ARCELOR MITTAL NIPPON STEEL INDIA LTD. versus ESSAR BULK TERMINAL LTD.

[2021] 5 S.C.R.

AARCELOR MITTAL NIPPON STEEL INDIA LTD.

ESSAR BULK TERMINAL LTD.

(Civil Appeal No. 5700 of 2021)

BSEPTEMBER 14, 2021

[INDIRA BANERJEE AND J. K. MAHESHWARI, JJ.]

Arbitration and Conciliation Act, 1996 – ss. 9, 11 and 17 –Appellant and respondent entered into an agreement for cargohandling – Disputes arose between the parties – Appellant invokedCarbitration clause and gave notice to respondent – Appellant filedapplication u/s.11 of the Act, for appointment of an Arbitral Tribunalbefore the High Court – Respondent replied to arbitration noticestating that the dispute was not arbitrable and there was an amountdue and payable by the appellant – Both appellant and respondentDfiled separate applications u/s.9 before the Commercial Court – Inpursuance to the earlier application u/s.11, the High Court appointedthree member Arbitral Tribunal – Thereafter, the appellant filedapplication for reference of both the applications filed u/s.9 to theTribunal – The Commercial Court dismissed the application forreference – The order of the Commercial Court was challengedEbefore the High Court – The High Court held that the CommercialCourt has the power to consider whether the remedy u/s.17 of theArbitration Act is inefficacious and pass necessary orders u/s.9 ofthe said Act – Before the Supreme Court, the appellant contendedthat s.9(3) of the Act restricts the power to entertain an applicationFunder sub-section (1) of s.9 of the Act once an Arbitral Tribunalhas been constituted – Held: s. 9(1) enables the parties to anarbitration agreement to approach the appropriate Court for interimmeasures before the commencement of arbitral proceedings, duringarbitral proceedings or at any time after the making of an arbitralaward but before it is enforced and in accordance with s.36 of theGArbitration Act – The bar of s. 9(3) operates where the applicationu/s. 9(1) had not been entertained till the constitution of the ArbitralTribunal – If an application u/s. 9 had been entertained before theconstitution of the Tribunal, the Court always has the discretion todirect the parties to approach the Arbitral Tribunal, if necessary by

passing limited order of interim protection, particularly when therehas been long time gap between hearings and the application hasfor all practical purposes, to be heard afresh, or the hearing hasjust commenced and is likely to consume lot of time – The HighCourt has rightly directed the Commercial Court to proceed tocomplete the adjudication – It is clarified that it shall not benecessary for the Commercial Court to consider the efficacy of reliefu/s. 17, since the application u/s. 9 has already been entertainedand considered by the Commercial Court.

Arbitration and Conciliation Act, 1996 – s. 9(3) – Expression‘entertain’ – Held: the expression “entertain” means to consider byapplication of mind to the issues raised – The Court entertains acase when it takes matter up for consideration.

Partly allowing the appeal, the Court

HELD: 1. The bar of Section 9(3) operates after an ArbitralTribunal is constituted. There can therefore be no question ofusurpation of jurisdiction of the Arbitral Tribunal under Section17 before the Arbitral Tribunal is constituted. The Court isobliged to exercise power under Section 9 of the Arbitration Act,if the Arbitral Tribunal is yet to be constituted. Whether the Courtgrants interim relief or not is different issue, for that woulddepend on the facts of the case - whether the Applicant has madeout good prima facie case, whether the balance of convenienceis in favour of relief being granting to the applicant, whether theapplicant would suffer irreparable injury by refusal of interim reliefetc. [Para 88][1049-G-H; 1050-A-B]2. It is now well settled that the expression “entertain”means to consider by application of mind to the issues raised.The Court entertains case when it takes matter up forconsideration. The process of consideration could continue tillthe pronouncement of judgment. Once an Arbitral Tribunal isconstituted the Court cannot take up an application under Section9 for consideration, unless the remedy under Section 17 isinefficacious. However, once an application is entertained in thesense it is taken up for consideration, and the Court has appliedits mind to the Court can certainly proceed to adjudicate theapplication. [Para 93][1052-D-E]

A3. On combined reading of Section 9 with Section 17 ofthe Arbitration Act, once an Arbitral Tribunal is constituted, theCourt would not entertain and/or in other words take up forconsideration and apply its mind to an application for interimmeasure, unless the remedy under Section 17 is inefficacious,even though the application may have been filed before theBconstitution of the Arbitral Tribunal. The bar of Section 9(3) wouldnot operate, once an application has been entertained and takenup for consideration, as in the instant case, where hearing hasbeen concluded and judgment has been reserved. Appellant maybe right, that the process of consideration continues till theCpronouncement of judgment. However, that would make nodifference. The question is whether the process of considerationhas commenced, and/or whether the Court has applied its mindto some extent before the constitution of the Arbitral Tribunal. Ifso, the application can be said to have been entertained beforeconstitution of the Arbitral Tribunal. [Para 95][1052-F-H; 1053-DA-B]

4. Even after an Arbitral Tribunal is constituted, there maybe myriads of reasons why the Arbitral Tribunal may not be anefficacious alternative to Section 9(1). This could even be byreason of temporary unavailability of any one of the ArbitratorsEof an Arbitral Tribunal by reason of illness, travel etc. [Para96][1053-B-C]

5. Applications for interim relief are inherently applicationswhich are required to be disposed of urgently. Interim relief isgranted in aid of final relief. The object is to ensure protection ofFthe property being the subject matter of Arbitration and/orotherwise ensure that the arbitration proceedings do not becomeinfructuous and the Arbitral Award does not become an award onpaper, of no real value. [Para 97][1053-C-D]

6. The principles for grant of interim relief are (i) good primaGfacie case, (ii) balance of convenience in favour of grant of interimrelief and (iii) irreparable injury or loss to the applicant for interimrelief. Unless applications for interim measures are decidedexpeditiously, irreparable injury or prejudice may be caused tothe party seeking interim relief. [Para 98][1053-D-E]H

7. It could, therefore, never have been the legislative intentthat even after an application under Section 9 is finally heard reliefwould have to be declined and the parties be remitted to theirremedy under Section 17. [Para 99][1053-E-F]

8. When an application has already been taken up forconsideration and is in the process of consideration or has alreadybeen considered, the question of examining whether remedyunder Section 17 is efficacious or not would not arise. Therequirement to conduct the exercise arises only when theapplication is being entertained and/or taken up for consideration.As observed above, there could be numerous reasons whichrender the remedy under Section 17 inefficacious. To cite anexample, the different Arbitrators constituting an Arbitral Tribunalcould be located at far away places and not in position to assembleimmediately. In such case an application for urgent interim reliefmay have to be entertained by the Court under Section 9(1).[Para 100][1053-F-H]9. It is reiterated that Section 9(1) enables the parties toan arbitration agreement to approach the appropriate Court forinterim measures before the commencement of arbitralproceedings, during arbitral proceedings or at any time after themaking of an arbitral award but before it is enforced and inaccordance with Section 36 of the Arbitration Act. The bar ofSection 9(3) operates where the application under Section 9(1)had not been entertained till the constitution of the ArbitralTribunal. Ofcourse it hardly need be mentioned that even if anapplication under Section 9 had been entertained before theconstitution of the Tribunal, the Court always has the discretionto direct the parties to approach the Arbitral Tribunal, if necessaryby passing limited order of interim protection, particularly whenthere has been long time gap between hearings and theapplication has for all practical purposes, to be heard afresh, orthe hearing has just commenced and is likely to consume lot oftime. In this case, the High Court has rightly directed theCommercial Court to proceed to complete the adjudication.[Para 107][1055-D-F]

Amazon.com NV Investment Holdings LLC v. FutureRetail Limited & Ors. 2021 SCC Online SC 557; ChloroControls India Private Limited v. Severn Trent WaterPurification Inc (2013) 1 SCC 641 : [2012] 13 SCR 402;Vidya Drolia and Ors. v. Durga Trading Corporation(2021) 2 SCC 1 : 2021 (6) JT 460 – relied on.

