The dispute stems from a Shareholders Agreement (SHA) signed in 2017, requiring the respondents to buy the petitioner's shares. Arbitration proceedings were initiated due to non-compliance with the SHA, leading to multiple interim orders.

The petitioners sought interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, asking the court to direct the respondents to secure ₹145 crores by way of a bank guarantee or deposit. The petitioners argued that the respondents’ conduct, including failure to comply with previous awards and bankruptcy proceedings, warranted urgent interim measures. The Emergency Arbitrator's Decision (EA Decision) and subsequent orders by the Arbitral Tribunal were pivotal in the proceedings.

The Bombay High Court granted interim relief to the petitioners, ordering the respondents to furnish a bank guarantee of ₹145 crores, recognizing the finality of previous arbitration awards and rejecting objections about the Emergency Arbitrator’s decision not being binding.

1. Background of the Dispute:

The conflict originated from a 2017 Shareholders Agreement (SHA) between the parties, which required the respondents to purchase shares of the petitioners in Respondent No. 4 company (Ebix Payment Services Pvt. Ltd.). Arbitration was triggered due to the respondents’ failure to comply.

2. Arbitral Proceedings:

The Singapore International Arbitration Centre (SIAC) initiated the arbitration, with an Emergency Arbitrator ruling in favor of the petitioners in March 2024. The arbitral tribunal also upheld the termination of the SHA and ordered the respondents to purchase the shares.

3. Interim Award and Enforcement Efforts:

The petitioners obtained enforcement orders for earlier awards from the Delhi High Court, but the respondents failed to comply. The petitioners also engaged PwC to value the shares, resulting in a valuation of ₹181 crores, which the respondents disputed.

4. Relief Sought under Section 9 of Arbitration Act:

The petitioners approached the Bombay High Court seeking interim relief to secure the pending amount, alleging that the respondents were attempting to frustrate enforcement of the arbitration awards by citing bankruptcy and financial distress.

5. Respondents’ Defense:

The respondents argued that the Emergency Arbitrator's decision was a final award under Part II of the Arbitration Act, which required enforcement proceedings under Section 49. They also claimed that the petition was not maintainable due to the exclusion of Part I of the Arbitration Act.

6. Court’s Findings:

The court rejected the respondents' arguments, affirming that the Emergency Arbitrator’s decision was an interim order and not a final award. It ruled that the petitioners were entitled to interim relief under Section 9, especially considering the respondents' non-compliance and obstructionist conduct.

7. Final Relief Ordered:

The Bombay High Court directed the respondents to furnish a bank guarantee or deposit of ₹145 crores as security, thereby safeguarding the petitioners' interests pending the final outcome of the arbitration.

Acts and Sections Discussed:

• Arbitration and Conciliation Act, 1996:
  • Section 9: Provides for interim measures of protection by courts.
  • Section 49: Deals with enforcement of foreign awards.
• Code of Civil Procedure, 1908 (Order 38 Rule 5): Addresses attachment before judgment.
• SIAC Rules: Used for determining the validity and enforcement of the Emergency Arbitrator’s orders.

Ratio Decidendi:

The court's reasoning centered on the binding nature of the Emergency Arbitrator’s decision, despite it being termed as an "order" rather than an "award." The court upheld the autonomy of the arbitral process and supported Section 9 applications even in cases involving international commercial arbitration seated outside India, provided there is no express exclusion of Part I of the Arbitration Act.

Subjects:

• Commercial Arbitration
• Shareholder Dispute
• Interim Relief
• Arbitration Act, 1996
• Emergency Arbitrator
• SIAC