Jaya Industries vs Mother Dairy Calcutta & Anr
2023 Latest Caselaw 1624 Cal/2

                     IN THE HIGH COURT AT CALCUTTA
                     Ordinary Original Civil Jurisdiction
                                Original Side
                           (Commercial Division)


Present :-
The Hon'ble Justice Moushumi Bhattacharya


                                AP 85 of 2023

                               Jaya Industries
                                     Vs.
                        Mother Dairy Calcutta & Anr.


For the petitioner                       :   Mr. Suddhasatva Banerjee, Adv.
                                             Mr. Debraj Sahu, Adv.
                                             Mr. Snehashis Sen, Adv.
                                             Mr. Abhishek Banerjee, Adv.


For the respondent nos. 1 & 2        :       Mr. B.P. Vaisay, Adv.
                                             Mr. Joydip Banerjee, Adv.
                                             Mr. Nilay Baran Mondal, Adv.


Last Heard on                        :       05.07.2023


Delivered on                         :       20.07.2023



Moushumi Bhattacharya, J.

1. The petitioner has filed the present application for interim relief under

section 9 of The Arbitration and Conciliation Act, 1996. The only question

which arises is whether the Court should continue to entertain the

application after constitution of the Arbitral Tribunal.

2. The application was filed on 10th February, 2023 and the Arbitral

Tribunal was constituted by an order of a learned Single Judge of this Court

on 17th May, 2023. The particulars of the orders passed in between are as

follows.

3. After filing of the application on 10th February, 2023, a Co-ordinate

Bench passed an order on 15th March, 2023 directing the respondents to

show-cause as to why the respondents should not be directed to deposit a

sum of Rs. 5,95,40,498.60/- before the Registrar, Original Side of this Court

for securing the claim of the petitioner. The respondents were represented

on the returnable date i.e. on 30th March, 2023 when the matter was

adjourned on the request of counsel appearing for the respondents.

Affidavits were exchanged between the parties and recorded in the orders

passed by the Court on 10th April, 2023, 1st May, 2023 and 14th June, 2023.

The respondents took an adjournment on 13th June, 2023. Learned counsel

appearing for the parties were thereafter heard on the question of whether

the section 9 application should continue as recorded in the order dated

22nd June, 2023.

4. Counsel appearing for the petitioner wants this Court to continue to

hear the petition for interim relief while counsel appearing for the

respondents relies on section 9(3) of the Act to put emphasis on the bar on

the Court from entertaining an application under section 9(1) of the Act

subject to the efficacy of the remedy under section 17 before the arbitral

tribunal.

5. Section 9(1) permits a party before or during arbitral proceedings or at

any time after making of the arbitral award but before enforcement of the

award to apply to a Court for interim measures. The width of the Court's

powers to grant interim relief to a party under section 9(1) and the right of a

party to seek for such relief is almost boundless but is reined-in by section

9(3) - which is reproduced below.

"9(3). - Once the arbitral tribunal has been constituted, the Court shall not entertain an application under sub-section (1), unless the Court finds that circumstances exist which may not render the remedy provided under section 17 efficacious."

6. The constitution of the arbitral tribunal hence becomes a fetter on the

Court from passing interim orders under section 9(1) or even entertaining an

application under section 9(1) subject to the Court being of the view that

circumstances are not conducive for the party seeking such interim relief

before the arbitral tribunal under section 17 of the Act. Section 17 provides

for interim measures by the arbitral tribunal and grants equal leeway to an

arbitral tribunal to pass orders for interim relief.

7. The language of section 9(3) is mandatory in the use of the words "......

shall not entertain an application...." and would have been sufficient in itself

to stop the Court from entertaining an application for interim measures

under section 9(1) subject to the qualification of the efficacy of section 17

application before the arbitral tribunal. The decision of the Supreme Court

in Arcelor Mittal Nippon Steel India Limited vs. Essar Bulk Terminal Limited;

(2022) 1 SCC 712 has however softens the stiffness of section 9(3) with a

purposive construction. The Supreme Court considered the expression

"entertain" and held that if the Court had already applied its mind to the

issues raised, then the Court can proceed to adjudicate the application

under section 9(1) notwithstanding the bar of section 9(3).

