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The Scope of the Court’s Power under Section 9 of the Arbitration and Conciliation Act, 1996

Arbitration has penetrated the legal system to be the leading form of an alternate dispute resolution. The roots of arbitration are dated back to antiquity, with the first arbitrator being King Solomon of Ancient Israel. In India, Arbitration finds its roots in the colonial establishment. Some famous regulations being The Bengal Regulation of 1772 and 1780 and Sir Elijah Impey's of 1781.

The Indian Arbitration Act 1899, was the first statutory recognition granted to Arbitration, albeit, confined to only 3 Presidency towns, Bombay, Madras and Calcutta. Arbitration since then has been the recourse to formal legal proceeding, and now stands tantamount. The amplified usage of arbitration to settle disputes amongst parties is a consequence of the case pendency in courts.

However, courts exercise certain powers, and this jurisdiction of courts has been adjudicated as matters of arbitration principle. It is an established principle of Arbitration Law that courts have the power to grant interim measures before, during and after the making of the arbitral award, but before its enforcement as under Section 9.

It begs the question of the powers of the court and the extent of interpretation of section 9 of granting interim measures of the Arbitration and Conciliation Act, 1996, ("The Law", for the purposes of brevity). The Supreme Court in the case of NV Investment Holdings LLC v. Future Retail Ltd, (2022) 1 SCC 209, held that the primary objective of constituting an Arbitral Tribunal is to reduce the burden on the courts and to adjudicate matters in a timely manner.

Before furthering the scope of Section 9 of The Law, it is pertinent to note that, applying the Doctrine of Comity, no court can pass an order, which would be against an order passed by another competent court of law (India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd, AIR 2007 SC 1376). Additionally, Section 17 of The Law, and Section 9 are similarly worded, however, the power to grant interim measures under Section 17 lies with the Arbitral Tribunal, and under Section 9, the powers are granted to the courts. Powers under Section 9 enjoy a wider scope.

Extent of Courts Interference and Scope of Section 9(3)
Section 9 and technicalities under The Code of Civil Procedure, 1908 (Hereinafter, referred to as CPC, for purposes of brevity).

The courts have ruled multiple times in favour of the powers to grant interim relief section 9 not being marred by procedural technicalities under the CPC. The courts can grant interim measures based on the three cardinal principles that govern the grant of equitable remedy.
  1. Applicant has a Prima Facie good case for Interim Measures
  2. Balance of convenience favours granting interim relief
  3. The applicant has approached the court with reasonable expedition

There are 2 approaches that the court has debated upon pertaining to the technicalities of CPC, 1908 and its applicability to Section 9 of The Act. The inclusive and exclusive approach. The Bombay High Court and Delhi High Court in Judgements which are in consonance with each other have held that Section 9, need not be barred by procedural technicalities of the CPC.

The relevant judgements are Delta Construction Systems Ltd, Hyderabad v. M/S Narmada Cement Company Ltd and Ajay Singh v. Kal Airways Private Limited, respectively. The Supreme Court, upholding the judgements has adjudicated that Section 9 has a wider scope and is not barred by the CPC. This is in the case of Arcelor Mittal Nippon Steel India Ltd v. Essar Bult Terminal Ltd.2

The landmark judgement of the supreme court which widened the scope of Section 9, as mentioned above is, Arcelor Mittal Nippon Steel India Ltd v. Essar Bult Terminal Ltd, (2022) 1 SCC 712). The Court in this case held that Section 9 (3) has a two-fold approach to it. First, the prohibition of applications after the arbitral tribunal has been constituted and secondly, an exception to the prohibition if the interim measure under Section 17 is, in the view of the court, rendered futile.

The Supreme Court in the case discussed the interpretation of the word, "Entertain," as enumerated under Section 9(3), which reads as follows, "(3) Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious." "Entertain" in the view of the Court is to "to consider, by application of mind to the issues raised. The Court entertains a case when it takes a matter up for consideration."

It is pertinent to note that although, prior to the 2015 Amendment, courts exercised a much wider power over arbitration proceedings. The court could entertain an application with or without the existence of an Arbitral Tribunal. This prima facie would be contrary to the objective of instituting an Arbitral Tribunal in preferment. The 2015 Amendment has removed this technicality, and making dispute resolution Arbitration friendly.

Can a court entertain an application under Section 9 for the enforcement of the terms of a contract?
The Gujarat High Court, in the case of Kanhai Foods Limited v. A and HP Bakes [R/First Appeal No. 2638 of 2021], adjudged that a Court has no power to entertain an application for interim measures for the enforcement of the terms of a contract.

The rights and duties of the parties arise from the contract and the court only has power after the Arbitral Tribunal has passed its order. The crystallization of rights realises itself after the contract has been enforced and the court cannot direct parties to perform their duties under the covenants of the contract under Section 9. This defeats the objective enshrined in Section 9 of The Act.

The Courts, thus, exercise wide powers under Section 9 of the Arbitration and Conciliation Act, 1996. If the Arbitral Tribunal/ Sole Arbitrator's order has not satisfied any of the parties, they must have the recourse to approach the court, for which the provision has been enumerated. However, the powers of the court are not exhaustive nor are they set in stone. The Supreme Court continues to interpret the extent of interference in matters of Arbitration.

Award Winning Article Is Written By: Ms.Ananya P Rau
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Authentication No: JL47258270705-28-0723

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