Section 9 Interim Reliefs Must Yield to Section 17 Jurisdiction Once the Arbitral Tribunal Is Constituted

The Petitioner Society entered into a Development Agreement (DA) dated May 2, 2013, with Respondent No. 1 (Developer) for property redevelopment

Following defaults by the Developer in paying corpus amounts, transit rent, and statutory dues, the Society filed a Section 9 Petition in 2017

In December 2017, the Court issued an expansive injunction restraining the Developer from alienating any assets or creating third-party rights across *all* its projects

Over time, 31 Interim Applications (IAs) were filed by third-party decree-holders and allottees from unrelated projects seeking to claim funds deposited in this Court

An Arbitral Tribunal was finally constituted on September 2, 2024, and has since passed a Section 17 order

1. Whether a Section 9 Court should continue to exercise jurisdiction and maintain interim orders once an Arbitral Tribunal has been constituted and a Section 17 application is filed

2. Whether third parties (decree-holders or allottees) who are not signatories to the arbitration agreement can intervene in Section 9 proceedings to recover dues unrelated to the subject matter of the arbitration

The Court applied Section 9 and Section 17 of the Arbitration and Conciliation Act, 1996, emphasizing that Section 9 is intended only for the "preservation and protection" of the subject matter of the arbitration agreement

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

Relying on *Ashok Traders v. Gurumukh Das Saluja*, the court noted that Section 9 is not a standalone equity jurisdiction

Furthermore, based on *Cox and Kings Ltd. v. SAP India (P) Ltd.* and *ASF Buildtech*, a third party can only be joined if they are a "veritable party" (e.g., via the Group of Companies doctrine or commonality of subject matter), as the term "party" under Section 2(1)(h) is strictly defined

The Court reasoned that since the Arbitral Tribunal is now functional and has already passed a Section 17 order, the "temporal shelf life" of the Section 9 jurisdiction has expired

The Court found that the hundreds of third-party applicants (decree-holders from other projects) had no privity to the DA and were not "veritable parties"; thus, allowing them to chase the Developer's assets within this specific arbitration's Section 9 umbrella would be *coram non judice*

The Court observed that the 2017 injunction was so broad that it stalled the Developer's other projects, and now that a Statement of Claim for Rs. 18.65 Crores is before the Tribunal, the Tribunal is the only efficacious forum to determine what specific assets must remain secured

The Court disposed of the Section 9 Petition and all 31 IAs. It held that: (i) All third-party intervention requests are rejected as they lack privity to the arbitration agreement [para. 51]; (ii) The Learned Arbitral Tribunal shall determine, within three months, the specific amount required to secure the Society's interests; any surplus shall then be released to the Developer [para. 70(C-D)]; (iii) The broad 2017 injunction is referred to the Tribunal for modification/vacation based on the Society's actual claims [para. 70(E)]; (iv) The Court-appointed Commissioner is directed to hand over all materials to the Registry/Tribunal and the previous oversight committee is disbanded