Mere Existence Of Power Under S. 9 Of Arbitration Act Not Sufficient To Justify A S. 9 Petition: Delhi High Court

The bench of Justice Yashwant Varma remarked that though Section 9(3) of the A&C Act is not an ouster clause, it still requires the court to consider whether its intervention is warranted after the Arbitral Tribunal has been constituted and is in seisin of the dispute.

For allowing a Section 9 petition, there must be compelling reasons for the court to conclude that the Tribunal would either be unable to grant effective and emergent relief or for various other reasons the Tribunal would constitute an inefficacious forum, the Court said.

“The mere existence of the power invested in a court by Section 9 would thus not be sufficient to justify a petition under the said provision being entertained,” it ruled.

Section 9 (3) provides that once the arbitral tribunal has been constituted, the Court shall not entertain an application for interim measures under Section 9(1), unless the Court finds that circumstances exist which may not render the remedy provided under Section 17 efficacious.

The dispute between the heirs and descendants of the Late Hakeem Hafiz Abdul Majeed Sahib, relating to the segregation of Hamdard Institute of Medical Sciences and Research (HIMSR) from the Jamia Hamdard (deemed University), was referred to arbitration.

Seeking reliefs in respect of a resolution passed by the Jamia Hamdard Society, in terms of which a decision came to be taken for converting HIMSR from a “constituent institution” to a ‘school’ of the Jamia Hamdard, the petitioners, including Asad Mueed, filed a petition under Section 9 of the A&C Act before the Delhi High Court.

The petitioners sought an interim injunction restraining Jamia Hamdard Society (respondent no. 5) from registering the amended and ratified Memorandum of Association of Jamia Hamdard (respondent no. 4), contending that the same was illegally amended to change the legal status of HIMSR from a constituent institution to a school.

The petitioner submitted that the respondents, including Hammad Ahmed, were acting in breach of the prescriptions relating to HIMSR, as contained in the Family Settlement Deeds executed between the parties.

The petitioner argued before the Court that since the 5^th respondent, Jamia Hamdard Society, as well as the 4^th respondent, Jamia Hamdard, do not stand arrayed as parties before the Arbitral Tribunal, the petitioners have no other efficacious remedy and are compelled to invoke the Court’s jurisdiction under Section 9.

The petitioner further averred that the powers conferred on the Arbitral Tribunal under Section 17 is not of the same plenitude as the powers conferred on the courts under Section 9.

While contending that all aspects arising out of or relating to the said resolution passed by the respondent no. 5- Society, have been duly taken cognizance of and are pending consideration of the Arbitral Tribunal, the respondent, Hammad Ahmed, submitted that the petitioners cannot be permitted to agitate identical issues before two forums.

The respondent further pleaded that the petitioners had failed to show that the remedy provided under Section 17 was inefficacious and thus, the petition under Section 9 was liable to be dismissed.

Referring to the provisions of Section 17 of the A&C Act, as substituted by the Amendment Act of 2015, the Court ruled that the powers conferred upon a court under Section 9 and the powers exercisable by an Arbitral Tribunal under Section 17, are similar. The Court thus concluded that it would be incorrect to recognize the power of the Arbitral Tribunal under Section 17 as inferior to the power of a court under Section 9.

“The amended Section 17 is an embodiment of the legislative intent to arm the Tribunal with powers similar and akin to those conferred upon a court,” the Court said, while holding that the amended provision enables the Arbitral Tribunal to frame injunctions and pass orders of protection in terms identical to those conferred upon a court under Section 9.

Referring to Section 9(3), the bench said, “While Section 9(3) may not be an ouster clause, it still bids the court to consider whether its intervention is warranted notwithstanding the Tribunal having been constituted and being in seisin of the entire dispute.”

“The mere existence of the power invested in a court by Section 9 would thus not be sufficient to justify a petition under the said provision being entertained. The court would also have to be convinced that its emergent intervention is warranted since the remedy provided by Section 17 would not be efficacious,” it added.

While holding that there must be compelling reasons for the court to conclude that the Arbitral Tribunal would be either unable to grant effective and emergent relief or for various other reasons it would constitute an inefficacious forum, the Court concluded that the petitioners had failed to meet the said test.

The Court further remarked, “The argument of an injunction not being liable to be granted against a person who is not a party to the arbitral proceedings also fails to move this Court since the facts of the present case would establish that the restraint in any case operates upon parties from taking steps which may amount to a change of status of HIMSR. This would clearly operate upon parties before the Tribunal.”

It added: “The perception of the petitioners that the Tribunal does not stand vested with the authority and the power to preserve and protect the subject matter of the arbitration or for such injunctions not obliging third parties to take those restraints into consideration, is clearly misconceived. This more so in light of Section 17(2) which now ordains that the order of the Tribunal is comparable to and commensurate with that of a court and is enforceable under the Code in like manner.”

While dismissing the Section 9 petition, the Court ruled that the same shall not preclude the petitioners from pursuing their applications under Section 17, as pending before the Arbitral Tribunal.

Case Title: Asad Mueed & Anr versus Hammad Ahmed & Ors.

Citation: 2023 LiveLaw (Del) 165

Counsel for the Petitioners: Mr. Rajiv Nayar, Sr. Adv. with Mr. Saket Sikri, Ms. Ekta Sikri, Mr. Vikalp Mudgal, Mr. Ajaypal Singh Khullar, Ms. Priya Singh, Mr. K.V. Sriwas Narayanan, Advs.

Counsel for the Respondents: Mr. Sudhir Nandrajog, Sr. Adv. with Mr. Shreyans Singhvi and Ms. Tanuja Singh, Advs. for R1 & 3. Ms. Malvika Trivedi, Sr. Adv. with Mr. Shreyans Singhvi, Ms. Tanuja Singh and Mr. Shailendra Slaria, Advs. for R2. Mr. Kailash Vasdev, Sr. Adv. with Ms. Ekta Mehta and Ms. Kanika Sharma, Advs. for R-4. Mr. Umesh Gupta, Adv. R-5

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