The Wide Scope of Section 9 of the Arbitration and Conciliation Act

“Discourage litigation. Persuade your neighbours to compromise whenever you can. Point
out to them how the nominal winner is often a real loser — in fees, expenses, and waste of
time. As a peacemaker, the lawyer has a superior opportunity of being a good man. There
will still be business enough.” — Abraham Lincoln The present statutory regime that
regulates arbitration in India is the Arbitration and Conciliation Act, 19962 (“the Act” for
brevity).
The Act is comprehensive and seeks to protect the interests of the parties; one such provision
aimed at safeguarding the interests of the parties before, during and after the commencement
of arbitral proceedings is the power to grant interim relief. The Act envisages interim
measures under Section 9 and Section 17 of the Act. There is a basic distinction between the
two provisions i.e. the forum before which the interim measures can be sought and the stage
of proceedings when the application can be moved. Section 9 of the Act stipulates the powers
of the court to grant interim relief before or during the arbitral proceedings or after the
passing of the arbitral award and also lays down a restriction under clause (3) after the
constitution of the Arbitral Tribunal unless such circumstances exist which may render a
remedy under Section 17 inefficacious. Section 17 lays down that the parties may apply to the
Arbitral Tribunal for interim relief during the arbitral proceedings. The general principles
which are taken into account while granting interim relief are: (i) prima facie case; (ii)
balance of convenience in favour of grant of interim relief; and (iii) irreparable injury or loss
to the applicant for interim relief. Though, the Arbitral Tribunal is not bound 5 by the Civil
Procedure Code, 1908 but the general principles are fairly taken into account while
determining the questions. This raises a question whether the court is restricted in its scope in
terms of the provisions of the Civil Procedure Code also whether it is barred from
entertaining an application under Section 9 of the Act after the constitution of the Arbitral
Tribunal. In Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel India Ltd.7, the Supreme
Court has held that the provisions of the Civil Procedure Code are not binding upon Section 9
of the Act and on mere technicality the relief cannot be withheld. In the instant matter, the
Bombay High Court allowed the application filed under Section 9 of the Act by Arcellor
Mittal Nippon Steel India Limited which directed Essar Services to deposit Rs 47.41 crores
with the Prothonotary and Senior Master of the High Court. Essar Services filed an appeal
before the Supreme Court challenging the aforesaid order and the Supreme Court
categorically held: Section 9 of the Arbitration Act confers wide power on the court to pass
orders securing the amount in dispute in arbitration, whether before the commencement of the
arbitral proceedings, during the arbitral proceedings or at any time after making of the arbitral
award, but before its enforcement in accordance with Section 36 of the Arbitration Act. All
that the court is required to see is, whether the applicant for interim measure has a good prima
facie case, whether the balance of convenience is in favour of interim relief as prayed for
being granted and whether the applicant has approached the court with reasonable expedition.
If a strong prima facie case is made out and the balance of convenience is in favour of interim
relief being granted, the court exercising power under Section 9 of the Arbitration Act should
not withhold relief on the mere technicality of absence of averments, incorporating the

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grounds for attachment before judgment under Order 38 Rule 5 CPC9. Proof of actual
attempts to deal with, remove or dispose of the property with a view to defeat or delay the
realisation of an impending arbitral award is not imperative for the grant of relief under
Section 9 of the Arbitration Act. A strong possibility of diminution of assets would suffice.
To assess the balance of convenience, the court is required to examine and weigh the
consequences of refusal of interim relief to the applicant for interim relief in case of success
in the proceedings, against the consequence of grant of the interim relief to the opponent in
case the proceedings should ultimately fail. The object of Section 9(3) has been laid down by
the Supreme Court: . … to avoid courts being flooded with Section 9 petitions when an
Arbitral Tribunal is constituted for two good reasons — (i) that the clogged court system
ought to be decongested; and (ii) that an Arbitral Tribunal, once constituted, would be able to
grant interim relief in a timely and efficacious manner. Different observations upon this
question have been made by the High Courts of different States. “Once an Arbitral Tribunal
is constituted, an application for interim relief should ordinarily be decided by the Arbitral
Tribunal.” A harmonious reading of Section 9(1) with Section 9(3) of the 1996 Act, as
amended by the 2015 Amendment Act, makes it amply clear that, even after the amendment
of the 1996 Act by incorporation of Section 9(3), the Court is not denuded of power to grant
interim relief once an Arbitral Tribunal is constituted.In Benara Bearings & Pistons Ltd. v.
Mahle Engine Components India (P) Ltd. a Division Bench of the Delhi High Court held: . …
We are of the view that Section 9(3) does not operate as an ouster clause insofar as the
courts’ powers are concerned. It is a well-known principle that whenever the legislature
intends an ouster, it makes it clear. We may also note that there is no provision under the said
Act which, even as a transitory measure, requires the court to relegate or transfer a pending
Section 9(1) application to the Arbitral Tribunal, the moment an Arbitral Tribunal has been
constituted. The Kerala High Court observed: . … Normally, the court shall not entertain an
application under Section 9(1) of the Act after the constitution of the Arbitral Tribunal. But
the court has the power to entertain an application under Section 9(1) of the Act even after
the constitution of the Arbitral Tribunal unless the court finds that in the circumstances of the
case the party has got efficacious remedy under Section 17 of the Act. The Delhi High Court
in Avantha Holdings Ltd. v. Vistra ITCL India Ltd observed, The court, while exercising its
power under Section 9 of the 1996 Act, has to be acutely conscious of the power vested in the
arbitrator/Arbitral Tribunal, by Section 17 of the same Act. A reading of Section 9 and
Section 17 of the 1996 Act reveals that they are identically worded. The “interim measures ”,
which can be ordered by the Arbitral Tribunal, under Section 17, are the very same as those
which can be ordered by the court under Section 9. It is for this reason that sub-section (3) of
Section 9 proscribes grant of interim measures, by the court, consequent on constitution of
the Arbitral Tribunal, save and except where the court finds that circumstances exist, which
may not render the remedy, under Section 17, to be efficacious. The court, while exercising
jurisdiction under Section 9, even at a pre-arbitration stage, cannot, therefore, usurp the
jurisdiction which would, otherwise, be vested in the arbitrator, or the Arbitral Tribunal, yet
to be constituted. In Ajay Singh v. Kal Airways (P) Ltd.17 the Delhi High Court held that
wide powers are granted to the court under Section 9 and that the courts cannot be bound
littera scripta by the provisions of Orders 38 and 39 but must follow the principles
underlying. In Srei Infrastructure Finance Ltd. v. Ravi Udyog (P) Ltd.19 the Calcutta High
Court held, “An application under Section 9 of the Arbitration and Conciliation Act, 1996 for
interim relief is not to be judged as per the standards of a plaint in a suit.” The Act being a

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special legislation could not be restricted in its scope in terms of the provisions of the Civil
Procedure Code. Thus, to bind the powers of the court under any provision of the Act as per
the standards laid down in the Civil Procedure Code would not be amenable. The same has
been reiterated by a number of judgments of the High Courts and rightly upheld by the
Supreme Court in Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel India Ltd.21 This
gives wide powers to the courts while exercising authority under Section 9 of the Act. The
court is not strictly bound by the provisions of Order 38 Rule 5 while granting relief under
Section 9 of the Act and the scope of Section 9 is very broad. It is the court’s discretion to
grant a wide range of interim measures which may appear to the court to be just and proper.
The discretion has to be exercised in a judicious manner and not arbitrarily.