2020 (9) TMI 1283 - HC - Indian Laws

Grant of ad-interim injunction restraining the respondent therein, (appellant before us), from disseminating the information declaring the applicants therein as wilful defaulters - HELD THAT - Apparently, a recourse to the provisions of the Arbitration and Conciliation Act, 1996 is permissible. If a person is aggrieved with the information disseminated by credit institution like the present appellant in the public domain and there is a dispute with regard to the same, the person aggrieved by such information can either approach the concerned credit institution itself for correction of such information or can approach the Reserve Bank of India, for such grievance. Therefore, the remedial measures to be undertaken by the aggrieved parties have a necessary recourse to the provisions of the Arbitration and Conciliation Act, 1996. Section 9 of the said Act, as quoted above, provides for interim relief to the aggrieved party before or during the course of arbitral proceedings - In the present case, it seems that the dispute as of now, does not stand referred to any Arbitrator appointed by the Reserve Bank of India. The parties do not seem to have raised these issues before the learned Single Judge in appropriate manner and there is no discussion in the order impugned before us dated 31.1.2019 passed by the learned Single Judge. Therefore, we are deprived of the benefit of reasoned opinion of the learned Single Judge on these two important issues raised in this appeal. Appeal disposed off.

Summary

Issues:
Interpretation of Section 9 of the Arbitration and Conciliation Act, 1996 in the context of dissemination of prejudicial information by a credit institution without notice to the affected parties.

Analysis:
The case involved an appeal by a credit institution against an interim injunction granted by a Single Judge restraining the institution from disseminating information declaring certain individuals as wilful defaulters. The appellant argued that the borrowers should have approached the lending institutions directly for correction of the information, as provided under Section 21(3) of the Credit Information Companies (Regulation) Act 2005, instead of invoking Section 9 of the Arbitration and Conciliation Act, 1996. The respondents contended that the dissemination of prejudicial information without notice entitled them to seek relief under Section 9 of the Arbitration Act.

The High Court noted the provisions of both Acts, emphasizing the right of aggrieved parties to seek correction of information from the credit institution or the Reserve Bank of India. The Court highlighted that Section 9 of the Arbitration Act allows for interim relief during arbitral proceedings, which was relevant in the absence of arbitration in this case. However, the Court observed a lack of discussion by the Single Judge on key issues raised by the appellant regarding the maintainability of the application under Section 9 and the necessity of impleading lending institutions.

Due to the absence of detailed consideration on these crucial issues, the High Court decided to remand the matter back to the Single Judge for a proper examination. The parties were directed to raise the pertinent questions before the Single Judge, who was instructed to provide a reasoned opinion after hearing both sides. Until the Single Judge resolves these issues, the interim injunction granted by the Single Judge would remain in effect. The appeal was disposed of with no order as to costs.

In conclusion, the High Court's decision focused on the procedural aspects of the case, highlighting the need for a thorough examination of the issues raised by the appellant regarding the application of Section 9 of the Arbitration Act in the context of correcting prejudicial information disseminated by a credit institution.