The Delhi High Court on July 7, 2020 in the case of Hero Wind Energy Limited v. Inox Renewables Limited, while deciding an appeal under Section 37 of the Arbitration and Conciliation Act (‘the Act’) answered an interesting question of law qua interpretation of Section 9(3) of the Act i.e. if an arbitral tribunal has already been constituted to adjudicate the disputes which have arisen out of an agreement or set of agreements containing an arbitration clause, whether the remedy of approaching the court for interim measures with respect to disputes subsequently arising from the same agreement or set of agreements is barred by Section 9(3) of the Act.
Brief facts of the case:
Hero Wind Energy Limited (‘Appellant’) desirous of owning one of the wind farms in the wind park developed by Inox Group of companies, in or about the year 2014, entered into, inter-alia, three agreements with Inox Wind Limited (IWL), IRL (Inox Renewables Limited) and Inox Wind Infrastructure Services Limited (WISL) (‘Respondents’), such agreements were wrap agreement, shared services contract and operation and maintenance (‘O&M’) agreement.
All the three agreements contained identical arbitration clauses. The Appellant being aggrieved by the non-fulfilment of obligations under the O&M agreement by the Respondent group companies, sent a notice calling upon IWL and IWISL to cure such breaches and make payment of compensation. Subsequently, vide notice dated February 28, 2020, the Appellant invoked the arbitration clause and called upon IWL and IWISL to nominate their arbitrator within 30 days.
While the appointment was pending, on May, 2018, the Appellant filed a petition for interim measures praying for two reliefs i.e. (i) direct IWISL to hand over control over the O&M of the project to the Appellant or its agents; and, (b) restrain IWISL from interfering in the Appellant or its agents carrying on the O&M of the project or from accessing project premises and shared infrastructure. During the pendency of the petition, the arbitral tribunal having been constituted, the Appellant on October 10, 2018 withdrew the petition with liberty to approach the arbitral tribunal under Section 17 of the Act. After withdrawal of the petition, on October 22, 2019, the Appellant issued another notice to IWISL terminating the O&M agreement and called upon IWISL to hand over the possession of project site to the Appellant with full control. As was stated in the O&M agreement, the Appellant and IWISL were required to mutually arrive at an agreement qua the O&M charges payable by the Appellant to IWISL for O&M of shared infrastructure. Though several meetings were held, the negotiation did not fructify. Hence, another Section 9 petition under the Act was filed by the Appellant.
The trial court held in favour of the Respondents and held that the disputes indeed had arisen out of the O&M agreement and having held so, proceeded to hold that since an arbitral tribunal had already been constituted with respect to disputes arising from the O&M agreement, Section 9(3) of the Act would come into play. Section 9(3) of the Act states that once an arbitral tribunal has been constituted, the court shall not entertain an application for granting of interim reliefs, unless the court finds that circumstances exist which may not render the remedy provided under Section 17 of the Act, efficacious. However, the question, that even if the disputes had arisen out of O&M agreement, whether the arbitral tribunal constituted to adjudicate the disputes which had earlier arisen from the O&M agreement, would be the arbitral tribunal within the meaning of Section 9(3) of the Act, was not addressed before the trial court.
Observations of the court:
This update has been contributed by Pooja Chakrabarti (Partner) and Debjyoti Saha (Associate).
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