Scope Of Section 9 Of The A&C Act Cannot Be Extended To Enforcement Of The Arbitral Award: Calcutta High Court

The Single Bench of Justice Ravi Krishan Kapur held that the right to withdraw the amount deposited by the award debtor, pursuant to an application filed for stay of operation of the award under Section 36(2), does not constitute as an interim protection under Section 9 of the A&C Act since it transgresses into the domain of enforcement of the award.

The Arbitral Tribunal passed an Award in favour of the petitioner M/s Satyen Construction. The respondent filed an application to set aside the arbitral Award under Section 34 of the A&C Act, which is pending. Thereafter, in an application filed by the respondent under Section 36(2) for stay of operation of the arbitral Award, a Coordinate Bench of Calcutta High Court directed the respondent/ award debtor to furnish security. The petitioner filed an application under Section 9 of the A&C Act before the Calcutta High Court to withdraw the sum deposited by the respondent/ award debtor State of West Bengal with the Registrar of the Calcutta High Court, upon furnishing of appropriate security by the petitioner.

The respondent State of West Bengal contended before the High Court that the relief sought by the petitioner was beyond the scope and ambit of Section 9 of the A&C Act. The State submitted that in an application made under Section 9, only an interim order can be passed for preserving or securing the subject matter of arbitration proceedings. The State of West Bengal averred that Section 9 of the A&C Act does not contemplate payment of the awarded amount to the petitioner. The petitioner/award holder Satyen Construction contended before the Court that the scope of Section 9 is wide enough to enable the Court to allow the award holder to withdraw the amount deposited by the award debtor upon furnishing of appropriate security.

The Court held that the scope of Section 9 of the A&C Act cannot be extended to enforcement of the arbitral award or granting the fruits of the award to the award holder as an interim measure.

The Court ruled that the relief sought by the petitioner of withdrawal of the amount deposited by the respondent/ award debtor went beyond the scope of Section 9. The Court added that even under Section 9(ii)(e) of the A&C Act, where the court is guided by purely equitable considerations, the Court cannot permit withdrawal of the amount deposited by the award debtor.

"The order sought for by the petitioner goes beyond the realm of securing the petitioner and shifts to encashment of the security or equitably dealing with the same. This is not permissible even on the broadest interpretation of Section 9 of the Act. Even in a situation under Section 9(ii)(e) of the Act, which is an omnibus protection and where the Court is guided purely by equitable considerations, a Court cannot permit withdrawal as a measure of protecting the award holder."

The Court ruled that the object of an order passed under Section 9 of the A&C Act is to see that the arbitral award is capable of enforcement. Therefore, the Court held that the right to withdraw the amount deposited by the judgment debtor does not constitute as an interim protection under Section 9 of the A&C Act. The Court added that the order sought by the petitioner transgresses beyond the ambit of interim protection available under Section 9 of the A&C Act and into the domain of enforcement of the Award.

"Accordingly, even after the amended Section 36 of the Act, the right to withdraw the deposited amount by the judgment debtor cannot be stretched as an interim protection under Section 9 of the Act. The order sought for in this petition transgresses beyond the pale of protection in aid of enforcement into the exclusive domain of enforcement of an award. Thus, the prayer sought for cannot be granted in an application under Section 9 of the Act."

The Court thus dismissed the application filed by the petitioner.

Case Title: M/s. Satyen Construction versus State of West Bengal & Ors.

Case Citation: 2022 LiveLaw (Cal) 124

Dated: 08.04.2022 (Calcutta High Court)

Counsel for the Petitioner: Mr. Jayanta Mitra, Senior Advocate, Ms. Nilanjana Adhya, Mr. Aniruddha Mitra, Mr. N. Das.

Counsel for the Respondent/State of West Bengal: Mr. S. N. Mookerji, Advocate General, Mr. Suman Dutta, Mr. Paritosh Sinha

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