The Arbitration and Conciliation Act, 1996, provides that
a Party may approach the Court for interim measures at any stage of
the arbitral process. However, Section 9 does not prescribe the
territorial jurisdiction of the Court empowered to grant such
The question that arose in the present case of NHPC
Limited v. Hindustan Construction Co. Ltd. 2015 SCC Online Del
9804 was the regarding the territorial jurisdiction of the
Court where the interim application should be filed.
The Appellant and Respondent were involved in an arbitration
matter, in which the final award was being challenged in the Delhi
High Court, when the Respondent filed for an injunction under
Section 9 of the Act asking for one week's advance notice if
the Appellant decided to invoke the bank guarantees given by the
Respondent, during the pendency of the challenge proceedings. The
setting aside application under Section 34 of the Arbitration Act
and the application for interim injunction were both filed by the
Appellant in the Delhi High Court on the grounds that the seat of
arbitration was Delhi and the arbitration took place in Delhi. The
injunction was granted by the Court but was subsequently challenged
by the Appellant in appeal on both jurisdiction and merits. The
present discussion will focus on the former.
The Appellant argued in appeal, that the Delhi High Court did
not have jurisdiction to hear the matter as no part of the cause of
action arose in Delhi. The agreement was signed in Faridabad,
executed in West Bengal and the registered office of the parties
were in Faridabad and Mumbai.
In upholding the jurisdiction of the Delhi High Court, the Court
relied on Bharat Aluminium Co. v. Kaiser Aluminium Technical
Service, Inc. 2012 9 SCC 552 (hereinafter referred to
as "BALCO") wherein it was held that: "the
legislature has intentionally given jurisdiction to two courts i.e.
the court which would have jurisdiction where the cause of action
is located and the courts where the arbitration takes place. This
was necessary as on many occasions the agreement may provide for a
seat of arbitration at a place which would be neutral to both the
parties." The Respondent argued that this decision would
not apply as BALCO only applies prospectively to arbitration
agreements entered into after 06.09.2012 and the arbitration
agreement in this case was entered into before the judgement was
rendered by the Hon'ble Supreme Court in BALCO. The Court
however, disregarded this argument since the prospectively
application of BALCO was only limited to the non-applicability of
Part I of the Act to Part II thereof.
Further reliance was placed by the Court on the judgment of the
Division bench of the Delhi High Court in Ion Exchange
(India) Ltd. vs Panasonic Electric Works Co. Ltd. (2014) 208 DLT
597, wherein it was held that "that the Courts at
the seat or place of arbitration would have territorial
jurisdiction to entertain an application under the said Act subject
to the provisions of Section 42 thereof, irrespective of the fact
that the cause of action arose elsewhere and / or the respondent
Thus, it has been re-iterated by the Delhi High Court that the
Courts at the seat of arbitration have the requisite jurisdiction
to entertain a Section 9 application under the Arbitration Act even
if they have no nexus with dispute per se, as the seat of the
arbitration, in essence, is the legal jurisdiction to which the
arbitration is tied. Recognition and understanding of this vital
philosophy will bring Indian arbitration policy a step closer to
the international best practices.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The Constitution of India is the supreme law of the land and forms the basis of Indian law and the parliamentary system of government – the Indian judiciary is independent of the executive and legislative branches of government.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).