Arbitral Tribunals Cannot Direct Deposit of Disputed Mesne Profits as Interim Measures Without Evidentiary Adjudication

The Respondent (Claimant) asserted ownership of land in Village Goyla Khurd via a registered sale deed and leased it to the Appellant Society in 2000 for institutional purposes

After disputes regarding lease termination and continued possession arose, the Respondent filed a commercial suit, which was referred to arbitration under Section 8 of the A&C Act

During arbitral proceedings, the Respondent moved an application under Section 17 for interim measures.

The learned Sole Arbitrator, via order dated 16.09.2025, directed the Appellant to deposit retrospective and prospective usage charges of ₹3,00,000/- per month in a joint interest-bearing account, permitted monthly inspections, and restrained the creation of third-party rights

The Appellant challenged this order under Section 37(2)(b) of the A&C Act, arguing the relief was arbitrary and premature

Whether the Arbitral Tribunal exceeded its jurisdiction under Section 17 of the A&C Act by granting what amounts to final monetary relief at the interlocutory stage

Whether the fixation of interim usage charges based on external lease exemplars without an evidentiary trial was legally sustainable

The court primarily applied Section 17 of the Arbitration and Conciliation Act, 1996, which empowers tribunals to grant interim measures of protection

It relied on the "triple test" (prima facie case, balance of convenience, and irreparable injury) as established under Order XXXIX of the CPC and affirmed in *Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd.*

It further applied the principle from *Evergreen Land Mark Pvt. Ltd. v. John Tinson & Company Pvt. Ltd.*, which holds that an Arbitral Tribunal cannot direct the deposit of disputed rentals/mesne profits under Section 17 when the foundational liability is yet to be adjudicated on merits

The scope of appellate interference under Section 37(2)(b) was governed by *Dinesh Gupta v. Anand Gupta*, emphasizing minimal judicial intervention unless the order is perverse or lacks legal basis

The Court observed that the Arbitrator’s direction to deposit ₹3,00,000/- per month from October 2018 onwards was determinative rather than preservative

The Tribunal prematurely assumed the lease was validly terminated and the Appellant was an unauthorized occupant, despite these being the core triable issues in the arbitration

The Court found that the Arbitrator failed to record specific findings on the "triple test," specifically neglecting to show how the Claimant would suffer irreparable injury or how the award would be frustrated without such a deposit

Furthermore, the Court critiqued the mechanical reliance on lease deeds from 2021 and 2025 to retrospectively calculate 2018 rates without expert testimony or cross-examination

Such "coercive" financial obligations were held to be outside the limited, protective scope of Section 17

It set aside the direction requiring the Appellant to deposit mesne profits and usage charges, holding that such monetary relief at an interim stage was an overreach of jurisdiction under Section 17

However, the Court upheld the ancillary protective measures, including the right of the Respondent to inspect the property and the restraint on the Appellant from creating any third-party interests, as these were bona fide measures to preserve the subject matter

All substantive rights regarding title and final mesne profits were reserved for adjudication during the trial