Calcutta High Court: In an application preferred under Section 9 of the Arbitration and Conciliation Act, 1996 (the Act), seeking interim relief as the award holder to prevent respondent from selling iron ore to third parties, a single-judge bench comprising of Krishna Rao,* J., held that Section 9 of the Act provides for interim relief at various stages, including after the arbitral award is made but before enforcement under Section 36. The Court appointed a Special Officer to preserve the iron ore and disposed of the petition.
Factual Matrix
In the instant matter, the petitioner, the award holder, filed an application under Section 9 of the Act, seeking interim relief as the award holder. On 27-02-2005, the petitioner and respondent entered into an agreement for the sale of iron ore from Mines, with payments made by the petitioner. In December 2009, the petitioner discovered that respondent had commenced mining operations without informing them, breaching the agreement. The petitioner raised concerns through letters, and the respondent responded, alleging the agreement was void due to a violation of Mineral Concession Rules.
In August 2011, the petitioner referred the disputes to arbitration, but the respondent refused to comply with the arbitration agreement. The petitioner filed an application under Section 9 in 2011, and the court directed the respondent to notify petitioner before commencing mining operations. In March 2012, respondent informed petitioner of its intention to resume mining, leading the petitioner to file another Section 9 application, resulting in a court order restraining respondent from selling iron ore without offering it to petitioner. Legal proceedings continued, involving appeals and special leave petitions, with varying court orders modifying injunctions and directing deposit of a specified amount by respondent.
The petitioner claimed specific performance of the contract during the arbitration proceeding, which faced delays due to a moratorium imposed by the NCLT in 2017. The Resolution Professional excluded petitioner’s claim from the Corporate Insolvency Resolution Process. The arbitration proceedings resumed after the approval of the Resolution Plan in June 2018. On June 30-06-2023, the Sole Arbitrator issued an award in favor of petitioner, holding respondent in violation of the agreement and granting specific performance rights. The petitioner filed the present Section 9 application seeking interim protection to prevent respondent from selling iron ore to third parties.
Moot Point
-
Whether the petitioner is entitled to specific performance of the agreement?
-
Whether the respondent violated the terms of the agreement?
Parties’ Contentions
The petitioner contended that the Appellate Court vide order dated 16-05-014 had restrained the respondent from selling iron ore which is still subsisting. It was contended that the arbitral award is not stayed or set aside, and the petitioner fears that the respondent is continuing to sell iron ore to third parties. The petitioner requested an interim order restraining the respondent from selling iron ore to anyone except the petitioner and the appointment of a Special Officer/Receiver.
The respondent contended that Section 9 application is filed after a delay of more than three months from the award. It was contended that the relief sought in the application is beyond the scope of Section 9 and amounts to enforcing the award. It was contended that the agreement is not specifically enforceable under Section 14(b) of the Specific Relief Act, 1963. It was argued that the mining lease has expired, making the reliefs sought infructuous.
Court’s Analysis
The Court noted that Section 9 of the Act provides the power to grant interim measures of protection by the Court and the petitioner invoked Section 9 before arbitration proceedings, and the interim relief has been in effect since then. The Court clarified that interim measures can be granted even after the arbitral award is published but before enforcement. The Court stated that the term “interim” implies provisional relief granted before the arbitral award is enforced under Section 36 of the Act. The provision allowed interim measures concerning goods, amounts in dispute, property, interim injunction, or any other measure deemed just and convenient by the Court.
“…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 published.”
The Court held that interim measures can be granted before, during, and after arbitral proceedings but before enforcement under Section 36. The Court held that the petitioner, enjoying interim protection since before the arbitration proceedings, made a prima facie case, and the balance of convenience favored them and “if at this stage, interim protection is not granted to the petitioner, there will be every chance that the petitioner will suffer irreparable loss and injury.”
Court’s Decision
The Court, finding merit in the petitioner’s case, granted interim protection and appointed a Special Officer with specific responsibilities to preserve and supervise the already excavation of iron ore and ensure compliance with the Award. The Court directed the Special Officer to make an inventory, take symbolic possession, supervise ongoing excavations, and ensure no dealings with third parties except the petitioner. The Court ordered the petitioner to pay Rs. 3,00,000/- as remuneration to the Special Officer. The application is disposed of.
[Synergy Ispat (P) Ltd. v. Orissa Manganese & Minerals Ltd., 2024 SCC OnLine Cal 892, order dated 31-01-2024]
*Judgment by Justice Krishna Rao
Advocates who appeared in this case :
Mr. S.N. Mookherjee, Sr. Adv., Mr. Paritosh Sinha, Mr. Saunak Mitra, Mr. Sabyasachi Choudhury, Mr. Amitava Mitra, Mr. Naman Choudhury and Ms. Antara Choudhury, Counsel for the Petitioner
Mr. Gopal Jain, Sr. Adv., Mr. Anuj Singh, Mr. D. Kumar Srivastava, Mr. Aman Agarwal, Ms. T. De and Ms. Niharika Singh, Counsel for the Respondent
Buy Arbitration and Conciliation Act, 1996 HERE
