The Supreme Court has held that Section 9 of the Arbitration and Conciliation Act, 1996 permits any party to an arbitration agreement, including a party unsuccessful in arbitration, to seek interim measures at the post-award stage so long as the award has not yet been enforced in accordance with Section 36. The expression “a party” cannot be read down to mean only an award-holder or successful party, since the statute draws no such distinction. The Court further held that unsuccessful parties cannot be denied the right to invoke Section 9 post-award, and the exercise of power in favour of an unsuccessful party is to be undertaken cautiously, with a higher threshold for interim relief.
A Two-Judge Bench comprising Justice Manoj Misra and Justice Manmohan observed that the expression “a party” in Section 9, read with Section 2(h), is plain and unambiguous and cannot be contextually modulated to mean only a successful party at the post-award stage. It observed that neither Section 2(h) nor Section 9 draws any distinction between a successful and an unsuccessful party, and reading such a restriction into the provision would amount to judicial amendment of the statute.
The Bench observed that Section 9 expressly permits a party to seek interim measures before arbitration, during arbitration, and after the award but before enforcement under Section 36, and the Indian statute deliberately expands beyond Article 9 of the UNCITRAL Model Law by allowing post-award interim relief. The Parliament introduced this additional post-award stage without restricting the class of parties entitled to apply.
The Bench further observed that Sections 34 and 36 operate in spheres distinct from Section 9. While Sections 34 and 36 deal with challenge to the award and stay of enforcement, Section 9 is concerned with protection of the subject matter of arbitration or the amount in dispute. Denial of Section 9 relief to an unsuccessful party could leave such party remediless in cases where the subject matter requires preservation pending challenge proceedings.
The Bench held that Section 9 uses broader expressions such as “subject matter of arbitration” and “amount in dispute”, and also clarified, that the threshold for grant of interim relief to an unsuccessful party would be higher. Relief under Section 9 would still depend on the established principles of prima facie case, balance of convenience and irreparable harm, and such applications by unsuccessful parties would warrant care, caution and circumspection, to be granted only in rare and compelling cases.
Briefly, the batch of appeals raises the substantial question whether, at the post-award stage, a petition under Section 9 of the Arbitration and Conciliation Act, 1996 is maintainable at the instance of a party that has lost in the arbitral proceedings and has no enforceable award in its favour.
The appellants contended that if an award is set aside under Section 34, the underlying contractual rights revive and parties may have to recommence arbitration, for which protection of the subject matter may be necessary. They also argued that Section 43(4) preserves the right to re-initiate arbitration by excluding time spent in earlier proceedings, and that Section 9 uses the expression “party”, as defined in Section 2(h), without distinguishing between a successful and an unsuccessful party.
The respondent argued that once an award is rendered, only the successful party can seek post-award interim protection under Section 9 to secure the fruits of the award, whereas the unsuccessful party is confined to remedies under Sections 34 and 36. It was submitted that permitting an unsuccessful party to invoke Section 9 post-award would undermine the finality of arbitral awards and the statutory scheme of minimal judicial intervention.
Appearances:
ASG K.M. Nataraj, Senior Advocates Dr. Menaka Guruswamy and Abhimanyu Bhandari, AORs Dr. N. Visakamurthy, M/S. Lawyer S Knit & Co, Ganesh Kumar R., Rooh-e-hina Dua, along with Advocates Vinayak Sharma, Sharath Nambiar, Satvika Thakur, Annirudh Sharma-ii, Gayatri Mishra, Bina Madhavan, S. Udaya Kumar Sagar, Shruti Sharma, Manjunath Meled, Vijayalaxmi Udapudi, Arushi, Yashika Kapoor, and Piyush Jain, for the Appellants
Senior Advocate Dama Seshadri Naidu, AORs Kaushal Yadav, Ranu Purohit, P. N. Puri, Amarjit Singh Bedi, Nidhi Mohan Parashar, Prabhas Bajaj, Ram Kishor Singh Yadav, along with Advocates Nandlal Kumar Mishra, Dr. Ajay Kumar, Naina Garg, Priyanka, Ritul Tandon, Onkar Nath Sharma, Aman Vachher, Yadunath Choudhary, Dhiraj, Chinmoy Acharya, Ashutosh Dubey, Anshu Vachher, Abhiti Vachher, Akshat Vachher, Nandni Sharma, Amit Kumar, Jasvinder Choudhary, P. N. Puri, Suraj Prakash, Mrinal Litoria, Priyanka Solanki, and Priyanka Singh, for the Respondents
