Case Note & Summary
The appellant, Niraj J. Vora, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order of a learned Single Judge dated 2 September 2015, which rejected his application under Section 9 of the Act. The appellant sought injunctory relief in respect of property described in a Memorandum of Understanding (MOU) dated 31.10.2014/14.8.2014. The respondent no.2, Dharmendra Gandhi, was in possession of the property based on a registered agreement dated 13 August 2014, and full consideration had been paid. The appellant's Section 9 application was based on an arbitration clause in the MOU, but respondent no.2 was not a party to that MOU. The court held that for invocation of Section 9, there must be an arbitration agreement between the parties. Since there was no arbitration agreement between the appellant and respondent no.2, the Section 9 application could not be maintained against respondent no.2. The court also noted that respondent no.1, who entered into the MOU with the appellant despite the prior registered agreement with respondent no.2, did not appear, and this conduct was a relevant factor against the appellant. The court found no merit in the appeal and dismissed it, upholding the Single Judge's order.
Headnote
A) Arbitration Law - Interim Relief under Section 9 - Requirement of Arbitration Agreement - Section 9 of the Arbitration and Conciliation Act, 1996 - The court held that for invocation of Section 9, there must be an arbitration agreement between the parties. Since respondent no.2 was not a party to the MOU containing the arbitration clause, no relief under Section 9 could be granted against respondent no.2. (Paras 2-3) B) Arbitration Law - Third Party MOU - Binding Effect - Section 9 of the Arbitration and Conciliation Act, 1996 - The court held that an arbitration clause in a third-party MOU is not sufficient to invoke Section 9 against a non-party, merely because the property is the same. The presence of respondent no.2 in meetings or the nature of transactions does not create an arbitration agreement. (Paras 2-3) C) Arbitration Law - Conduct of Parties - Relevance - Section 9 of the Arbitration and Conciliation Act, 1996 - The court noted that respondent no.1, who entered into the MOU with the appellant despite a prior registered agreement with respondent no.2, did not appear. This conduct was considered a relevant factor against the appellant at the interim stage. (Para 4)
Issue of Consideration
Whether an application under Section 9 of the Arbitration and Conciliation Act, 1996 can be maintained against a party who is not a signatory to the arbitration agreement, merely because the property in question is the same as that covered by a third-party MOU containing an arbitration clause.
Final Decision
Appeal dismissed. The order of the learned Single Judge rejecting the Section 9 application is upheld.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996 requires an arbitration agreement between the parties seeking interim relief
- absence of arbitration agreement between appellant and respondent no.2 precludes grant of relief
- third party MOU cannot bind non-party to arbitration clause
