Interim Protection under Section 9(1) A&C Act

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Source: Calcutta High Court (AP/863/2022)

Justice Moushumi Bhattacharya observed that a party who seeks urgent intervention of the court cannot be strung to the rigidness of any statute.

The Calcutta High Court gave this observation in the case of AMR JV v. Orissa Steel Expressway Private Limited.

The application of petitioner was presented under Section 9(1) of Arbitration & Conciliation Act, 1996 (A&C) for interim protection and appointment of arbitrator.
The petitioner contended that there was a contract with respondent where they performed their part however the respondent made a fundamental breach of terms of the contract.
And due to the act of respondent, the petitioner faced loss.
There was already an arbitral proceeding going on where the respondent had been awarded a sum of approx. Rs 322 crores.
The petitioner presented this application for claim of unpaid dues against the respondents that was of approx. Rs 76 crores, and hence prayed for an interim restraint on the respondent to withdraw the amount that he was awarded in prior arbitral proceedings.

Calcutta HC observed that if the court drags the feet of the petitioner, the respondent may well deport and decamp with what was intended to be preserved.
This would be regressive to the whole purpose of timely, effective and focused interim relief under section 9(1) of the A&C Act.

About:
- Section 9 empowers the court to grant interim relief during the arbitral proceedings or at any time after the making of the arbitral award but before it is enforced.
Objective:
- This is to ensure that the effectiveness of the arbitration process is not undermined, and the purpose of the arbitration is not frustrated.
- Under Section 9, a party can approach a court to seek interim measures such as injunctions, preservation of property, or any other necessary orders to safeguard their rights or assets.
- The court has the authority to grant such interim measures, taking into consideration the urgency and the nature of the dispute.
- This provision not only enhances the efficacy of the arbitral process but also provides a safety net for parties who might face irreparable harm if immediate relief is not granted.
Time-Limit:
- Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection the arbitral proceedings shall be commenced within a period of ninety days from the date of such order or within such further time as the Court may determine.

Section 9(1) of the Arbitration & Conciliation, 1996: Interim measures etc. by court—

The party may apply for

(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely: —
- (a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
- (b) securing the amount in dispute in the arbitration;
- (c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
- (d) interim injunction or the appointment of a receiver;
- (e) such other interim measure of protection as may appear to the Court to be just and convenient.