Report No. 176
2.6.2 Existing sec. 9 is proposed to be recast as follows:
Interim measures etc. by court
"9. (1) A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with section 36, apply to a court for interim measures.
(2) The Court shall have the same powers for making orders under sub-section (1) as it has for the purpose of, and in relation to, any proceedings before it.
(3) In particular and without prejudice to sub-section (2), a party may apply to the court for any of the following, namely:-
(a) appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings;
(b) interim measure of protection in respect of any of the following matters, namely:-
(i) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(ii) securing the amount in dispute in the arbitration;
(iii) the detention, preservation or inspection of any property or thing which is the subject matter of the dispute in arbitration, or as to which any question may arise therein and authorizing for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorizing any samples to be taken or any observation to be made, or experiment to be tried, which may be necessary or expedient for the purpose of obtaining full information or evidence;
(iv)interim injunction or the appointment of a receiver. (c) other interim measure of protection as may appear to the court to be just and convenient.
2.6.3 One other aspect under sec. 9 is of some procedural importance. In case interim orders are issued before the commencement of proceedings, can they be allowed to continue for ever even if the party who has obtained an order in his favour does not within reasonable time takes steps to have an arbitrator appointed under sec. 11?
To obviate any such situation, it is decided to introduce a provision in sec. 9 requiring the Court to prescribe a specific period to file the application under sec. 9 to take steps as envisaged under sec. 11 for appointment of an arbitrator, and with a further condition that the Court must also prescribe that if such steps are not taken within the prescribed time, the interim directions granted shall stand vacated unless the prescribed time is extended. It is proposed to confer a power on the Court to order restitution, if need be. Therefore, sub-sections (4), (5) and (6) are proposed to be inserted after the proposed sub-sections (1), (2) and (3) of section 9 as follows:
"(4) Where a party makes an application under subsection(1) for the grant of interim measures before the commencement of arbitration, the court shall direct the party in whose favour the interim measure is granted, to take effective steps for the appointment of the arbitral tribunal in accordance with the procedure specified in section 11, within a period of thirty days from the date of the said order.
(5)The court may direct that if such steps are not taken within the period of thirty days specified under sub-section (4), the interim measure granted under sub-sections (2) and (3), shall stand vacated on the expiry of the said period:
Provided that the court may on sufficient cause being shown for the delay in taking such steps, extend the said period.
(6) Where an order granting an interim measure stands vacated under sub-section (5), the court may pass such further orders as to restitution as it may deem fit against the party in whose favour the interim measure was granted under this section."
A suggestion was made that at the stage of section 11, the court, i.e., section 2 (1) (e), court should itself be able to appoint arbitrators. It is pointed out that there is no need to drive the parties to the High Court or the Supreme Court under section 11.
They have to incur extra expense and even travel upto the seat of the High Court for purpose of appointment under section 11, in case there is no agreement in the appointment. The Commission does feel that this is a very legitimate point but feel that it is not possible now to alter the scheme of the 1996 Act that in the case of disagreement, parties have to approach the Chief Justice of the High Court or the Chief Justice of India, as the case may be, for appointment under section 11.
Therefore, we are not able to make any provision in section 11 for reference by the court as defined in section 2 (1) (e). A suggestion has been made that even at the stage of sec. 9 proceedings, the Court must be enabled to first decide jurisdictional issues if raised. It has been held in Alpic Finance Ltd. vs. Allied Resins & Chemicals Ltd. 2000 C.L.C. 293 (Cal) that the existence of an arbitration agreement is necessary for application of sec. 9 though not the existence of a dispute.
In the opinion of the Commission, it is not necessary for the Court to decide jurisdictional issues as preliminary issues before granting interim measures under sec. 9. After all, the grant of interim measures is discretionary, and while exercising the discretion, the Court is supposed to take into account various factors including the existence of a prima facie case on jurisdictional issues. Hence no provision need be made in this behalf.