Case Note & Summary
The appellant, Spice Digital Ltd., filed an appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, challenging an order dated 16th August 2012 passed by the learned arbitrator rejecting its application for interim relief under Section 17 of the Act. The appellant and respondent had entered into a Content Licence Agreement on 11th June 2010, effective from 1st January 2010, for a period of 18 months, with a lock-in period of 18 months for the licensor. The agreement granted the appellant an exclusive licence to use content and provide related services. Disputes arose, and the appellant sought interim relief from the arbitral tribunal, which was rejected. The appellant contended that the arbitrator failed to consider the prima facie case, balance of convenience, and irreparable loss. The High Court held that the principles for granting interim relief under Section 17 are the same as those under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908. The court found that the arbitrator's order did not reflect any application of these principles and was therefore unsustainable. The court allowed the appeal, set aside the arbitrator's order, and remanded the matter back to the arbitrator for fresh consideration of the interim relief application in accordance with law.
Headnote
A) Arbitration - Interim Relief under Section 17 - Principles for Grant - The arbitral tribunal, while deciding an application under Section 17 of the Arbitration and Conciliation Act, 1996, must apply the same principles as a civil court under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908, i.e., prima facie case, balance of convenience, and irreparable injury. The tribunal's order rejecting interim relief without such consideration is unsustainable. (Paras 1-10)
B) Arbitration - Appeal under Section 37(2)(b) - Scope - An appeal lies against an order of the arbitral tribunal granting or refusing interim relief under Section 17. The appellate court can interfere if the tribunal has acted arbitrarily, capriciously, or without considering relevant principles. (Para 1)
Issue of Consideration
Whether the learned arbitrator erred in rejecting the appellant's application for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996 without properly considering the principles of prima facie case, balance of convenience, and irreparable loss.
Final Decision
The High Court allowed the appeal, set aside the order dated 16th August 2012 passed by the learned arbitrator, and remanded the matter back to the arbitrator for fresh consideration of the interim relief application in accordance with law, after applying the principles of prima facie case, balance of convenience, and irreparable loss.
Law Points
- Section 17 of the Arbitration and Conciliation Act
- 1996 empowers the arbitral tribunal to grant interim measures
- the principles for granting interim relief under Section 17 are akin to those under Order 39 Rules 1 and 2 of the Code of Civil Procedure
- 1908
- the tribunal must consider prima facie case
- balance of convenience
- and irreparable injury
- an order rejecting interim relief without considering these principles is liable to be set aside under Section 37(2)(b).
Case Details
2012 LawText (BOM) (10) 67
Arbitration Petition (L) No. 1164 of 2012
Mr. D.D. Madon, Sr. Advocate alongwith Sanaya Dadachanji along with Mr. Amit Chavan along with Tanvi Dudeja and Ujwal Trivedi i/by M/s. Manilal Kher Ambalal & Co. for the appellant; Mr. Pradip Sancheti, Sr. Advocate alongwith Mr. Nirmay Dave along with Mr. Mayur Agarwal i/by M/s. Bilawala & Co. for respondent.
Vistaas Digital Media Pvt. Ltd.
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Nature of Litigation
Appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 against an order of the arbitral tribunal rejecting an application for interim relief under Section 17 of the Act.
Remedy Sought
The appellant sought to challenge the order dated 16th August 2012 passed by the learned arbitrator rejecting its application for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996.
Filing Reason
The appellant's application for interim relief under Section 17 was rejected by the arbitral tribunal, and the appellant appealed against that order.
Previous Decisions
The learned arbitrator passed an order on 16th August 2012 rejecting the appellant's application for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996.
Issues
Whether the learned arbitrator erred in rejecting the appellant's application for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996 without properly considering the principles of prima facie case, balance of convenience, and irreparable loss.
Submissions/Arguments
The appellant argued that the arbitrator failed to consider the prima facie case, balance of convenience, and irreparable loss while rejecting the interim relief application.
The respondent supported the arbitrator's order.
Ratio Decidendi
The principles for granting interim relief under Section 17 of the Arbitration and Conciliation Act, 1996 are the same as those under Order 39 Rules 1 and 2 of the Code of Civil Procedure, 1908, i.e., the applicant must establish a prima facie case, balance of convenience in its favour, and irreparable loss if the relief is not granted. The arbitral tribunal must consider these principles while deciding an application under Section 17. An order rejecting interim relief without such consideration is liable to be set aside under Section 37(2)(b).
Judgment Excerpts
By this appeal filed under Section 37(2)(b) of Arbitration & Conciliation Act, 1996 (for short Arbitration Act, 1996) though lodged as petition, the appellant (original claimant/applicant before the arbitral tribunal) seeks to challenge the order dated 16th August, 2012 passed by the learned arbitrator rejecting the application for interim relief sought by the appellant under section 17 of the Arbitration Act, 1996.
Procedural History
The appellant filed an application for interim relief under Section 17 of the Arbitration and Conciliation Act, 1996 before the arbitral tribunal. The learned arbitrator rejected the application by order dated 16th August 2012. The appellant then filed the present appeal under Section 37(2)(b) of the Act before the High Court.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 17, 37(2)(b)
- Code of Civil Procedure, 1908: Order 39 Rules 1 and 2
