Delhi HC: Whether the court should direct deposit of Arbitration award amount U/S 9 of Arbitration Act?

Arbitration -Amount awarded -Deposit of -Sections 9 and36 of Arbitration and Conciliation Act, 1996 -Present petition filed under Section 9 of Arbitration Act seeking deposit of amount awarded to NHAI and restraining respondent from alienating assets -Whether respondent must secure and deposit awarded amount and disclose assets to safeguard enforcement of arbitral award -Held, Section 9 of Arbitration Act permits reliefs before, during, or post-arbitration -Post-award, execution under Section 36 of Arbitration Act is standard for enforcing awards -Courts rarely order deposits under Section 9of Arbitration Act, except in exceptional cases where it's vital to protect award holder -Merely winning award doesn't justify deposit orders -Courts require evidence of risks rendering award unenforceable -Grounds like financial instability or asset movement must be substantiated -NHAI's plea cites stakes involved and respondent's financial condition -It only speculates risks without proof of asset dissipation or unrealisable claims -Concession agreement remains active, and IRB pledged no fund appropriation from escrow until dues clear -Courts apply strict standards to post-award Section 9 of Arbitration Act relief -There must be realisable award and proof of risk making it illusory -Precarious financial conditions alone are insufficient -IRB's substantial investments and commitments negate grounds for immediate deposit -Courts must balance fairness while ensuring awards aren't rendered illusory -Current facts don't justify granting NHAI's requested deposit -Petition dismissed. Deposit under Section 9 of Arbitration Act needs proven risk of award becoming unenforceable, not mere existence of award.

IN THE HIGH COURT OF DELHI

OMP (I) (Comm.) 172/2024

Decided On: 18.10.2024

National Highways Authority of India Vs. IRB Ahmedabad Vadodara Super Express Tollways Pvt. Ltd.

Hon'ble Judges/Coram: C. Hari Shankar, J.

Citation:  MANU/DE/7333/2024, 2024:DHC:8034.

Print Page

Whether court can grant interim relief as per S 9 of arbitration Act even after passing of arbitral award?

 The question, that arises for adjudication before us is, as to whether the proceedings initiated Under Section 9 of the Act, (whilst the arbitral proceedings were pending) survive, after the arbitral proceedings come to a closure. Insofar as the instant aspect of the matter is concerned, the answer thereto has to emanate from Section 9 of the Act. The above provision is extracted hereunder:

9. Interim measures, etc. by Court.--(1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court--

(i) for the appointment of a guardian for a minor or a 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, and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

(2) Where, before the commencement of the arbitral proceedings, a Court passes an order for any interim measure of protection under Sub-section (1), 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.

(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.

A perusal of the above provision reveals, that interim measures can be allowed in favour of a party (who moves an application Under Section 9 of the Act), either before the commencement of the arbitration proceedings, or during the pendency of the arbitral proceedings, and even after the making of the arbitral award "... but before it is enforced in accordance with section 36...". It is therefore apparent, that an interim arrangement, can be made Under Section 9 of the Act, not only before and during the pendency of the arbitral proceedings, but also after the arbitral award has been pronounced.

7. As to whether the orders passed by the different Courts, which culminated in the two orders, extracted hereinabove, dated 13.12.2013 and 14.03.2014, would continue even after the passing of the arbitral award, in our considered view, would depend on the nature of the prayer made by the Appellant, when the application Under Section 9 was filed, before the concerned Court. 

IN THE SUPREME COURT OF INDIA

C.A. No. 679 of 2017 

Decided On: 19.01.2017

Ultratech Cement Limited Vs.  Rajasthan Rajya Vidyut Utpadan Nigam Limited

Hon'ble Judges/Coram:

J.S. Khehar, C.J.I. and Dr. D.Y. Chandrachud, J.

Citation: (2018) 15 SCC 678

Print Page

Whether money recoverable under arbitration award can be recovered as arrears of land revenue?