State Bank of India and Ors. v. S. N. Goyal (2008) 8SCC 92 : [2008] 7 SCR 631 AIR 2008 SC 2594; DeepChand & Ors v. Land Acquisition Officer & Others(1994) 4 SCC 99 : [1994] 1 SCR 530 AIR 1994 SC1901; A.V. Venkateswaran, Collector of Customs,Bombay v. Ramchand Sobhraj Wadhwani & Anr AIR1961 SC 1506 : [1962] SCR 753; Manbhupinder SinghAtwal v. Neeraj Kumarpal Shah 2019 GLH (3) 234;Firm Ashok Traders and Anr. v. Gurumukh Das Salujaand Ors (2004) 3 SCC 155 : [2004] 1 SCR 404;Lakshmi Rattan Engineering Works Ltd. v Asstt.Commissioner Sales Tax, Kanpur and Anr. (1968) 1 SCR505 : AIR 1968 SC 488; Hindustan Commercial BankLtd. v Punnu Sahu (1971) 3 SCC 124; Martin & HarrisLtd. v VIth Additional District Judge and Others (1998)1 SCC 732 : [1997] 6 Suppl. SCR 380; Union of Indiaand Ors. v. Uttar Pradesh State Bridge CorporationLimited (2015) 2 SCC 52 : [2014] 13 SCR 1180 –referred to.

Energo Engineering Projects Limited v. TRF Lt 2016SCC Online Del 6560; Tufan Chatterjee v. Sri. RanganDhar 2016 SCC Online Cal 483; Benara Bearings andPistons Limited v. Mahle Engine Components IndiaPrivate Limited (2017) SCC Online Del 7226; KundanLal v. Jagan Nath Sharma AIR 1962 All 547; Anil KunjBihari Saraf v. Namboodas S/o Shankarlal and Ors.(1996) SCC Online MP 112; M. Ashraf v. Kasim V.K(2018) SCC OnLine Ker 4913; Srei EquipmentFinance Limited (Sefl) v. Ray Infra Services PrivateLimited & Anr. (2016) SCC OnLine Cal 6765; AvanthaHoldings Limited v. Vistra ITCL India Limited 2020 SCCOnLine Del 1717 – referred to.

ARCELOR MITTAL NIPPON STEEL INDIA LTD. v. ESSARBULK TERMINAL LTD.

CIVIL APPELLATE JURISDICTION : Civil Appeal No.5700of 2021.

From the Judgment and Order dated 17.08.2021 of the High Courtof Gujarat at Ahmedabad in R/Special Civil Application No.10492 of2021.

Drius Khambata, Sr. Adv., Mihir Thakore, Manu Nair, RishabGupta, Sairam Subramanian, Ms. Shreya Gupta, Neelabh Shreesh, Ms.Juhi Gupta, Ms. Swagata Ghosh, Ms. Archismita Raha, Saloni Gupta, S.S. Shroff, Advs. for the appellant.

Kapil Sibal, Mukul Rohatgi, Saurabh Soparkar, Sr. Advs., MaheshAgarwal, Keyur Gandhi, Ms. Amita Katragadda, Ms. AnuradhaMukherjee, Raheel Patel, Rishabh Parikh, Kaustubh Rai, E. C. Agrawala,Advs. for the respondent.

The Judgment of the Court was delivered by

INDIRA BANERJEE, J.

1. Leave granted.

2. The short question of law raised in this appeal is, whether theCourt has the power to entertain an application under Section 9(1) of theArbitration and Conciliation Act, 1996, hereinafter referred to as “theArbitration Act”, once an Arbitral Tribunal has been constituted and ifso, what is the true meaning and purport of the expression “entertain” inSection 9(3) of the Arbitration Act. The next question is, whether theCourt is obliged to examine the efficacy of the remedy under Section 17,

Abefore passing an order under Section 9(1) of the Arbitration Act, oncean Arbitral Tribunal is constituted.

3. The Appellant and the Respondent entered into an agreementfor Cargo Handling at Hazira Port. The said Cargo Handling Agreementwas amended from time to time.B4. Article 15 of the said Cargo Handling Agreement provided thatall disputes arising out of the Cargo Handling Agreement were to besettled in Courts, in accordance with the provisions of the ArbitrationAct and be referred to sole Arbitrator appointed mutually by the parties.

5. Disputes and differences having arisen under the said CargoCHandling Agreement, the Appellant invoked the arbitration clause by anotice of arbitration dated 22[nd] November 2020. According to theAppellant, the Respondent did not respond to the notice of arbitration.

6. The Appellant approached the High Court of Gujarat atAhmedabad under Section 11 of the Arbitration Act, for appointment ofDan Arbitral Tribunal. On or about 30[th] December, 2020, the Respondentreplied to the notice of arbitration, contending that the disputes betweenthe parties were not arbitrable and further contending that the total amountdue and payable by the Appellant as on 24[th] December, 2020 wasRs.673.84 crores inclusive of interest of Rs.51.11 crores.

E7. On or about 15[th] January, 2021, the Appellant filed an applicationbeing Commercial Civil Miscellaneous Application No.2 of 2021 underSection 9 of the Arbitration Act in the Commercial Court and the 12[th]Additional District Judge, District & Sessions Court at Surat. On 16[th]March 2021, the Respondent also filed an application being CommercialFCivil Miscellaneous Application No.99 of 2021 in the Commercial Courtunder Section 9 of the Arbitration Act.8. Section 9 of the Arbitration Act is set out hereinbelow forconvenience:-

“9. Interim measures, etc. by Court (1) party may, beforeGor during arbitral proceedings or at any time after the makingof the arbitral award but before it is enforced in accordancewith Section 36, apply to Court—

(i) for the appointment of guardian for minor or personof unsound mind for the purposes of arbitral proceedings;Hor

(ii) for an interim measure of protection in respect of any ofthe following matters, namely:—

(a) the preservation, interim custody or sale of any goodswhich are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any propertyor thing which is the subject-matter of the dispute inarbitration, or as to which any question may arise thereinand authorising for any of the aforesaid purposes any personto enter upon any land or building in the possession of anyparty, or authorising any samples to be taken or anyobservation to be made, or experiment to be tried, which maybe necessary or expedient for the purpose of obtaining fullinformation or evidence;

(d) interim injunction or the appointment of receiver;

(e) such other interim measure of protection as may appearto the Court to be just and convenient,

and the Court shall have the same power for making ordersas it has for the purpose of, and in relation to, any proceedingsbefore it.

(2) Where, before the commencement of the arbitralproceedings, Court passes an order for any interim measureof protection under sub-section (1), the arbitral proceedingsshall be commenced within period of ninety days from thedate of such order or within such further time as the Courtmay determine.

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

9. Section 9 as originally enacted, has been renumbered as Section9(1) by the Arbitration and Conciliation (Amendment) Act (Act 3 of2016) with effect from 23[rd] October 2015. The said 2015 Amendmentalso incorporated sub-Section (2) and sub-Section (3) reproduced above.

10. Before the enactment and enforcement of the said 2015Amendment, Section 17 read:-

“17. Interim measures ordered by arbitral tribunal.- (1) Unlessotherwise agreed by the parties, the arbitral tribunal may, atthe request of party, order party to take any interimmeasure of protection as the arbitral tribunal may considernecessary in respect of the subject-matter of the dispute.

(2) The arbitral tribunal may require party to provideappropriate security in connection with measure orderedunder sub-section (1).”

11. After enactment of the said 2015 Amendment, Section 17reads:-

“17. Interim measures ordered by arbitral tribunal.- (1) Aparty may, during the arbitral proceedings, apply to thearbitral tribunal—

(i) for the appointment of guardian for minor or personof unsound mind for the purposes of arbitral proceedings;or

(ii) for an interim measure of protection in respect of any ofthe following matters, namely—

(a) the preservation, interim custody or sale of any goodswhich are the subject matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any propertyor thing which is the subject matter of the dispute inarbitration, or as to which any question may arise thereinand authorising for any of the aforesaid purposes anyperson to enter upon any land or building in the possessionof any party, or authorising any samples to be taken, orany observation to be made, or experiment to be tried,which may be necessary or expedient for the purpose ofobtaining full information or evidence;

(d) interim injunction or the appointment of receiver;(e) such other interim measure of protection as may appearto the arbitral tribunal to be just and convenient,

and the arbitral tribunal shall have the same power formaking orders, as the court has for the purpose of, and inHrelation to, any proceedings before it.

(2) Subject to any orders passed in an appeal under Section37, any order issued by the arbitral tribunal under this sectionshall be deemed to be an order of the Court for all purposesand shall be enforceable under the Code of Civil Procedure,1908 (5 of 1908), in the same manner as if it were an order ofthe Court.”

