Case Note & Summary
The appellants, owners of a property, entered into a development agreement with the respondent developer. Disputes arose, and the respondent filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court, seeking interim relief. The Commercial Court passed an ex parte order of injunction restraining the appellants from alienating or encumbering the property. The appellants challenged this order in the present appeal under Section 13(1A) of the Commercial Courts Act, 2015 read with Section 37(1)(b) of the Arbitration Act. The High Court held that the Commercial Court's order was unsustainable as it did not consider the principles of balance of convenience and irreparable injury, which are essential for granting an interim injunction under Order 39 Rules 1 and 2 CPC. The court emphasized that while Section 9 of the Arbitration Act allows for interim measures, the relief must be in accordance with the CPC. The impugned order was set aside, and the matter was remanded to the Commercial Court for fresh consideration.
Headnote
A) Civil Procedure - Interim Injunction - Order 39 Rules 1 and 2 CPC - Principles - The court must consider prima facie case, balance of convenience, and irreparable injury before granting an interim injunction. The Commercial Court failed to apply these principles, leading to an unsustainable order. (Paras 3-10) B) Arbitration - Interim Measures - Section 9 of Arbitration and Conciliation Act, 1996 - Scope - While Section 9 empowers courts to grant interim relief, such relief must be in accordance with the principles of the Code of Civil Procedure, 1908, including the requirement to assess balance of convenience and irreparable injury. (Paras 3-10) C) Commercial Courts - Appeal - Section 13(1A) of Commercial Courts Act, 2015 - Maintainability - An appeal lies against an order granting interim injunction under Order 39 Rules 1 and 2 CPC in a Section 9 application, as it is a 'judgment' within the meaning of Section 13(1A). (Para 1)
Issue of Consideration
Whether the Commercial Court was justified in granting an interim injunction under Order 39 Rules 1 and 2 CPC in a Section 9 application under the Arbitration Act without considering the principles of balance of convenience and irreparable injury.
Final Decision
The High Court allowed the appeal, set aside the impugned order dated 19/11/2020 passed by the Commercial Court, and remanded the matter back to the Commercial Court for fresh consideration in accordance with law.
Law Points
- Interim injunction under Order 39 Rules 1 and 2 CPC must satisfy three principles: prima facie case
- balance of convenience
- and irreparable injury
- Commercial Court's order granting injunction without considering balance of convenience and irreparable injury is unsustainable
- Section 9 of Arbitration Act does not confer power to grant blanket injunction without proper application of CPC principles.
