Case Note & Summary
The case involves an appeal filed by Ashok Leyland Finance Ltd. against an order of a single judge of the Bombay High Court dated 18.1.2005, which rejected the appellant's petition under Section 9 of the Arbitration and Conciliation Act, 1996. The appellant had entered into an agreement with the respondents on 21.8.2003, under which the first respondent was entitled to an Affinity Card Facility to purchase goods from Bharat Petroleum Corporation Ltd. The second respondent, the Managing Director of the first respondent, stood as a guarantor. The vehicle in question was hypothecated in favor of the appellant. The respondents defaulted on payments, and the appellant filed a petition under Section 9 seeking interim relief to prevent the respondents from disposing of the hypothecated vehicle. The single judge rejected the petition, holding that the appellant should first approach the arbitrator under Section 17 of the Act. The appellant challenged this order. The Division Bench of the Bombay High Court, consisting of Justice A.P. Shah and Justice S.J. Vazifdar, allowed the appeal. The court held that the mere availability of an alternative remedy under Section 17 does not bar the court from entertaining a petition under Section 9, especially where urgency is shown. The court noted that the facts regarding the transaction were not in dispute and that the only dispute was regarding the amount due. The court allowed the appeal and granted interim relief in terms of the petition, directing the respondents to maintain status quo regarding the vehicle. The court also directed the arbitrator to dispose of the application under Section 17 expeditiously.
Headnote
A) Arbitration Law - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Availability of remedy under Section 17 - The court held that the mere availability of an alternative remedy under Section 17 of the Act does not bar the court from entertaining a petition under Section 9, especially where urgency is shown. The court must consider the facts and circumstances of each case. (Paras 2-5) B) Arbitration Law - Hypothecation - Interim Relief - Section 9 of the Arbitration and Conciliation Act, 1996 - The appellant sought interim relief to prevent the respondents from disposing of a hypothecated vehicle. The court allowed the appeal and granted interim relief in terms of the petition, directing the respondents to maintain status quo regarding the vehicle. (Paras 3-5)
Issue of Consideration
Whether the court can entertain a petition under Section 9 of the Arbitration and Conciliation Act, 1996 for interim relief after the arbitrator has been appointed, and whether the existence of an alternative remedy under Section 17 of the Act bars such a petition.
Final Decision
The appeal is allowed. The order of the single judge dated 18.1.2005 is set aside. The appellant's petition under Section 9 is allowed in terms of the prayer clause. The respondents are directed to maintain status quo regarding the hypothecated vehicle. The arbitrator is directed to dispose of the application under Section 17 expeditiously.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Section 17 of the Arbitration and Conciliation Act
- Interim measures by court
- Availability of alternative remedy under Section 17
- Urgency as a factor for invoking Section 9
