Purushotam vs. Antony Joseph

Facts

The appellants filed an Arbitration Appeal challenging an interim order dated 30.07.2025 passed by the Principal District Court, Theni, in Arb.O.P.No.41 of 2025. The original petition was filed by respondents 1 to 4 under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an injunction. The impugned order directed that the partnership property be secured under lock and key and restrained both parties from altering the nature of the quarry or interfering with the property. The appellants, who were respondents 1 to 3 in the original petition, argued that the court below erred in exercising discretion under Section 9 without a clear demonstration of intent to initiate arbitration proceedings. They also contended that Section 9 relief is ancillary to arbitration and cannot be an independent remedy.

Held

The Court held that the respondents had clearly demonstrated a manifest intention to initiate arbitral proceedings and had filed the interim measures petitions before the commencement of arbitration proceedings. The Court found that Clause 20(b) of the Partnership Deed dated 16.04.2024 clearly stipulated that all disputes and questions in respect of the partnership arising between the parties, whether during or after the partnership, shall be referred to an arbitrator. The Court noted that the respondents had clearly stated in their affidavit that a serious dispute had arisen between the partners regarding the management of the firm, which required resolution through arbitration, and that they had taken steps to commence arbitration proceedings. The Court also referred to Section 9(2) of the Arbitration and Conciliation Act, 1996, which requires arbitral proceedings to be commenced within 90 days from the date of the interim order. The Court observed that the respondents issued a notice on 23.10.2025, which was within the period prescribed by the learned judge in the order dated 28.08.2025. Therefore, the Court concluded that it could not be said that the notice was issued after a lapse of 90 days. The Court found no illegality in the order passed by the Tribunal and held that the judgments relied upon by the appellants were distinguishable. The Court confirmed the order passed by the Principal District Court, Theni.

Key Issues

1. Whether the Court below erred in exercising discretion under Section 9 of the Arbitration and Conciliation Act, 1996, in the absence of a clear demonstration of a manifest intention by the respondents to initiate arbitration proceedings. 2. Whether Section 9 relief can be treated as an independent remedy, or if it is ancillary to arbitration proceedings. 3. Whether the issuance of a Section 21 notice after the impugned order can retrospectively cure the defect of the absence of a manifest intention to arbitrate at the time of filing the Section 9 application. Appellants' Contentions: The appellants argued that a party seeking interim relief under Section 9 must exhibit a bona fide and unequivocal intention to commence arbitration. They contended that the impugned order did not record any discussion or acknowledgement of the respondents' intention to arbitrate. They further argued that Section 9 relief is ancillary to arbitration and cannot be an independent remedy, and that granting interim protection without ensuring compliance with the statutory requirement of initiating arbitration proceedings within a reasonable time defeats the legislative intent. They also argued that a Section 21 notice issued after the impugned order cannot cure the defect of the absence of a manifest intention to arbitrate at the time of filing the Section 9 application. They relied on the Memorandum of Understanding dated 01.03.2024 and the amended Partnership Deed dated 16.04.2024, arguing that the dispute did not arise from dissolution or termination, which was the condition in one of the clauses for arbitration. Respondents' Contentions: The respondents contended that a Memorandum of Understanding was executed, followed by a reconstituted deed of partnership, and that they had contributed significant amounts to the business. They alleged that after receiving the money, the appellants prevented them from participating in the business, denied them profits, and kept them away from operations. They stated that a serious dispute had arisen regarding the management of the firm and that they had taken steps to commence arbitration proceedings. They also pointed to Clause 20(b) of the Partnership Deed dated 16.04.2024, which clearly stipulated that all disputes and questions in respect of the partnership arising between the partners, whether during or after the partnership, shall be referred to arbitration.