In the case of Ambrish H. Soni v. Chetan Narendra Dhakan & Ors., the Bombay High Court ruled that it can grant interim relief under the Arbitration and Conciliation Act, 1996 (A&C Act) even after an Arbitral Tribunal is constituted, if necessary. This decision clarifies the court's role in providing interim protection when arbitration proceedings are already underway.
Brief facts of the case
The dispute involved partners of a construction firm. One of the partners, Mr. Chetan Narendra Dhakan alleged that his partners, including Mr. Ambrish H. Soni, were mishandling the firm's business. The disagreement led to Mr. Dhakan invoking arbitration under the partnership deed. A sole arbitrator was appointed by the Bombay High Court (HC) and the HC also ordered that status quo be maintained until the arbitrator's final award.
The arbitrator later confirmed that the status quo order of the HC extended to a property in Virar, Maharashtra owned by the firm (Virar Property). Despite this, Mr. Soni and another partner started construction on the Virar Property, violating both the HC's and the arbitrator's orders. Consequently, Mr. Dhakan sought interim relief from the HC, requesting the appointment of the Court Receiver, High Court, to act as a receiver to safeguard the Virar Property.
HC's ruling
The key issue before the HC was whether it could grant interim relief under the A&C Act despite the ongoing arbitration. The HC affirmed that it retains the power to provide such relief only if the court finds that circumstances exist which may render the remedy of interim relief available through the arbitral tribunal ineffective.
The HC noted that an arbitrator cannot appoint the Court Receiver, High Court, as a receiver and can only appoint a private receiver. The HC noted that a compelling case for the appointment of a Receiver had been made out due to Mr. Soni's blatant disregard for the HC's and the arbitrator's status quo order. Given the circumstances, the HC granted interim relief by appointing the Court Receiver, High Court, Bombay as a receiver to safeguard the Virar Property.
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