12. The Commercial Court and 12[th] Additional District Judge,District & Sessions Court at Surat, heard both the applications filed bythe Appellant and the Respondent respectively, under Section 9(1) ofthe Arbitration Act and reserved the same for orders on 7[th] June, 2021.

13. On 9[th] July 2021, the application filed by the Appellant underSection 11(6) of the Arbitration Act was disposed of by appointing athree-member Arbitral Tribunal, comprising of three retired Judges ofthis Court, to adjudicate the disputes between the Appellant and theRespondent.

14. On or about 16[th] July 2021, the Appellant filed an interimapplication being Commercial Civil Miscellaneous Application No.2 of2021, praying for reference of both the applications filed by the Appellantand the Respondent respectively under Section 9 of the Arbitration Act,to the learned Tribunal.

15. Paragraph 3 of the said application filed by the Appellant isset out hereinbelow for convenience.

“3. I say and submit that this Hon’ble Court had heard theAMNS Petition and the EBTL Petition extensively, and reservedthe petitions for pronouncement of orders. The matters arelisted on 20 July 2021 for pronouncement of orders.”

16. By an order dated 16[th] July 2021, the Commercial Courtdismissed the said application filed by the Appellant. The CommercialCourt however granted the Appellant 10 days’ time to challenge theorder of the Commercial Court if it so desired.

17. The Appellant filed an application being R/Special CivilApplication No.10492 of 2021 in the Gujarat High Court under Article227 of the Constitution of India challenging the order of the CommercialCourt.

18. The said application under Article 227 of the Constitution washeard by Division Bench of the High Court and listed for final arguments

Aon 2[nd] August, 2021. In the meanwhile, the High Court directed theCommercial Court to defer the pronouncement of orders in the applicationsunder Section 9 of the Arbitration Act till 9[th] August, 2021.

19. On 5[th] August 2021, the application under Article 227 of theConstitution was heard again and reserved for orders on 9[th] August,B2011. The Commercial Court adjourned the pronouncement of orders inthe two applications for interim relief till 31[st] August, 2021.

20. In the meanwhile, by an order dated 17[th] August, 2021, whichis impugned in this Appeal, the High Court dismissed the application filedby the Appellant under Article 227 of the Constitution of India, holdingCthat the Commercial Court has the power to consider whether the remedyunder Section 17 of the Arbitration Act is inefficacious and pass necessaryorders under Section 9 of the said Act. The High Court held:-

“24. Considering the submissions made before us as well asthe judgments cited before us by both the sides, though theDlearned trial court has not given proper reasons for dismissingthe application filed by the petitioner, the trial court hascommitted no error in not granting the prayer prayed for bythe petitioner in the interim application filed in CMA No.2 of2021. In our opinion the trial court should be permitted topronounce the order on both the applications under SectionE9 pending before it keeping in mind the observations madeby us in this judgment and taking into consideration theprovisions of Section 9(3) of the Act.”

21. Mr. Darius Khambata, Senior Advocate appearing on behalfof the Appellant submitted that Section 9(3) of the Arbitration Act, asFamended, restricts the power of the Court to entertain an applicationunder sub-Section (1) of Section 9 of the Arbitration Act once an ArbitralTribunal has been constituted.

22. Mr. Khambata argued that an Arbitral Tribunal having beenconstituted, the Commercial Court cannot proceed further with theGapplication under Section 9 of the Arbitration Act.

23. Mr. Khambata argued that, the purpose of insertion of Section9(3) of the Arbitration Act was to curtail the role of the Court. Eventhough Section 9(3) does not oust the jurisdiction of the Court underSection 9(1), it restricts the role of the Court, post the constitution of anHArbitral Tribunal. Once an Arbitral Tribunal is constituted, the Court is

not to entertain an application under Section 9 of the Arbitration Actunless it finds that circumstances exist, which may render the remedyunder Section 17 of the Arbitration Act inefficacious.

24. Mr. Khambata submitted that the High Court rightly held thatthe Commercial Court had erred in construing the word ‘entertain’narrowly, observing that entertain would not mean admitting forconsideration, but would mean the entire process upto its final adjudicationand passing of an order on merits.

25. Mr. Khambata referred to the observations of the 246[th] Reportof the Law Commission of August 2014, that the insertion of Section9(3) “seeks to reduce the role of the Court in relation to grant of interimmeasures once the Arbitral Tribunal has been constituted.” Mr. Khambatasubmitted that this also appears to be the spirit of the UNCITRAL ModelLaw as amended in 2006. Accordingly, Section 17 has been amended toinfuse the Arbitral Tribunal with the same powers as Court.

26. Mr. Khambata submitted the Report dated July 30, 2017 ofthe High Level Committee to Review the Institutionalisation of ArbitrationMechanism in India, chaired by Hon’ble Mr. Justice B. N. Srikrishnaalso referred to the insertion of Section 9(3) and observed that the “2015amendments, in two important respects, signal paradigm shift towardsminimizing judicial intervention in the arbitral process. First, theamendment to Section 9 of the ACA provides that Courts should notentertain applications for interim relief from the parties unless it is shownthat interim relief from the Arbitral Tribunal would not be efficacious.”In the aforesaid report, the Arbitration Act is referred to as ACA inshort.

27. Mr. Khambata cited Amazon.com NV Investment HoldingsLLC v. Future Retail Limited & Ors.[1], where this Court, speakingthrough Nariman J. held that the object of introducing Section 9(3) was“to avoid Courts being flooded with Section 9 petitions when an ArbitralTribunal is constituted for two good reasons – (i) that the clogged CourtSystem ought to be decongested, and (ii) that an Arbitral Tribunal, onceconstituted, would be able to grant interim relief in timely and efficaciousmanner.”

28. Mr. Khambata contended that Section 9(3) has been introducedto reduce the burden on Courts. Therefore, Section 9(3) must be construed

1 2021 SCC Online SC 557

Apurposively and any attempt to thwart the mandate of Section 9(3) mustbe discouraged.

29. Mr. Khambata argued that Section 9(3) was measure ofNegative Kompetenz-Kompetenz. This is substantiated by thecorresponding introduction of Section 17(2) which lends further efficacyBand enforceability to orders passed by the Arbitral Tribunal under Section17. Mr. Khambata further argued that it is well settled that Courtbecomes functus officio, only after it pronounces, signs and dates thejudgment. Mere dictation of judgment after it is reserved, does notconstitute pronouncement of judgment. In support of the aforesaidsubmission Mr. Khambata cited State Bank of India and Ors. v. S. N.CGoyal[2].

30. Mr. Khambata argued that the fact that an order is reserveddoes not mean that the District Court stopped entertaining the Section 9petitions. Referring to State Bank of India v. S. N. Goyal (supra), Mr.Khambata argued that judge can make corrections to judgment and/Dor in other words continue to adjudicate and thus continue to entertain aproceeding even after judgment is pronounced, until it is signed.

31. Mr. Khambata argued that, in this case the Commercial Courthad not passed its orders in the Section 9 applications. It had not evenpronounced its orders. Thus, as on the date of the impugned order, theECommercial Court was entertaining the Section 9 applications. Eventoday the Commercial Court is entertaining the applications under Section9 of the Arbitration Act. The fact that orders were reserved on 7[th] June2021 does not mean that the Commercial Court stopped entertaining thesaid petitions.F

32. Referring to Deep Chand & Ors v. Land Acquisition Officer& Others[3], Mr. Khambata submitted that the term “adjudication” means“..formal giving or pronouncing judgment or decree in Courtproceeding..” and implies hearing by Court. Thus, the term“entertain” in Section 9(3) of the Arbitration Act, is to be interpreted toGmean “adjudicate” and implies the passing of an order and/or judgment.

33. Mr. Khambata argued that the word “entertain” in Section9(3) has to be interpreted in the context of Section 9(1) of the ArbitrationAct. Section 9(1) of the Arbitration Act provides for the “making of

2 (2008) 8 SCC 92 : AIR 2008 SC 2594

H3 (1994) 4 SCC 99 : AIR 1994 SC 1901

orders” for the purpose of grant of interim relief. The internal aid toconstruction provided under Section 9 of the Arbitration Act furthersubstantiates the Appellant’s submission that entertain would necessarilymean all acts including the act of making orders under Section 9(1) ofthe act.

