TMI Blog1999 (1) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... JUDGMENT Kirpal, J. - Leave granted. 2. An important question which arises for consideration in these cases is whether under section 9 of The Arbitration and Conciliation Act, 1996 ('the 1996 Act') the Court has jurisdiction to pass interim orders even before arbitral proceedings commence and before an arbitrator is ap- pointed. 3. The relevant facts which are necessary for the consideration of the point in issue are that the respondent had entered into a hire-purchase agreement with the appellant herein in respect of supply of two wind turbine generators along with all accessories. The terms of the agreement contemplated payments being made in instalments by the respondent, the first instalment was payable on 29-9-1995 and the last was due by 25-8-1998. In all the payment was to be made by 36 instalments. 4. According to the appellant the respondent paid the first fifteen instalments and thereafter committed default and payment was not made in spite of several demands being made by the appellant. The hire-purchase agree- ment contained an arbitration clause which reads as follows : "All disputes, differences and/or claims, arising out of this hire purchase a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "Second Schedule to the 1940 Act is the powers of the Court and item No. 4 is "interim injunction or the appointment of a receiver". Therefore, there is no virtual difference between section 41 read with Schedule 2 and present section 9 of the Arbitration Act. Moreover, if an interpretation such as the one contended by the Learned Counsel for the appellant is to be given to section 9 the very object of-the Act would be defeated. Any party, who has an agreement for arbitration with another can rush to Civil Court and straight away get an order under section 9 and thereafter keep quite without referring the matter to Arbitration. That will have a very serious consequence on the provisions of the Act. It could not have been the intention of the Legislature in enacting the present Arbitration Act. Further, the very facts that section 9 comes after section 8 which deals with the reference of disputes to Arbitration, the only interpretation that could be given to section 9 is that it could be availed of when an arbitration proceeding is pending before the Arbitral Tribunal or is at the reference stage before the Court or after the Arbitral award has been made." While coming to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, serve as a model for legislation on domestic arbitration and conciliation. The present Bill seeks to consolidate and amend the law relating to domestic arbitration, international commercial arbitration, enforcement of foreign arbitral awards and to define the law relating to conciliation, taking into account the said UNCITRAL Model Law and Rules." 9. The 1996 Act is very different from the Arbitration Act, 1940. The provisions of this Act have, therefore, to be interpreted and construed independently and in fact reference to 1940 Act may actually lead to misconstruction. In other words the provisions of the 1996 Act have to be interpreted being uninfluenced by the principles underlying the 1940 Act. In order to get help in construing these provisions it is more relevant to refer to the UNCITRAL Model Law rather than the 1940 Act. 10. Some of the provisions of the 1996 Act which are relevant in the present case are sections 2( d ) , 9, l7 and 21. Section 2( d ) defines an Arbitral Tribunal to mean a sole arbitrator or a panel of arbitrators. Section 9 of the 1996 Act, which gives power to the Court to pass interim orders, and with the interpretation of which we are c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire a party to provide appropriate security in connection with a measure ordered under sub-section (1)." 12. The reading of section 21 clearly shows that the arbitral proceedings commence on the date on which a request for a dispute to be referred to arbitration is received by the respondent. It is in this context that we have to examine and interpret the expression 'before or during arbitral proceed- ings 'occurring in section 9 of the 1996 Act. We may here observe that though section 17 gives the Arbitral Tribunal the power to pass orders the same cannot be enforced as orders of a Court. It is for this reason that section 9 admittedly gives the Court power to pass interim orders during the arbitration proceedings. 13. The position under the Arbitration Act, 1940 was that a party could commence proceedings in Court by moving an application under section 20 for appointment of an arbitrator and simultaneously it could move an application for interim relief under the Second Schedule read with section 41( b ) of the 1940 Act. The 1996 Act does not contain a provision similar to section 20 of the 1940 Act. Nor is section 9 or section 17 similar to section 41( c ) and the Seco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore arbitral proceedings or during arbitral proceedings or after the making of the arbitral award but before it is enforced in accordance with section 36 of the Act. 15. Section 9 of the said Act corresponds to article 9 of the UNCITRAL Model Law which is as follows: "It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a Court an interim measure of protection and for a Court to grant such measure." This article recognises, just like section 9 of the 1996 Act, a request being made before a Court for an interim measure of protection before arbitral proceedings. It is possible that in some countries if a party went to the Court seeking interim measure of protection that might be construed under the local law as meaning that the said party had waived its right to take recourse to arbitration. Article 9 of the UNCITRAL Model Law seeks to clarify that merely because a party to an arbitration agreement requests the Court for an interim measure 'before or during arbitral proceedings 'such recourse would not be regarded as being incompatible with an arbitration agreement. To put it differently the arbitration p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame kind as is ultimately being sought from the arbitral Tribunal." 17. In our opinion this view correctly represents the position in law, namely, that even before the commencement of arbitral proceedings the Court can grant interim relief. The said provision contains the same principle which underlies section 9 of the 1996 Act. Our attention was also drawn to the case of The Channel Tunnel Group Ltd. France Manche S.A. v. Balfour Beatty Construction Ltd. [1992] (2) Lloyd's Law Reports dealing with the question of the jurisdiction of the England Court to grant an interim injunction in a case where the parties have agreed that the disputes shall be settled by arbitration. The Court of Appeal referred to section 12(6) of the Arbitration Act, 1950 which provided as follows: "The High Court shall have, for the purpose of and in relation to a reference, the same power of making orders in respect of - ( h ) interim injunctions or the appointment of a receiver; as it has for the purpose of and in relation to an action or matter in the High Court...." Construting this Staughton, LJ observed as under: "In my view this power can be exercised before there has been any reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 9 it would not be necessary that a notice invoking the arbitration clause must be issued to the opposite party before an application under section 9 can be filed. The issuance of a notice may, in a given case, be sufficient to establish the manifest intention to have the dispute referred to Arbitral Tribunal, but a situation may so demand that a party may choose to apply under section 9 for an interim measure even before issuing a notice contemplated by section 21 of the said Act. If an application is so made the Court will first have to be satisfied that there exists a valid arbitration agreement and the applicant intends to take the dispute to arbitration. Once it is so satisfied the Court will have the jurisdiction to pass orders under section 9 giving such interim protection as the facts and circumstances warrant. While passing such an order and in order to ensure that effective steps are taken to commence the arbitral proceedings, the Court while exercising jurisdiction under section 9 can pass conditional order to put the applicant to such terms as it may deem fit with a view to see that effective steps are taken by the applicant for commencing the arbitral proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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