In AFCONS Infrastructure Ltd v The Board of Trustees of the Port of Mumbai , the Mumbai High Court confirmed that courts had the power to order interim relief under Section 9 of the Indian Arbitration and Conciliation Act, 1996, even after an award had been issued. However, the court refused to grant interim relief under Section 9 where it was tantamount to securing enforcement of an award.
Arbitration proceedings were held between AFCONS Infrastructure and the Board of Trustees of the Port of Mumbai in relation to a dispute that had arisen between them. The arbitral tribunal rendered a monetary award in favor of AFCONS. The Board of Trustees applied to the court to set aside the award under Section 34 of the Arbitration Act. AFCONS applied to the court seeking an order directing the Board of Trustees to deposit sums payable pursuant to the award into the court pending determination of the Section 34 challenge.
Decision of the Court
At the outset the court confirmed that it had the power to order interim relief under Section 9 of the Arbitration Act even after an arbitral award had been issued. It recognized that such a power extended to securing property that is the subject of the award. However, following the decision of the Supreme Court in National Aluminium Co. Ltd v Pressteel and Fabrications (P) Ltd, the High Court held that the power to order interim relief did not extend to securing amounts ordered to be paid pursuant to an award.
The court observed that this limitation stemmed from the consequences of making a setting aside application under Section 34 of the Arbitration Act. The court held that due to the mandatory nature of the language in Section 34, the award becomes unexecutable until the challenge under Section 34 is refused and the court did not have the power to make an interim order in respect of the award pending such determination. The court observed that the only recourse available to the successful party was to wait until the determination of the Section 34 application and proceed to enforcement pursuant to the provisions of the Civil Procedure Code, 1908.
The decision of the court reflects a fine balance the court has drawn between supporting arbitration and avoiding a subversion of established processes. By recognizing the power to issue interim orders even after an award has been rendered, the court has lent itself to aid a successful party in circumstances where the losing party may be looking to render an award nugatory by disposing of assets or disposing of property that is the subject of the arbitration. On the other hand, the court was cautious to ensure that safeguards available to a party in the enforcement processes contained in the Civil Procedure Code are preserved.
The decision also underlines the powerful impact of Section 34 on domestic arbitration proceedings, and the incentive on losing parties to challenge awards through the Indian courts.