WALKING THE TIGHT ROPE: BALANCING INTERIM RELIEF FOR NON-

SIGNATORIES TO ARBITRATION AGREEMENT UNDER SECTION 9 OF THE

ARBITRATION AND CONCILIATION ACT, 1996

(Submitted for the Purpose of Continuous Internal Assessment)

Submitted by Priyadharshini R (BC0210031) on 30th October, 2024

Submitted to Prof Ms Malini Elumalai, Course Faculty

For the Clinical Course on Alternate Dispute Resolution

I. Introduction to the Conundrum of Interim Relief to Non-Signatories to the

Agreement

Section 9 of the Arbitration and Conciliation Act, 19961 empowers the court to pass an order
for interim relief to parties involved in a dispute. However there has been no constant judicial
standing on the matter of whether non-signatories to the arbitration clause or agreement can
seek interim relief as mentioned under section 9 of the Act. Courts do not have a uniform
practise while dealing with the trend of issuing interim relief under or against non-signatory or
third party to the arbitration agreement. Earlier trend used to be that; court cannot pass orders
of interim protection against a non-signatory to the agreement. It can be observed in cases such
as Cox & Kings India Ltd. v. Indian Rly. Catering and Tourism Corpn. Ltd,2 Impex Trading
GmbH v. Anunay Fab Ltd3 and Shoney Sanil v. Coastal Foundations (P) Ltd.4

In cases that followed up until recently, the court has interpreted section 9 of the act liberally
and attributed a wider scope of interpretation to it. They highlight that interim measures can be
ordered against non-signatories in certain cases based on the facts of the case. It can be

1
Arbitration and Conciliation Act, No. 26 of 1996, § 9, India Code (1996).
2
Cox & Kings India Ltd. v. Indian Rly. Catering and Tourism Corpn. Ltd 2., (2012) 7 SCC 587
3
Impex Trading GmbH v. Anunay Fab Ltd 2007 SCC OnLine Del 1618
4
Shoney Sanil v. Coastal Foundations (P) Ltd., 2006 SCC OnLine Ker 38

1
observed in cases such as Value Advisory Services v. ZTE Corporation5 and Gatex India (P)
Ltd. v. Arshiya Rail Infrastructure Ltd.6 Both these positions are prevalent and can be
observed today in courts. The ability of non-signatories to seek interim relief under section 9
of the act is limited even after multiple doctrines and principles were introduced to extend the
arbitration agreement to non-signatories in the Indian Jurisprudence.

II. Breakdown of Section 9 of the Arbitration and Conciliation Act, 1996

Interim relief is one of the important safeguard mechanisms given under this act to ensure that
the claims that a party wishes to raise in the arbitration are protected in the form of security or
guarantee or other measures Section 9 of the Arbitration and Conciliation Act, 1996, provides
the framework for interim measures by the court before or during the arbitration proceedings,
or at any time after the making of the arbitral award but before it is enforced. This section
enables parties to seek judicial intervention to protect their interests and secure assets or
evidence essential for the arbitration process. It empowers court to grant interim relief in cases
where immediate action is required to safeguard the subject matter of the arbitration. Interim
relief can be claimed in relation to preservation, interim custody, sale of goods, securing
amount, appointing receiver etc.

Although courts have the authority to provide temporary relief, they must take into account
how much doing so will disrupt the arbitration process. Generally speaking, courts must respect
the authority of an arbitral tribunal to provide temporary relief if one has already been
established, unless the tribunal is unable to provide effective relief. Something to be noted is
that, if the court grants interim relief before the commencement of arbitration, the applicant is
obligated to initiate the proceedings within 90 days of the order so passed by the court.

5
Value Advisory Services v. ZTE Corpn., 2009 SCC OnLine Del 1961.
6
Gatx India (P) Ltd. v. Arshiya Rail Infrastructure Ltd., 2014 SCC OnLine Del 4181

2
 III. Whether court can grant Interim Relief against Non-Signatories to the
Arbitration Agreement under Section 9?

The case of Cox & Kings II7 is of pertinence while discussing the interpretation of section 9 of
the act. The Constitution Bench recognised the three-judge bench's concern in paragraph 152
of the Cox & Kings II case and attempted to address it by ruling that the definition of "party"
under Section 2(1)(h) read with Section 7 of the Act8 serves as the foundation for the "group of
companies" doctrine. By using the concept, the Constitution Bench has abandoned the
conservative meaning of the term "party" in Section 9 of the Act, which was supported by
several High Courts9 and the Constitution Bench's earlier ruling in Firm Ashok Traders v.
Gurumukh Das Saluja.10 Previously, this view limited the application of Section 9 of the Act
to only the signatories to the arbitration agreement. However, there are varying judicial analysis
on the present moot point substantiating arguments for and against inclusion of non-signatories
within the ambit of section 9 of the act. In the case of Energo Engg. Projects Ltd v TRF Ltd11,
the court made a key observation that, when an application for interim relief is filed before the
court under section 9 of the act, the court must assess whether the relief provided under section
17 would be effective for the applicant or not.

