Hearing Of Interim Application U/S 9(1) Arbitration Act Not Barred By Constitution Of Arbitral Tribunal If Court Has Already ‘Entertained’ It: Calcutta HC

The Calcutta High Court has recently held that that the power of a Court to continue hearing an application for interim relief under Section 9(1) of the Arbitration and Conciliation Act, 1996, (“1996 Act”) would not be “fettered” under Section 9(3) after the constitution of an arbitral tribunal, if the court has already entertained the application.

A single-judge bench of Justice Moushumi Bhattacharya held, that while Section 9(3) barred the Court from taking up any interim application after the due constitution of the arbitral tribunal, the same could not fetter the power of a Court to continue hearing an application, which it had already entertained prior to constitution of such a tribunal. It was held:

“The Supreme Court considered the expression “entertain” and held that if the Court had already applied its mind to the issues raised, then the Court can proceed to adjudicate the application notwithstanding the bar of section 9(3)."

The bench was referring to Supreme Court's decision in Arcelor Mittal Nippon Steel India Limited vs. Essar Bulk Terminal Limited.

Court said the intended object of section 9(3) is to allow the arbitral tribunal to consider the prayer for interim relief once the tribunal has been constituted. Section 9(3) aims to prevent multiple levels of hearing for the same relief and envisages a clockwise motion of considerations of the matter after an arbitral tribunal has been constituted. However, it held,

"the hands of the clock however stop to tick where the Court has already gone into the matter. Permitting the parties to re-agitate the matter in such cases before the arbitral tribunal would in effect rewind the clock which is not what section 9(3) intends. That obligation becomes less relevant in the face of the other and more important question; whether the Court has already applied its mind to the dispute in accordance with the dictum in Arcelor Mittal."

The application for interim relief was filed by the petitioners on 10th February, 2023 and the Arbitral Tribunal was constituted on 17th May, 2023. Meanwhile, a Co-ordinate Bench of the Court passed an order on 15th March, 2023 directing the respondents to show-cause as to why the respondents should not be directed to deposit a sum of Rs. 5,95,40,498.60 for securing the claim of the petitioner. Affidavits were exchanged between the parties and orders were passed by the Court on 10th April, 2023, 1st May, 2023 and 14th June, 2023.

It was argued by the petitioner that the Court could continue hearing the petition for interim relief while the respondents relied on section 9(3) of the 1996 Act to emphasise on the bar on the Court.

Upon relying on a Supreme Court decision in the case of Arcelor Mittal, it was held,

The orders on record show that the learned Single Judge had considered the factual contentions raised in the matter. The order directing the respondents to show-cause would otherwise not even passed at all. The order reflects that the learned Judge was satisfied on the facts and considered the necessity of passing such an order.

The word “entertain” requires the Court to enter into an active consideration of the issues presented by the parties and pleaded in an application and involves the Court applying its mind to the facts and the law urged before it. It is an active and interactive process where the Court participates in the adjudication by engaging with the issues raised. The process of entertaining a matter (with or without the Court being entertained) hence commences from the day when the Court enters into the arena of the facts, law and essentially the dispute between the parties and cannot be broken up into phases of intensity or relevance. Although the degree of a Court’s engagement in a matter may be subjective, the broad requirement is that a Court becomes alive and interested in the matter and applies its mind to the facts before it.”

Accordingly, it was held that the Court would continue hearing the interim application under Section 9(1), notwithstanding the constitution of the Arbitral tribunal, since it would not fall under the bar under Section 9(3) due to having already ‘entertained’ the dispute previously.

Case: Jaya Industries v Mother Dairy Calcutta & Anr.

Coram: Justice Moushumi Bhattacharya

Citation: 2023 LiveLaw (Cal) 191

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