8. In light of the dictum in Arcelor Mittal, the Court has to determine

whether the present application can continue to be entertained despite the

arbitral tribunal being constituted on 17th May, 2023. This would depend on

whether the Court has applied its mind to the present application which is

required to circumvent the mandate of section 9(3) of the Act.

9. The orders on record show that the learned Single Judge by the order

dated 15th March, 2023 directed the respondents to show-cause as to why

the respondents should not be directed to deposit a certain sum of money. A

total of about 7 orders were passed thereafter and the respondents were

represented each and every time. Affidavits were also directed which were

subsequently filed by the parties. Apart from the length of the period of

consideration, i.e. from 15th March, 2023 to 14th June, 2023 when affidavits

were complete, the first order of 15th March, 2023 itself shows that the

learned Single Judge had considered the factual contentions raised in the

matter. The order directing the respondents to show-cause would otherwise

not even passed at all. The order reflects that the learned Judge was

satisfied on the facts and considered the necessity of passing such an order.

10. The word "entertain" requires the Court to enter into an active

consideration of the issues presented by the parties and pleaded in an

application and involves the Court applying its mind to the facts and the law

urged before it. It is an active and interactive process where the Court

participates in the adjudication by engaging with the issues raised. The

process of entertaining a matter (with or without the Court being

entertained) hence commences from the day when the Court enters into the

arena of the facts, law and essentially the dispute between the parties and

cannot be broken up into phases of intensity or relevance. Although the

degree of a Court's engagement in a matter may be subjective, the broad

requirement is that a Court becomes alive and interested in the matter and

applies its mind to the facts before it.

11. The brakes imposed by section 9(3) on this active engagement by the

Court is only to preserve the sanctity of the arbitration. It is not to wrench

territory from the Court despite the Court having put its mind to the matter

- meat included - before it. Section 9(3) in any event contains an exception

that the Court must also come to a finding that the relief prayed for would

be equally and efficaciously available to the parties under section 17 of the

Act. This would also mean that the party who disputes the efficacy of

interim relief before the arbitral tribunal and the one who opposes the Court

from entertaining the application under section 9(1) must discharge their

respective obligations with regard to the second limb of section 9(3).

12. The intended object of section 9(3) is to allow the arbitral tribunal to

consider the prayer for interim relief once the tribunal has been constituted.

Section 9(3) aims to prevent multiple levels of hearing for the same relief.

The section envisages a clockwise motion of considerations of the matter

after an arbitral tribunal has been constituted. The hands of the clock

however stop to tick where the Court has already gone into the matter.

Permitting the parties to re-agitate the matter in such cases before the

arbitral tribunal would in effect rewind the clock which is not what section

9(3) intends.

13. That obligation becomes less relevant in the face of the other and

more important question; whether the Court has already applied its mind to

the dispute in accordance with the dictum in Arcelor Mittal.

14. Upon considering the orders passed by the Court particularly that on

15th March, 2023, this Court is of the view that the Court has already

entertained the matter and thought it fit to direct affidavits to consider the

dispute further. This, hence, is certainly a case where the Court has applied

its mind to the matter and consequently "entertained" the application filed

by the petitioner. The process of consideration has indeed commenced and

the subsequent constitution of the Arbitral Tribunal will not act as a fetter

on the Court to continue hearing the application.

15. AP 85 of 2023 will accordingly be heard by this Court.

16. The parties shall be at liberty of mentioning for early listing of the

matter.

Urgent photostat certified copies of this judgment, if applied for, be

supplied to the parties upon fulfillment of the requisite formalities.

(Moushumi Bhattacharya, J.)