Section 17: Arbitration and Conciliation Act, 1996
By Nivedita Dhiman
Table of Contents
Introduction
Section 17 of the above-mentioned Act of 1996 talks about the interim measures that an arbitral tribunal can grant to the parties involved in an arbitration proceeding. Any interim measure to be granted should be within the scope of the arbitral proceedings and not beyond the dispute raised between the parties for the arbitration.
If the agreement between the parties does not exclude the jurisdiction of the arbitral tribunal to order a party to take any measure of protection, it is within the discretion of arbitral tribunal to pass necessary orders as warranted by the facts and circumstances. The arbitral tribunal is empowered to make orders amounting to interim measures of protection. This expression is enough to include all those measures which the parties themselves could have achieved by agreement.
Section 17 of Arbitration and Conciliation Act
Interim measures ordered by arbitral tribunal.
(1) A party may, during the arbitral proceedings [***], apply to the arbitral tribunal-
(i) for the appointment of a guardian for a minor or person of unsound mind for the purposes of arbitral proceedings; or
(ii) for an interim measure of protection in respect of any of the following matters, namely:-
(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;
(b) securing the amount in dispute in the arbitration;
(c) 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 authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party, or authorising 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;
(d) interim injunction or the appointment of a receiver.
(e) such other interim measure of protection as may appear to the arbitral tribunal to be just and convenient, and the arbitral tribunal shall have the same power for making orders, as the court has for the purpose of, and in relation to, any proceedings before it.
(2) Subject to any orders passed in an appeal under section 37, any order issued by the arbitral tribunal under this section shall be deemed to be an order of the Court for all purposes and shall be enforceable under the Code of Civil Procedure, 1908, in the same manner as if it were an order of the Court.]
Substituted by the Arbitration and Conciliation (Amendment) Act, 2015 (w.e.f 23.10.2015). Prior to substitution, the section as:
17. (1) Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order a party it) take any interim measure of protection as the arbitral tribunal may consider necessary in respect of the subject matter of the dispute.
(2) The arbitral tribunal may require a party to provide appropriate security in connection with a measure ordered under sub- section (1).
Landmark Judgements
Alka Chandewar vs Shamshul Ishrar Khan
Section 37 of the Act provides a recourse to parties in case an application under Section 17 of the Act is accepted or rejected by the arbitral tribunal. Prior to the 2015 Amendment Act, an order passed by an arbitral tribunal was not enforceable proprio vigore, however, the tribunal could always apply to the Court to take action for contempt under Section 27(5) of the Act.
Firm Ashok Traders vs Gurmukh Das Saluja
The arbitral tribunal is empowered to make orders amounting to interim measures of protection. The need for section 9, inspite of section 17 having been enacted is that section 17 would operate only during the existence of the arbitral tribunal and its being functional. During that period the power conferred on the court under section 9 may overlap to some extent but insofar as the period pre and post the arbitral proceedings is concerned, the party requiring an interim measure of protection shall have to approach only the court.
Bakshi Speedways vs Hindustan Petroleum Corp.
As per the arbitrator, the said allegations were to be true, it would not be fair to allow appellant to continue operating retail outlet to the detriment of customers who could never be compensated for short supply by appellant and in such a case it was held that reference to public interest by the arbitrator was justified.
Conclusion
The amendment which was made to the above Act established a more effective framework by enhancing the enforceability of the interim measures granted by arbitral tribunals. Section 17 of the Act contains similar provisions for seeking interim reliefs before an arbitral tribunal during the pendency of arbitral proceedings.
These provisions are meant to preserve the rights and interests of the parties during the arbitration process. While making an interim order, the arbitrator referred to public policy being one of the considerations. Interim measure of protection has to be a measure of protection to preserve situation prevailing and to keep property available to answer final adjudication as and when final award is passed by the arbitrator.
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