII Rule 5. The same would aid in gaining a deeper understanding of the relationship between CPC, 1908 and Section 17 of the Act as well.

 

In the case of National Shipping Company of Saudi Arabia v. Sentrans Industries Limited,[ix] the Court held that Order XXXVIII Rule 5 cannot be read as it is and imported in Section 9 of the Act. The latter cannot be obstructed by the provisions of the former.

 

This position was, however, scrutinized more in the subsequent cases. From the cases of Adhunik Steels Limited v. Orissa Manganese and Minerals (P) Ltd.,[x] and Steel Authority of India Ltd. v. AMCIPTY Ltd.,[xi] it can be inferred that Section 9of the Actis not wholly independent of CPC, 1908.

 

In Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corporation,[xii] the Supreme Court held that Section 9 of the Act shall only be guided by Order XXXVIII Rule 5 and its application shall be decided in specific cases.

 

In the case of Nimbus Communications Limited v. BCCI,[xiii] the High Court of Bombay, in line with the previous cases highlighted hereinabove held that,

 

“The principles laid down in the Code of Civil Procedure 1908 for the grant of interlocutory remedies must furnish a guide to the Court when it determines an application under section 9 of the Arbitration and Conciliation Act, 1996. The underlying basis of Order XXXVIII, Rule 5 therefore has to be borne in mind while deciding an application under section 9(ii)(b).”

 

3. Does Section 17 Possess The Power Of Enforcement?

 

Notwithstanding the amendment and judgements in favour of the power of the Arbitral Tribunal to grant interim relief, the Courts have still been reluctant to interpret Section 17 as possessing the power of enforcement.

 

In the case of M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd.,[xiv] the Court held that neither any power was conferred on the Arbitral Tribunal to enforce its order nor does it provide for judicial enforcement of such an order. On the other hand, in the case of Sri Krishan v. Anand,[xv] the Court held that any party that fails to honour the interim order of the Arbitral Tribunal is deemed to be “making any other default” or “guilty of contempt to the Arbitral Tribunal during the conduct of the proceedings” in terms of section 27(5) of the Act. The dilemma regarding the power of enforcement made the Law Commission recommend changes to Section 17 to give teeth to the orders of the Arbitral Tribunal.

 

After much deliberation regarding this issue, the judgement in the case of Pradeep K.N. v. The Station House Officer,[xvi] held that the Arbitral Tribunal does not have the power to enforce its own order. Such orders shall be enforced in a manner provided under the CPC, 1908. In the present case, where an Arbitral Tribunal ordered the repossession of a vehicle under an interim order, the Court held that such an order shall only be enforced by a Civil Court.

 

4. Overlap Of Sections 9 And 17

 

The cases dealt with in the previous sections shall reflect an overlap between Sections 9 and 17 of the Act in terms of the time period when each section shall be applicable. In other words, now that both sections have similar powers of granting interim relief in relation to property under Order XXXVIII Rule 5 of the CPC, 1908, which judicial body should the aggrieved party approach?

 

Section 9, in relation to the power of the Courts to grant interim relief states that interim relief can be sought for (1) before arbitral proceedings (2) during arbitral proceedings (3) or at any time after making of the arbitral award but before it is enforced in accordance with Section 36 of the Act. However, the 2015 amendment to the Act introduced sub-sections 2 and 3 in Section 9 which state that once the arbitral proceedings have commenced, “the Court shall not entertain an application under sub-section 1” of Section 9 unless it finds that circumstances exist which may not render relief under Section 17 as efficacious.

 

The Hon’ble Supreme Court in the case of ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd.,[xvii] and the High Court at Calcutta in the case of Jaya Industries v. Mother Dairy Calcutta and Anr.,[xviii] relying upon the former judgement, held that even if there is a bar under Section 9(3) on the court to entertain an application for interim relief once the arbitral tribunal has been constituted and an efficacious remedy is available under Section 17, it can proceed if it has already applied its mind to the issues raised.

 

Section 17, in relation to the power of the Arbitral Tribunal states that interim relief can be sought for during the arbitral proceedings only. The phrase “at any time after the making of the arbitral award but before it is enforced in accordance with Section 36” has been omitted by the Arbitration and Conciliation (Amendment) Act, 2019 because it was inconsistent with Section 32 of the Act which stated that the mandate of the Arbitral Tribunal shall be terminated with the termination of the arbitral proceedings.

 

An appeal from the order to grant or not grant interim relief under Sections 9 and 17 shall lie in accordance with Section 37 of the Act.

 

The Hon’ble Courts, time and again have underscored the autonomy of parties in arbitration. In the case of Bharat Aluminum Co. v. Kaiser Aluminum Technical Services,[xix] and PASL Wind Solutions Private Limited v. GE Power Conversion,[xx] the Court held that party autonomy is the brooding and guiding spirit in arbitration. Hence, it can be inferred that during the arbitral proceedings, which is the only period of overlap between Sections 9 and 17 of the Act, the parties can approach the Arbitral Tribunal to claim interim relief. They can only approach the Courts for the same if circumstances exist which shall make the relief under Section 17 ineffective.

