Emergency Award Can Be Relied Upon, Even If Not Enforced: Bombay High Court Dismisses Appeal Against Section 9 Relief in ₹145 Crore Share Buyback Arbitration Dispute

Interim relief under Section 9 of the Arbitration Act need not be thwarted by technicalities of the CPC — In a significant ruling Bombay High Court dismissed two Commercial Arbitration Appeals filed under Section 37 of the Arbitration and Conciliation Act, 1996, challenging interim measures granted under Section 9 by a Single Judge. The Division Bench comprising Justice A.S. Chandurkar and Justice Rajesh S. Patil upheld the trial court’s direction for the appellants to furnish a ₹145 crore irrevocable bank guarantee, observe status quo on assets, and disclose properties on oath, pending enforcement of an award in a Singapore-seated arbitration under SIAC Rules.

The Court affirmed: “If the learned Judge has taken a reasonable and possible view based on the material on record, it would not be permissible for the Appellate Court to substitute that view merely because another view is possible.”

The dispute stemmed from a 2017 Shareholders’ Agreement (SHA) between Ebix entities and Vyoman India Pvt Ltd & Ashok Goel. Upon alleged breach by Ebix, the matter was referred to SIAC arbitration. A Partial Award (01.06.2023) upheld termination of the SHA and directed Ebix to purchase the claimants’ shares. A subsequent Cost Award (01.09.2023) of ₹9 crore was also issued. The Deloitte valuation was rejected for lack of independence, and PwC valued the shares at ₹181 crore.

Following non-compliance by Ebix, claimants approached the Delhi High Court, which granted status quo on Ebix’s assets. An Emergency Arbitrator under SIAC Rules on 14.03.2024 directed Ebix to furnish a ₹145 crore bank guarantee, but Ebix failed to comply, citing the Delhi HC’s earlier status quo order. Ebix’s plea to substitute the guarantee with alternate security was rejected by the Arbitral Tribunal on 24.07.2024.

Consequently, the claimants filed a Section 9 Petition before Bombay High Court. Despite a Final Award being passed on 02.10.2024, the Single Judge on 08.10.2024 granted interim relief based on the Emergency Award and overall conduct of the appellants. These directions were the subject of the present appeals under Section 37.

Appellants’ Challenge: Emergency Award Not Enforceable, No Prima Facie Case Made Out
Senior Advocates Chetan Kapadia and Mayur Khandeparkar for Ebix argued that: “Reliefs akin to attachment before judgment under Order XXXVIII Rule 5 CPC were granted without proper pleadings or proof that the appellants were attempting to defeat the award.”

They stressed that: “Emergency Arbitrator’s award is not enforceable under the 1996 Act and can only be relied on in a civil suit, as held in Raffles Design (2016 SCC OnLine Del 5521).”

They also contended that the Section 9 petition became infructuous once the Final Award was passed on 02.10.2024, before judgment was delivered on 08.10.2024, and thus ought to have been dismissed.

High Court’s Ruling: Emergency Award Can Be Considered, Interim Relief Not Limited by CPC Formalism
The Division Bench squarely rejected these objections. It clarified that: “Respondents were not seeking enforcement of the Emergency Award under Section 9—they relied upon it as a factor to support interim relief.”

The Court drew strength from the Supreme Court’s decision in Amazon.com NV Investment Holdings LLC v. Future Retail Ltd.: “An Emergency Award, though not enforceable under the Act per se, can form part of the factual matrix to grant relief under Section 9.”

Further, addressing the Order XXXVIII Rule 5 CPC argument, the Court held: “While procedural principles must guide Section 9, the Court is not bound by the technical rigours of the Code—relief can be moulded to secure justice and preserve the arbitral process.”

Citing Essar House Pvt Ltd and Sepco Electric, the Court reiterated: “Where there is a prima facie case, balance of convenience, and risk of frustration of the arbitral award, interim relief may be granted even in absence of strict pleadings under the CPC.”

“Obstructionist Conduct” Was Not the Sole Basis for Relief
The Court acknowledged that while appellants’ conduct—such as failure to pay ₹9 crore costs, refusal to honour the PwC valuation, and delayed compliance with the Emergency Award—could amount to obstructionism, the learned Single Judge had granted relief not solely on that ground. The Court clarified: “It is not only in view of the ‘obstructionist stand’ of the appellants that relief was granted… various other factors, including their non-cooperation and delay tactics, justified interim protection.”

On the question of maintainability after the Final Award, the Court held: “Section 9 jurisdiction extends beyond the date of award till its enforcement. Merely placing the award on record without a formal application or objection is not sufficient to bar the Section 9 relief.”

Relying on Ultratech Cement Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd., the Court confirmed: “An arbitration petition seeking relief pending enforcement of the award does not become infructuous merely because the award is passed during its pendency.”

Upholding the discretion of the Single Judge, the High Court refused to interfere, emphasizing that the relief granted under Section 9 was legally sustainable and factually justified.

“The view taken by the learned Judge is not arbitrary, capricious or perverse. In fact, it is the only reasonable view possible in the circumstances.”

Accordingly, both Commercial Arbitration Appeals were dismissed, affirming the interim protection granted to the claimants to preserve the effectiveness of the arbitral process.

Date of Decision:  26 March 2025