A Division Bench of the Supreme Court of India (“SC”) in the case of Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited, [Special Leave Petition No. 3187 of 2021 decided on September 14, 2022], observed that a court exercising power under Section 9 of the Arbitration and Conciliation Act, 1996 (“the Act”) is not strictly bound by provisions of the Code of Civil Procedure, 1908 (“CPC”) and should not withhold relief on the mere technicality. The Court further held that, proof of actual attempts to deal with, remove or dispose of the property with a view to defeat or delay the realization of an impending arbitral award is not imperative for grant of stay. 

Issue: 

Whether principles of the CPC are to be strictly followed while deciding an application filed under the provisions of the Act? 

Decision of the Court:

In deciding a petition under Section 9 of the Act, a court cannot ignore the basic principles of CPC. At the same time, the power of the court to grant relief is not curtailed by the procedural provision in the CPC. The SC noted that the power under Section 9 of the Act should not ordinarily be exercised ignoring the basic principles of procedural law as laid down in CPC, however, the technicalities of CPC cannot prevent the Court from securing the ends of justice. Thus, as per the Court, if a strong prima-facie case is made out and the balance of convenience is in favour of interim relief being granted, the court exercising power under Section 9 of the Act should not withhold relief on the mere technicality of absence of averments, incorporating the grounds for attachment before judgment under Order 38 Rule 5 of CPC.

Please find a copy of the judgment, here.

This update has been contributed by R. Sudhinder (Partner) and  Ekta Bhasin (Principal Associate).

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