INTRODUCTION
The provision dealing with grant of ad-Interim orders for the preservation of subject matter of arbitration proceedings is governed by Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ACA). The provision is analogous to the provision incorporated in CPC, 1908 under Order XXXIX, dealing with temporary injunctions and interlocutory orders. The ACA enables a party to receive interim protection in the nature as provided under the Act, before or after the arbitration proceedings. The question remains as to whether a party, having invoked the jurisdiction u/s 9, can approach the court again through a subsequent application, seeking interim protection, in the same proceeding. One way to answer the question would be to draw parallels from the procedure as provided under CPC in case of applications for interim relief in civil proceedings.[1] The purpose of this article is to analyse/discuss whether the scope/nature of S.9 application is similar to that of an interlocutory application under CPC and whether the procedure under CPC for entertaining interlocutory applications can be read into the ACA. This raises two important questions; firstly, whether CPC is applicable to Arbitration proceedings? And secondly, whether a section 9 application under the ACA is akin to an interlocutory application under the CPC?
WHETHER CPC IS APPLICABLE TO ARBITRATION PROCEEDINGS?
The Law that is applicable to the arbitration proceeding is the law of the Juridical seat of the arbitration or more commonly referred to as lex arbitri. The lex arbitri determines the procedural law, and the courts which retain supervisory jurisdiction over the arbitration proceedings. In the case of an arbitration that is sought to be conducted within the juridical limits of India, the applicability of Code of Civil Procedure, 1908 and the Indian Evidence Act, 1872, assume significance, having a bearing on how the rights of the parties are to be decided by a tribunal, distinct from the workings of a civil court. The High of Bombay in the case of Sahyadri Earthmovers vs. L and T Finance Limited and Anr [2], while examining the scope of applicability of CPC during arbitration proceedings held that the principles underlying the provisions of CPC and the Evidence Act, will apply and guide the tribunal in its conduct of arbitral proceedings, even though Section 19 (1) of Arbitration and Conciliation Act, 1996 (hereinafter referred to as ACA, 1996) acts as an apparent restriction. The courts have time and again construed the condition prescribed under sub-section (1) of section 19 as words implying caution and not restriction. In construing the scope of sub-section (1) of Section 19 of ACA, 1996 the Bombay High Court observed:
‘In sub-section (1) of Section 19, the Act has prescribed that the Arbitral Tribunal shall not be bound by the Code of Civil Procedure, 1908 or by the Evidence Act, 1872. These are words of amplitude and not of restriction. These words do not prohibit the Arbitral Tribunal from drawing sustenance from the fundamental principles underlying the Civil Procedure Code or Evidence Act, but free the Tribunal from being bound, as would a Civil Court, by the requirement of observing the provisions of the Code and the law relating to evidence with all its rigor.’
Therefore, the discussion that follows regarding the legal permissibility of invoking a particular provision of ACA, 1996 more than once in the same proceeding, draws parallels from the permissibility dealt within the general law governing civil procedure in India.
WHETHER SECTION 9 APPLICATION IS AKIN TO INTERLOCUTORY APPLICATION UNDER CPC?
Although on a comparative analysis of the nature and scope of interlocutory applications under CPC and Section 9 applications under the ACA, it is evidently clear that both of these serve the same purpose, however, the question whether an application under s 9 of the ACA is of the same nature as an interlocutory application under the Code of Civil Procedure has not escaped judicial scrutiny.
The High Court of Karnataka in M/S Sovereign Developers and Infrastructure Ltd v. Paramount Vijetha Holding [3] held that an application under s 9 of the ACA is of the same nature as an interlocutory application under the Code of Civil Procedure. It was held that “a proceeding for an interim measure under Section 9 of the Arbitration Act is almost like an interlocutory application in a suit and hence such a proceeding cannot be construed as a suit within the meaning of Section 10 of the Code of Civil Procedure.[4] Therefore, on a careful examination of the nature and scope of applications under section 9 of the ACA and the interlocutory applications under the Code of Civil Procedure, it can be concluded that they are akin to each other in law and practice.
CONCLUSION: AS RES JUDICATA IS NOT APPLICABLE TO INTERLOCUTORY APPLICATIONS, THEREFORE SUBSEQUENT APPLICATIONS UNDER S9 ARE MAINTAINABLE.
Courts have held time and again that an interlocutory application does not encroach upon the merits of the controversy between parties an order pursuant to such applications cannot be regarded as a matter affecting the trial of the suit. Most notably, the Supreme Court in Arjun Singh vs Mohindra Kumar & Ors [5] held that “It is needless to point out that interlocutory orders are of various kinds; some like orders of stay, injunction or receiver are designed to preserve the status quo pending the litigation and to ensure that the parties might not be prejudiced by the normal delay which the proceedings before the court usually take. They do not, in that sense, decide in any manner the merits of the controversy in issue in the suit and do not, of course, put an end to it even in part. Such orders are certainly capable of being altered or varied by subsequent applications for the same relief, though normally only on proof of new facts or new situations which subsequently emerge.” The court further went on to observe that “As the interlocutory orders do not decide any matter in issue arising in the suit nor do they put an end to the litigation and do not decide the legal rights of the parties to the litigation, the principle of res judicata does not apply to the findings on which these orders are based.” This position has been reaffirmed in various other decisions [ e.g., Surendra Sawhney v. Murlidhar and Ors. 2007 (3) ILR (Raj) 693].
Now, on a joint reading of the decisions in M/S Sovereign Developers and Arjun Singh, it is only logical to infer that there is no bar on subsequent applications under section 9 of the Arbitration and Conciliation Act. As a section 9 application is akin to an interlocutory application under CPC, it is bound to be treated in the same manner. The Supreme Court has clearly laid down that there is no bar on subsequent interlocutory applications for the same relief and orders passed under the same are alterable given new facts and situations emerge. Drawing a parallel from this settled position of law, the High Court of Karnataka in M/S Sovereign Developers and Infrastructure Ltd v. Paramount Vijetha Holding came to the conclusion that subsequent applications under Section of the ACA are maintainable in law. As already demonstrated in this article, the reasoning of the court is sound and logical and the question whether Res Judicata will apply to subsequent Section 9 applications under the Arbitration Act is bound to be answered in the negative.