Section 9 Interim Measures Cease Once Arbitral Tribunal Can Efficaciously Grant Relief Under Section 17.

The Petitioner Society entered into a Development Agreement (DA) dated May 2, 2013, with the Respondent Developer for property redevelopment

Following defaults by the Developer regarding statutory dues, transit rent, and construction milestones, the Society filed a Section 9 petition in 2017 seeking interim protection

On December 14, 2017, the Court issued an injunction restraining the Developer from alienating any assets across all its projects and directed the attachment of various personal assets

Over several years, 31 Interim Applications (IAs) were filed by third-party decree-holders and allottees from unrelated projects of the Developer, seeking to claim funds (~Rs. 11 crores) deposited in Court

An Arbitral Tribunal was finally appointed on September 2, 2024, and subsequently passed an order under Section 17 on February 4, 2026

1. Whether a Section 9 Court should continue to exercise jurisdiction and entertain third-party interventions once an Arbitral Tribunal is constituted and Section 17 proceedings have commenced

2. Whether third parties (decree-holders or allottees from unrelated projects) who are not signatories to the arbitration agreement can intervene in Section 9 proceedings to claim deposited assets

The court primarily applied Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996

It emphasized that the term "party" under Section 2(1)(h) is restricted to signatories or "veritable parties" to the arbitration agreement

The court relied on the "Group of Companies" doctrine and principles governing non-signatories established in Cox and Kings Ltd. v. SAP India (P) Ltd., ASF Buildtech Pvt. Ltd. v. Shapoorji Pallonji, and Adavya Projects Pvt. Ltd. v. Vishal Structurals, which require demonstrable proximity or consent to rope in third parties

Additionally, the court applied the temporal restriction in Section 9(3), which mandates that a Court shall not entertain Section 9 applications once a tribunal is formed unless the Section 17 remedy is inefficacious

The Court reasoned that Section 9 is not a standalone equity jurisdiction but is strictly in aid of preserving the subject matter of the specific arbitration agreement

Since the Arbitral Tribunal was constituted and had already passed a Section 17 order, the "rule of law" dictated that the Court exit the proceedings to avoid becoming coram non judice

Regarding third-party intervenors, the Court found they lacked privity to the DA and did not qualify as "veritable parties" because their claims arose from entirely different projects and contracts

The Court observed that while the 2017 injunction was expansive, its continued necessity must now be assessed by the Tribunal based on the specific Statement of Claim (SOC) filed by the Society, rather than the interests of the world at large

The Court held that third-party applicants have no standing to intervene and must seek relief in appropriate execution or civil forums

The Arbitral Tribunal was directed to determine within three months which portion of the deposited funds is necessary to secure the Society's claims; any surplus must be released to the Developer

The developer was ordered to abide by his undertaking to settle decree-holders' claims within 12 months of such release

The Court-appointed Commissioner was directed to hand over all materials to an official Registry Commissioner and was awarded fees of Rs. 2,50,000