Case Note & Summary
The present appeal under Section 37 of the Arbitration and Conciliation Act, 1996 was filed by Nimbus Communications Limited (the appellant) against a common judgment and order dated 3 September 2015 passed by the learned Single Judge of the Bombay High Court. The Single Judge had allowed the petition under Section 9 of the Act filed by the Board of Control for Cricket in India (BCCI, respondent no.1) and directed the appellant to furnish security by depositing Rs. 390 crores in court within four weeks. The dispute arose out of a media rights agreement between BCCI and Nimbus Communications Limited, where BCCI claimed that Nimbus had failed to pay the agreed amounts. BCCI filed Arbitration Petition No. 167 of 2012 seeking interim relief under Section 9, including a direction for security. The Single Judge, after considering the submissions, passed the order directing security. The appellant challenged this order on the ground that the Single Judge had erred in directing such a large security without proper justification. The Division Bench heard the appeal and considered the scope of Section 9 and Section 37. The court held that the Single Judge's order was justified as it was necessary to preserve the subject matter of the arbitration and to ensure that the eventual award is not rendered infructuous. The court noted that the appellant had not demonstrated any perversity or error of law in the impugned order. Accordingly, the appeal was dismissed, and the order of the Single Judge was upheld.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Security Deposit - The court considered whether the Single Judge's order directing the appellant to deposit Rs. 390 crores as security was proper. The Division Bench held that the order was justified as it aimed to preserve the subject matter of the arbitration and prevent frustration of the eventual award. The appeal was dismissed. (Paras 1-13) B) Arbitration - Appeal under Section 37 - Scope of Appellate Court - The court noted that an appeal under Section 37 is not a routine appeal and the appellate court should not interfere unless the order is perverse or contrary to law. The Division Bench found no such infirmity in the Single Judge's order. (Paras 2-13)
Issue of Consideration
Whether the learned Single Judge was justified in directing the appellant to furnish security of Rs. 390 crores under Section 9 of the Arbitration and Conciliation Act, 1996, pending arbitration.
Final Decision
The appeal is dismissed. The order of the learned Single Judge dated 3 September 2015 directing the appellant to deposit Rs. 390 crores as security is upheld.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- interim measures
- security deposit
- preservation of subject matter
- Section 37 appeal
- scope of appellate court