34. Mr. Khambata submitted that while the Respondent’s nomineeArbitrator has withdrawn, the Respondent has not nominated newArbitrator. Instead of nominating new arbitrator, the Respondent hasfiled an application in the Commercial Court, stating that since the ArbitralTribunal is not functioning, the remedy before the Tribunal would beinefficacious. The same submission has been advanced in this Court.

35. Relying on the judgment of this Court in A.V. Venkateswaran,Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani &Anr[4], Mr. Khambata argued that it is well settled that party cannotallege inefficacy of remedy when that party disables itself from availingthe remedy.

36. Mr. Khambata also cited Manbhupinder Singh Atwal v.Neeraj Kumarpal Shah[5], where the Gujarat High Court held that aparty which is intentionally trying to render the remedy under Section 17inefficacious, cannot be permitted to approach the Court under Section9 to secure interim reliefs which can be granted by the Tribunal. Mr.Khambata submitted that the intention of the Respondent to avoid theArbitral Tribunal, is evident all through.

37. Mr. Khambata argued that even though the Section 11proceedings had finally been disposed of by consensus, the appointmentof the Arbitral Tribunal was delayed by reason of the conduct of theRespondent. Moreover, after the Appellant issued notice invokingarbitration on 22[nd] November, 2020, and called upon the Respondent tomutually agree to the appointment of sole Arbitrator, the Respondentdid not respond within 30 days as mandated in Section 11(4)(a) of theArbitration Act.

38. Mr. Khambata also submitted that the Respondent filed itsobjection to the Section 9 application of the Appellant in the CommercialCourt on 16[th] March, 2021 and also initiated other proceedings againstthe Appellant. The Respondent, however, refused to file reply to the

4 AIR 1961 SC 1506 (para 11)5 2019 GLH (3) 234 (para 6.1 to 6.3)

Apetition under Section 11 of the Arbitration Act. The Respondent filed abelated reply on 7[th] June, 2021, after the hearing of the applicationsunder Section 9 had concluded.

39. Mr. Khambata submitted that it is well settled that partyinvoking Section 9 of the Act must be ready and willing to go to arbitration.BIn support of his submission Mr. Khambata cited Firm Ashok Tradersand Anr. v. Gurumukh Das Saluja and Ors.[6]. Mr. Khambata contendedthat the Respondent had itself delayed the nomnation of the substituteArbitrator, but is now is taking the plea of inefficacy of the remedyunder Section 17 of the Arbitration Act.

C40. Mr. Khambata submitted that the High Court had erred indirecting the District Court to pass orders in the applications under Section9 of the Arbitration Act, despite the fact that no party had filed anyapplication in the Commercial Court, challenging the efficacy of the arbitralproceedings. Mr. Khambata submitted that the High Court’s interpretationof Section 9(3) of the Arbitration Act is in accordance with the prevalentDlaw as settled by this Court and the various High Courts.

41. Mr. Khambata referred to the meaning of “entertain” in Black’sLaw Dictionary (Bryan A. Garner, 8th edition, 2004), which is to “bearin mind or”to give judicial consideration to”. Mr. Khambata alsocited the judgment of Division Bench of the Calcutta High Court inESri. Tufan Chatterjee v. Sri. Rangan Dhar[7], authored by one of us,(Indira Banerjee, J.). In Tufan Chatterjee (supra), the word “entertain”was interpreted to mean “considering an application on merits, even atthe final stage”. Mr. Khambata argued that the interpretation of theterm “entertain” by the Gujarat High Court in the judgment and orderFimpugned, is consistent with the interpretation of the expression in TufanChatterjee (supra).

42. Mr. Khambata argued that in Energo Engineering ProjectsLimited v. TRF Ltd[8], authored by one of us (Indira Banerjee, J.) theDivision Bench of the Delhi High Court observed that once an ArbitralGTribunal is constituted, an application for interim relief should ordinarilybe decided by the Arbitral Tribunal. Moreover, Court can only grantinterim relief under Section 9, if circumstances exist which might notrender the remedy under Section 17 of the Arbitration Act efficacious.6 (2004) 3 SCC 1557 2016 SCC Online Cal 483 (Paras 35, 43)H8 2016 SCC Online Del 6560 (Para 34)

43. In Energo Engineering Project Limited v. TRF Limited(supra), the Delhi High Court noted that the Tribunal was non-functionalbecause the challenge against the Appellant’s nominee arbitrator waspending and the Supreme Court had stayed the arbitration proceedingstill the challenge proceedings were decided. In the circumstances, theHigh Court held that the Court could pass orders under Section 9 as theremedy under Section 17 was inefficacious.

44. Mr. Khambata submitted that in Lakshmi RattanEngineering Works Ltd. v Asstt. Commissioner Sales Tax, Kanpurand Anr.[9], this Court cited with approval the judgment of the AllahabadHigh Court in Kundan Lal v. Jagan Nath Sharma[10], and held that‘entertain’ would mean adjudicate upon and consider for the purpose ofadjudication on merits. In support of the aforesaid proposition, Mr.Khambata also cited Hindustan Commercial Bank Ltd. v PunnuSahu[11], Martin & Harris Ltd. v VIth Additional District Judge andOthers[12].45. In conclusion Mr. Khambata submitted that the High Courthad erred in directing the District Court to pass orders in the petitionsunder Section 9, even though it had interpreted the word ‘entertain’ tomean “the whole gamut upto its final adjudication and passing of anorder on merits”. Mr. Khambata argued that, having observed that theCommercial Court had erred in interpreting ‘entertain’ narrowly andalso that there was no challenge to the efficacy of the arbitral proceedingsbefore the District Court as on the date of the impugned order, the HighCourt should not have directed the Commercial Court to pass orders.

46. Mr. Kapil Sibal appearing on behalf of the Respondentsubmitted that the question before this Court, of whether Section 9(3) ofthe Arbitration Act would be applicable in respect of the aforesaid twoapplications under Section 9 of the Arbitration Act, filed by the Appellantand the Respondent respectively, has to be answered in the negativesince the applications were finally heard on merits and reserved fororders on 7[th] June 2021, before the constitution of the Arbitral Tribunalon 9[th] July, 2021.

9 (1968) 1 SCR 505 (Para 9) : AIR 1968 SC 488

10 AIR 1962 All 547 (Para 7)

11 (1971) 3 SCC 124

12 (1998) 1 SCC 732 (Paras 8-10)

A47. Mr. Sibal argued that the application under Article 227 filed inthe Gujarat High Court was not maintainable for the following reasons:

(i)The Arbitration Act being self-contained Code providingthe right of appeal at various stages, Article 227 cannot beinvoked to circumvent the procedure under Arbitration Act.BPower under Article 227 can only be exercised where aparty is left either remediless or where clear bad faith isshown.

(ii)An application under Article 227 of the Constitution of Indialies where the lower Court has acted outside the bounds ofCits authority, without jurisdiction, in violation of principles ofnatural justice, or if the order suffers from patent perversity.

(iii)The application before the Gujarat High Court under Article227 was premature and speculative, since the issue ofwhether the Trial Court had acted outside the “bounds ofits authority” or “without jurisdiction” or whether the orderDsuffered from “patent perversity”, could only be determinedafter an order had been passed by the Trial Court in theSection 9 Applications.

48. Mr. Sibal argued that Section 9(1) of the Arbitration Actprovides that party will apply to the court before, during or after theEarbitral proceedings. The Courts therefore do not lose jurisdiction uponconstitution of the Arbitral Tribunal.

49. Mr. Sibal argued that Section 9(3) of the Arbitration Act wasneither non-obstante clause nor an ouster clause, that would renderthe courts coram non judice, immediately upon the constitution of theFArbitral Tribunal.

50. Mr. Sibal argued that subject to the checks and balancesprovided under the Arbitration Act itself, Court would continue to havepowers to grant interim relief under Section 9. In support of his argument,Mr. Sibal cited the judgment of Delhi High Court in Benara BearingsGand Pistons Limited v. Mahle Engine Components India PrivateLimited[13] and in Energo Engineering Projects Limited v. TRF Limited(supra).

51. Mr. Sibal argued that Section 9(3) of the Arbitration Actrestrains the court from “entertaining” an application under Section 9,

unless circumstances exist which may not render the remedy providedunder Section 17 efficacious. In this case, only the formality ofpronouncing the order in the Section 9 Applications remained. Since theapplication under Section 9 had been entertained, fully heard andarguments concluded, Section 9(3) of the Arbitration Act would not apply.