Interpretation 1: Include third party in the proceeding to grant interim relief

In certain case, the court has interpreted section 9 liberally by placing reliance over the spirit
of the act as a whole. In Skypower Solar India (P) Ltd. v. Sterling & Wilson International12,
the court granted relief against non-signatory to the arbitration agreement involving banks or
subsidiary company. Further in the case of Arun Kapur v. Vikram Kapur,13 interim applications
were filed under section 9 of the act. The court categorically emphasized that application for
interim relief under section 9 and section 7 are very distinct. Application for interim relief under
section 7 before a tribunal concerns only parties to the proceeding. On the other hand, interim

7
2023 SCC OnLine SC 1634.
8
Supra note 1.
9
Vijay Arvind Jariwala v. Umang Jatin Gandhi, R/Special Civil Application No. 16131 of 2021, dated 6-5-2022
(Guj HC), Girish Mulchand Mehta v. Mahesh S. Mehta, 2009 SCC OnLine Bom 1986.
10
(2004) 3 SCC 155; see also Deutsche Post Bank Home Finance Ltd. v. Taduri Sridhar, (2011) 11 SCC 375.
11
Energo Engg. Projects Ltd v TRF Ltd 2016 SCC OnLine Del 6560,
12
Skypower Solar India (P) Ltd. v. Sterling & Wilson International FZE, 2023 SCC OnLine Del 7240,
13
Arun Kapur v. Vikram Kapur, 2009 SCC OnLine Del 1186

3
Application u/s 9 before a court need not only be against a party to the proceeding and can
concern a third party.

Further in the case of Blue Coast Infrastructure Development Pvt Ltd v Blue Coast Hotel Ltd
and Anr14, the court reiterated that the power of tribunal under section 17 is limited in scope
as compared ot power of court under section 9 of the act. The court also noted that limitations
of the contract i.e. non signatory members not allowed to submit interim applications as per
the agreement is not applicable in a court of law.15

Interpretation 2: Cannot Include third party in the proceeding to grant interim relief

The opposing view point is that courts cannot include third parties or non-signatories to the
agreement while granting interim relief under section 9 of the act. In the case of Mikuni Corpn.
v. Ucal Fuel Systems Ltd. Carburettors Ltd. Siemens Vdo Automotive,16 the court held that,
interim application under section 9 will not lie against any such party against whom arbitration
proceedings cannot be initiated inorder to secure the sanctity of the agreement in the first place
by not including irrelevant parties. Further, the court in Shoney Sanil v. Coastal Foundations
(P) Ltd17 noted that courts under the garb of powers vested upon them by virtue of section 9 of
the act cannot interfere with the rights of the non-signatory members.

They clearly established that interim measures can be granted only to parties to the agreement
or any party claiming under it. Much recently, in the case of Value Advisory Services v. ZTE
Corpn,18 the court explained that if it is interpreted that section 9 application cannot lie against
a third party, it shall hamper on its efficacy the operations of the act. The court shall have the
same power for making orders as it has for the purpose of, and in relation to, any proceedings
before it.

14
Blue Coast Infrastructure Development Pvt Ltd v Blue Coast Hotel Ltd and Anr O.M.P. (I) (COMM) No.
35/2020
15
See also MD Army Welfare Housing Organization v Sumangal Services Pvt Ltd and Gatx India Pvt. Ld. v.
Arshiya Rail Infrastructure Limited, 2014 SCC OnLine Del 4181 (Both judgements were delivered prior to the
2015 amendment to the act)
16
Mikuni Corpn. v. Ucal Fuel Systems Ltd. Carburettors Ltd. Siemens Vdo Automotive, 2008 SCC OnLine Del
127
17
Shoney Sanil v. Coastal Foundations (P) Ltd., 2006 SCC OnLine Ker 38
18
Value Advisory Services v. ZTE Corpn18., 2019 SCC OnLine Del 12111

4
 IV. Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel India Ltd

The supreme court in Essar House Pvt Ltd. v. Arcellor Mittal Nippon Steel India Ltd,19
explained relief granted section 9 could be valid when the relief sought becomes inefficacious
under section 17 of the act. The following circumstances were highlighted in relation to the
same;

o Tribunal is unavailable due to reasons of illness

o Where members of tribunal cannot congregate on short notice
o Constitution of the tribunal itself is under challenger

Citing Jagdish Ahuja v Cupino Limited where BomHC held scope of section 9 is very broad
and court has discretion to grant thereunder wide range of interim measures as may appear to
the court to be just and convenient but must be exercised judiciously and not arbitrarily.20 The
court is guided by principles reflected in Order 39 Rule 1 and Rule 2, Order 38 Rule 5 but not
unduly bound by the text of the same. The court also relied on Nimbus Limited v Board of
Control for Cricket in India for arguing that the exercise of power under section 9 cannot be
carried out in an uncharted territory ignoring principles of procedural law but at the same time,
the provisions under CPC cannot be interpreted in such a way to defeat the grant of relief as it
would subserve the interests of justice.

The court finally observed that section 9 of the act confers wide powers on the court to pass
orders securing the amount of dispute in arbitration whether before, during arbitral proceedings
or after passing award but before enforcement. All that the court is required to see is whether
the applicant for interim measure has a good prima facie case, whether the balance of
convenience is in favour of interim relief as prayed for being granted and whether the applicant
has approached the court with reasonable expedition.21 The effect of this judgment was that the
power of arbitral tribunal is equated with those of the court with limited exceptions.

19
Essar House Pvt Ltd. v. Arcellor Mittal Nippon Steel India Ltd., 2022 SCC OnLine SC 1219
20
Ibid, para 45.
21
Ibid, para 48,49,50.

5
 Conclusion

The application of section 9 to non-signatories presents a complicated interplay between

contract privity doctrine and judicial intervention to serve justice. Conventionally, the act
restricts providing interim reliefs to only signatories to the arbitration agreement, courts over
the years have broadened the scope and granted to non-signatories as well. This approach, is
taken with the intention to administer justice and avoid ineffective decisions. It is also evidence
to the evolution from formal contractual constraints to a more practical approach of
interpretation. However, this trend is exercised with some concern because it is apprehended
that taking the interim relief beyond the members who signed it is to tread on the sovereignty
of the contract. Section 9 applications require a contractual analysis while providing due
consideration on case-by-case disposition of the two competing but equally important interests.