Sections 17 and 37 of the Arbitration Act – Legality of Interim reliefs by Arbitrator

The petitioner – owner of the land at village Mira in Thane district had sub-licensed the development of the said land to Jagruti vide Agreements of 2009 and 2011.

On 28.9.2015, the show cause cum termination notice was given on account of material breaches by Jagruti.

According to the petitioners, the agreements stood terminated since Jagruti did not reply the notice in 30 days and also did not rectify the breaches.

On 15.11.2015, the public notice of termination of agreements was given.

On 2.12.2015, Jagruti replied to the notice and also issued public notice on 24.4.2016 disputing the termination. Thereafter, according to Jagruti, the parties continued to share office space till May, 2017 and ousted from the said project.

On 13.7.2019, Jagruti issued notice invoking arbitration and filed section 9 petition.   The said petition was withdrawn.   However, by the order dated 25.4.2022, the disputes were referred to arbitration.  

After filing of the Statement of Claim and the Defence, Jagruti had filed application under Section 17 of the AA in February 2024 for various interim reliefs.

By the impugned order dated 21.6.2024, the Tribunal (majority) had substantially allowed the Application granting the interim reliefs and directions for disclosures as reproduced in para 2(v) on pages 9 and 10 of the HC judgment.

HELD that the impugned interim order is set-aside on detailed reasons and analysis in Clause [A[ to [H] of para 32 of the judgment and few are summarised as follows:-

1.    Delay of 9 years in filing section 17 interim application after issuance of termination letter.
2. The Tribunal has completely failed to first ascertain if Jagruti had made in fact made out a prima facie case, balance of convenience and irreparable injury for grant of interim reliefs.
3. The Tribunal failed to consider the financial hardship of the petitioners in requiring them to deposit sale proceeds from 2017 onwards.
4. The Tribunal had conducted mini trial at the interim stage.
5. The Tribunal failed to consider that the termination was not called in question in the interim application.

Judgment dated 17.12.2024 of the High Court of Bombay (OS) in Commercial Arbitration Petition No.384 of 2024 of Arun Bhoomi Corporation and another   Vs.    M/s. Jagruti Developers and others