Section 9 Courts lack jurisdiction to adjudicate third-party claims once an Arbitral Tribunal is constituted.

The Petitioner Society entered into a Development Agreement (DA) in 2013 with the Respondent Developer for property redevelopment

Following defaults in rent and construction, the Society filed a Section 9 petition in 2017, resulting in a "December 2017 Order" that attached the Developer’s personal assets and restrained them from creating third-party rights in any of their projects

Over the years, 31 Interim Applications (IAs) were filed by third-party decree-holders, allottees from unrelated projects, and the Developer's family members, seeking intervention or release of funds

An Arbitral Tribunal was finally constituted in September 2024, and a Section 17 order was passed in February 2026 regarding the same subject matter

1. Whether a Section 9 Court should continue exercising jurisdiction and entertaining third-party interventions once an Arbitral Tribunal has been constituted

2. Whether third parties (decree-holders and allottees of unrelated projects) have the standing to intervene in Section 9 proceedings arising from a specific arbitration agreement

3. Whether the restrictive "December 2017 Order" should be modified or referred to the Arbitral Tribunal for reconsideration

Section 9 is intended for the "preservation and protection" of the subject matter of the arbitration agreement

Per Section 2(1)(h), a "party" is limited to those seeking relief under the arbitration agreement

The court applied the "veritable parties" doctrine as established in Cox and Kings Ltd. v. SAP India (P) Ltd. and ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji, requiring a non-signatory to show proximity, consent, or a de facto connection to the dispute to be joined

Under Section 9(3), once a tribunal is constituted, the Court shall not entertain applications unless Section 17 is inefficacious

The Court reasoned that Section 9 is not a "standalone equity jurisdiction" but is tethered to the arbitration agreement

Since a Tribunal is now constituted and has passed a Section 17 order, the Section 9 proceedings must end to respect the "rule of law"

Regarding third-party Applicants, the Court held they lacked privity; being a creditor of a developer does not make one a "veritable party" to an arbitration agreement in a bilateral contract

The Court found it "impermissible" for a Section 9 Court to conduct mini-trials or auctions for assets (like the Mahul Property) involving third-party claims

Furthermore, continuing a blanket injunction (December 2017 Order) over all of the Developer's projects for nearly a decade was deemed a matter for the Tribunal to reassess based solely on the Society's specific claims in the Statement of Claim (SOC)

All third-party IAs are rejected as the applicants lack privity to the DA

The "December 2017 Order" and the custody of deposited funds (approx. ₹11 crores) are referred to the Arbitral Tribunal, which must determine the "surplus" beyond the Society's needs within three months

The Developer is held to his undertaking to pay third-party decree-holders within 12 months of the release of funds

The private Court Commissioner is replaced by an official Registry Commissioner to facilitate a handover to the Tribunal