Court Reiterates Limitations on Section 9 Relief Under Arbitration and Conciliation Act
In a recent judgment, the Division Bench of the Delhi High Court, comprising Justices Anil Kshetarpal and Amit Mahajan, upheld the decision of a Single Judge in a case involving M/s SLR Construction Pvt. Ltd. and GAIL India Ltd. The appeal, filed by M/s SLR Construction, challenged the dismissal of their petition under Section 9 of the Arbitration and Conciliation Act, 1996, which sought the release of alleged contractual dues certified by GAIL.
The case revolved around a contract awarded to M/s SLR Construction for the execution of terminal station works in Gorakhpur, which encountered delays and complications. Despite completing the work and submitting a final bill certified by the project management consultant, the appellant claimed that GAIL withheld payment and attempted cross-recoveries related to other contracts.
The Single Judge had dismissed the Section 9 petition, stating that the relief sought amounted to enforcing monetary claims without adjudicating disputes through arbitration. The appellant contended that the amounts were not disputed and that GAIL, as a public sector undertaking, should act fairly. However, the Division Bench reaffirmed that Section 9 relief is protective and interim, not meant for final adjudication of contractual disputes or enforcement of monetary claims.
The court emphasized that the jurisdiction under Section 9 is not to bypass the arbitration process or secure payment of disputed amounts. It highlighted that disputes concerning contractual performance and financial liabilities require arbitration, as agreed by the parties.
The court noted that no exceptional circumstances, such as imminent dissipation of assets or frustration of arbitral proceedings, were demonstrated to warrant interim protection under Section 9. Furthermore, it reiterated that the mere fact that one party is a public sector undertaking does not alter the agreed dispute resolution mechanism.
In dismissing the appeal, the court clarified that the appellant could still pursue arbitration and other legal remedies. It maintained that the discretion exercised by the Single Judge was not arbitrary or contrary to settled principles, thus limiting appellate interference.
Bottom line:-
Relief under Section 9 of the Arbitration and Conciliation Act, 1996, seeking enforcement of alleged admitted contractual dues, cannot be granted when such relief substantially amounts to enforcement of a monetary claim without any circumstances warranting interim protection in aid of arbitral proceedings.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 - Sections 9, 37
M/s SLR Construction Pvt. Ltd. v. GAIL India Ltd., (Delhi)(DB) : Law Finder Doc id # 2933182
