The Delhi High Court has held that the fact that interim reliefs sought under Section 17 of the Arbitration and Conciliation Act, 1996 may be co-extensive with the prayers in the Statement of Claim does not, ipso facto, mean that granting such relief would amount to final determination of the dispute.
Justice Tushar Rao Gedela observed that interim orders may, depending on the circumstances, be necessary to maintain equality and balance the contrasting rights of the parties, and that granting such relief would not by itself amount to an expression on the merits of the Statement of Claim. The Court observed that accepting the contrary proposition would mean that temporary injunctions or other interim relief could never be granted.
The Court was examining an appeal against the arbitrator’s refusal to grant interim relief under Section 17. The arbitrator had held that granting the reliefs sought would amount to granting the final relief, pre-judge the dispute concerning Clauses 11 and 12 of the Lease Deed, and render the arbitral proceedings on merits redundant.
The High Court, however, held that it was unable to discern from the arbitrator’s order how or why grant of all or any of the interim prayers would amount to pre-judging the dispute, or how such relief would determine the Statement of Claim finally.
Holding that reasons are the bedrock of every judicial or quasi-judicial order, the Court observed that although arbitral orders are not expected to meet the same threshold as a judicial determination by a court, some reason or justification for the formation of an opinion must nevertheless be discernible.
Referring to the Supreme Court’s decision in Dyna Technologies v. Crompton Greaves
Limited, 2019 SCC OnLine SC 1656, the Court held that while inadequacy of reasons may not by itself justify interference with an arbitral award, reasons nevertheless have to be provided for the formation of an opinion.
The Court found that the arbitrator had not provided reasons explaining how the Section 17 reliefs would pre-judge Clauses 11 and 12 of the Lease Deed or render the arbitral proceedings on merits wholly redundant. It clarified that the arbitrator was not required to provide a determinative or conclusive opinion at the interim stage, but was required to provide some reason for the opinion formed.
Accordingly, the appeal was allowed, and the Section 17 application was directed to be heard afresh and disposed of expeditiously. The Court clarified that its order was not an expression on the merits of the Statement of Claim or the Section 17 application, which the arbitrator was directed to decide uninfluenced by the High Court’s order.
