A Division Bench of the Bombay High Court reaffirmed the significance and persuasive value of an emergency arbitration award by upholding the interim relief granted by a single Judge and reiterating that appellate courts should only interfere when such orders are arbitrary, perverse or capricious.
Background
Disputes arose under a Shareholders' Agreement (SHA) between Ebix and its shareholders, which led to an arbitration before the Singapore International Arbitration Centre (SIAC). A Partial Award was handed down upholding the termination of the SHA and directing Ebix to buy back shares based on a new valuation.
When Ebix refused to pay the enhanced call price, the shareholders sought emergency interim relief from SIAC. The Emergency Arbitrator ordered Ebix to furnish a bank guarantee of USD 16.74 million. Ebix failed to comply thus prompting the shareholders to file a petition under §9 of the Arbitration & Conciliation Act 1996 before the Bombay High Court seeking interim relief.
Granting the interim relief, the Single Judge directed Ebix to furnish the abovementioned bank guarantee and restrained it from disposing of its assets.
Ebix filed an appeal under §37 of the Arbitration Act.
Decision
During the appeal proceedings, Ebix contended that the §9 petition was not maintainable since the shareholders, under the guise of interim relief, were effectively seeking the enforcement of the Emergency Award, and the award could only be executed by filing a civil suit. The High Court disagreed. It said that the Emergency Award was not being enforced by way of the §9 petition; it was merely being used as persuasive evidence to support the prayer for interim relief.
The Division Bench also identified criteria to be taken into account while granting interim relief:
- A good prima facie case coupled with the balance of convenience in favor of the interim relief and the promptness with which an applicant has approached the Court.
- Hyper technicalities and principles of procedural law should not ordinarily prevent the Court from securing the ends of justice.
- The conduct of a party which lacked in bona fides or which would result in frustration of the arbitration proceedings can be considered as "obstructionist conduct" and deter the court.
Conclusion
The ruling of the Bombay High Court reaffirms the pro-arbitration approach of the Indian judiciary along with its facilitative role in ensuring the efficacy of arbitral proceedings, including those seated outside India.
* 2025 SCC OnLine Bom 698
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