Interim Relief u/s. 9 Arbitration & Conciliation Act Cannot Be Granted To a Party Outside Arbitration Agreement: Uttarakhand High Court

Interim Relief u/s. 9 Arbitration & Conciliation Act Cannot Be Granted To a Party Outside Arbitration Agreement: Uttarakhand High Court

A person not a party to the Arbitration Agreement cannot invoke jurisdiction of the Court for an Interim relief under Section 9, Arbitration and Conciliation Act, 1996.

Uttarakhand High Court, in its decision on November 10th, held that a person not a party to the Arbitration Agreement cannot invoke jurisdiction of the Court for an Interim relief under Section 9, Arbitration and Conciliation Act, 1996. [Mohd Yusuf v. Ashish Aggarwal, Appeal from order no. 188 of 2021]

A Division Bench of Chief Justice Raghvendra Singh Chauhan and Justice Alok Kumar Verma, while dismissing the appeal, noted,

"Section 9 of the Act, 1996 is enacted with the intention of preserving and protecting the subject matter of the arbitral proceedings. Therefore, for invoking the jurisdiction of the court, under Section 9 of the Act, 1996, the person should be a party to an arbitration agreement. Thus, a person not a party to the arbitration agreement cannot invoke the jurisdiction of the court for the interim relief under Section 9 of the Act, 1996."

The Court concluded that appellants were not "Partners" under the "Partnership Deed" and therefore cannot be called "Parties" to the Arbitration Agreement.

Reliance was placed on Arcelor Mittal Nippon Steel India v. Essar Bulk Terminal Ltd., Civil Appeal No. 5700 of 2021.

An appeal was filed under Section 37 of the Act, 1996 against order dated 15.09.2021, passed by Additional District Judge (Commercial Court), Dehradun in Arbitration Case No.69 of 2020, whereby the application under Section 9 filed by appellants was dismissed on the ground that the appellants have neither made out a prima facie case nor is the balance of convenience in their favour, as the appellants are not "partners" as per the arbitration clause.

Appellant 1, 2, 3, that is, Mohd. Yusuf, Smt. Shamim, Shri Momin Ali and one Tehsin Malik formed a partnership firm on 15.02.2008.

Shri Tehsin Malik, partner, retired from the said firm on 26.10.2009.

In the year 2016, appellant no.1 took a loan of Rs. 20689000 from the respondent.

It was agreed between the parties that the partnership deed along with papers of immovable property, cheques, and blank signed papers would be kept with the respondent and only after repayment of loan along with interest, the original papers would be returned to the appellants.

On 16.02.2016, the appellant's signatures were taken by the respondents on the "Partnership Admission Deed"

On 19.02.2016, the same was registered as "Partnership Deed - Retirement Cum Admission Deed"

According to the aforementioned, the appellants withdrew themselves from the said firm and new partners, i.e. respondents were admitted as partners in the firm.

Counsel for the Appellants contended that respondent 1 obtained blank signature papers from the appellants under pressure and by misrepresentation used those papers in registering the said deed dated 19.02.2016. It was further submitted that the deed was a void document, therefore, the appellants have a right to invoke Clause 22, an Arbitration Clause, of the "Partnership Deed-Retirement Cum Admission Deed."

Counsel for the respondent contended that the "Partnership Deed-Retirement Cum Admission Deed" dated 19.02.2016 was executed by the appellants and the respondents with their free will and without any pressure or misrepresentation. Further, the terms and conditions of the said Deed was effective from the 16th day of February, 2016 and supplements the Original Partnership Deed dated 15.02.2008 and the Deed dated 26.10.2009.

The bench while adjudicating the matter added that under Clause 22 of the said Deed, there was no provision to the effect that the retiring partners can invoke the said provision for the purpose of arbitration and, secondly, Section 31 of the Specific Relief Act, 1963 provides that only "court" has jurisdiction to cancel any void or voidable document.