52. Mr. Sibal argued that an application is “entertained” when thecourt applies its mind to it. Entertain means “admit into consideration” or“admit in order to deal with”. In support of his submission Mr. Sibal citedLakshmi Rattan Engineering Works Ltd. (supra), Anil Kunj BihariSaraf v. Namboodas S/o Shankarlal and Ors.[14]and Kundanlal v.Jagan Nath Sharma (supra).

53. Mr. Kapil Sibal further argued that, whether matter hadalready been “admitted into consideration”, would depend on whetherthe Trial Court had admitted into consideration and applied its mind tothe Section 9 Applications, filed by the respective parties, and therefore,the Section 9 Applications had gone past the stage of “entertainment”,as contemplated under Section 9(3) of the Arbitration Act. Mr. Sibalargued that the High Court has erroneously held:

“The word ‘entertain’ occurring in sub-section (3) of section9 would not merely mean to admit matter for consideration,but it also entails the whole procedure till adjudication, i.e.,passing of final order.”

54. Mr. Sibal argued that the prayer in the application dated 16[th]July, 2021 filed by the Appellant could never have been granted. Mr.Sibal pointed out that the Appellant sought an order for referring alldisputes between the parties as mentioned in the two applications underSection 9 of the Arbitration Act to the Arbitral Tribunal for adjudication.However, the Arbitration Act did not confer power under the ArbitrationAct on the Court, to relegate or transfer pending application underSection 9(1) of the Arbitration Act to the Arbitral Tribunal, the momentan Arbitral Tribunal were constituted.

55. Mr. Sibal submitted that the Special Leave Petition filed in thisCourt was an abuse of process of Court and an attempt to stop thecompetent Court from passing an order in an application under Section 9of the Arbitration Act, which had been fully heard. He argued that if theinterpretation of the expression “entertain” as canvassed by the

AAppellant, were upheld, it would open floodgate, where litigants whowanted to deny urgent reliefs to another party, would protract litigationby taking procedural defences and avoid the legislated remedy underSection 9 of the Arbitration Act.

56. Mr. Sibal further submitted that lot of judicial time, cost andBresources of the parties had been spent in agitating the Section 9Applications. Both parties had approached the Commercial Courts andthe pleadings in the Section 9 Applications exceeded 2,200 pages. TheSection 9 Applications were listed before the Commercial Courts 36times and were finally argued extensively for 11 full days. The Section 9Applications were reserved for orders on 7[th] June, 2021, before theCArbitral Tribunal was constituted.

57. As rightly argued by Mr. Sibal unnecessary delay or expensefrustrates the very purpose of arbitration as held by this Court in Unionof India and Ors. v. Uttar Pradesh State Bridge CorporationLimited[15] cited by Mr. Sibal.D

58. Mr. Sibal submitted that since the filing of the Section 9Applications, the contractual dues of the Appellant to the Respondentfor the interim period aggregate to Rs.255 crores. The Respondent issuffering every day.

E59. Mr. Sibal pointed out that an appeal from an order passed bythe Arbitral Tribunal in an application under Section 17, lies before theSuperior Court. It cannot, therefore, be said that Section 17 proceedingflows any differently from proceeding in Court under Section 9 of theArbitration Act, or has any distinct hierarchy.

F60. Mr. Sibal categorically denied that the Respondent has delayedcommencement of arbitration. He submitted that the disputes raised inthe notice of arbitration dated 22[nd] November, 2020 given by the Appellantdid not correspond to the disputes raised by the Appellant in its Section 9Application in the Commercial Court. The question of arbitrability of thedisputes raised in the notice is still to be determined.

61. Mr. Sibal submitted that the Respondent was in contact withthe Appellant to agree on the name of the Arbitrator. Eventually theparties consented to have three member Arbitral Tribunal. On 25[th]August, 2021, Justice G.T. Nanavati (Retired) resigned on the ground of

health, after which there is no functional Arbitral Tribunal. Even afterthe Arbitrator appointed by the Respondent resigned, the Respondentpromptly commenced the process for appointment of substitute arbitrator,and addressed letter dated 27.08.2021 to the Appellant.

62. Distinguishing the judgments cited by Mr. Khambata, Mr. Sibalemphatically argued that the word “entertain” in Section 9(3) of theArbitration Act would mean the first occasion when the Court takes upthe application for consideration, and would have no application to acase where the application is fully heard and orders are reserved.

63. Section 9(1) of the Arbitration Act, as amended enables aparty to an arbitration agreement to apply to Court for interim measuresof protection before or during the arbitral proceedings, or at any timeafter an award is made and published, but before the Award is enforcedin accordance with Section 36 of the Arbitration Act.

64. Civil Court of competent jurisdiction thus has the jurisdictionto admit, entertain and decide an application under Section 9(1) of theArbitration Act, any time before the final arbitral award is enforced inaccordance with Section 36 of the Arbitration Act.

65. However, sub-Section (3) of Section 9 of the Arbitration Act,on which much emphasis has been placed both by Mr. Khambata andMr. Kapil Sibal provides that once an Arbitral Tribunal has beenconstituted, 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.

66. Sub-Section (3) of Section 9 has two limbs. The first limbprohibits an application under sub-Section (1) from being entertainedonce an Arbitral Tribunal has been constituted. The second limb carvesout an exception to that prohibition, if the Court finds that circumstancesexist, which may not render the remedy provided under Section 17efficacious.

67. To discourage the filing of applications for interim measuresin Courts under Section 9(1) of the Arbitration Act, Section 17 has alsobeen amended to clothe the Arbitral Tribunal with the same powers togrant interim measures, as the Court under Section 9(1). The 2015Amendment also introduces deeming fiction, whereby an order passedby the Arbitral Tribunal under Section 17 is deemed to be an order ofCourt for all purposes and is enforceable as an order of Court.

A68. With the law as it stands today, the Arbitral Tribunal has thesame power to grant interim relief as the Court and the remedy underSection 17 is as efficacious as the remedy under Section 9(1). There is,therefore, no reason why the Court should continue to take up applicationsfor interim relief, once the Arbitral Tribunal is constituted and is in seisinofthe dispute between the parties, unless there is some impediment inBapproaching the Arbitral Tribunal, or the interim relief sought cannotexpeditiously be obtained from the Arbitral Tribunal.

69. There can be no dispute with the proposition as held in StateBank of India and Ors. v. S.N. Goyal(supra), that when judgmentis reserved, mere dictation does not amount to pronouncement. When aCjudgment is dictated in open Court, that amounts to pronouncement. Ajudgment not dictated in open Court, has to be pronounced in Open Court.Even after pronouncement, the Judge can make corrections before signingand dating the judgment. Once judge pronounces, signs and dates thejudgment, he becomes functus officio. However, the law enunciatedDby this Court in State Bank of India and Ors. v. S. N. Goyal (supra) isnot attracted in this case.The judgment does not interpret or explain theexpression “entertain”.

70. In Deep Chand & Ors v. Land Acquisition Officer (supra),cited by Mr. Khambata, the question was, whether objections underESection 49 of the Land Acquisition Act 1894 to acquisition, on the premisethat the property proposed for acquisition was only part of the house,manufactory or building amounts to an adjudication.

71. This Court referred to Black’s Law Dictionary (6[th] edition)where “adjudication” has been defined as hereunder:-F

“Adjudication.- The legal process of resolving dispute. Theformal giving or pronouncing judgment or decree in courtproceeding; also the judgment or decision given. The entryof decree by court in respect to the parties in case. Itimplies hearing by court, after notice, of legal evidenceGon the factual issue(s) involved.”

72. This Court found that reading of Section 49 of the LandAcquisition Act showed that right had been given to the owner of theland to object to acquisition of part of any house, manufactory or otherbuilding. Decision on the objection under Section 49(1) to acquisition ofonly part of house, manufactory or building would not amount to anH

adjudication on the question of whether the land proposed to be takenwas reasonably required for the full and unimpaired use of the house,manufactory or building. The judgment is not of relevance to the issuesinvolved in this appeal.

73. There can be no dispute with the proposition in A.V.Venkateswaran. Collector of Customs, Bombay v Ramchand SobhrajWadhwani and Anr. (supra) that party cannot allege inefficacy of aremedy when that party disables itself from availing the remedy.

