Section 9 interim measures necessarily cease when the underlying arbitration terminates.

JSW Steel Ltd. (“JSW”) filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 against Delta Iron & Steel Co. Pvt. Ltd., Yatin Steels India Pvt. Ltd. and ARK Industries Pvt. Ltd., alleging non-payment for hot-rolled steel coils supplied under a Franchise Agreement dated 1 July 2018.

Pursuant to an ex parte interim order dated 23 August 2019, the Court Receiver attached and took possession of 160 coils, including eleven coils claimed by Aashna Yatin Khanna (“Aashna”), proprietress of Aashna Steel Traders.

Aashna sought release of the eleven coils, contending that she had purchased them for value from Aeon Creations Pvt. Ltd. without notice of any claim or lien of JSW.

Karu separately sought payment of warehousing charges incurred while the coils remained in storage pursuant to the Court’s orders.

Meanwhile, the arbitral tribunal had been constituted, but JSW withdrew the arbitration on 11 November 2025 after the respondents underwent corporate insolvency resolution under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

Whether interim protective measures and the Court Receiver’s attachment under Section 9 could continue after the arbitration proceedings had been withdrawn and the corporate respondents had undergone resolution under the IBC.

Whether Aashna and Karu, as third parties affected by the Section 9 order, could maintain applications seeking release of the coils and directions concerning warehousing charges.

Whether JSW could claim delivery of the subject coils on the basis that it was an unpaid seller or that the coils constituted security for its monetary claim.

Which party was liable to pay the storage charges incurred for the subject coils while they remained under attachment or in custody pursuant to the Court’s orders.

Whether Aashna and Karu were entitled to restitution, damages or costs arising from the attachment and its continuation.

Section 9 of the Arbitration and Conciliation Act, 1996 permits interim measures only as protective or preservative relief in aid of arbitral proceedings; when the arbitration ends, the interim measure must ordinarily cease.

Firm Ashok Traders v. Gurmukh Das Saluja, (2004) 3 SCC 155, establishes that Section 9 relief must remain connected with an actual or manifestly intended arbitration and cannot become permanent protection.

Under Sections 47 and 49 of the Sale of Goods Act, 1930, an unpaid seller’s lien depends on possession and generally ends upon delivery where no right of disposal has been reserved; under Section 30(2), a good-faith purchaser without notice may obtain title free from the original seller’s lien.

The IBC resolution process gives the corporate debtor a “clean slate”; claims arising before resolution are dealt with under the approved resolution plan and do not retain a residual cause of action capable of sustaining arbitration or Section 9 protection.

The principles of actus curiae neminem gravabit and restitution require that no person suffer prejudice from an act of the Court and that the party obtaining an interim order bear the consequences and costs caused by it.

Third parties affected by an ex parte order may approach the Section 9 Court on principles analogous to Order XXXIX Rule 4 of the Code of Civil Procedure, 1908.

The Court held that the attachment was created solely to preserve assets in aid of JSW’s arbitration and monetary claim. Once JSW withdrew the arbitration on 11 November 2025, following resolution of the corporate respondents under the IBC, there was no surviving arbitral proceeding or enforceable cause of action to justify continuation of the attachment.

JSW’s assertion that it remained an unpaid seller did not preserve its right over the coils: its claim was a monetary operational debt, and the approved resolution plan resulted in the statutory “clean slate” applicable to the corporate debtors.

Further, JSW had delivered the coils to the respondents’ warehouse without reserving a right of disposal. Applying Sections 47, 49 and 30(2) of the Sale of Goods Act, and the reasoning in Vanit Gupta and Kothari Steel, the Court found that JSW could not assert a continuing lien against a bona fide downstream purchaser without notice.

The Court also rejected JSW’s renewed objections concerning invoice discrepancies, coil identification and the alleged unreliability of Aeon’s invoices.

Since the attachment had been obtained at JSW’s request, the equitable principle that acts of the Court should prejudice no one required JSW to bear the storage costs incurred by warehouses compelled to retain the coils.

However, liability was apportioned according to when each coil came under Court custody: Aashna was made responsible for the eighth coil’s storage at Karu before 10 November 2022 because that coil had not yet been attached, while JSW was made responsible for the other storage periods attributable to the Court’s attachment.

Damages beyond quantified costs could not be adjudicated summarily in Section 9 proceedings, but Aashna and Karu were granted liberty to pursue appropriate restitution or damages proceedings.

Aashna’s and Karu’s applications were held maintainable as applications by third parties affected by the Section 9 order.

JSW was denied any right to retain or receive the subject coils and was directed to bear the storage charges attributable to the Court’s attachment: storage of seven coils at Karu until 10 November 2022; storage of eight coils at Paramshakti from 10 November 2022; and storage of three coils at Rishabh Digha for the period of attachment until release.

Aashna was directed to bear storage charges for the eighth coil at Karu until 10 November 2022.

The warehouses were directed to issue invoices to the Court Receiver, who was to verify and forward them to JSW; JSW was required to pay the verified charges within four weeks, with interest at 12% per annum.

JSW was further directed to pay costs of ₹1,50,000 to Karu and ₹2,50,000 to Aashna within four weeks, the costs of the Court Receiver’s report within one week, and the Receiver’s charges under the applicable Rules.

Aashna and Karu were granted liberty to institute appropriate proceedings for further damages or restitution.