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TMI Blog2021 (10) TMI 1457X X X X Extracts X X X X X X X X Extracts X X X X ..... vision however, is of Section 24. Sub-Section (2) of Section 24 inter alia mandates that the parties 'shall be' given sufficient advance notice of 'any hearing',. The provisions of Section 18, 19 and 24 would be required to be read in conjunction, as there is a common thread passing through these provisions in relation to the conduct of the arbitral proceedings, which is to the effect that the parties need to be fairly treated at all stages of the arbitral proceedings, and an adequate/sufficient opportunity is made available to them to present their case on any proceedings before the arbitral tribunal, which would also include before any order ad-interim, interim or final is to be passed by the arbitral tribunal. It would be unknown to law and quite peculiar for an arbitral tribunal to pass an ex-parte ad-interim order, on the mere filing of a Section 17 application, without hearing even the party making the application, much less the contesting respondent, who would certainly be affected and/or prejudiced by an ex-parte order. It may be that the arbitral tribunal is of a firm opinion in the facts of a given case, that some urgent orders are required to be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. This is an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (for short 'the Act') assailing an ex-parte order 8 October 2021 passed by the learned Sole Arbitrator on a Section 17 application filed by the respondent. By the impugned order, the learned Sole Arbitrator has granted ex-parte ad-interim reliefs in terms of prayer clauses (a), (b), (c) and (d) of the respondent's application, which read thus: (a) Restrain the Respondent and its agents, servants, employees, directors, officers, representatives and/or any one claiming through or under the Respondent, from dealing with, alienating, encumbering, creating third party rights or selling the unsold flats/inventories of Residential Zone-II in any manner whatsoever, without express/written permission or consensus of the claimant and sharing of the Gross Sales Revenue thereof with the Claimant in accordance with terms agreed upon between the parties, pending adjudication of the present proceeding by the Hon'ble Tribunal; b) Restrain the Respondent from deducting the alleged pending D. M. Fees towards 'Facilities Agreement' and 'Villa DMA' or any other claim/s from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant was trying to arbitrarily sale the balance inventories of Tower 'F', without sharing the Gross Sales Revenue with the respondents. It was stated that the appellant was high-handedly threatening appropriation of the share of the respondent/claimant, towards the alleged pending D.M. Fees of "Facilities Agreement" and "Villa DMA", although the issue pertaining to the entitlement of the appellant was pending adjudication before the tribunal. By the said email on behalf of the respondent, the following request was made to the arbitral tribunal:- "Therefore, while tendering an apology for the inconvenience which is being caused to Hon'ble Tribunal, the Claimant is requesting the Hon'ble Tribunal for fixing an early date for the hearing of the said application, so that the Claimant is in a position to demonstrate to the Hon'ble Tribunal the illegalities on the part of the Respondent and request for grant of appropriate interim relief. (emphasis supplied) 4. The learned Arbitrator immediately on the next day i.e. on 8 October 2021 and suo moto, considered the respondent's section 17 application, even without hearing the respondent/applicant on the said ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex-parte ad-interim order. (iii) Placing on record a copy of the said e-mail dated 7 October 2021, the contents of which are discussed above, it is submitted that the only request made to the arbitral tribunal was that the arbitral tribunal should fix a date for hearing of the section 17 application. (iv) It is submitted that it is alien to the arbitration jurisprudence and/or that it is not a practice in our country, that an arbitral tribunal would pass ex parte ad-interim orders or pass orders without notice to the parties involved in the arbitral proceedings. In supporting this submission, Dr. Saraf has submitted that there is an express departure from what has been adopted in the year 2006 under the UNCITRAL Model Law on International Commercial Arbitration (for short "the UNCITRAL Model Law"). In this regard reference is made to Section 2 of the 2006 amendment to the UNCITRAL Model Law, which was adopted by the Commission at its thirty-ninth session in 2006, to incorporate the provisions inter alia on Interim measures and Preliminary orders by Section 2 thereof, whereby Article 17B providing for 'applications for preliminary orders and conditions for granting prelimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Counsel for the respondent in supporting the impugned order passed by the arbitral tribunal, has drawn my attention to the contents/averments as made by the respondent in the Section 17 application, to submit that, the cause to move such application, was to prevent the appellant to frustrate any orders which will be passed by the arbitral tribunal on the pending Section 17 application, as seen from the specific prayers made in the respondents section 17 application. He submits that the requirement of sub-rule (3) of Order 39 of the CPC also stood satisfied as per