74. The judgment in Manbhupinder Singh Atwal v. NeerajKumarpal Shah (supra) was rendered in facts and circumstances ofthat case where proceedings had been pending before the ArbitralTribunal under Section 17, but the party against whom relief had beensought protracted the proceedings, by indulging in making bare, baselessallegations and insinuations against the Arbitrators of bias and improprietyand thereafter made allegations against the Arbitrators of alleged inaction,to make out case of inefficacy of the remedy under Section 17. Thejudgment has no manner of application in this case.

75. In this case there are no materials on record to show thatthere were any lapses or laches on the part of the Respondent, whichdelayed the constitution of an Arbitral Tribunal. The allegation that theRespondent had disabled itself from availing the remedy under Section17, is unsubstantiated. Moreover, mere delay in agreeing to an Arbitratordoes not dis-entitle party from relief under Section 9 of the ArbitrationAct. Section 11 of the Arbitration Act itself provides remedy in case ofdelay of any party to the arbitration agreement to appoint an Arbitrator.

76. Mr. Khambata rightly submitted that party invoking Section9 of the Act must be ready and willing to go to arbitration. The lawenunciated in Firm Ashok Traders and Anr. v. Gurumukh Das Salujaand Ors. (supra) is well settled. In this case, both the Appellant and theRespondent have invoked the jurisdiction of the Commercial Court underSection 9 of the Arbitration Act.

77. As argued by Mr. Sibal, in Tufan Chatterjee (supra) theapplicant seeking interim relief under Section 9 of the Arbitration Acthad referred to Section 26 of the Amendment Act (Act 3 of 2016) andcontended that the 2015 Amendment would not apply to proceedingspending when the 2015 Amendment came into force.

A78. It was also argued that arbitral proceedings having commencedbefore the 2015 Amendment came into effect and/or in other words,before 23[rd] October 2015, the 2015 Amendments would not apply to thearbitral proceedings, which would be governed by the law as it stoodbefore the amendment. The Arbitral Tribunal would, therefore, not beable to grant relief under Section 17 as amended by the 2015BAmendments. As argued by Mr. Kapil Sibal, the applicability of the 2015Amendment to pending proceedings under Section 9 of the ArbitrationAct in Court, as also the power of the Arbitral Tribunal to grant reliefunder Section 17 in pending Arbitration proceedings, were in issue inTufan Chatterjee (supra).C

79. The High Court distinguished Court proceedings from arbitralproceedings and held that the 2015 Amendment would apply to Courtproceedings. The High Court also negated the contention of the applicantunder Section 9 that the Arbitral Tribunal was not competent to grantrelief under Section 17 as Arbitral proceedings had commenced beforeDthe 2015 Amendment.

80. The judgment in Tufan Chatterjee (supra) was rendered inan appeal against an order of the District Court dismissing the applicationof the appellant under Section 9 of the Arbitration Act, with theobservation that since arbitral proceedings had been initiated, the CourtEwas no longer authorized to pass orders on an application under Section9(1) of the 1996 Act. The High Court interpreted the expression entertainand held:-

“35. However, as rightly argued by Mr. Bhattacharya, thereis difference between the expressions ‘institute’ and theFexpression ‘entertain’. The expression ‘institute’ is notsynonymous with the expression ‘entertain’. In Martin &Harris Ltd. v. 6th Additional District Judge reported in (1998)1 SCC 732 cited by Mr. Bhattacharya, the Supreme Courtinterpreted the expression ‘entertain’ in Clause 21(1)(a) ofthe U.P. Urban Buildings (Regulation of Letting, Rent andGEviction) Act, 1972, to mean entertaining the ground forconsideration for the purpose of adjudication on merits andnot any stage prior thereto. Unlike the Limitation Act, whichbars the institution of suit after expiry of the period oflimitation, Section 26 prohibits the Court from entertainingHan application under Section 9, except in circumstances

specified in Section 9(3), which necessarily meansconsidering application on merits, even at the final stage.

36. After amendment by the Amendment Act of 2015, the scopeof Section 17 has considerably been widened and the ArbitralTribunal has expressly been conferred the same power, as theCourt under Section 9. An order of the Tribunal under Section17 is also enforceable in the same manner as an order ofCourt under Section 9, under the provisions of the CivilProcedure Code.”

81. The High Court dismissed the appeal from the order of theDistrict Court dismissing the application under Section 9 on the groundthat an application for interim relief would have to be filed before theArbitral Tribunal.

82. In Energo Engineering Projects Ltd. v. TRF Limited (supra)authored by one of us (Indira Banerjee, J.), Division Bench of DelhiHigh Court held:-

“27. harmonious reading of Section 9(1) with Section 9(3)of the 1996 Act, as amended by the 2015 Amendment Act,makes it amply clear that, even after the amendment of the1996 Act by incorporation of Section 9(3), the Court is notdenuded of power to grant interim relief, once an ArbitralTribunal is constituted.

28. When there is an application for interim relief underSection 9, the Court is required to examine if the applicanthas an efficacious remedy under Section 17 of gettingimmediate interim relief from the Arbitral Tribunal. Once thecourt finds that circumstances exist, which may not renderthe remedy provided under Section 17 of the 1996 Actefficacious, the Court has the discretion to entertain anapplication for interim relief. Even if an Arbitral Tribunal isnon functional for brief period of time, an application forurgent interim relief has to be entertained by the Court underSection 9 of the 1996 Act.

29. It is well settled proposition that if the facts andcircumstances of case warrant exercise of discretion to actin particular manner, discretion should be so exercised. Anapplication for interim relief under Section 9 of the 1996 Act,

must be entertained and examined on merits, once the Courtfinds that circumstances exist, which may not render theremedy provided under Section 17 of the said Act efficacious.

30. In our view, the Learned Single Bench patently erred inholding “there is no impediment or situation where the remedyBunder Section 17 of the Act is not efficacious”. The LearnedSingle Bench failed to appreciate that the pendency of aSpecial Leave Petition in which the constitution of the ArbitralTribunal was under challenge, was in itself, circumstancewhich rendered the remedy of the parties under Section 17uncertain and not efficacious.

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34. An application for interim relief should ordinarily bedecided by the Arbitral Tribunal, once an arbitral tribunal isconstituted. However, if circumstances exist which may notrender the remedy under Section 17 of the 1996 actDefficacious, the Court has to consider the prayer for interimrelief on merits, and pass such order, as the Court may deemappropriate.

35. The Learned Single Bench has not at all consideredwhether any interim protection was at all necessary in thisEcase. The bank guarantee was apparently unconditional. Ineffect, the appellants have been restrained from invoking anunconditional guarantee. The application cannot be heardout until the special leave petition is disposed of.”

83. Even after enforcement of the 2015 Amendment Act, anapplication for interim relief may be filed in Court under Section 9 of theF1996 Act, before the commencement of arbitration proceedings, duringarbitration proceedings or at any time after an award is made, but beforesuch award is enforced in accordance with Section 36 of the 1996 Act.The Court has to examine whether the remedy available to the Applicantunder Section 17 is efficacious. In Energo Engineering Projects Ltd.Gv. TRF Limited (supra), the remedy of interim relief under Section 17was found to be inefficacious in view of an interim order passed by thisCourt in Special Leave Petition.

84. In Banara Bearings & Pistons Ltd. (supra) cited by Mr.Sibal Division Bench of the Delhi High Court, speaking through BadarDurrez Ahmed J. Held:H

“24...... We are of the view that Section 9(3) does not operateas an ouster clause insofar as the courts’ powers areconcerned. It is well-known principle that whenever theLegislature intents an ouster, it makes it clear. We may alsonote that if the argument of the appellant were to be acceptedthat the moment an Arbitral Tribunal is constituted, the Courtwhich is seized of Section 9 application, becomes coramnon judice, would create serious vacuum as there is noprovision for dealing with pending matters. All the powers ofthe Court to grant interim measures before, during the arbitralproceedings or at any time after the making of the arbitralaward but prior to its enforcement in accordance with Section36 are intact (and, have not been altered by the amendment)as contained in Section 9(1) of the said Act. Furthermore, itis not as if upon the very fact that an Arbitral Tribunal hadbeen constituted, the Court cannot deal with an applicationunder sub-section (1) of Section 9 of the said Act. Section9(3) itself provides that the Court can entertain an applicationunder Section 9(1) if it finds that circumstances exist whichmay not render the remedy provided under Section 17efficacious.

