Justice Somasekhar Sundaresan, Bombay High Court
Relief U/S 9 A&C Act Cannot Survive Termination Of Arbitration: Bombay High Court Vacates Attachment On Steel Coils In JSW Steel Dispute
|The Bench vacated a six-year-old attachment over steel coils, and held JSW liable for storage costs and costs of litigation to third-party warehouse keeper and purchaser once arbitration was withdrawn following the corporate debtor's resolution under IBC.
The Bombay High Court has held that a party who obtains an attachment under Section 9 of the Arbitration and Conciliation Act, 1996, in aid of its arbitration proceedings cannot expect a free ride without paying for the receivership and the expenses and costs it inflicts on others, particularly where that party has itself abandoned the arbitration in whose aid the attachment was obtained.
Disposing of a cluster of interim applications and a Court Receiver's Report pending since 2019, the Court vacated an ex parte attachment obtained by JSW Steel Ltd. over steel coils traced to third-party warehouses, and directed JSW to pay the accumulated warehousing charges for the coils along with costs of Rs. 1,50,000 and Rs. 2,50,000 to the affected warehouse keeper and purchaser respectively, holding that JSW could not be permitted to keep re-agitating its claim to the coils after having withdrawn the very arbitration that gave the attachment its purpose.
A Bench of Justice Somasekhar Sundaresan observed, “The jurisdiction under Section 9 is inextricably linked to arbitration proceedings. The protective and preservative measures under Section 9 of the Act are necessarily in aid of arbitration. If the arbitration proceedings terminate, the interim measures must necessarily come to an end. There can be no scope for protective measures already granted, being able to continue in the absence of any scope whatsoever for the arbitration to take place. Therefore, the Interim Order is hereby vacated”.
“…it must be remembered that when a Section 9 Petitioner expects attachment of assets in aid of its arbitration proceedings, such Petitioner has to foot the bill for expenses in this regard, even if the arbitration was terminated only because it was forced to abandon the proceedings by operation of law. A Section 9 Petitioner cannot expect a free ride without paying for the receivership and the expenses incurred and costs inflicted because of the receivership”, it noted.
Advocate Vishal Muglikar appeared for the applicant and Advocate Ankita Singhania appeared for the original petitioner.
JSW had filed the Section 9 petition against Delta Iron & Steel Co. Pvt. Ltd., Yatin Steels India Pvt. Ltd. and ARK Industries Pvt. Ltd. in 2019, claiming non-payment for hot rolled steel coils supplied under a Franchise Agreement, resulting in an ex parte interim order under which the Court Receiver attached 160 coils across multiple warehouses, including eleven coils later claimed by Aashna as a third-party purchaser from one Aeon Creations. Disputes over the identity and release of these coils continued for years, with the Court Receiver eventually filing report compiling the rival contentions on title.
In the interim, Delta and Yatin were referred to the Corporate Insolvency Resolution Process, JSW's claims were dealt with as those of an unsecured operational creditor, and JSW ultimately withdrew the arbitration in November 2025 after the corporate debtor's resolution plan was approved.
JSW resisted release of the coils, contending it remained an unpaid seller entitled to the coils or, alternatively, that they should not be released to Aashna either, while also disputing the maintainability of applications by non-parties to the arbitration agreement.
Aashna and Karu contended that identical objections raised by JSW had already been rejected in respect of other coils in two earlier orders of the Court, and that the termination of arbitration left no basis for continued attachment or for further litigating title.
The Court held that once JSW withdrew the arbitration, its locus to contest title or resist release became academic, since even a favourable arbitral award would only have ranked as an unsecured debt subject to the IBC resolution process, and the resolution of the corporate debtor on a "clean slate" extinguished any residual cause of action.
Relying on its earlier judgments where it had rejected materially identical objections under Sections 47 and 49 of the Sale of Goods Act, and applying the Constitution Bench's restitution principles in Indore Development Authority v. Manoharlal & Ors. (2020) 8 SCC 129, the Court held that acts of the court must prejudice no one, and that JSW, having obtained the attachment, was liable for the storage costs incurred by the warehouse keepers during its currency, apportioned across the relevant periods and locations.
Accordingly, the Court recalled the interim order in its entirety, directed JSW to pay the verified storage invoices of the warehouses with 12% annual interest, awarded costs of Rs. 1,50,000 to Karu and Rs. 2,50,000 to Aashna, discharged the Court Receiver, and granted Aashna and Karu liberty to separately pursue further restitution claims, including for loss and depreciation, in an appropriate forum.
Cause Title: JSW Steel Ltd. v. Delta Iron & Steel Co. Pvt. Ltd. & Ors. (Neutral Citation: 2026:BHC-OS:19081)
Appearances:
Applicant/Intervenor: Vishal Muglikar, Chaula Solanki, H.H. Nagi, Niranjan Pradhan, instructed by Nagi & Associates, For other applicants A.K. Singh with Piyush A. Singh, K.A. Singh; For the Court Receiver — Deepak S. Bhalerao, 2nd Assistant to Court Receiver.
Original Petitioner: Ankita Singhania, Siddharth Srivastava, Yasmeen Sabir, Jahnvi Pandey, instructed by Link Legal.