The Court U/S. 9(1)(ii)(e) of Arbitration Act cannot appropriate to itself the power of adjudication vested in the Arbitral Tribunal: High Court of Delhi

Arbitration Act does not envisage adjudication in two stages i.e. summary adjudication by the Court under Section 9 and final adjudication by the Arbitral Tribunal under Chapter VI of Part I of the Act. Clause (e) of Section 9(1)(ii) empowers the Court to grant “such other interim measure of protection as may appear to the Court to be just and convenient” and the relief granted thereunder cannot be anything other than interim in nature or granting protection during the pendency of the arbitration. This was held in NATIONAL HIGHWAYS AUTHORITY OF INDIA v. BHUBANESWAR EXPRESSWAY PRIVATE LIMITED[W.P. (CRL) 1347/2020] in the High Court of Delhi by division bench consisting of JUSTICE RAJIV SAHAI ENDLAW And JUSTICE ASHA MENON.

Facts are that the appeal U/S.9 of the Arbitration Act was filed by the respondent (BEPL). Order was passed directing the appellant NHAI to, subject to the respondent BEPL furnishing an unconditional and irrevocable bank guarantee in favour of the appellant NHAI and further subject to the final award of the Arbitral Tribunal, deposit in an escrow account, a sum found due from NHAI to BEPL towards termination payment under the Concession Agreement between NHAI and BEPL.

The short question for adjudication in the appeal before the court is whether Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant to an applicant, a relief, not in the nature of interim measure of protection, but in the nature of final relief, even if a case for urgent need thereof is made out and merely by expressing the same to have been granted on a prima facie view of the matter and by making it subject to the arbitral award and by securing the respondent, against whom the relief is so granted, for restitution.

The court made reference to the judgement of High Delhi  Court in Jetpur Somnath Tollways Ltd. Vs. National Highways Authority of India, wherein the following observations were made, “..that Court exercising power under Section 9 has the same power as that of a Civil Court during the pendency of the suit, under Order XXXIX Rule 10 of the CPC; and, (h) that the order of the Single Judge took care of the interest of NHAI as it directed furnishing of an unconditional bank guarantee in favour of NHAI for the amount which was directed to be deposited.”

The court also made reference to the judgement of Ajay Singh Vs. Kal Airways Private Limited., and made the following observation, “..in the exercise of powers under Section 9, the amounts were directed to be secured, by part deposit in the Court and by part furnishing of bank guarantee, and which power is expressly vested under Section 9(1)(ii)(b). Though undoubtedly, as held, the powers of the Court under Section 9 are wide but cannot be held to be so wide as to be in excess of preserving the status required to be preserved and so as not to reduce the arbitral award to a paper decree and so as not to lead either party to the arbitration to steal a march over the other. The exercise of powers under Section 9 is subject to bar/prohibition contained in Section 5. Clause (e) of Section 9(1)(ii), in our view has to be read ejusdem generis to the earlier clauses (a) to (d) which are all of an interim nature.”

Considering the facts of the case and keeping in mind the provisions of law applicable. The Court held that the exercise undertaken by the Commercial Division was beyond the jurisdiction vested in the Court under Section 9 of the Arbitration Act. The observations/findings and reasoning of the Commercial Division in the impugned order, being without jurisdiction, cannot be sustained. Thus the court allowed the appeal and set aside the order passed by the Commercial Division.

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