25. We may also note that there is no provision under the saidAct which, even as transitory measure, requires the Courtto relegate or transfer pending Section 9(1) application tothe Arbitral Tribunal, the moment an Arbitral Tribunal hasbeen constituted.”

85. In M. Ashraf v. Kasim V.K.[16 ]a Division Bench of the KeralaHigh Court speaking through R. Narayana Pisharadi J. held:-

“8. ….Even after the amendment of the Act by incorporation ofSection 9(3), the Court is not denuded of the power to grant interimrelief under Section 9(1) of the Act. What is provided under Section9(3) of the Act is that, after the constitution of the Arbitral Tribunal,the Court shall not entertain an application under Section 9(1) ofthe Act unless the Court finds that circumstances exist whichmay not render the remedy provided under Section 17 efficacious.Normally, the Court shall not entertain an application under Section9(1) of the Act after constitution of the Arbitral Tribunal.But, the

ABC

1048SUPREME COURT REPORTS

ACourt has the power to entertain an application under Section9(1) of the Act even after the constitution of the ArbitralTribunal unless the Court finds that in the circumstances ofthe case the party has got efficacious remedy under Section17 of the Act. An application for interim relief under Section9(1) of the Act shall be entertained and examined on merits,Bonce the Court finds that circumstances exist, which may notrender the remedy provided under Section 17 of the Actefficacious.”

86. In Srei Equipment Finance Limited (Sefl) v. Ray InfraServices Private Limited & Anr.[17]authored by one of us (Indira BanerjeeCJ.), the Division Bench of Calcutta High Court held:

“5. Under Section 9 of the Arbitration and Conciliation Act,1996 - party might before or during arbitral proceedingsor at any time after the making of the arbitral award but beforeit is enforced in accordance with Section 36, apply to CourtDunder Section 9 for interim relief.

6. In our view, the learned Single Bench erred in holding thatthere was no scope for further order in the pending applicationunder Section 9. The learned Single Bench has not consideredthe question of depreciation of the value of the assets due toEconstant use. Prima facie, the respondent has defaulted ininstalments. In terms of the agreement, the appellant financieris entitled to take possession of the hypothecated assets. Afterthe enactment of the Arbitration and Conciliation (Amendment)Act of 2015 with effect from 23rd October, 2015, the Court isFnot to entertain an application under Section 9(1) of theArbitration and Conciliation Act, 1996, once the ArbitralTribunal has been constituted, unless the Court finds thatcircumstances exist, which may not render the remedy providedunder Section 17 efficacious.

G7.The hearing before the Arbitral Tribunal may have beenconcluded. Proceedings are, however, still pending before theArbitral Tribunal. It may have been possible to make anapplication before the Arbitral Tribunal. However consideringthe lethargic manner in which the learned Arbitrator has been

H17 (2016) SCC OnLine Cal 6765

proceeding the remedy of the Appellant under Section 17 ofthe Arbitration and Conciliation Act, 1996 does not appearto be efficacious. The amendments being recent, complicatedissues of law may also arise with regard to the applicabilityof the amended provisions to pending arbitral proceedings.”

87. In Avantha Holdings Limited v. Vistra ITCL IndiaLimited[18]a Single Bench of the Delhi High Court (C. Hari Shankar J.)held:-

“45.The Court, while exercising its power under Section 9 ofthe 1996 Act, has to be acutely conscious of the power, vestedin the arbitrator/arbitral tribunal, by Section 17 of the sameAct. reading of Section 9, and Section 17, of the 1996 Act,reveals that they are identically worded. The “interimmeasures”, which can be ordered by the arbitral tribunal,under Section 17, are the very same as those which can beordered by the Court under Section 9. It is for this reasonthat sub-section (3) of Section 9 proscribes grant of interimmeasures, by the Court, consequent on constitution of thearbitral tribunal, save and except where the Court finds thatcircumstances exist, which may not render the remedy, underSection 17, to be efficacious. The Court, while exercisingjurisdiction under Section 9, even at pre-arbitration stage,cannot, therefore, usurp the jurisdiction which would,otherwise, be vested in the arbitrator, or the arbitral tribunal,yet to be constituted.”

88. We fully approve the view taken by the Single Bench of theDelhi High Court in Avantha Holdings Limited (supra) except for theobservation that the “Court, while exercising jurisdiction underSection 9, even at pre-arbitration stage, cannot usurp thejurisdiction which would, otherwise, be vested in the arbitrator, orthe Arbitral Tribunal, yet to be constituted”. The bar of Section 9(3)operates after an Arbitral Tribunal is constituted. There can thereforebe no question of usurpation of jurisdiction of the Arbitral Tribunal underSection 17 before the Arbitral Tribunal is constituted. The Court is obligedto exercise power under Section 9 of the Arbitration Act, if the ArbitralTribunal is yet to be constituted. Whether the Court grants interim reliefor not is different issue, for that would depend on the facts of the case18 (2020) SCC OnLine Del 1717

A- whether the Applicant has made out good prima facie case, whetherthe balance of convenience is in favour of relief being granting to theapplicant, whether the applicant would suffer irreparable injury by refusalof interim relief etc.

89. In Lakshmi Rattan Engineering Works Ltd. (supra) theBCourt held:-

“9. The word “entertain” is explained by Divisional Benchof the Allahabad High Court as denoting the point of time atwhich an application to set aside the sale is heard by thecourt. The expression “entertain”, it is stated, does not meanthe same thing as the filing of the application or admission ofthe application by the court. similar view was again takenin Dhoom Chand Jain v. Chamanlal Gupta [AIR 1962 All 543]in which the learned Chief Justice Desai and Mr JusticeDwivedi gave the same meaning to the expression “entertain”.It is observed by Dwivedi, J., that the word “entertain” in itsapplication bears the meaning “admitting to consideration”,and therefore when the court cannot refuse to take anapplication which is backed by deposit or security, it cannotrefuse judicially to consider it. In single bench decision ofthe same court reported in Bawan Ram v. Kunj Beharilal [AIR1961 All 42] one of us (Bhargava, J.) had to consider thesame rule. There the deposit had not been made within theperiod of limitation and the question had arisen whether thecourt could entertain the application or not. It was decidedthat the application could not be entertained because proviso(b) debarred the court from entertaining an objection unlessthe requirement of depositing the amount or furnishing securitywas complied with within the time prescribed. In that case theword “entertain” is not interpreted but it is held that the Courtcannot proceed to consider the application in the absence ofdeposit made within the time allowed by law. This case turnedon the fact that the deposit was made out of time. In yet anothercase of the Allahabad High Court reported in Haji RahimBux & Sons v. Firm Samiullah & Sons [AIR 1963 All 326] aDivision Bench consisting of Chief Justice Desai and MrJustice S.D. Singh interpreted the words of Order 21, Rule90, by saying that the word “entertain” meant not “receive”

or “accept” but “proceed to consider on merits” or“adjudicate upon”.

9. In our opinion these cases have taken correct view ofthe word “entertain” which according to dictionary also means“admit to consideration”. It would therefore appear that thedirection to the court in the proviso to Section 9 is that thecourt shall not proceed to admit to consideration an appealwhich is not accompanied by satisfactory proof of the paymentof the admitted tax. ...”

90. In Kundan Lal v Jagan Nath Sharma and Ors. (supra), aDivision Bench of Allahabad High Court held that the expression“entertain” did not mean the same thing as the filing of the application oradmission of the application by the Court. The dictionary meaning of theword “enterain” was to deal with or to take matter into consideration.The High Court further held:-

“7. The use of the word ‘entertain’ in the proviso to R. 90 ofOr. XXI denotes point of time at which an application to setaside the sale is heard by the court. This appears to be clearfrom the fact that in the proviso it is stated that no applicationto set aside sale shall be entertained ‘upon any groundwhich could have been taken by the applicant on or beforethe date on which the sale proclamation was drawn up.’ Surely,the question as to the consideration of the grounds upon whichthe application is based can only arise when it is beingconsidered by the court on the merits, that is, when the courtis called upon to apply its mind to the grounds urged in theapplication. In our view the stage at which the applicant isrequired to make the deposit or give the security within themening of Cl. (b) of the proviso would come when the hearingof the application is due to commence.”91. In Hindustan Commercial Bank Ltd. v Punnu Sahu (supra),the Court held that the expression “entertain” in the proviso to clause (b)Order 21 Rule 90 (as amended by Allahabad High Court), means to“adjudicate upon” or “proceed to consider on merits” and not “initiationof proceeding.”

