Karnataka High Court: While considering the instant appeal, wherein the Court had to consider that whether an order refusing or granting ex-parte interim measure on an application under Section 9 of the Arbitration and Conciliation Act, 1996 (A&C Act) falling under ‘Commercial Arbitration Dispute’ is appealable order under Section 37 of the A&C Act; or whether such an appeal is barred under the proviso to Section 13(1A) of the Commercial Courts Act, 2015, the Division Bench of Anu Sivaraman and Anant Ramanath Hegde*, JJ., opined that an order granting or declining ex-parte interim measure is appealable under Section 37 of A&C Act, even if a dispute under Section 9 of A&C Act is before the Commercial Court.
The Division Bench also overruled Symphony Services Corporation (India) Private Limited, Bangalore v. Sudip Bhattacharjee, 2007 SCC OnLine Kar 368.
Contentions: The appellant contended that the power to grant interim order under Section 9 of A&C Act also includes the power to grant ex-parte interim order. Such power is expressly recognized in the High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001 (2001 Rules). Thus, an order issuing an emergent notice and declining ex-parte order is also an appealable order under Section 37 of A&C Act
Per contra, the respondents contended that the instant appeal challenging the order of the Commercial Court issuing emergent notice, and declining ‘ex-parte’ interim measure on an application under Section 9 of the A&C Act, 1996 is not maintainable.
The respondents further argued that in a proceeding under A&C Act, in respect of a Commercial Arbitration Dispute, the appeal under Section 37 of A&C Act is maintainable against an interlocutory order, only if such order falls under Order 43 of CPC, in view of the proviso to Section 13(1A) of the Commercial Courts Act, 2015.
Issue Before the Court: The Court had to consider the interplay of Sections 9 and 37 of A&C Act, Section 13 of the Commercial Courts Act and Rule 9 of 2001 Rules.
The issue was that whether the expression “granting or refusing to grant any measure under Section 9” appearing in Section 37 of Arbitration and Conciliation Act,1996 (A&C Act) includes only a ‘final order’ under Section 9, or it includes an ‘ex-parte interim measure’
Court’s Assessment:
The Court noted that due to the introduction of the non-obstante clause in S. 37 of A&C Act by way of 2019 Amendment, there is no dispute on the point that under Section 37 the final order granting or refusing to grant any interim measure under Section 9 is appealable. The non-obstante clause in S. 37 takes care of any inconsistency in any other law providing for an appeal in respect of the matters covered under the A&C Act.
The Court noted that if the expression, “granting or refusing to grant any measure under Section 9” appearing in Section 37(1)(b) of A&C Act, includes the order granting or refusing the ex-parte interim order, then under Section 37, appeal against such an order is maintainable.
Examining the relevant portions of R. 9 of High Court of Karnataka Arbitration (Proceedings before the Courts) Rules, 2001, the Court stated that the language used in 2001 Rules, particularly the expression, “When an application is made for an interim measure, under Section 9 of the Act, the Court shall in all cases, except where it appears that the object of granting the interim measure would be defeated by the delay before passing the interim order, direct notice of the application to be given to the opposite party”, clearly suggests that the ex-parte interim measure, if granted, is in exercise of power under Section 9 of the A&C Act itself.
Rule 9 of 2001 Rules does not confer the power to pass an ex-parte order, but it only recognizes the power inherent in Section 9 of the A&C Act and Rule 9 also deals with the procedure to be followed in case of ex-parte order.
The Court further pointed out that there is nothing in the language of Section 13 of Commercial Courts Act, 2015 to hold that the only ‘final order’ under Section 9 is appealable under Section 37 read with Section 13 of Commercial Courts Act when it comes to arbitration disputes coming under the jurisdiction of the Commercial Courts Act.
Thus, the Court was of the view that an order granting or declining ex-parte interim measure is appealable under S. 37 even if a dispute under S. 9 is before the Commercial Court.
Conclusions:
The Court concluded that appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is maintainable against an order granting or refusing ex-parte interim measure under Section 9 of the A&C Act, even if the application under Section 9 is filed before the Commercial Court, as defined under Commercial Courts Act, 2015.
The Court further concluded that as a corollary, appeal under Section 37 of A&C Act is maintainable against an order granting or refusing ex-parte interim measure under Section 9, if the Section 9 application is filed before the Court exercising jurisdiction under the A&C Act, 1996.
Though the appeal under Section 37 of the Act, 1996 is maintainable against the order refusing ‘ex-parte’ measure, the scope of interference in such appeal is limited as the Appellate Court is only required to consider whether consideration of prayer of ex-parte interim measure can be deferred till the appearance of the respondent.
In an appeal under Section 37 of the Act, 1996 against the order granting ‘ex-parte’ measure, the appeal may be entertained only in exceptional cases as the aggrieved party will have an efficacious remedy of moving the same Court which passed the order, to vacate the ‘ex-parte order.
[KLR Group Enterprises v. Madhu H.V., 2024 SCC OnLine Kar 65, decided on 19-07-2024]
*Judgment by Justice Anant Ramanath Hegde
Advocates who appeared in this case :
For the appellants: DHANANJAY JOSHI, SENIOR COUNSEL FOR SHASHIDHAR R, ADVOCATE
For the respondents: PRASHANTH G., ADVOCATE FOR R1, ASHOK HARANAHALLI, SENIOR COUNSEL A/W PRASANNA B.R, ADVOCATE FOR R2 TO R5
Buy Arbitration and Conciliation Act, 1996 HERE
