Case Note & Summary
The petitioner, Board of Control for Cricket in India (BCCI), filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 seeking an order directing the respondent, KPH Dream Cricket Pvt. Ltd., to furnish an unconditional bank guarantee of US $ 5,480,000 pending arbitration. The dispute arose out of a franchise agreement dated 10th April 2008, whereby the respondent was awarded the Punjab franchise in the Indian Premier League (IPL). The BCCI terminated the agreement on 10th October 2010, leading the respondent to file Arbitration Petition (Lodging) No.1303 of 2010. By a reasoned order dated 8th December 2010, the court disposed of that petition, directing the respondent to provide an unconditional bank guarantee of US $ 3.5 million. This order was confirmed by a Division Bench on 15th December 2010. Subsequently, by consent order dated 1st December 2011, the bank guarantee was reduced to US $ 2.74 million due to set-off. The parties were unable to appoint an arbitrator or settle the dispute by 31st December 2011 as contemplated in the earlier order. The BCCI then filed the present petition seeking an additional bank guarantee of US $ 5,480,000, claiming that the existing guarantee was insufficient to cover losses for the year 2012. The respondent opposed the petition, arguing that the earlier consent order had attained finality and there was no change in circumstances. The court held that the petitioner failed to demonstrate any new circumstances justifying modification of the earlier consent order. The court observed that the earlier order was passed by consent and could not be re-opened by filing a fresh Section 9 petition. The court also noted that the arbitration proceedings had not yet commenced and the petitioner had not shown any urgency or irreparable harm. The court dismissed the petition, holding that it was not maintainable and amounted to an abuse of process.
Headnote
A) Arbitration - Interim Relief - Section 9 of the Arbitration and Conciliation Act, 1996 - Enhancement of Security - The petitioner sought an order directing the respondent to furnish an unconditional bank guarantee of US $ 5,480,000 pending arbitration, in addition to an existing bank guarantee of US $ 2.74 million provided under a previous consent order. The court held that the petitioner failed to demonstrate any new circumstances or change in situation that would justify modifying the earlier consent order. The court observed that the earlier order was passed by consent and had attained finality, and the petitioner could not seek to re-open the same by filing a fresh Section 9 petition. The court also noted that the arbitration proceedings had not yet commenced, and the petitioner had not shown any urgency or irreparable harm. Held that the petition was not maintainable and was dismissed. (Paras 1-6) B) Arbitration - Interim Relief - Section 9 of the Arbitration and Conciliation Act, 1996 - Maintainability - The court considered whether a second Section 9 petition for interim relief is maintainable when a previous consent order had already granted interim protection. The court held that such a petition is not maintainable unless there is a material change in circumstances or the earlier order is modified by consent or by a competent court. The court emphasized that the purpose of Section 9 is to provide interim measures of protection pending arbitration, and not to allow a party to repeatedly seek modifications of settled orders. Held that the petition was an abuse of process and was dismissed. (Paras 1-6)
Issue of Consideration
Whether the petitioner is entitled to an enhanced bank guarantee of US $ 5,480,000 under Section 9 of the Arbitration and Conciliation Act, 1996, when a previous consent order had already provided for a bank guarantee of US $ 3.5 million (later reduced to US $ 2.74 million) and the arbitration proceedings were yet to commence.
Final Decision
The court dismissed the petition, holding that the petitioner failed to demonstrate any new circumstances justifying modification of the earlier consent order. The petition was not maintainable and amounted to an abuse of process.
Law Points
- Interim relief under Section 9 of the Arbitration and Conciliation Act
- 1996 cannot be used to modify or enhance security already ordered by consent
- Petitioner must demonstrate new circumstances for additional interim protection
- Court cannot re-open settled orders without change in circumstances
