Section 9 of the arbitration and conciliation act, 1996, jurisdiction, powers, court, local, international, judgments, supreme court, high court, powers, interim, time limit, amendment 2015

1. SECTION 9 OF THE
ARBITRATION AND
CONCILIATION ACT
:Prepared by:
H. S. MULIA
1

2. Disclaimer
Views expressed in
this document are
for information and
academic purpose
only.
2

3. Retrospective Effect of Amended
Provisions:-
In view of the Judgment delivered by the
Division Bench of Delhi High Court in the
case of Ardee Infrastructure Pvt. Ltd. v. Ms.
Anuradha Bhatia & Ardee Infrastructure
Pvt. Ltd. v. Yashpal & Sons, FAO(OS) No.
221/2016 and FAO(OS) No.222/2016, dated
06.01.2017, the unamended 1996 Act
would apply to the whole gambit of
arbitration proceedings which commenced
before the Amendment Act, right upto the
culmination of the proceedings into a
challenge or an enforcement of the award. 3

4. Therefore, the crucial date
to determine as to whether
provisions of new Act would
apply to the particular
Arbitral Proceedings or not
would depend on the date
on which the Arbitral
Proceedings has
commenced.
4

5. In other words if, Arbitral
Proceedings commenced prior to
the date on which new Act came
into effect i.e. prior to 28.10.2015,
then in that case the unamended
1996 Act would apply to the whole
gambit of arbitration proceedings
which commenced before the
Amendment Act, right upto the
culmination of the proceedings
into a challenge or an
enforcement of the award.
5

6. And if, Arbitral Proceedings
commenced after the date
on which new Act came into
effect i.e. after 28.10.2015,
then in that case the
unamended 1996 Act would
not apply to the Arbitration
proceedings which
commenced after the
Amendment Act. 6

7. Section 9 of the A & C Act:-
There is no material change in the old Section 9 and
Amended Section 9 of A & C Act but Section 9 has
been Re-numbered as sub-section (1) whereas, Sub
Section (2) in the following terms has been added
(2) Where, before the commencement of the
arbitral proceedings, a Court passes an order for
any interim measure of protection under subsection
(1), the arbitral proceedings shall be commenced
within a period of ninety days from the date of such
order or within such further time as the Court may
determine.
(3) Once the arbitral tribunal has been constituted,
the Court shall not entertain an application under
sub-section (1), unless the Court finds that
circumstances exist which may not render the
remedy provided under section 17 efficacious. 7

8. After reading Section 9 of the A &
C Act, two situations emerge and,
therefore, one has to decide on
which date an Application u/s 9 has
been preferred:-
(A) Prior to the Amendment came
into effect i.e. before 28.10.2015
and,
(B) After the Amendment came
into effect i.e. after 28.10.2015. 8

9. (A) Prior to the Amendment came
into effect i.e. before 28.10.2015. This
situation again leads to two
possibilities, which are:-
(a) If an application u/s 9 had been
preferred prior to 28.10.2015 and,
Arbitral Proceeding has been initiated
before 28.10.2015 and,
(b) If an application u/s 9 had been
preferred prior to 28.10.2015 and,
Arbitral Proceeding has been initiated
after 28.10.2015 or likely to be
initiated in the near future. 9

10. What do you mean by commencement
of Arbitral Proceedings.
The meaning of Arbitral Proceeding
has been given under Section 21 of
the Act which reads as under:-
21. Commencement of arbitral
proceedings:- Unless otherwise
agreed by the parties, the arbitral
proceedings in respect of a particular
dispute commence on the date on
which a request for that dispute to be
referred to arbitration is received by
the respondent. 10

11. Therefore, if an application
u/s 9 had been preferred
prior to 28.10.2015 and,
Arbitral Proceeding has been
initiated before 28.10.2015,
an application u/s 9 has to
be decided as per the
unamended Act.
11

12. And, If an application u/s 9
had been preferred prior to
28.10.2015 and, Arbitral
Proceeding has been
initiated after 28.10.2015 or
likely to be initiated in the
near future, an application
u/s 9 has to be decided
under the amended Act.
12

