Application Before Court Seeking Interim Measure Of Protection Maintainable Even After Passing Of Arbitration Award But Before It Is Enforced: Kerala HC [Read Judgment]

‘It would not be proper for the Court to reject the application merely on the ground that he has got efficacious remedy under Section 17 of the Act.’

The Kerala High Court has held that application under Section 9(1)(ii) of the Arbitration and Conciliation Act, 1996 seeking an interim measure of protection is maintainable even after passing of the award by the arbitral tribunal but before it is enforced.

The bench comprising of Justice V. Chitambaresh and Justice R. Narayana Pisharadi was considering an appeal (M. Ashraf vs. Kasim VK) filed against District Court order which found that the applicant has got efficacious remedy under Section 17 of the Act and therefore, the application filed before it under Section 9(1)(ii) of the Act is not maintainable in view of the bar contained in Section 9(3) of the Act.

Section 17 is the provision for Interim measures to be ordered by arbitral tribunal and Section 9(3) stipulates that once the arbitral tribunal has been constituted, the court shall not entertain an application under sub-section (1), unless the court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.

The bench observed that 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 bench said: “Even after the amendment of the Act by incorporation of Section 9(3), the Court is not denuded of the power to grant interim relief under Section 9(1) of the Act. What is provided under Section 9(3) of the Act is that, after the constitution of the Arbitral Tribunal, the Court shall not entertain an application under Section 9(1) of the Act unless the Court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious. Normally, the Court shall not entertain an application under Section 9(1)of the Act after 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. An application for interim relief under Section 9 (1) of the Act shall be entertained and examined on merits, once the Court finds that circumstances exist, which may not render the remedy provided under Section 17 of the Act efficacious.”

The court further said: “The unsuccessful party may then take hasty steps to alienate or dispose of the property which was the subject matter of dispute. The successful party may then approach the Court with an application under Section 9(1) of the Act for granting interim relief. In such circumstances, it would not be proper for the Court to reject the application merely on the ground that he has got efficacious remedy under Section 17 of the Act. The Court has to adopt a liberal approach in such circumstances. When interim relief is sought after an arbitral award is made but before it is enforced, the measure of protection is intended to safeguard the subject matter of dispute or the fruits of the proceedings till the enforcement of the award. Interim measure of protection, then sought, is a step in aid of enforcement of the award. It is intended to ensure that the award is not rendered illusory by the opposite party. In such circumstances, when urgent relief is required, especially by a party who is successful in the arbitral proceedings, remedy under Section 17 of the Act may not be efficacious because the Arbitral Tribunal may not be then actually functioning. It may also be possible that the Arbitrator is not readily available. When an application under Section 9(1) of the Act is made by a party after the passing of the award but before it is enforced, the Court has to consider all these circumstances. Of course, the party who approaches the Court has to enlighten the Court with regard to such or similar circumstances.”

The bench then set aside the district court order observing that a mere statement by the court to the effect that the remedy provided under Section 17 of the Act is efficacious, without reference to the circumstances which make it so, is not sufficient to reject an application under Section 9(1) of the Act. It then remanded the matter for fresh consideration.