the averments in paragraphs 49 and 52 of the application, to the effect that if the reliefs as prayed for are not granted by the arbitral tribunal, and if an award is made, it would be rendered a paper award as also there is likelihood of multiplicity of proceedings. Mr. Dewani has also referred to the contents of the impugned order to submit that the learned Arbitrator has indicated a clear concern, that the parties were heard earlier on the initial Section 17 applications and orders on such applications were under consideration of the arbitral tribunal. It is submitted that in such context, looking at the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be required to be read in conjunction, as there is a common thread passing through these provisions in relation to the conduct of the arbitral proceedings, which is to the effect that the parties need to be fairly treated at all stages of the arbitral proceedings, and an adequate/sufficient opportunity is made available to them to present their case on any proceedings before the arbitral tribunal, which would also include before any order ad-interim, interim or final is to be passed by the arbitral tribunal. In my opinion such provisions certainly make it incumbent upon the arbitral tribunal to give sufficient notice of any hearing to the parties before it. If this is what is plainly reflected from the said provisions of the Act, it would be unknown to law and quite peculiar for an arbitral tribunal to pass an ex-parte ad-interim order, on the mere filing of a Section 17 application, without hearing even the party making the application, much less the contesting respondent, who would certainly be affected and/or prejudiced by an ex-parte order. It may be that the arbitral tribunal is of a firm opinion in the facts of a given case, that some urgent orders are required to be passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination. (2) With regard to a request for an interim measure under article 17(2)(d), the requirements in paragraphs (1)(a) and (b) of this article shall apply only to the extent the arbitral tribunal considers appropriate. Section 2. Preliminary orders Article 17 B Applications for preliminary orders and conditions for granting preliminary orders (1) Unless otherwise agreed by the parties, a party may, without notice to any other party, make a request for an interim measure together with an application for a preliminary order directing a party not to frustrate the purpose of the interim measure requested. (2) The arbitral tribunal may grant a preliminary order provided it considers that prior disclosure of the request for the interim measure to the party against whom it is directed risks frustrating the purpose of the measure. (3) The conditions defined under article 17A apply to any preliminary order, provided that the harm to be assessed under article 17A(1)(a), is the harm likely to result from the order being granted or not." 12. The amendment of such nature a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preliminary order, in particular under the law of the place of arbitration. 23-23 A second question is whether the structure of the Rules is such as to provide an indication that a Tribunal should not act ex parte. In this respect, the general, albeit perhaps conservative reaction is that is always better to hear both parties. One of the reasons for this is that, despite the obligation under Art. 17 for example of disclosure by the applying party of the relevant circumstances, there is not as yet a well-settled concept in international arbitration such as the requirement of "full and fair disclosure" as understood in England for example. In addition, hearing both sides permits the Tribunal to apprehend or fully appreciate arguments to which it may not otherwise give adequate weight. 23-24 Another question is whether a preliminary order would be effective in the circumstances of the case and how the Tribunal should act after the preliminary order has been issued. The effectiveness of a preliminary order will in many instances depend on enforceability in state courts, a subject that is dealt with in the UNCITRAL Model Law. As regards the procedure to be followed after the prelimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Section 18 would be required to be given when it prescribes that a party shall be given sufficient advance notice of any hearing and further qualified with an obligation of the tribunal to treat all the parties equally and that each party shall be given a full opportunity to present its case, which is required to be recognized to be applicable at all stages of the proceedings before the arbitral tribunal. In view of this conclusion, I do not find it necessary to discuss the decision in Shiv Kumar Chadha Vs. Municipal Corporation of Delhi & Ors. (supra) as relied by Dr. Saraf which lays down the principles of law in regard to applicability of sub-rule (3) of Order 39 emphasizing that reasons to be recorded by the Court to be the basic requirement of the proviso to sub-rule (3) of Order 39. 15. In so far as the decision in Vendhar Movies Vs. S. Mukundchand Bothra (supra) is concerned, the learned Single Judge of Madras High Court has observed that proper hearing is required to be granted to the parties in arbitral proceedings. In this case the Court was examining the contention that the arbitral tribunal ought not to have proceed ex-parte against a party to the proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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