Case Note & Summary
The petitioners, a partnership firm and its partner engaged in architectural services, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim reliefs pending arbitration. The petitioners were appointed by respondent nos. 1 and 2, owners of an old building in Mahim, Mumbai, to provide architectural services for redevelopment. The respondents terminated the agreement on 15th September 2021, alleging delays and non-performance. The petitioners claimed that the termination was wrongful and that they were entitled to fees of Rs. 3,39,76,770/- as per the letters of appointment. They sought directions for payment of this amount, or alternatively, deposit of security, stay of the termination letter, and an injunction restraining the respondents from proceeding with redevelopment or appointing new architects. The court examined the scope of Section 9 and held that it is not a substitute for a final award. The court found that the petitioners failed to establish a prima facie case that the fees were admitted or that the termination was invalid. The balance of convenience was against granting the reliefs, as the respondents had lost confidence and the project was stalled. The court also noted that the petitioners had an alternative remedy by way of arbitration. The petition was dismissed, but the court clarified that the dismissal would not prejudice the petitioners' rights in arbitration.
Headnote
A) Arbitration - Interim Measures under Section 9 - Payment of Fees - The court held that Section 9 of the Arbitration and Conciliation Act, 1996 does not permit a direction for payment of disputed fees without a final adjudication, as it would amount to a decree without trial. The petitioners failed to establish a prima facie case that the fees were admitted or that the termination was wrongful. (Paras 1-35) B) Arbitration - Interim Measures - Injunction against Termination - The court held that an injunction against termination of a contract for services is not ordinarily granted, as it would compel specific performance of a personal service contract. The balance of convenience was against granting such relief, as the respondents had lost confidence in the petitioners. (Paras 20-35) C) Arbitration - Interim Measures - Security for Claim - The court held that while Section 9 can be used to secure the amount in dispute, the petitioners failed to demonstrate a strong prima facie case or that the respondents were likely to dissipate assets. The claim for fees was disputed and not admitted. (Paras 25-35)
Issue of Consideration
Whether the petitioners are entitled to interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, including payment of alleged admitted fees, deposit of security, stay of termination, and injunction against redevelopment pending arbitration.
Final Decision
The petition is dismissed. No order as to costs. The dismissal does not prejudice the petitioners' rights to pursue their claims in arbitration.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- prima facie case
- balance of convenience
- irreparable loss
- security for claim
- injunction against termination
- payment of fees
