Section 9 interim protection against the borrower continues until the tribunal decides the corresponding Section 17 application.

The Petitioner advanced a medium-term loan of ₹5 crores to Respondent No. 1 under a Sanction Letter dated 27 September 2024, followed by a Term Loan Agreement and Deed of Hypothecation dated 28 September 2024.

Respondent Nos. 2 and 3 executed personal guarantees. Following repayment defaults, dishonour of cheques, issuance of a loan recall notice, and partial payment of ₹38 lakhs, the Petitioner claimed ₹3,12,88,646.50 from the Respondents jointly and severally.

The Petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, apprehending alienation or encumbrance of the Respondents’ assets.

On 29 July 2026, the Court directed the Respondents to maintain status quo concerning their assets to the extent of the Petitioner’s outstanding claim.

On 25 September 2026, the parties agreed to attempt mediation and, if unsuccessful, to refer the disputes to arbitration.

Whether the dispute should first be referred to mediation and, upon failure of settlement, to arbitration before a sole arbitrator.

Whether the arbitration agreement was undisputedly applicable to Respondent No. 1 and whether its existence, applicability, or binding effect qua Respondent Nos. 2 to 6 should be determined at the stage of appointment or left open for adjudication by the Arbitral Tribunal.

Whether the interim protection granted under Section 9 should continue and be placed before the Arbitral Tribunal for consideration under Section 17 of the Act.

The Court applied Section 9 of the Arbitration and Conciliation Act, 1996, which empowers the Court to grant interim measures in aid of arbitration, including protection against dissipation or alienation of assets; the Court had earlier found a prima facie case, balance of convenience, and a risk that enforcement of a future award could be frustrated.

Section 17 of the Act permits the Arbitral Tribunal to grant interim measures after constitution of the Tribunal, and a Section 9 application may thereafter be treated as an application under Section 17.

Section 12(2) requires the arbitrator to furnish the prescribed disclosures before proceeding with the reference.

The Court also applied the principle that objections concerning the existence, validity, applicability, or binding effect of the arbitration agreement, including objections raised by non-signatories or other respondents, may be left open for determination by the Arbitral Tribunal in accordance with law.

The parties were ad idem that mediation should be attempted before commencing arbitration, and the Court accordingly referred them to the Delhi High Court Mediation and Conciliation Centre for six weeks.

Since the existence of the arbitration agreement between the Petitioner and Respondent No. 1 was undisputed, the Court found no impediment to appointing a sole arbitrator.

Although Respondent Nos. 2 to 6 disputed the applicability and binding effect of the arbitration agreement in their individual capacities, the Court did not conclusively decide those objections; instead, it preserved them for determination by the Arbitral Tribunal.

Because the earlier interim protection was granted on the basis of continuing defaults, dishonoured cheques, and apprehension of asset dissipation, the Court continued that protection only qua Respondent No. 1 until the Tribunal could consider the matter under Section 17.

If mediation failed, Mr. Bishwajit Dubey, Advocate, was appointed as the Sole Arbitrator, subject to furnishing the disclosures required under Section 12(2), with the arbitration to be conducted under the aegis of the Delhi International Arbitration Centre.

The Section 9 petition was directed to be placed before the Arbitral Tribunal and treated as an application under Section 17.

The interim protection granted on 29 July 2026 was continued qua Respondent No. 1 until consideration by the Tribunal, which was empowered to continue, modify, vary, or vacate it.

All objections and contentions, including those concerning arbitrability, the arbitration agreement, and misjoinder, were left open.