Arbitrator’s Power u/s 17 and Court’s Powers u/s 9 of Arbitration Act are Paro Passu to Each Other: Calcutta High Court

WHAT DID THE Court SAY?

• In Jagrati Trade Services Pvt Ltd v. Deepak Bhargava & Ors., the Calcutta HC observed that after the 2015 Amendment Act, the powers of an Arbitrator with regards to granting interim measures u/s 17 of the of the Arbitration and Conciliation Act, 1996 (A&C Act), are on equal footing with the Court’s power u/s 9 of the Act. 
• A Single Judge Bench of Justice Shekhar B. Saraf noted that a similar test would be applicable while granting interim protection u/s 9 and while determining the validity of an order passed by the Arbitrator u/s 17.

WHAT IS THE CASE ABOUT?

• In this case, a Share Purchase Agreement (SPA) was entered into by the parties where a certain number of shares were to be transferred to the petitioner.
• When the shares were not transferred, the dispute was referred to arbitration.
• The petitioner filed an application u/s 17 of the Arbitration Act seeking to stop the Company from executing a Development Agreement in respect of the premises over which the latter held leasehold rights.
• The Arbitrator passed an interim order restricting the transaction but refused to grant any other reliefs.
• Accordingly, an appeal was filed in the Calcutta High Court. 

CONTENTIONS OF THE PARTIES: 

• The petitioner contended that he was unaware about the execution of the Development Agreement.
• It was further contended by the petitioner that the same was concealed from him with the intent to render the company assetless. 
• The respondents contended that the petitioner was not entitled to claim the shares of the company as it failed to make payment as per the terms of the SPA. 

OBSERVATION OF THE COURT AND DECISION:

• The Ld. Court noted that by the Amendment Act, 2015, the modifications made to the Arbitrator’s powers u/s 17 is pari passu to that of the Court’s powers u/s 9. 
• Consequently, an Arbitrator would be bound by the same standards as a court while passing interim reliefs u/s 17 of the Arbitration Act.

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