92. In Martin & Haris Limited (supra), the Court was consideringproviso to Section 21 of the U.P. Urban Buildings (Regulation of Letting,

ARent and Eviction) Act, 1972 which provided that where the buildingwas in the occupation of tenant since before its purchase by the landlord,such purchase being made after the commencement of this Act, noapplication shall be entertained on the grounds mentioned in Clause (a),unless period of 3 years has elapsed since the date of such purchaseand the landlord has given notice in that behalf to the tenant, not lessBthan 6 months before such application, and such notice may be givenbefore the expiration of the aforesaid period of 3 years. The Court held:-

“Thus the word “entertain” mentioned in the first proviso toSection 21(1) in connection with grounds mentioned in clause(a) would necessarily mean entertaining the ground forCconsideration for the purpose of adjudication on merits andnot at any stage prior thereto as tried to be submitted bylearned Senior Counsel, Shri Rao, for the appellant.”

93. It is now well settled that the expression “entertain” means toconsider by application of mind to the issues raised. The Court entertainsDa case when it takes matter up for consideration. The process ofconsideration could continue till the pronouncement of judgment as arguedby Khambata. Once an Arbitral Tribunal is constituted the Court cannottake up an application under Section 9 for consideration, unless the remedyunder Section 17 is inefficacious. However, once an application isEentertained in the sense it is taken up for consideration, and the Courthas applied its mind to the Court can certainly proceed to adjudicate theapplication.

94. Mr. Sibal rightly submitted that the intent behind Section 9(3)was not to turn back the clock and require matter already reserved forForders to be considered in entirety by the Arbitral Tribunal under Section17 of the Arbitration Act.

95. On combined reading of Section 9 with Section 17 of theArbitration Act, once an Arbitral Tribunal is constituted, the Court wouldnot entertain and/or in other words take up for consideration and applyGits mind to an application for interim measure, unless the remedy underSection 17 is inefficacious, even though the application may have beenfiled before the constitution of the Arbitral Tribunal. The bar of Section9(3) would not operate, once an application has been entertained andtaken up for consideration, as in the instant case, where hearing hasbeen concluded and judgment has been reserved. Mr. Khambata mayHbe right, that the process of consideration continues till the pronouncement

of judgment. However, that would make no difference. The question iswhether the process of consideration has commenced, and/or whetherthe Court has applied its mind to some extent before the constitution ofthe Arbitral Tribunal. If so, the application can be said to have beenentertained before constitution of the Arbitral Tribunal.

96. Even after an Arbitral Tribunal is constituted, there may bemyriads of reasons why the Arbitral Tribunal may not be an efficaciousalternative to Section 9(1). This could even be by reason of temporaryunavailability of any one of the Arbitrators of an Arbitral Tribunal byreason of illness, travel etc.

97. Applications for interim relief are inherently applications whichare required to be disposed of urgently. Interim relief is granted in aid offinal relief. The object is to ensure protection of the property being thesubject matter of Arbitration and/or otherwise ensure that the arbitrationproceedings do not become infructuous and the Arbitral Award does notbecome an award on paper, of no real value.

98. The principles for grant of interim relief are (i) good primafacie case, (ii) balance of convenience in favour of grant of interimrelief and (iii) irreparable injury or loss to the applicant for interim relief.Unless applications for interim measures are decided expeditiously,irreparable injury or prejudice may be caused to the party seeking interimrelief.

99. It could, therefore, never have been the legislative intent thateven after an application under Section 9 is finally heard relief wouldhave to be declined and the parties be remitted to their remedy underSection 17.

100. When an application has already been taken up forconsideration and is in the process of consideration or has already beenconsidered, the question of examining whether remedy under Section 17is efficacious or not would not arise. The requirement to conduct theexercise arises only when the application is being entertained and/ortaken up for consideration. As observed above, there could be numerousreasons which render the remedy under Section 17 inefficacious. Tocite an example, the different Arbitrators constituting an Arbitral Tribunalcould be located at far away places and not in position to assembleimmediately. In such case an application for urgent interim relief mayhave to be entertained by the Court under Section 9(1).

A101. As pointed out by Mr. Khambata, the 246[th] Report of theLaw Commission, submitted in August 2014 states that Section 9(3)seeks to reduce the role of the Court in relation to grant of interimmeasure, once the Arbitral Tribunal has been constituted. This is also inkeeping with the UNCITRAL Model Law which discourages Courtproceedings in relation to disputes arising out of an agreement whichBcontains clause for arbitration.

102. As held by this Court in Amazon.com NV InvestmentHoldings LLC v. Future Retail (supra), the object of introducing Section9(3) was to avoid Courts being flooded with applications under Section 9of the Arbitration Act.

103. Negative Kompetenz-Kompetenz is sequel to the rule ofpriority in favour of the Arbitrators, that is, the requirement for parties toan arbitration agreement to honour their undertaking to submit any disputecovered by such an agreement to arbitration. This entails the consequencethat the Courts are prohibited from hearing such disputes.104. In Chloro Controls India Private Limited v. Severn TrentD

104. In Chloro Controls India Private Limited v. Severn TrentDWater Purification Inc.[19], this Court observed that majority of thecountries admit to the positive effect of kompetenz – kompetenz principle,which requires that the Arbitral Tribunal must exercise jurisdiction overthe dispute under the arbitration agreement. Thus, challenge to theexistence or validity of the arbitration agreement would not prevent theEArbitral Tribunal from proceeding with the hearing and ruling upon itsjurisdiction. If it retains jurisdiction, it may make an award on the substanceof the dispute, without waiting for the outcome of any court action aimedat deciding the issue of jurisdiction.

105. As held by this Court in Vidya Drolia and Ors. v. DurgaFTrading Corporation[20] :-

“129. Principles of competence-competence have positive andnegative connotations. As positive implication, the ArbitralTribunals are declared competent and authorised by law torule as to their jurisdiction and decide non-arbitrabilityquestions. In case of expressed negative effect, the statuteGwould govern and should be followed. Implied negative effectcurtails and constrains interference by the court at the referralstage by necessary implication in order to allow the ArbitralTribunal to rule as to their jurisdiction and decide non-

19 (2013) 1 SCC 641H20 (2021) 2 SCC 1 at page 98

arbitrability questions. As per the negative effect, courts atthe referral stage are not to decide on merits, except whenpermitted by the legislation either expressly or by necessaryimplication, such questions of non-arbitrability. Suchprioritisation of the Arbitral Tribunal over the courts can bepartial and limited when the legislation provides for some orrestricted scrutiny at the “first look” referral stage. We would,therefore, examine the principles of competence-competencewith reference to the legislation, that is, the Arbitration Act.”

[Emphasis supplied]

106. As held in Vidya Drolia (supra), the Courts do not decide onmerits except when permitted by legislation either expressly or bynecessary implication. Prioritisation of the Arbitral Tribunal over the theCourts can be partial and limited when the legislation so provides. VidyaDrolia (supra) was referred to larger Bench, but on different issue.

107. It is reiterated that Section 9(1) enables the parties to anarbitration agreement to approach the appropriate Court for interimmeasures before the commencement of arbitral proceedings, duringarbitral proceedings or at any time after the making of an arbitral awardbut before it is enforced and in accordance with Section 36 of theArbitration Act. The bar of Section 9(3) operates where the applicationunder Section 9(1) had not been entertained till the constitution of theArbitral Tribunal. Ofcourse it hardly need be mentioned that even if anapplication under Section 9 had been entertained before the constitutionof the Tribunal, the Court always has the discretion to direct the partiesto approach the Arbitral Tribunal, if necessary by passing limited orderof interim protection, particularly when there has been long time gapbetween hearings and the application has for all practical purposes, tobe heard afresh, or the hearing has just commenced and is likely toconsume lot of time. In this case, the High Court has rightly directedthe Commercial Court to proceed to complete the adjudication.

108. For the reasons discussed above, the appeal is allowed onlyto the extent of clarifying that it shall not be necessary for the CommercialCourt to consider the efficacy of relief under Section 17, since theapplication under Section 9 has already been entertained and consideredby the Commercial Court. The judgment and order under appeal doesnot, otherwise, call for interference.