Can Court Fix Time Limit For Operation Of Interlocutory Order Under Section 9 A&C Act? Karnataka HC Answers
Justice Suraj Govindaraj, Karnataka High Court
The Karnataka High Court has held that a time limit for operation of the interlocutory order under Section 9 of the Arbitration and Conciliation Act could be fixed by the Court.
But the time fixed has to be so fixed to achieve the purpose of a section 9 proceedings and not be fixed in a manner as to negate the purport and intent of Section 9 of the A&C Act, the Court added.
The Court partially allowed a Writ Petition filed under Article 227 of the Constitution, extending interlocutory relief to the Petitioners. The Bench explained that though a time limit for the operation of the interlocutory order could be fixed by the Court under Section 9 of the Arbitration and Conciliation Act, 1996 (the Act), it must be done to achieve the purpose of such proceedings and not be fixed in a manner as to negate the purport and intent of the Act.
A Single Bench of Justice Suraj Govindaraj observed that “though a time limit for operation of the interlocutory order could be fixed by the Section 9 Court, the time fixed has to be so fixed to achieve the purpose of a section 9 proceedings and not be fixed in a manner as to negate the purport and intent of Section 9 of the A&C Act. The operation of the interim order ought to be extended until a period of atleast 30 days after the constitution of the Arbitral Tribunal or till the culmination or the Arbitral Proceedings.”
Advocate Sanjana M. represented the Petitioners, while Advocate P.D. Surana appeared for the Respondents.
The Petitioners were engaged in a real estate partnership with the Respondents. Disputes arose regarding the management and ownership of the firm’s properties, leading to the invocation of an arbitration clause in their partnership agreement.
The Petitioner filed Section 9 proceedings before the Commercial Court, seeking interim measures to prevent the Respondents from alienating or encumbering the partnership properties. The Commercial Court granted an injunction, which was later extended for 30 days after the Section 9 proceedings were disposed of.
The Petitioner challenged this limitation, arguing that the interim relief should have been extended until the Arbitral Tribunal was constituted.
The High Court clarified that a Civil Court can grant interlocutory relief at an ex-parte stage after proceedings under Section 9 of the Act are filed. It held, “The imposition of an artificial 30 day period or the like, be it either 60 or 90 days without the Arbitral Tribunal being constituted, in my considered opinion, would not be in the interest of justice, both substantive and procedural.”
The Bench noted that initially when Section 9 proceedings were filed, no ex-parte orders were passed since there was a caveat filed and at that stage, the Petitioner had approached the Court where ad-interim reliefs were granted. “The imposition of an artificial 30 day period or the like, be it either 60 or 90 days without the Arbitral Tribunal being constituted, in my considered opinion, would not be in the interest of justice, both substantive and procedural,” it noted.
Consequently, the Court held, “The operation of the interim order ought to be extended until a period of atleast 30 days after the constitution of the Arbitral Tribunal or till the culmination or the Arbitral Proceedings.”
Accordingly, the High Court partly allowed the Petition.
Cause Title: Gaurav K Bhandari & Ors. v. Bharath Chandrashekhar & Ors. (Neutral Citation: 2024:KHC:53034)
Appearance:
Petitioners: Advocates Sanjana M. and Pradeed Nayak.
Respondents: Advocate P.D. Surana