Can Interim Relief Under Section 9 be Granted to the Unsuccessful Party at the Post Award Stage?

Section 9 of India’s Arbitration and Conciliation Act, 1996 (“Act”) allows parties to seek interim relief(s) from the courts at three distinct stages, i.e. (i) prior to commencement of arbitral proceedings (“pre commencement stage”); (ii) during pendency of arbitral proceedings (“proceeding stage”); and (iii) subsequent to issuance of the arbitral award but prior to its enforcement (“post arbitral award stage”). From a bare perusal of Section 9, it naturally follows that the remedy thereunder would be available to all interested parties at each of the three stages. However, divergent judicial views were adopted by various Indian High Courts on the availability of such a remedy against the unsuccessful party in arbitration at the post arbitral award stage. This jurisprudential uncertainty has now been conclusively resolved by the Supreme Court of India (“Supreme Court”) in the recently issued judgment of Home Care Retail Marts (P) Ltd. v. Haresh N. Sanghavi (“Home Care”). In its judgment, the Supreme Court held that the entitlement to invoke Section 9 at the post arbitral award stage is not contingent upon the outcome of the arbitral proceedings, thereby recognising the unsuccessful party’s entitlement to avail such remedy even at the post arbitral award stage. This decision assumes greater significance in light of the Supreme Court’s judgments in Gayatri Balasamy v. ISG Novasoft Technologies Ltd. (“Gayatri Balasamy”) and Saisudhir Energy Ltd. v. NTPC Vidyut Vyapar Nigam Ltd., (“Sai Sudhir”), which confirmed the Indian courts’ power to modify arbitral awards at the challenge of the arbitral award stage. This post builds upon an earlier post on this issue and analyses the Supreme Court’s judgment in light of the conflicting Indian High Courts’ views, and the evolving framework governing remedies at the post arbitral award stage.

Position prior to the Supreme Court’s judgment in Home Care

As discussed above, prior to the Supreme Court’s judgment in Home Care, conflicting judicial views existed across various Indian High Courts on whether an unsuccessful party could make a request for interim relief under Section 9, at the post arbitral award stage. On one hand, the Bombay High Court, Delhi High Court, and Karnataka High Court held that an unsuccessful party could not invoke Section 9 at the post arbitral award stage, proceeding on the premise that after the arbitral award is rendered, such relief is available only in aid of enforcement of the arbitral award, in respect of which the unsuccessful party has no enforceable right. In contrast, the Telangana High Court, Gujarat High Court and Punjab & Haryana High Court were of the view that a Section 9 application could be initiated by unsuccessful parties even at the post arbitral award stage, since the statutory framework under Section 9 does not bar the unsuccessful parties from seeking interim relief at the post arbitral award stage. It was further recognised that an arbitral award remains susceptible to being stayed or even set aside in appropriate proceedings and, therefore, until the setting aside proceedings become final, it would be untenable to deny the unsuccessful party recourse to an interim relief request under Section 9 of the Act. The underlying rationale was that the rights flowing from an arbitral award become final only upon the conclusion of the setting-aside proceedings. In light of these divergent views, it became imperative for the Supreme Court to settle the law on this issue. The opportunity finally arose in Home Care.

Supreme Court’s observations in Home Care

In the Home Care judgment, the Supreme Court provided much-needed clarity by observing that even an unsuccessful party in arbitral proceedings is entitled to seek interim measures under Section 9 at the post arbitral award stage. In arriving at this conclusion, the Supreme Court primarily considered the following factors:

a.     Interpretation of the term ‘party’: Section 9 of the Act permits “a party” to seek interim relief from the Court. Section 2(1)(h) of the Act defines “party” as “a party to an arbitration agreement”. A combined reading of these provisions makes it evident that any party to an arbitration agreement would be entitled to avail the remedy under Section 9. There is nothing provided in the Act to disentitle a party from seeking such a remedy on the basis of the stage or outcome of the proceedings. Thus, any interpretation that results in ousting any party from availing the Section 9 remedy would amount to an unwarranted judicial restriction inconsistent with the statutory framework. Further, the Supreme Court emphasised that Article 9 of the UNCITRAL Model Law confines the parties’ right to seek interim measures from the court only at the pre commencement stage and the proceeding stage. However, Section 9 of the Act goes a step further and entitles the parties to an arbitration agreement to seek interim measures even at the post arbitral award stage. Accordingly, the Supreme Court held that the expression “a party” under Section 9 of the Act cannot be read restrictively to oust any party to an arbitration agreement from seeking interim relief from courts at any of the three stages provided thereunder.