13. Sub-section (2) of Section 9 provides
that, the arbitral proceedings shall be
commenced within a period of ninety
days from the date of such order or
within such further time as the Court
may determine. Meaning thereby, if
the arbitral proceedings has not
commenced within a period of ninety
days from the date of such order or
within such further time as the Court
may determine, after passing an
order u/s 9 of the Act, it shall stand
terminated or vacated.
13

14. (B) After the Amendment came
into effect i.e. after 28.10.2015:-
If an application u/s 9 has been
preferred after the arbitral tribunal
has been constituted, the Court
shall not entertain an application
under sub-section (1), unless the
Court finds that circumstances
exist which may not render the
remedy provided under section 17
efficacious. [section 9(3)]
14

15. Territorial Jurisdiction of the Court u/s 9 of
the Act:-
In the case of Bharat Aluminium Co. v. Kaiser
Aluminium Technical Services Inc. vs. Coal
India Ltd., AIR 2012 SC (Supp) 444, it has
been held that, if the arbitration agreement
is found or held to provide for a seat / place
of arbitration outside India, then the Part I of
the Arbitration Act, 1996 would not govern
those arbitration proceedings and would not
enable Indian Courts to exercise supervisory
jurisdiction over the arbitration or the award.
15

16. It would only mean that the parties
have contractually imported from the
Arbitration Act, 1996, those provisions
which are concerned with the internal
conduct of their arbitration and which
are not inconsistent with the
mandatory provisions of the English
Procedural Law. This necessarily
follows from the fact that Part I applies
only to arbitrations having their
seat/place in India.
16

17. In Balaji Coke Industry Pvt. Ltd. v.
Maa Bhagwati Coke Gujarat Pvt.
Ltd., (2009) 9 SCC 403, the contract
between the parties stated that the
arbitration would take place at
Kolkata. Pursuant to the said
agreement the parties entered into
a High Seas Sale Agreement
(‘HSSA’) wherein it was specified
that coal would be supplied to the
Respondent at Gujarat. Clause 14 of
the HSSA provided that the sale
contract would be “subject to
Kolkata jurisdiction”.
17

18. When disputes arose, an
application was filed by in the
Court of the Principal Civil Judge
at Bhavnagar, Gujarat under
Section 9 of the Act seeking
injunction to restrain the
otherside from disposing of the
materials. The otherside then
approached the Supreme Court
with a petition under Section 25
CPC for transfer of the application
preferred u/s 9 to the Calcutta
High Court.
18

19. The Supreme Court reiterated the settled position
that where two courts have jurisdiction to try a suit
or proceedings under the provisions of the CPC, an
agreement between the parties that one of such
courts would have jurisdiction to decide the
disputes would not be contrary to public policy and
was, therefore, not hit by Section 28 of the Indian
Contract Act, 1872. It was held that the parties
knowingly and voluntarily agreed that the contract
arising out of the HSSA would be subject to Kolkata
jurisdiction. The application u/s 9 of the A & C Act
in the Gujarat court was asked to be transferred to
the High Court at Kolkata.
19

20. In Swastik Gases Pvt. Ltd. v. Indian Oil
Corporation Ltd., (2013) 9SCC 32, it has
been reiterated that where the parties
have consciously agreed to refer their
disputes to one of the Courts which has
jurisdiction, it is that Court alone which
would entertain the petition.
Referring to Section 20 CPC the Court
explained:
“Where the contract specifies the
jurisdiction of the courts at a particular
place and such courts have jurisdiction
to deal with the matter, we think that an
inference may be drawn that parties
intended to exclude all other courts”. 20

21. In the same situation, Supreme Court
in the recent case of B.E. Simoese
Von Staraburg Niedenthal & Another
v. Chhattisgarh Investment Limited,
(2015) 12 SCC 225 has dealt with all
the earlier decisions and has held
that where the agreement between
the parties restricted jurisdiction to
only one particular court, that court
alone would have jurisdiction. Any
petition preferred to courts outside
the exclusive court agreed to by the
parties would also be without
jurisdiction.
21

