Smt. Sunita Garg vs. M/S Scraft Product (P) LTD & Ors.

Facts

The petitioner, Smt. Sunita Garg, filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief. She is the owner of a property in Sonepat, Haryana, leased to Respondent No. 1, M/s Scraft Product (P) Ltd., with Respondents No. 2-4 as directors. The lease deed, dated December 15, 2019, stipulated a monthly rent of Rs. 8,00,000/- exclusive of other charges. The petitioner claimed arrears of rent amounting to Rs. 71,54,865/- from January 1, 2022, to April 30, 2023, along with 18% GST. The petitioner had previously terminated the lease and invoked arbitration. An arbitrator was appointed by the High Court on February 23, 2023, in Arbitration Petition No. 997/2022.

Held

The Court held that once an arbitral tribunal has been constituted, it shall not entertain an application under Section 9(1) of the Arbitration and Conciliation Act, 1996, unless it finds that circumstances exist which may render the remedy provided under Section 17 inefficacious. The Court noted that the remedies sought by the petitioner – directing the deposit of Rs. 71,54,865/- along with GST and furnishing a bank guarantee for arrears of rent – are measures that can be alternatively rendered by the learned Arbitral Tribunal under Section 17 of the Act. Citing Arcelor Mittal Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd., the Court reiterated that the arbitral tribunal has the same power to grant interim relief as the court, and the remedy under Section 17 is as efficacious as under Section 9(1). Therefore, unless there is an impediment in approaching the arbitral tribunal or the relief cannot be expeditiously obtained, the court should not entertain such applications after the tribunal's constitution. The Court found no cogent reason to allow the petition.

Key Issues

1. Whether the High Court should entertain a petition under Section 9 of the Arbitration and Conciliation Act, 1996, for interim measures when an arbitral tribunal has already been constituted, and if so, under what circumstances? (Section 9(3) of the Act, 1996). The petitioner argued that the present petition is maintainable as the initiation of proceedings before the learned Arbitrator takes time, which would prejudice the petitioner's rights. They relied on Arcelor Mittal Nippon Steel India Limited v. Essar Bulk Terminal Limited, emphasizing that Section 9(1) allows approaching the court for interim measures before, during, or after arbitral proceedings if the remedy under Section 17 is inefficacious. The revenue or State (implicitly, as the respondents did not appear) did not present arguments.