Court's Power To Grant Interim Relief In Arbitration Extends Post-Award And Into Execution Stage: Madras High Court

The Madras High Court has held that interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, remains available even after an arbitral award is passed and execution proceedings are filed, until the award is fully satisfied.

“The words 'before it is enforced' means 'until the complete satisfaction of the award',” a full bench said, rejecting the view that such relief ends once the award becomes enforceable.

A Full Bench of Justices S.M. Subramaniam, D. Bharatha Chakravarthy and C. Kumarappan settled conflicting interpretations within the High Court on the meaning of the word “enforced” in Section 9(1) of the Act.

Section 9 permits courts to grant interim measures before arbitration, during arbitration, or after the award but before it is enforced in accordance with Section 36.

The court held that the statute uses the word “enforced”, not “enforceable”, and the two cannot be equated.

“When Section 9 contemplates a Post-Award protection, the purpose of such interim protection being to secure the property or amount for the benefit of the party which seeks enforcement of the award, no further interpretation can be made which will cripple such interim protection intended to be given to the award holder by the statute.,” the bench held.

The court said “enforced” denotes a completed act, while “enforceable” merely indicates capability.

It added that reading “enforced” as “enforceable” would wrongly narrow the window for post-award interim relief, contrary to legislative intent.

“The post-award and pre-enforcement stage interim measure as given under Section 9 is unique,” the court said, adding that it exists to prevent frustration of the award during the 90-day challenge period under Section 34.

The Bench further held that mere filing or pendency of execution proceedings does not bar a Section 9 application.

"In essence, an interim measure of protection when sought before or during an arbitral proceeding is considered as a step in aid to the fruition of the arbitral proceedings, When sought after an arbitral award is made but before it is enforced, the measure of protection is intended to safeguard the fruit of the proceedings until the eventual enforcement of the Award. Here again the measure of protection is a step in aid of enforcement," it observed.

The reference arose from two arbitration applications seeking post-award interim protection.

B.M. Insulation Pvt. Ltd. sought security for Rs 10.20 lakh against Vardeep Petro Chemical Pvt. Ltd., while Saffe Systems sought protection for Rs 21.07 lakh against BGR Energy Systems Ltd.

The matter was placed before the Full Bench due to divergent views taken earlier by coordinate Benches of the High Court.

An earlier Division Bench in Gopuram Enterprises Ltd. v. Integrated Finance Company Ltd. had read “before it is enforced” as “before it becomes enforceable.”

A later Division Bench in Eros International Media Ltd. v. 14 Reels Entertainment Pvt. Ltd. took a broader view, treating post-award interim measures as safeguards pending enforcement.

Rejecting the restrictive interpretation, the Full Bench held that the earlier view was “bad in law.”

The court directed that the applications be placed before the regular bench for disposal on merit.

For B.M. Insulation Private Limited: Advocates K. S. Sharath Chandran and  Anukriti Anand

For Vardeep Petro Chemical Private Limited : Advocate Thomas T. Jacob

For Saffe Systems :  Advocate Pranava Charan MG

For BGR Energy Systems Limited : Advocate C. P. Prasath Gopal