Section 9 & Section 11 Arbitration Act Are Not Parallel Proceedings On Same Cause Of Action: Bombay High Court
The Bombay High Court appointed an Arbitrator to adjudicate the dispute between the parties arising from an Investment Agreement.
While remarking that it is surprising that the invocation of Sections 9 and 11 of the Arbitration and Conciliation Act is being treated in a cavalier manner, the Bombay High Court clarified that the two cannot be termed as ‘parallel proceedings’ arising from same cause of action.
The Court disposed of an Application under Section 11 of the Arbitration and Conciliation Act, 1996 (the Act) by appointing an Arbitrator to adjudicate the dispute between the parties arising from an Investment Agreement.
A Single Bench of Justice Somasekhar Sundaresan clarified, “It is rather surprising that invocation of Section 9 and Section 11 have been treated in a cavalier manner by the Respondent, terming them as parallel proceedings on the same cause of action in the teeth of the scheme of the Act. Section 9 is meant to grant temporary interim protection in aid of the arbitral tribunal conducting proceedings. Noncompliance with the agreed commitment to refer disputes to arbitration is the basis of filing a Section 11 Application.”
Advocate Nadeem Shama appeared for the Applicant, while Advocate Pathik Muni represented the Respondents.
Brief Facts
Fab Tech Works & Constructions Pvt. Ltd. (Applicant) had moved the Court with a Commercial Arbitration Application under Section 11 of the Act, seeking the appointment of an arbitrator. The dispute arose from differences regarding the execution of their investment agreement.
The Applicant invoked arbitration in 2024, but the Respondents contended that the arbitration was not maintainable due to parallel proceedings.
Earlier, the Court had granted interim reliefs under Section 9, including an order for financial disclosure. However, the Respondents allegedly failed to provide full compliance, leading to a contempt Petition.
Court’s Reasoning
The High Court, however, clarified that the invocation of arbitration under Section 11 and interim relief under Section 9 did not constitute parallel proceedings.
“When a Learned Single Judge of this Court has already considered existence of the arbitration agreement and has thought it fit to pass an order under Section 9, it would be expected that the party affected by it would such order in appeal or for an appropriate intervention, or comply with it. This is the only manner of having deference to the rule of law,” the Court stated.
“Neither of this approach having been adopted, no useful purpose would be served in keeping the Section 11 Application pending on the docket of this Court any further,” the Bench remarked.
Being satisfied that an arbitration agreement validly existed and that arbitration had been duly invoked, the Court held that “it is in the fitness of things to refer the disputes and differences between the parties in connection with the aforesaid Investment Agreement to arbitration by a Sole Arbitrator.”
Consequently, the Court ordered, “ The order passed on July 22, 2024 under Section 9 shall be treated as a final order under Section 9. It shall be open to the parties to convince the arbitral tribunal on the need for variation, modification or vacation of such order, once the arbitral tribunal has had occasion to consider the merits of the case and decide what is appropriate as the next step in the arbitral proceedings.”
Accordingly, the High Court disposed of the Application.
Cause Title: Fab Tech Works & Constructions Pvt. Ltd. v. Savvology Games Pvt. Ltd. & Ors. (Neutral Citation: 2025:BHC-OS:4877)
Appearance:
Applicant: Advocates Nadeem Shama, Hrishikesh Nadkarni and Salman Athania
Respondents: Advocates Pathik Muni and Chinton B
