Ex-Parte Interim Measures Under Arbitration Act Are Appealable: Karnataka High Court

Clarifies the scope of Section 37 of the Arbitration and Conciliation Act, 1996 in relation to ex-parte orders in commercial arbitration disputes. In a landmark decision, the High Court of Karnataka at Bengaluru, comprising Hon’ble Mrs. Justice Anu Sivaraman and Hon’ble Mr. Justice Anant Ramanath Hegde, has upheld the maintainability of appeals against orders granting or refusing ex-parte interim measures under Section 9 of the Arbitration and Conciliation Act, 1996. This judgment clarifies the scope of Section 37 of the Act, which deals with appealable orders, and its interplay with the Commercial Courts Act, 2015.

The case involves M/S KLR Group Enterprises (the appellant), which filed a commercial appeal against the respondents, residents of Heggondahalli Village, Sarjapur Hobli, Anekal Taluk, Bengaluru District. The appeal was lodged under Section 13(1-A) of the Commercial Courts Act, 2015 read with Section 37(1)(B) of the Arbitration and Conciliation Act, 1996, and Order 43 Rule 1® of the Code of Civil Procedure, 1908. The appellant sought to set aside an order dated 13.02.2024 that denied ex-parte interim relief, which was crucial for the appellant’s peaceful possession and development of the disputed property.

The core issue was whether an appeal against an order refusing or granting ex-parte interim measures under Section 9 of the Arbitration and Conciliation Act is maintainable. The respondents contended that such appeals are barred under the proviso to Section 13(1A) of the Commercial Courts Act, 2015.

The court examined the relevant provisions of the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act, 2015, alongside Rule 9 of the Karnataka Arbitration (Proceedings before the Courts) Rules, 2001. It emphasized that Section 37(1)(b) of the Arbitration Act explicitly allows appeals from orders granting or refusing interim measures, which includes ex-parte interim orders.

“The expression ‘granting or refusing to grant any measure under Section 9’ appearing in Section 37(1)(b) of the Act, 1996 includes the order granting or refusing the ex-parte interim order,” noted the bench.

“The appeal under Section 37 of the Arbitration and Conciliation Act, 1996 is maintainable against an order granting or refusing ex-parte interim measure under Section 9 of the Act, 1996, even if the Section 9 application is filed before the Commercial Court, as defined under the Commercial Courts Act, 2015”.

Further, the court clarified that while appeals are maintainable, the scope of interference is limited:

“In an appeal under Section 37 of the Act, 1996 against the order granting ‘ex-parte’ measure, the appeal may be entertained only in exceptional cases as the aggrieved party will have an efficacious remedy of moving the same Court which passed the order, to vacate the ‘ex-parte order”.

This judgment by the High Court of Karnataka reinforces the judiciary’s commitment to ensuring clear legal interpretations and procedural fairness in arbitration disputes. By affirming the maintainability of appeals against ex-parte interim measures, the court has provided clarity on the scope of Section 37 of the Arbitration and Conciliation Act, 1996. This decision is expected to have significant implications for future arbitration proceedings, ensuring that parties have a clear avenue for appeal in cases of ex-parte interim orders.

Date of Decision:  July 19, 2024