Interim Injunction against Arbitral Parties must satisfy Maintainability and be conditional upon Security Deposit.

The appellant (Kred Realties LLP) and the respondent no. 1 (Ishaani Electronics) entered into a Memorandum of Understanding (MoU) dated March 30, 2016, for the development of a property leased from WEBEL.

Later, Ishaani Electronics challenged the validity of its own MoU through a writ petition, alleging it was de hors the parent lease deed.

A learned Single Judge passed an interim order restraining the appellant from entering into development agreements or raising construction, despite the existence of an ongoing arbitral proceeding between the parties.

The appellant challenged this interim injunction.

1. Whether an unbridled interim injunction should be maintained in a writ petition when the subject matter is already pending before an Arbitral Tribunal.

2. Whether the issue of maintainability of a writ petition must be decided, at least prima facie, before granting an injunction.

Section 5 of the Arbitration and Conciliation Act, 1996, which mandates minimal judicial intervention in matters governed by an arbitration agreement.

The principle of Estoppel, questioning whether a party can challenge the veracity of a contract (MoU) it voluntarily entered into.

The procedural principle that the "prima facie case" for an injunction must necessarily include a preliminary assessment of the court's jurisdiction/maintainability.

The Court reasoned that since an Arbitrator had already assumed jurisdiction and the process was "under the trappings of the 1996 Act," Section 5 of said Act prescribes that Court interference should be the exception rather than the norm.

The Court found the learned Single Judge erred by granting a stay while simultaneously deferring the question of maintainability, noting that maintainability is intrinsic to establishing a prima facie case.

The bench observed that the writ petitioner (Ishaani Electronics) sought an "unbridled and unfettered" injunction against a contract they were a party to, which necessitated the imposition of conditions (security deposit) to balance the equities.

The Court modified the interim order, setting aside the restraint on the arbitral proceedings and allowing the Arbitral Tribunal to proceed regardless of the pending writ petition.

The Writ Court was directed to decide the final maintainability and merits expeditiously.