Interim measures in Arbitration Act meant to support not undermine arbitration: Bombay High Court

The object and intention of Section 9 (interim measures) of the Arbitration and Conciliation Act, 1996 is to support arbitration and not defeat or permit parties to detract from the very process, the Bombay High Court recently observed..Justice Arif Doctor added that the intention of Section 9 of the Arbitration Act is not only to provide relief but also to reinforce the arbitration process itself."There can be no dispute that the grant of relief under Section 9 of the Arbitration Act is a discretionary relief and is to be exercised keeping in mind the well settled principles for the grant of such interim relief. However, equally, the object and intention of Section 9 of the Arbitration Act is to support Arbitration and not defeat and/or permit parties to detract from the very process of arbitration," the Court observed. .It made the observation while considering a petition stemming from a protracted dispute between Vyoman Tradelink (now Vyoman India) - the original promoters of ITZ Cash which is now rebranded as Ebix Payment Services - and EbixCash Ltd. (Ebix), a forex, gift cards and payments service company.By an order passed on October 8, the Court directed EbixCash and its associated companies to honour an Emergency Arbitrator's decision in the matter.This decision required Ebix to furnish an irrevocable bank guarantee of ₹145 crores in favor of Vyoman Tradelink Ltd. within 14 days, in furtherance of a shareholders agreement between the parties..The dispute dates back to 2019 when Vyoman Tradelink sought arbitration against EbixCash for failing to make certain earn-out payments as outlined in their Shareholders Agreement (SHA).Vyoman held a significant stake in the Ebix Payment Services. In 2017, both parties entered into an SHA under which Ebix was supposed to purchase Vyoman's stake. The matter was referred to arbitration after disputes arose over the execution of this agreement. The Singapore International Arbitration Centre (SIAC) ruled that Ebix must purchase Vyoman's remaining stake.On March 14, 2024, the Emergency Arbitrator ordered Ebix to provide a bank guarantee of ₹145 crores within 14 days—a deadline that passed unheeded, prompting Vyoman to approach the Bombay High Court for enforcement..In Court, Senior Advocate Sharan Jagtiani, representing Vyoman, argued that while Section 9 of the Arbitration Act is not typically available for enforcing orders from an Emergency Arbitrator (EA), the Court could still assess the facts independently and grant interim relief if justified. Jagtiani contended that there was a compelling case for the requested interim relief based on Ebix's failure to comply with its obligations..Conversely, Advocate Mayur Khandeparkar, representing EbixCash, argued that the petition was not maintainable. He argued that the petition effectively sought to enforce the EA's decision without a formal enforcement application under Section 49 (enforcement of foreign arbitral awards) of the Arbitration Act (Part II). Khandeparkar also argued that the current petition did not meet the exceptional circumstances required for seeking interim relief under the SIAC's rules..The Court found Ebix’s objections unconvincing."The objection of Ebix that the EA Decision was an award (a final decision) and therefore was required to be enforced under the provisions (Section 49) of Part II of the Arbitration Act is entirely devoid of any merit," it said. It added that whether or not a decision is final hinges on its substance, not its nomenclature. In this case, the Court noted that Ebix had not claimed the EA Decision conclusively resolved any part of the ongoing dispute. Furthermore, the Court noted that the respondents had not raised any grievances regarding the merits of the EA Decision.Additionally, the Court stated that even if the EA decision was not factored in, Vyoman had made a compelling case for interim relief due to Ebix's obstructive conduct."Even without placing reliance upon the EA Decision, the Petitioners (Vyoman) have made out a very strong case for the grant of interim reliefs," the Court concluded. The Court also issued an injunction restraining EbixCash and its associated companies from dealing with, encumbering, or disposing of any of their assets, including those listed in a specified schedule.The matter is kept to check compliance on October 22..Senior Advocate Sharan Jagtiani along with Advocates Nitesh Jain, Juhi Mathur, Sonia Dasgupta Ananyaa, Jagirdar Surbhi Agarwa and Atul Jain on behalf of Trilegal appeared for Vyomen and its Director Ashok Kumar GoelAdvocate Mayur Khandeparkar along with Advocates Chetan Yadav, Allen Mathew & Pratibha Tiwari, on behalf of VJ Juris Advocates appeared for Ebix Cash Ltd and other group companies.[Read Order]