b.    Scope of post arbitral award relief: The Supreme Court observed that earlier decisions which excluded an unsuccessful party from invoking Section 9, proceeded on the premise that at the post arbitral award stage, the Indian courts’ jurisdiction is confined to either setting aside the arbitral award or upholding it. However, this premise was undermined in light of recent decisions (Gayatri Balasamy and Sai Sudhir) permitting the Indian courts to modify arbitral awards in setting aside proceedings. Further, under Article 142 of the Constitution of India, 1950, the Supreme Court is empowered to pass such orders as may be necessary for doing “complete justice” even where the relief(s) granted in such orders may not be expressly contemplated under the governing statutory framework. In various arbitration matters, the Supreme Court has exercised this power to mould the relief(s) granted under the arbitral award. For instance, Section 29 of the Act provides that the decision of an arbitral tribunal is to be governed by the majority view. However, in Ssangyong Engineering & Construction Co. Ltd. v. NHAI, the Supreme Court, while exercising its powers under Article 142 of the Constitution of India, 1950, upheld the view embodied in the minority award while setting aside the majority award, thereby fundamentally altering the parties’ rights and liabilities as determined in the arbitral award. On this basis, it was held that to completely exclude an unsuccessful party’s right from seeking recourse under Section 9 of the Act at the post arbitral award stage would be manifestly arbitrary and contrary to the rule of law.

Implications in light of Emerging Trends

Supreme Court’s judgment in Home Care assumes greater significance in light of the evolving jurisprudence on challenges to arbitral awards, especially following the judgments passed in Gayatri Balasamy and Sai Sudhir, where the Supreme Court recognised the Indian courts’ power to modify arbitral awards in the setting aside proceedings. While this power remains narrowly circumscribed, it introduces the possibility that in the setting aside proceedings, the court may alter or amend the reliefs granted in the arbitral award. Such modifications may result in a complete reversal of the parties’ rights and liabilities under the arbitral award, including a situation where a claim awarded against a party is ultimately determined in its favour by the court in the setting aside proceedings.

Notably, in Sai Sudhir, the Supreme Court upheld the modification of the arbitral award in the setting aside proceedings, where the quantum of liquidated damages awarded in favour of a party was altered by applying the principle of reasonable compensation. In light of such developments in arbitration jurisprudence, it is not inconceivable that at the post arbitral award stage, the Indian courts may intervene to correct outcomes that are manifestly inconsistent with settled legal principles, even where such intervention has the effect of altering how a claim or counterclaim has been addressed and awarded by the arbitral tribunal. In these circumstances, denying access to the remedy under Section 9 to any party, immediately upon the making of the arbitral award, would be premature. Accordingly, both parties must have equal access to interim measures under Section 9 of the Act at the post arbitral award stage, in order to adequately protect their interests until the conclusion of the setting aside proceedings. 

Conclusion

The Supreme Court’s judgment in Home Care marks an important development in Indian arbitration law. It aligns with the scheme of Section 9 of the Act, resolves conflicting High Court views, and affirms equal treatment of parties even at the post arbitral award stage, regardless of the arbitral award’s outcome. It strengthens India’s pro-arbitration approach by allowing parties to seek interim protection until the arbitral award attains finality after judicial scrutiny. However, in the authors’ view, the Indian courts should not entertain petitions under Section 9 of the Act from unsuccessful parties as a routine step that delays enforcement of the arbitral award. Such relief should be granted to an unsuccessful party only in exceptional circumstances where a strong prima facie case is established and it is apparent that the Indian court’s refusal would cause serious and irreparable harm.