The division Judge bench of Justice Indira Banerjee and Justice Krishna Murari of the apex court in the case of Speco Electric Power construction corporation Vs Power Mech projects Ltd. held that Section 9 of the Arbitration Act confers a wide power on the Court to pass orders securing the amount in dispute in arbitration, whether before the commencement of the Arbitral proceedings, during the Arbitral proceedings, or at any time after making of the arbitral award, but before its enforcement in accordance with Section 36 of the Arbitration Act. All that the Court is required to see is, whether the applicant for the interim measure has a good prima facie case, whether the balance of convenience is in favor of interim relief as prayed for being granted and whether the applicant has approached the court with reasonable expedition
BRIEF FACTS
The factual matrix of the case is that the dispute and differences arises between the appellant and the respondent further, which the matter was referred to Arbitration. Suffice it to mention that the Arbitration culminated in an Award approximately Rs. 1,42,00,00,000/ in the favour of the respondent. Thereafter, the appellant filed the application under section 34 of the Arbitration and Conciliation Act, 1996 challenging the arbitral award before the hon’ble Delhi high court. On the very same day, the appellant also filed the interim application under Section 36(2) of the Arbitration Act seeking a stay of the arbitral award. Further, the respondent filed an application under section 9 of the Arbitration Act and the high court issued the notice and directed the Appellant to file an affidavit of assets and the appellant’s compliance with the same. The high court also directed the appellant to deposit 10% of the amount in its bank account, which is referred to in its affidavit of assets in the High Court at intervals of every 15 days. Furthermore, the respondent filed an application to deposit the awarded amount of Rs. 142,41,14,499/ along with interest @ 12% per annum from the date of the award till the realization of the awarded amount in the High Court.
the single judge bench of the high court disposed of the application filed by the respondent under section 9 of the Arbitration act and other connected applications. directed that, on a deposit of Rs.142 Crores, as earlier directed in the application of the Respondent under Section 9 of the Arbitration Act, within four weeks, the enforcement of the award would remain stayed.
The learned counsel appearing on behalf of the appellant has contended that the application of the appellant under section 36(2) of the Arbitration Act was filed before the Respondent’s application under section 9 of the Arbitration Act. It was further contended that the High Court had deprived the Appellant of its legal remedy of appeal against any order passed under Section 9 by clubbing the order in the Appellant's application under Section 36(2) of the Arbitration Act with the order in the Respondent's application under Section 9 of the same Act. If the later application filed under Section 9 had not been combined with the earlier application filed by the Appellant under Section 36(2), the Appellant could have filed an intra-court appeal from the order under Section 9 of the Arbitration Act. Moreover, grant of stay in the case of an arbitral award for the payment of money, the Court is to have due regard to the provisions for grant of stay in a money decree under the provision of the CPC. It was also argued that the grant of a stay may be discretionary, but its use is required. The exercise of discretion necessitates an initial assessment of the merits of the challenge and, as a result, a review of the award, which has sadly not occurred.
COURT’S OBSERVATION
The hon’ble court held that there is no hard and fast rule that an application made earlier in point of time must be heard before an application is made later in point of time. Even though the applications may be independent applications, there are common factors required to be considered for both the applications of the Respondent under Section 9 and the application of the Appellant under Section 36(2). The jurisdiction of this Court under Section 9 is wide. A party may apply to a Court for interim measures before the commencement of Arbitral proceedings, during Arbitral proceedings, or at any time after the making of the Arbitral Award, but before it is enforced in accordance with Section 36 of the Arbitration Act. For grant of interim relief under Section 9, the Court would have to consider the prima facie case. In this case, prima facie there is an award for a huge amount of Rs.142 Crores against the Appellant. The Respondent has a strong case for interim relief.
The hon’ble apex court also stated that Under Section 36, where the time for making an application to set aside an arbitral award has expired, the award might be enforced in accordance with the provisions of the CPC in the same manner as it were a decree of the Court. Section 36(2) makes it clear that filing an application for setting aside an award under Section 34 is not to render the award unenforceable, unless the Court expressly grants an order of stay of operation of the arbitral award in accordance with the provisions of sub-section (3) of Section 36, on a separate application made for that purpose. The proviso to Section 36(3) of the Arbitration Act, makes it clear that while considering an application for grant of stay in the case of an arbitral award for payment of money, due regard has to be given to the provisions for grant of stay of a money decree under the provisions of the CPC. The proviso to Section 36(3) further stipulates that where the Court is satisfied that a prima facie case is made out that (a) the arbitration agreement or contract which is the basis of the award or, (b) the making of the award was induced or affected by fraud or corruption, it shall stay the award unconditionally pending disposal of the challenge under Section 34 of the award.
The hon’ble further relied upon the judgements titled Ajay Singh & Ors. v. Kal Airways Private Limited and Ors, and Valentine Maritime Ltd. v. Kreuz Subsea Pte Ltd. & Anr.
The hon’ble court held that Section 9 of the Arbitration Act confers a wide power on the Court to pass orders securing the amount in dispute in arbitration, whether before the commencement of the Arbitral proceedings, during the Arbitral proceedings, or at any time after making of the arbitral award, but before its enforcement in accordance with Section 36 of the Arbitration Act. All that the Court is required to see is, whether the applicant for the interim measure has a good prima facie case, whether the balance of convenience is in favor of interim relief as prayed for being granted and whether the applicant has approached the court with reasonable expedition. It is not in dispute that there is an award of Rs. 142 Crores in favor of the Respondent. No cogent ground has been made out even prima facie, for interference with the impugned award. At last, the hon’ble court dismissed the appeal and stated that the court found no ground at all to interfere with the high court’s decision.
CASE NAME- Speco Electric Power construction corporation Vs Power Mech projects Ltd.
CITATION- CIVIL APPEAL NO. OF 2022
CORUM- Justice Indira Banerjee and Justice Krishna Murari
DATE- 19.09.22
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