Case Note & Summary
The judgment arises from a commercial arbitration appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court. The appellant, Godrej Properties Ltd., challenged an ex-parte ad-interim order dated 8 October 2021 passed by the sole arbitrator on a Section 17 application filed by the respondent, Goldbricks Infrastructure Pvt. Ltd. The arbitrator had been appointed by consent of the parties by an order of the High Court dated 22 January 2021 in Commercial Arbitration Application (L) No.6975 of 2020. Both parties had filed Section 17 applications seeking interim measures, which were heard and reserved for orders on 8 and 12 September 2021. The dispute concerned a project involving Residential Zone-II, unsold flats/inventories, DM Fees, Facilities Agreement, Villa DMA, and a Power of Attorney dated 5 October 2012. On 7 October 2021, the respondent's advocates emailed a second Section 17 application to the appellant, requesting the tribunal to fix an early hearing date. The application did not seek ex-parte relief. Despite this, the next day, 8 October 2021, the sole arbitrator suo moto considered the application without hearing either party and granted ex-parte ad-interim reliefs in terms of prayers (a) to (d), including restraining alienation of unsold flats, prohibiting deductions, and directing disclosures. The tribunal directed the appellant to file a reply within 10 days and fixed a hearing for 20 October 2021, noting that the earlier Section 17 applications were under consideration and that the ex-parte order was necessary to maintain status quo. The appellant challenged the order on several legal grounds. First, it argued that the tribunal has no power under Section 17 to pass an ex-parte order without notice, as Section 18 requires equal treatment of parties and Section 24(2) mandates sufficient notice of hearings. The appellant contended that Indian law deliberately did not adopt the UNCITRAL Model Law Article 17B, which allows preliminary orders without notice, as evident from the 2015 and 2019 amendments to the Act. Second, it submitted that the respondent's application itself did not pray for ex-parte ad-interim relief, and the email only requested an early hearing. Third, it argued that even if ex-parte relief were available, the mandatory requirements of Order 39 Rule 3 of the Code of Civil Procedure, 1908 were not satisfied; reliance was placed on Shiv Kumar Chadha v. Municipal Corporation of Delhi. Fourth, it referred to Vendhar Movies v. S. Mukundchand Bothra regarding the approach to ex-parte orders. The respondent supported the impugned order, arguing that the application was necessary to prevent frustration of orders likely to be passed on the pending Section 17 applications, and that the requirements of Order 39 Rule 3 were met by paragraphs 49 and 52 alleging that the award would become a paper award and multiplicity would ensue. The respondent contended that the arbitrator had recorded a clear reason for maintaining status quo and that parties would be heard on the adjourned date. The provided judgment text ends after recording the counsels' submissions and the court's statement that it has heard learned counsel. It does not include the court's analysis, findings, or final operative order. Therefore, the final decision on the appeal is not available from the given text. The legal issues raised concerned the power of an arbitral tribunal to grant ex-parte ad-interim relief under Section 17, the applicability of natural justice principles under Sections 18 and 24(2), and the relevance of Order 39 Rule 3 CPC. The case underscores the tension between effective interim protection and procedural fairness in arbitration.
Headnote
A) Arbitration Law - Interim Measures - Ex-parte Ad-interim Orders - Arbitration and Conciliation Act, 1996, Section 17 - The appeal challenged an ex-parte ad-interim order passed by the sole arbitrator on a Section 17 application, which granted reliefs in terms of prayers (a) to (d) including restraint on alienation and disclosures. The appellant contended that the tribunal lacked power to pass such an order without notice and that the respondent's application did not seek ex-parte relief. The court heard the appeal under Section 37 (Paras 1-5). B) Natural Justice - Audi Alteram Partem - Equal Treatment and Notice - Arbitration and Conciliation Act, 1996, Sections 18 and 24(2) - Appellant argued that legitimate expectation to be heard existed and that the tribunal violated statutory requirements by passing order suo moto without hearing parties. The respondent contended that parties would be heard on the adjourned date and that the ex-parte order was necessary to prevent frustration. The court had not delivered final reasoning in the provided text (Paras 6-7). C) Comparative Arbitration Law - UNCITRAL Model Law - Preliminary Orders - Arbitration and Conciliation Act, 1996, Section 17 - Appellant submitted that India deliberately did not adopt UNCITRAL Model Law Article 17B allowing preliminary orders without notice, as seen from 2015 and 2019 amendments. The respondent's counsel did not address this point. The issue remained unresolved in the available text (Para 6). D) Civil Procedure - Interim Injunctions - Requirements for Ex-parte Orders - Code of Civil Procedure, 1908, Order 39 Rule 3 - Appellant contended that even if ex-parte relief was available, the conditions of Order 39 Rule 3 were not satisfied, relying on Shiv Kumar Chadha v. Municipal Corporation of Delhi. The respondent argued that paragraphs 49 and 52 of the application satisfied the rule by alleging award would be paper award and multiplicity of proceedings. The court had not yet ruled in the provided text (Paras 6-7). E) Arbitral Tribunal - Status Quo - Suo Motu Ex-parte Order - Arbitration and Conciliation Act, 1996, Sections 17 and 37 - The tribunal recorded that the ex-parte order was granted to maintain status quo till the application was heard bi-parte, since prior Section 17 applications were under consideration. The respondent supported this as preventing frustration of pending orders. The final outcome of the appeal was not included in the provided text (Paras 4, 7).
Issue of Consideration
Whether an arbitral tribunal has the power to pass an ex-parte ad-interim order under Section 17 of the Arbitration and Conciliation Act, 1996 without notice to the opposite party, particularly when the applicant did not seek ex-parte relief; and whether such order violated Section 18 read with Section 24(2) and Order 39 Rule 3 CPC.
Law Points
- Section 37 appeal against ex-parte order under Section 17
- Section 18 equal treatment
- Section 24(2) notice
- UNCITRAL Model Law Article 17B not adopted
- Order 39 Rule 3 CPC requirements
- status quo pending bi-parte hearing
