Interim Directions Affecting Proprietary Rights Cannot Be Passed Based Solely On Prima Facie Views Without Conclusive Adjudication

The Petitioner challenged an interim order dated 06.05.2026 passed by a Sole Arbitrator under the Arbitration and Conciliation Act, 1996

In the impugned order, the Arbitrator issued directions in Sub-Para 8(b) of Paragraph 6 requiring the Petitioner to remove, transport, and deliver certain items (equipment and cash) to the Respondent at the Petitioner's cost

Crucially, in Paragraph 4(i) of the same order, the Arbitrator had explicitly stated that the order did not establish "conclusive determination regarding ownership" but was merely based on a prima facie view of a Local Commissioner’s (LC) report

The Petitioner contended that the mandatory directions to transfer the goods were fundamentally inconsistent with the Arbitrator’s own caveat regarding the lack of a final determination on ownership

1. Whether an Arbitral Tribunal can issue mandatory directions for the removal, delivery, and payment of disputed goods while simultaneously stating that the ownership of said goods has not been conclusively adjudicated.

Section 37 of the Arbitration and Conciliation Act, 1996, which provides for appeals against certain orders of an arbitral tribunal

Interim or procedural directions cannot operate as a final adjudication of proprietary rights—affecting possession, control, and beneficial enjoyment—if the underlying entitlement remains undecided

The High Court found a fatal contradiction within the Arbitrator's order. It reasoned that since the Arbitrator expressly caveated the order in Paragraph 4(i) by stating it was not a "conclusive determination of ownership" and merely a "prima facie view", he lacked the legal basis to issue the operative directions found in Sub-Para 8(b)

The court observed that directions requiring a party to deliver goods at their own cost or pay for their retention effectively treat proprietary rights as settled. Such directions transcend "procedural or interim" measures because their implementation results in a finality of possession and "beneficial enjoyment" that the Arbitrator himself admitted was not yet substantiated by a final finding on title

The High Court allowed the petition in part, setting aside the directions contained in Sub-Para 8(b) of Paragraph 6 of the Impugned Order. The Court clarified it expressed no opinion on the merits of the ownership claims and requested the Arbitrator to consider the issue of ownership and entitlement expeditiously and in accordance with law.