 

Conclusion

 

The cases which dealt specifically with Section 17 shed light upon one of the many difficulties faced by tribunals since their establishment in India. Both the Legislature and the Judiciary have been reluctant to provide them with powers matching those of the Courts thus, keeping most tribunals as subordinate bodies to the High Courts. While defeating the purpose of alternative dispute resolution, it also increases the burden of Courts and encourages delay in the disposal of cases. The present issue of the power of grant of interim relief with regard to property is a case in point.

 

While the amendment has resolved the issue of power of the Arbitral Tribunal, the extent of the applicability of Order XXXVIII Rule 5 of the CPC, 1908 has been an issue in many cases as mentioned. The inference drawn from the judicial development reflects that the present position favours the application of the Order XXXVIII Rule 5 or any general provision on a case-to-case basis. Hence, the power of the tribunals regarding attachment of property can be construed from either the amended Section 17, enlarging the scope, or from Section 9 which is parallel to the former. The scope of Sections 9 and 17 seems to be delineated, however, the Arbitral Tribunals have not been provided with the power of enforcement.

 

As tribunals continue to be extremely helpful in handling the increasing number of cases in India, the practical difficulties in terms of their independence, uniformity in proceedings and competency must be addressed promptly.

 

[1] Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India).

[2] Arbitration and Conciliation Act, 1996, No. 26, Acts of Parliament, 1996 (India).

[3] Arbitration and Conciliation (Amendment) Act, 2015, No. 3, Acts of Parliament, 2015 (India).

[4] Arbitration and Conciliation (Amendment) Act, 2019, No. 33, Acts of Parliament, 2019 (India).

[5] Arbitration and Conciliation Act, 1996, §17, No. 26, Acts of Parliament, 1996 (India).

[6] Arbitration and Conciliation Act, 1996, §9, No. 26, Acts of Parliament, 1996 (India).

[7] Arbitration and Conciliation (Amendment) Act, 2015, No. 3, Acts of Parliament, 2015 (India).

[8] Arbitration and Conciliation Act, 1996, §17, No. 26, Acts of Parliament, 1996 (India).

[i] Law Commission of India, Amendments to the Arbitration and Conciliation Act, 1996 (Law Com No. 246, 2014) p. 26-28.

 

[ii] Intertoll ICS Cecons O & M Co. Pvt. Ltd. v. National Highways Authority of India,2013 SCC OnLine Del 447.

[iii] See National Highways Authority of India v. China Coal Construction Group Corporation, AIR 2006 Del 134 and Shin Satellite Public Co. Ltd. v. Jain Studios Ltd., (2008) 153 DLT 604.

 

[iv] Lanco Infratech Ltd. v. Hindustan Construction Company Ltd., 2016 SCC OnLine Del 5365.

 

[v] Reliance Communications ltd. v. State Bank of India, 2019 SCC OnLine SC 1886.

 

[vi] Steel Authority of India Ltd. v. AMCIPTY Ltd., AIRONLINE 2011 DEL 9

 

[vii] Sundaram Finance Ltd v. P.Sakthivel,, AIRONLINE 2018 MAD 2113.

 

[viii] ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., 2021 SCC OnLine SC 718.

 

[ix]  National Shipping Company of Saudi Arabia v. Sentrans Industries Limited, AIR 2014 Bom 136.

[x] Adhunik Steels Limited v. Orissa Manganese and Minerals (P) Ltd., 2007 (6) Mh.L.J. (S.C.) 502 : (2007) 7 SCC 125.

 

[xi]  Steel Authority of India Ltd. supra note 5.

 

[xii] Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corporation, 2008 (1) Mh.L.J. (S.C.) 7 (2007) 6 SCC 798.

 

[xiii]  Nimbus Communications Limited v. BCCI, 2013(1) MHLJ 39.

 

[xiv] M.D. Army Welfare Housing Organisation v. Sumangal Services Pvt. Ltd., (2004) 9 SCC 619.

 

[xv] Sri Krishan v. Anand, (2009) 3 Arb LR 447 (Del).

 

[xvi]  Pradeep K.N. v. The Station House Officer, 2016 SCC OnLine Ker 8995.

 

[xvii]  ArcelorMittal Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd., supra note 8.

 

[xviii]  Jaya Industries v. Mother Dairy Calcutta and Another, 2023 SCC OnLine Cal 2051.

 

[xix] Bharat Aluminum Co. v. Kaiser Aluminum Technical Services, (2016) 4 SCC 126.

 

[xx] PASL Wind Solutions Private Limited v. GE Power Conversion, (2021) 7 SCC 1.