Delhi HC Upholds Restraint on New Third-Party Rights Over 50% of Mall’s Saleable Area Pending Arbitration, Amid Promoter’s Disputed Claim

The respondent invoked arbitration under an MOU with Appellant Nos. 1 and 2 and sought interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain the appellants from creating third-party rights in 50% of the saleable area of a commercial project.

The claim arose from disputes concerning the respondent’s asserted entitlement to Realtech Infrastructure Limited’s interest in the project, earlier arbitral awards, and a 2018 divestment agreement.

The Single Judge granted the injunction, initially until constitution of the arbitral tribunal and later until its decision on a Section 17 application.

The appellants challenged the Section 9 order under Section 37, disputing the respondent’s entitlement, limitation, the effect of earlier proceedings, and the propriety and scope of the injunction.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the court to grant interim measures in aid of arbitration; the grant of an injunction ordinarily requires a prima facie case, balance of convenience, and risk of irreparable injury.

Under Section 37, an appellate court does not interfere merely because another view is possible; interference with the first-instance court’s discretion is warranted where it was exercised arbitrarily, capriciously, perversely, or contrary to settled principles. The Court relied on Wander Ltd. v. Antox India (P) Ltd., 1990 Supp SCC 727, for this appellate restraint.

The Court also referred to ITW Signode India Ltd. v. Collector of Central Excise, (2004) 3 SCC 48, and Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern Coal Field Limited, (2020) 2 SCC 455, in leaving disputed limitation questions for determination by the arbitral tribunal.

The Court considered the respondent’s claim under MOU-II and the parties’ competing interpretations of the earlier award and divestment agreement to raise serious disputes for arbitration, not to establish that the Section 9 claim was ex facie untenable.

The respondent’s initial role as RIL’s representative and his involvement in leasing project units supported allowing the claim to proceed to adjudication; whether he ultimately had an enforceable right, and whether the claim was time-barred, remained for the tribunal.

Given the pending proceedings and the risk that further transfers would complicate enforcement of a future award, the restraint against the appellants was a permissible means of preserving the subject matter.

It did not adjudicate or prejudice independent rights already acquired by non-party transferees.

Applying Wander, the Court found no basis to disturb the Single Judge’s discretionary assessment.

The restraint on the appellants from creating further third-party rights remained in place, without prejudice to any independent rights already acquired by existing transferees.

There was no order as to costs.