Under Section 18(3) of the Act of 2006 as arrears of land revenue thereby providing additional remedy for recovery of the awarded sum than the one provided in Section 36(1) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as "the Act of 1996").

Before adverting to the rival submissions, it is appropriate to refer to the relevant provisions of Rule 5 of the Rules which provides for recovery of the amount awarded under the Act of 2006 read with the Act of 1996. Rule 5 is extracted hereunder:

5. Recovery of amount due as arrears of land revenue:

If a buyer does not file any appeal Under Section 19 of the Act for setting aside any decree, award or other order made either by the Council itself or by any institution or centre or if such appeal is dismissed, in that situation such decree, award or order shall be executed by the Collector of the District concerned and the amount due shall be recovered as arrears of land revenue.

No doubt about it that by virtue of the provisions contained in Section 18(3) of the Act of 2006, the provisions contained in Section 36 of the Act of 1996 are clearly applicable and it is permissible to execute the arbitral award in accordance with the procedure prescribed for execution of a decree under the Code of Civil Procedure.

12. However, the question in the instant case is whether it was permissible to the State Government to enact Rule 5 of the Rules for recovery of the amount as arrears of land revenue and whether speedy remedy could have been provided under the Rules framed under the Act of 2006, notwithstanding the remedy as provided in Section 36 of the Act of 1996 for executing the arbitral award as a decree in accordance with the provisions of the Code of Civil Procedure, while providing remedy the State has exceeded its ken of powers.

 No doubt that Rule 5 is inconsistent with the provisions contained in Section 36(1) of the Act of 1996 which provides recovery mechanism under Order 21 of Code of Civil Procedure as a decree, but, in the matter of providing such remedies, it is open to legislate different remedies which may be inconsistent. It is a question of electing a remedy. Election of a remedy for recovery of the amount would depend upon the choice of the award-holder. Both the provisions i.e. Section 36 of the Act of 1996 as well as Rule 5 of the Rules of 2006 intend to recover the amount though by different procedures. Intendment of provisions is same. There is no question of any prejudice being caused to the judgment debtor.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 5317 of 2017 (Arising out of S.L.P. (C) No. 29266 of 2016)

Decided On: 17.04.2017

Power Machines India Limited Vs.  State of Madhya Pradesh and Ors.

Hon'ble Judges/Coram:

Arun Mishra and S. Abdul Nazeer, JJ.

Citation: (2017) 3 Company law journal 1 (SC)

Print Page

Whether amended S 36 of arbitration Act will be applicable to application U/S 34 on date of commencement of amendment Act?

In Narhari Shivram Shet Narvekar v. Pannalal
Umediram (1976) 3 SCC 203 at 207, this Court, following
Lalji Raja (supra), held as follows:
73“8. Learned counsel appearing for the
appellant however submitted that since the
Code of Civil Procedure was not applicable to
Goa the decree became inexecutable and this
being a vested right could not be taken away
by the application of the Code of Civil
Procedure to Goa during the pendency of the
appeal before the Additional Judicial
Commissioner. It seems to us that the right of
the judgment debtor to pay up the decree
passed against him cannot be said to be a
vested right, nor can the question of
executability of the decree be regarded as a
substantive vested right of the judgment
debtor. A fortiori the execution proceedings
being purely a matter of procedure it is well
settled that any change in law which is made
during the pendency of the cause would be
deemed to be retroactive in operation and the
appellate court is bound to take notice of the
change in law.”
Since it is clear that execution of a decree pertains to the
realm of procedure, and that there is no substantive
vested right in a judgment debtor to resist execution,
Section 36, as substituted, would apply even to pending
Section 34 applications on the date of commencement of
the Amendment Act.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.2879-2880 OF 2018
(Arising out of SLP (C) Nos.19545-19546 of 2016)
BOARD OF CONTROL FOR CRICKET
IN INDIA 
V
KOCHI CRICKET PVT. LTD. AND ETC.
Dated: March 15, 2018.

Print Page