22. In Indus Mobile Distribution Pvt.
Ltd. vs. Datawind innovation Pvt.
Ltd, AIR 2017 SC 2105 it has been
held that under the A & C Act,
unlike CPC which applies to suits
filed in Courts, 'Reference to Seat'
is the concept by which neutral
venue can be chosen by the
parties. Neutral venue may not in
classical sense have jurisdiction -
that is, no part of clause of action
may have arisen at neutral venue
and neither would any of
provisions of Section 16 to 21 of
CPC be attracted. 22

23. In purpose arbitration law
however, as has been held
in series of judgment that
the moment the Seat is
determined, fact that Seat is
at Mumbai would vest
Mumbai Court with
exclusive jurisdiction for the
purpose of regulating
arbitral proceedings arising
out of agreement between
the parties. 23

24. From the above referred ratios, it
becomes clear that when the
Arbitration Clause stipulates the
Seat as Place 'A' as neutral venue,
only that courts at Place 'A' alone
would have jurisdiction in respect
of disputes arising under the
agreement (though no cause of
action may have arise at neutral
venue) and would oust all other
courts including the Court, under
whose jurisdiction cause of action
has arisen. 24

25. If arbitral proceedings are not
commenced within a reasonable
time after filing of or after passing
an order u/s 9 (Unamended Act):-
In Firm Ashok Traders v/s Gurumukh
Das Saluja, reported in AIR 2004 SC
1433 wherein in para No.18 it is held
that:-
25

26. “If arbitral proceedings are not commenced within
a reasonable time of an order u/s 9, the
relationship between the order u/s 9 and the
arbitral proceedings would stand snapped and the
relief allowed to the party shall cease to be an
order made earlier i.e. in contemplation of arbitral
proceedings. The Court, approached by a party
with an application u/s 9, is justified in asking the
party as to how and when the party approaching
the Court proposes to commence the arbitral
proceedings. Rather, the scheme in which Section
9 is placed obligates the Court to do so. The Court
may also while passing an order under S. 9 put
the party on terms and may recall the order if the
party commits breach of the terms”.
26

27. An application for sale,
foreclosure or redemption of a
mortgaged property should
only be tried and decided by a
public forum and not by an
arbitral tribunal.
Hon'ble Apex Court in the case
of Booz Allen and Hamilton
Inc. v/s SBI Home Finance Ltd.,
reported in AIR 2011 SC 2507
has held in para 27 that:-
27

28. “An agreement to sell or an agreement to
mortgage does not involve any transfer of
right in rem but create only a personal
obligation. Therefore if specific performance
is sought either in regard to an agreement
to sell or an agreement to mortgage, the
claim for specific performance will be
arbitrable. On the other hand, a mortgage is
a transfer of a right in rem. A mortgage suit
for sale of the mortgaged property is an
action in rem, for enforcement of a right in
rem. A suit on mortgage is not a mere suit
for money. A suit for enforcement of a
mortgage being the enforcement of a right
in rem, will have to be decided by courts of
law and not by arbitral tribunals.”
28

29. In para No.27(ii) it is observed as
under:-
“(ii) In passing a preliminary
decree and final decree, the court
adjudicates, adjusts and
safeguards the interests not only
of the mortgagor and mortgagee
but also puisne/mesne
mortgagees, persons entitled to
equity of redemption, persons
having an interest in the
mortgaged property, auction
purchasers, persons in
possession. An arbitral tribunal
will not be able to do so.” 29

30. It is further held in para No.28 as under:-
“A decree for sale of a mortgaged property
as in the case of a decree for order of
winding up, requires the court to protect the
interests of persons other than the parties
to the suit/petition and empowers the court
to entertain and adjudicate upon rights and
liabilities of third parties (other than those
who are parties to the arbitration
agreement). Therefore, a suit for sale,
foreclosure or redemption of a mortgaged
property, should only be tried by a public
forum, and not by an arbitral tribunal.
Consequently, it follows that the court
where the mortgage suit is pending, should
not refer the parties to arbitration.”
30

31. Thank
You 31