Section 9 protection continues until the Section 17 decision, but no longer than 60 days.

The petitioner, an NBFC, had extended a medium-term loan facility of ₹4.25 crore to the respondent, also an NBFC.

The loan agreement contained an arbitration clause providing for New Delhi as the seat and conferring exclusive jurisdiction on Delhi courts.

Alleging defaults and apprehending dissipation of secured assets, the petitioner brought a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection, including restraint against dealings with hypothecated assets and security for its claim.

On 23 July 2026, the Court granted an ad interim restraint against dealings with the hypothecated assets, current assets and receivables connected with the loan facility.

At the hearing on 30 September 2026, both parties agreed to attempt mediation; the respondents also consented to arbitration if mediation failed.

1. Whether the dispute should be referred to mediation and, if settlement failed, to arbitration by a mutually accepted sole arbitrator.

2. Whether the existing Section 9 petition should be treated as an application under Section 17 for determination by the arbitral tribunal, and what interim protection should continue pending that determination.

The Court applied the Arbitration and Conciliation Act, 1996.

Section 9 provides for interim measures by a court, while Section 17 empowers the arbitral tribunal to consider interim measures; the Court directed that the pending Section 9 petition be treated as a Section 17 application for the tribunal’s consideration.

The Court also required the appointed arbitrator to furnish the disclosure contemplated by Section 12(2).

The parties’ consent enabled the Court to appoint a sole arbitrator and record their waiver of the contractual and formal appointment procedure under the Act.

No precedent was cited.

The parties’ agreement to mediation, together with the respondents’ consent to arbitration if mediation failed, led the Court to refer the dispute first to the Delhi High Court Mediation and Conciliation Centre (SAMADHAN), while appointing a sole arbitrator so that arbitration could proceed without delay if mediation proved unsuccessful.

Because the interim-relief dispute could then be considered by the tribunal, the Court directed that the pending Section 9 petition be treated as an application under Section 17 and requested an expeditious decision.

To preserve the existing protection in the meantime, the Court continued the 23 July restraint, but limited its duration to 60 days from the judgment, subject to the tribunal considering the application and passing appropriate orders.

If mediation failed, Mr. Ajay Tiwari, Former Judge of the Punjab and Haryana High Court, was appointed as sole arbitrator under the aegis of DIAC; he is to enter upon the reference within five weeks of the mediation report recording failure, subject to furnishing the required disclosure.

The Court directed that the Section 9 petition be treated as a Section 17 application and requested the arbitrator to decide it preferably within four weeks after commencement of the arbitral proceedings.

The interim restraint was continued for no more than 60 days from 30 September 2026, after which it would automatically lapse, and the petition was disposed of.