Interim Measures under Section 9 of the Arbitration and Conciliation Act, 1996

Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) provides for a situation whereby a party, before the enforcement of an arbitral award, can approach a court for interim measures. For instance, interim measures can be sought against any goods which are the subject-matter of arbitration. Importance of such measures cannot be easily neglected, especially when it affects the enforceability of the contingent arbitral award. Supreme Court of India (“Supreme Court”) has, in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.[1], held that Section 9 of the Arbitration Act, by virtue of being in Part I, is applicable where the place of arbitration is in India. Though the reasoning was ambiguous, this has, for the time being, become the legal position.

Nature of Power under Section 9 of the Arbitration Act

The court, under Section 9 of the Arbitration Act, is empowered to grant interim measures. Such measures, as the language of the section suggests, can be granted even before the commencement of arbitration proceedings. Since the measures are of "interim" character, a careful consideration is always required.

In Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corpn.,[2] it was held by the court that exercise of power under Section 9 of the Act must be based on well-recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a Receiver. That is, it would not be correct to say that the power under Section 9 of the Act is totally independent of the well-known principles of interim injunctions.[3]As regard the applicability of Specific Relief Act, 1963 to an application, under Section 9 of the Arbitration Act, it was held by the Supreme Court, in Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd.,[4] that:

“When the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration.”

The interim direction ordinarily would precede finding of a prima facie case. When existence of a prima facie case is established, the court shall consider the other relevant factors, namely, balance of convenience and irreparable injuries[5]. Since, under Section 9 of the Arbitration Act, the court only formulates the measures for protecting a right under adjudication, the section should be applied to maintain status quo.[6]While granting interim injunction, public interest can also be a consideration.[7]

How much “Before” the commencement of Arbitration?

So far as interim measures are sought during or after the arbitration proceedings, not much difficulty arises. The main difficult, however, arises when one seeks to interpret the term “before”.

According to the Supreme Court (Firm Ashok Traders v. Gurumukh Das Saluja.), the word “before” means, inter alia, “ahead of; in presence or sight of; under the consideration or cognizance of”. The two events sought to be interconnected (application under Section 9 and intention to start arbitration proceedings) by use of the term “before” must have proximity of relationship by reference to occurrence; the later event proximately following the preceding event as a foreseeable or “within-sight” certainty.[8]

In Sundaram Finance Ltd. v. NEPC India Ltd, it was held by the court that the phrase “before, or during arbitral proceedings” should be literally construed. If a party can show that it has a manifest intention to initiate the arbitration proceedings, it can approach for interim measures even before the commencement of arbitral proceedings. It was further held that, though issuance of notice may constitute manifest intention to initiate arbitration proceedings, such issuance of notice is not a mandatory requirement.[9]

Section 69 of the Partnership Act, 1932 restricts a court from entertaining a ‘suit’ to enforce a right arising from a contract. In Firm Ashok Traders v. Gurumukh Das Saluja,[10] a question arose whether this bar on the jurisdiction of the court, enacted by Section 69 of the Partnership Act, affects the maintainability of an application under Section 9 of the Arbitration Act. The Court held that an application, under Section 9 of the Arbitration Act, is not a suit and right conferred under the section does not arise from a contract. It held that:

“For the moment suffice it to say that the right conferred by Section 9 cannot be said to be one arising out of a contract. The qualification which the person invoking jurisdiction of the court under Section 9 must possess is of being a “party” to an arbitration agreement. A person not party to an arbitration agreement cannot enter the court for protection under Section 9. This has relevance only to his locus standi as an applicant. This has nothing to do with the relief which is sought for from the court or the right which is sought to be canvassed in support of the relief. The reliefs which the court may allow to a party under clauses (i) and (ii) of Section 9 flow from the power vesting in the court exercisable by reference to “contemplated”, “pending” or “completed” arbitral proceedings.”

Interplay between Section 9 and Section 17 of the Arbitration Act

Section 17 of the Arbitration Act, like Section 9, provides for the grant of interim measures. The difference, however, is that it is the court which grants such measures under Section 9; while, it is the arbitral tribunal which grants interim measures under Section 17. Explaining the relation between these two sections, Supreme Court, in Firm Ashok Traders v. Gurumukh Das Saluja,[11] held that:

“The need for Section 9, in spite of Section 17 having been enacted, is that Section 17 would operate only during the existence of the Arbitral Tribunal and its being functional. During that period, the power conferred on the Arbitral Tribunal under Section 17 and the power conferred on the court under Section 9 may overlap to some extent but so far as the period pre- and post- the arbitral proceedings is concerned, the party requiring an interim measure of protection shall have to approach only the court.”

Court can examine the validity of Arbitration Agreement under Section 9 of Arbitration Act

In SBP & Co. v. Patel Engg. Ltd., Supreme Court held that, in a situation when a party to arbitration agreement opposes the grant of interim measures, thereby challenging the validity of arbitration agreement or contending that the impugned dispute is covered under the agreement, the court has to necessarily determine the existence of the arbitration agreement.[12]

As we conclude this post, few important points should have become clear with regard to Section 9 of Arbitration Act. First, these are the well settled principles of interim measures which the court should apply. Second, if other party so challenges, court can also determine the validity of arbitration agreement. Third, if an application is made before the commencement of arbitration proceedings, there should be a manifest intention to do so.

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[1] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552

[2]  Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corpn., (2007) 6 SCC 798, 804

[3] Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125, 137

[4] Id, at page 135

[5] Transmission Corpn. of A.P. Ltd. v. Lanco Kondapalli Power (P) Ltd., (2006) 1 SCC 540, 554

[6] Transmission Corpn. of A.P. Ltd. v. Lanco Kondapalli Power (P) Ltd., (2006) 1 SCC 540, 554; Suresh Dhanuka v. Sunita Mohapatra, (2012) 1 SCC 578,590

[7] Mahadeo Savlaram Shelke v. Pune Municipal Corpn., (1995) 3 SCC 33, 41

[8] Firm Ashok Traders v. Gurumukh Das Saluja, (2004) 3 SCC 155, 168

[9] Sundaram Finance Ltd. v. NEPC India Ltd., (1999) 2 SCC 479, 488

[10] Id, at page 165

[11] Firm Ashok Traders v. Gurumukh Das Saluja, (2004) 3 SCC 155,168

[12] SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618, 648