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.

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Whether the court can grant interim relief U/S 9 of Arbitration Act if the contract is determinable?

 However, even in these circumstances, when a question arises before the Court, to consider granting of reliefs in the nature as prayed for by the petitioner, in my opinion, the basic consideration for the Court would be to examine as to what is the nature of the contract between the parties. Perusal of the contract and the general terms and conditions as appended thereto, more particularly, Clause (5) thereof, clearly indicate that the parties have provided that either of the parties can terminate the contract with a fifteen days notice to be served on the other party. Further such clause also provides for the validity of the contract up to 30 June 2022. It is thus clear that nature of the contract in question is determinable. If that be so, then Mr.Nankani would be correct in his contention that the provisions under sub-clause (d) of Section 14 of the Specific Relief Act which provides that a contract which is in its nature determinable,cannot be specifically enforced becomes applicable.

19. In the context of Section 14(d) of the Specific Relief Act, another

provision which would become relevant is Section 41 of the Specific

Relief Act, which provides as to when an injunction would be refused or when it cannot be granted. Section 41(e) provides that an

injunction cannot be granted by the Court to prevent the breach of a contract, the performance of which would not be specifically enforced. Thus once the nature of the contract itself is such, that it cannot be specifically enforced, Section 41 (e) of the Specific Relief Act would stare at the petitioner when the petitioner claims a relief of an injunction. Certainly the principles which are embodied in Section 14(d) read with Section 41(e) of the Specific Relief Act are applicable even when the Court considers an application under Section 9 of the Act for interim measures. It is a settled principle of law that although Section 9 is a remedy available to the parties having an arbitration agreement between them, however, when a relief for grant of an injunction is prayed for, certainly the Court would be guided by the principles as contained in the Specific Relief Act read with the provisions of Order 39 of the Code of Civil Procedure.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

ARBITRATION PETITION (L) NO. 1366 OF 2022

Chetan Iron LLP  V/s. RC Ltd. 

CORAM : G.S.KULKARNI, J.

PRONOUNCED ON: 24 January, 2022

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