Case Note & Summary
The appeal arose from an international commercial arbitration dispute pending before the High Court of Andhra Pradesh at Amaravati. The appellant, a Hong Kong incorporated shipping company, and respondents 1 to 3, entities involved in export of agricultural commodities, entered into a fixture note/charterparty agreement dated 12.03.2021 for carriage of 9,000 MT of rice from Kakinada to Ho Chi Minh City, Vietnam. The agreement provided for demurrage at USD 7,500 per day and contained an arbitration clause providing for arbitration in Singapore. The appellant claimed that discharge of cargo was delayed beyond the permitted laytime, resulting in demurrage of USD 128,409.74. The appellant issued invoices and legal notices, but no payment was made. The appellant later enhanced the claim to USD 296,326.74 by adding interest and costs. The appellant filed a Section 9 application before the learned Single Judge seeking ex parte attachment of 1600 MT of rice loaded or being loaded on vessel MV BULK MANARA at Kakinada port and direction to respondents to furnish security for USD 296,326.74 pending arbitration. On 23.04.2024, the Single Judge passed an ex parte conditional order directing attachment and furnishing of security within 24 hours. The first respondent deposited the security amount on 24.04.2024. The first respondent filed ICOMAA No.3 of 2024 before the Division Bench, which directed the respondent to submit objections before the Single Judge. The respondent then filed I.A.No.1 of 2025 under Order XXXIX Rule 4 CPC to vacate the ex parte order. After hearing both sides, the Single Judge by order dated 13.10.2025 vacated the interim order, dismissed the Section 9 application, and directed return of the security. The Single Judge framed four questions: strong prima facie case, balance of convenience, reasonable expedition, and whether respondent was attempting to dispose of assets to defeat decree. The Single Judge found that the appellant had not given specific details or particulars of assets and that cargo of rice was merely stock in trade not a substantive asset. The appellant filed the present appeal under Section 37 challenging the Single Judge's order. The appellant's counsel argued that balance of convenience should be gauged by enforceability of award, that the appellant approached court upon locating assets, that the Raman Tech case was inapplicable, and that the Single Judge erred in applying Order 38 Rule 5 CPC principles relying on Sanghi Enterprises instead of Essar House Case. The respondents argued that title to the cargo had passed to the buyer under a FOB contract and that the security deposited was exaggerated. The excerpt ended mid-submissions and did not include the final appellate decision.
Headnote
A) Arbitration Law - Interim Measures under Section 9 - Requirements for Grant of Interim Protection - Applicant must show strong prima facie case, balance of convenience, reasonable expedition, and risk of asset dissipation - Arbitration and Conciliation Act, 1996, Section 9 - The Single Judge framed these four questions and vacated the ex parte order because the appellant made only general and vague statements, failed to give specific details or particulars of assets, and the cargo was merely stock in trade not a substantive asset (Paras 13-14). B) Civil Procedure - Vacating Ex Parte Interim Orders - Order XXXIX Rule 4 CPC - Ex parte interim order can be vacated if applicant fails to satisfy conditions for grant - Code of Civil Procedure, 1908, Order XXXIX Rule 4 - The first respondent filed I.A.No.1 of 2025 to vacate the ex parte order; the Single Judge after hearing both sides vacated the order and directed return of security (Paras 5, 14). C) Arbitration Law - Appeal under Section 37 - Scope of Appeal Against Section 9 Orders - Challenge to order vacating interim protection - Arbitration and Conciliation Act, 1996, Section 37 - The appeal was filed under Section 37 against order dated 13.10.2025 dismissing Section 9 application; the appellate court heard submissions and the final decision was not included in the provided excerpt (Paras 1, 5, 15-19). D) Arbitration Law - Applicability of Order 38 Rule 5 CPC Principles to Section 9 - Interplay Between CPC and Arbitration Act - Order 38 Rule 5 CPC - The appellant contended that the Single Judge erred in applying Order 38 Rule 5 principles relying on Sanghi Enterprises and ignoring the binding precedent of Essar House Case; no final appellate holding was provided in the excerpt (Para 18).
Issue of Consideration
Whether the learned Single Judge erred in vacating the ex parte interim order dated 23.04.2024 and dismissing the Section 9 application; whether Order 38 Rule 5 CPC principles apply to Section 9 applications under the Arbitration and Conciliation Act, 1996; whether the appellant established a prima facie case, balance of convenience, and risk of asset dissipation for interim security.
Final Decision
Not mentioned in provided excerpt; appeal remained pending before Division Bench and final judgment not included.
Law Points
- Section 9 interim relief requires strong prima facie case
- balance of convenience
- reasonable expedition and proof of attempt to dispose assets
- general vague statements insufficient
- stock in trade not substantive asset
- Section 37 appeal lies against Section 9 order
- balance of convenience gauged by enforceability of award
- Order 38 Rule 5 CPC principles may apply to Section 9 applications.
