Case Note & Summary
The appellant, Kalpataru Limited, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the judgment of a learned Single Judge dated 16 December 2021, which dismissed its petition under Section 9 of the Act. The appellant had sought interim relief to restrain the respondent, Middle Class Friends Co-operative Housing Society Limited, from awarding the redevelopment contract of its building to any third party pending arbitration. The dispute arose from a tender process initiated by the respondent in February 2019 for redevelopment of its building. The appellant submitted a bid on 10 April 2019 and later submitted a revised offer on 23 May 2019. The respondent allegedly accepted the appellant's offer and issued a letter of intent, but subsequently sought to cancel the tender and award the contract to another developer. The appellant invoked the arbitration clause and filed a Section 9 petition for interim relief. The learned Single Judge dismissed the petition, holding that the appellant had not made out a prima facie case. On appeal, the Division Bench of the Bombay High Court considered the submissions of both sides. The appellant argued that there was a valid arbitration agreement and that the subject matter of the dispute would be frustrated if interim relief was not granted. The respondent contended that the appellant had not fulfilled the conditions of the tender and that no concluded contract existed. The court held that the appellant had made out a prima facie case for grant of interim relief, as there was a valid arbitration agreement and the balance of convenience was in favor of the appellant. The court also held that the learned Single Judge had erred in dismissing the petition without considering the relevant factors. The court allowed the appeal, set aside the impugned judgment, and granted interim relief in favor of the appellant, restraining the respondent from awarding the redevelopment contract to any third party until the disposal of the arbitration proceedings.
Headnote
A) Arbitration Law - Interim Measures under Section 9 - Prima Facie Case - The court considered whether the appellant had made out a prima facie case for grant of interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, pending arbitration. The court held that the appellant had a strong prima facie case as there was a valid arbitration agreement and the subject matter of the dispute (redevelopment rights) was at risk of being frustrated if interim relief was not granted. (Paras 1-10) B) Arbitration Law - Appellate Jurisdiction under Section 37 - Scope of Interference - The court examined the scope of an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, against an order dismissing a Section 9 petition. The court held that the appellate court can interfere if the trial court's exercise of discretion is perverse, arbitrary, or based on irrelevant considerations. (Paras 11-15) C) Arbitration Law - Balance of Convenience and Irreparable Injury - The court assessed the balance of convenience and irreparable injury. It held that the balance of convenience was in favor of the appellant as the respondent had not commenced any alternative redevelopment and the appellant would suffer irreparable injury if the redevelopment rights were awarded to a third party during the pendency of arbitration. (Paras 16-20)
Issue of Consideration
Whether the learned Single Judge erred in dismissing the appellant's petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief to protect the subject matter of the arbitration, and whether the appellant made out a prima facie case for grant of such relief.
Final Decision
The appeal is allowed. The impugned judgment dated 16 December 2021 is set aside. The respondent is restrained from awarding the redevelopment contract to any third party until the disposal of the arbitration proceedings.
Law Points
- Section 37 of the Arbitration and Conciliation Act
- 1996
- Section 9 of the Arbitration and Conciliation Act
- Prima facie case for interim relief
- Balance of convenience
- Irreparable injury
- Scope of appellate court under Section 37
