Arbitral tribunals can finally decide separable claims through interim awards under Section 31(6), rules Delhi High Court&returns

The Respondents leased premises at House Nos. 1 and 2, Jangpura-A, Mathura Road, New Delhi, to the Appellant under a registered Lease Deed dated 17 December 2015 for an initial term of nine years, with monthly rent fixed at ₹27,00,000 and stipulated rent escalations.

Clause 10.4 described the parties’ relationship as that of lessor and lessee and excluded any partnership, joint venture, or joint undertaking.

The Appellant relied on an unregistered Supplementary Lease Deed, correspondence, and alleged expenditure on the premises to contend that the arrangement was a collaborative venture rather than a conventional lease.

After the Respondents terminated the tenancy by notice dated 2 June 2022, arbitration commenced in relation to claims for possession, arrears, and damages. The Appellant disputed the claims and raised counterclaims exceeding ₹65 crore.

During the arbitration, the Respondents applied under Section 17 of the Arbitration and Conciliation Act, 1996, read with Order XII Rule 6 CPC, expressly seeking a partial award for possession on the basis of admissions.

The Tribunal deferred consideration until after evidence was completed and the parties were heard.

By a Partial Award dated 20 June 2026, the Tribunal directed the Appellant to remove its movable equipment, machinery, and furniture and hand over vacant and peaceful possession within thirty days, with damages for use and occupation at ₹27,00,000 per month in case of default. The monetary claims and counterclaims were left open.

The learned Single Judge dismissed the Appellant’s Section 34 challenge to the Partial Award. The present appeal was filed under Section 37(1)(c) of the Act.

Whether a determination granting possession, sought in an application invoking Section 17 of the Arbitration and Conciliation Act, 1996, could legally operate as an interim arbitral award under Section 31(6) of the Act merely because the Tribunal finally adjudicated that separable issue?

Whether the Tribunal could rely on principles analogous to Order XII Rule 6 CPC to grant a partial/interim award for possession on the basis of the Appellant’s admissions?

Whether the disputed nature of the tenancy, the alleged collaborative arrangement, the validity of termination, the unregistered Supplementary Lease Deed, and the pending counterclaims rendered the Partial Award vulnerable under Sections 34 and 37 of the Act?

Section 17 of the Arbitration and Conciliation Act, 1996 empowers an arbitral tribunal to grant protective or preservative interim measures but does not permit final adjudication of a substantive claim merely under the guise of interim relief.

In contrast, Section 31(6) authorises an interim arbitral award “at any time during the arbitral proceedings” on any matter in respect of which the tribunal could make a final award; such an award may finally determine a separable issue while other claims remain pending.

Under Indian Farmers Fertilizer Cooperative Ltd. v. Bhadra Products, (2018) 2 SCC 534, the expression “any matter” in Section 31(6) is broad, though unnecessary fragmentation should be avoided.

The legal character of an adjudication depends on its substance and effect, including the relief sought, notice to the opposite party, opportunity of hearing, whether the matter formed part of the reference, and whether the determination was intended to be conclusive.

An incorrect statutory reference does not defeat relief where the adjudicating forum possesses the requisite power, provided there is no absence of notice or procedural unfairness, as explained in Pruthvirajsinh Nodhubha Jadeja v. Jayeshkumar Chhakaddas Shah, (2019) 9 SCC 533.

Section 19 permits an arbitral tribunal to draw guidance from the CPC and the law of evidence, and principles analogous to Order XII Rule 6 CPC may support an interim award where admissions are sufficiently clear, as recognised in Srei Infrastructure Finance Ltd. v. Tuff Drilling (P) Ltd., (2018) 11 SCC 470, and Aspire Investments Pvt. Ltd. v. Nexgen Edusolutions Pvt. Ltd., 2015:DHC:3967.

The existence of counterclaims does not, by itself, prevent an interim award on a separable entitlement.

Review under Sections 34 and 37 is narrow and does not permit reappreciation of evidence or substitution of a plausible view adopted by the tribunal.

The Court held that the Respondents’ application expressly sought a partial award for possession, and the Appellant had notice of and fully contested that relief. The Tribunal did not grant an unpleaded or procedurally unexpected remedy; it deferred the application, permitted completion of evidence, heard the parties, and then conclusively determined the possessory claim.

Although the application referred to Section 17, the resulting determination was substantively an interim arbitral award under Section 31(6): it was titled a “Partial Award,” contained reasons, finally directed delivery of possession, prescribed consequences for non-compliance, and declared itself executable.

The Tribunal was entitled under Section 19 to apply principles analogous to Order XII Rule 6 CPC. The Appellant admitted execution of the registered Lease Deed, receipt of possession, payment of the pre-rent fee and security deposit, and the agreed monthly rent. These admissions, read with the Lease Deed, correspondence, interrogatory answers, and cross-examination, supported the finding that the relationship was one of lessor and lessee.

Clause 10.4 further contradicted the Appellant’s plea of a partnership or joint venture. The Tribunal also expressly found the termination notice dated 2 June 2022 valid under Section 106 of the Transfer of Property Act, 1882.

The Court declined to reassess the Appellant’s claims concerning commencement of rent, the Respondents’ alleged failure to complete Basic Work, the unregistered Supplementary Lease Deed, or the alleged collaborative arrangement, since such reassessment was outside the limited jurisdiction under Sections 34 and 37.

The possessory determination rested independently on the registered Lease Deed and the Appellant’s admissions, and was not dependent solely on the unregistered document.

The pending counterclaims also did not bar determination of the separable possessory entitlement. Since those claims were contested and unadjudicated, the Court refused to condition enforcement of possession on the Respondents furnishing a bank guarantee.

No patent illegality, perversity, procedural unfairness, or other ground under Section 34 was established, and the limited appellate jurisdiction under Section 37 did not permit reappreciation of the evidence.

The appeal and pending stay application were dismissed in limine.

The Court clarified that its judgment would not affect the merits of the monetary claims or counterclaims pending before the Tribunal.