Section 9 of the Arbitration and Conciliation Act, 1996 can only be exercised in the exceptional circumstances!

SAVITA JAIN SOLE PROPRIETOR OF MS NAVKAR SALES V M/S KRISHNA PACKAGING

IN THE HIGH COURT OF DELHI AT NEW DELHI

CITATION: - FAO (COMM) 62/2021

INTRODUCTION

The case of SAVITA JAIN SOLE PROPRIETOR OF M S NAVKAR SALES v.?M/S KRISHNA PACKAGING [FAO (COMM) 62/2021] holds a significant position in the arena of arbitration proceedings as the judges have fairly interpreted the Section 9 of the Arbitration and Conciliation Act, 1996 and can only be exercised in the exceptional circumstances when there has been an adequate material on record leading to a definite conclusion that the respondent is likely to render the entire arbitration proceedings infructuous or where there is an admitted liability.

BACKGROUND FACTS

The petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 in which the appellants had challenged the order of the trial court. The appellants argued that they have themselves admitted the liability of being unable to pay the amount, and stated that there must have been exercise of the discretionary relief in the case as there was adequate material on record that led to a definite conclusion, that the respondents had admitted its liability.

On the other hand, the respondents contended that the appellants have failed to establish urgency in the matter in the applications, and also that the respondents have not admitted any kind of liability.

GENESIS AND RULING

The court after hearing the parties interpreted and stated that the provision of Section 9 has been introduced for granting wide power to the courts in granting an appropriate interim order or relief based on the relevant facts and circumstances of the case in all the stages of the arbitration proceedings either before or after the arbitration proceedings. The court however expressed its positivity with the respondent i.e., it is the discretion of the court that Section 9 of the Arbitration and Conciliation Act, 1996 can be exercised even in the exceptional cases when there is an adequate material on record leading to a definite conclusion that the respondent is likely to render the entire arbitration proceedings infructuous or if there is an admitted liability. The exercise of the powers under Section 9 of the Arbitration and Conciliation Act, 1996 has been premised on the underlying principles of Orders XXXVIII and XXXIX of the C.P.C.

The court has referred to the case of Ajay Singh v. Kai Airways Private Limited, 2017 SCC OnLine Del 8934 in which the court held that “Though apparently, there seem to be two divergent strands of thought, in judicial thinking, this court is of the opinion that the matter is one of the weight to be given to the materials on record, a fact dependent exercise, rather than of principle. That Section 9 grants wide powers to the courts in fashioning an appropriate interim order, is apparent from its text. Nevertheless, what the authorities stress is that the exercise of such power should be principled, premised on FAO (COMM) 62/2021 Page 8 of 11 some known guidelines - therefore, the analogy of Orders 38 and 39. Equally, the court should not find itself unduly bound by the text of those provisions rather it is to follow the underlying principles”.

CONCLUSION

The vexatious litigation and the vexatious proceeding is a type of proceeding which acts as an abuse of the process of the court. The trial courts act as a primary judicial authority in granting justice to the parties, and if the trial court passes inappropriate and vexatious judgments, then it questions the judicial intervention of the courts. Hence, the case holds a significant position in the arena of judicial system as it has fairly quashed the orders of the trial court.

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