Court confirms narrow appellate scope under Section 37, emphasizes need for strong prima facie case and balance of convenience for interim measures.
In a significant ruling, the Andhra Pradesh High Court has dismissed an appeal by Zion Shipping Ltd. against an earlier order that refused interim relief in an arbitration-related matter. The Division Bench, comprising Justices Ravi Nath Tilhari and Maheswara Rao Kuncheam, upheld the learned Single Judge's decision to vacate an ex parte interim order for attachment of rice stock, emphasizing the limited scope for appellate intervention under Section 37 of the Arbitration and Conciliation Act, 1996.
The dispute originated from a charter-party agreement between Zion Shipping Ltd., a Hong Kong-based company, and Sarala Foods Pvt. Ltd., involving the transport of rice from India to Vietnam. Zion Shipping claimed demurrage for delayed unloading, a claim which Sarala Foods contested. Zion Shipping sought interim measures under Section 9 of the Arbitration and Conciliation Act, aiming to secure the amount in dispute by attaching Sarala Foods' rice stock. However, the learned Single Judge had dismissed this application, leading Zion Shipping to file an appeal under Section 37.
The Division Bench highlighted that the appellate jurisdiction under Section 37 is narrow and does not permit re-appreciation of evidence or interfere unless there is arbitrariness, perversity, or a violation of settled principles. The Court found no such issues in the Single Judge’s decision, which carefully assessed the absence of a strong prima facie case and the balance of convenience. It noted that Zion Shipping's claim was for liquidated damages and had not yet been adjudicated, thus not constituting an enforceable debt.
The Court also observed that Zion Shipping had delayed its claim for over three years, undermining its case for interim relief. It emphasized the importance of acting with reasonable expedition and the necessity for concrete evidence of the respondent's intent to dissipate assets to justify such interim measures.
The judgment underscores the importance of establishing a strong prima facie case and balance of convenience in seeking interim measures under arbitration law, reinforcing the principle of minimal judicial intervention in arbitral processes.
Bottom Line:
Arbitration and Conciliation Act - An appeal under Section 37 of the Act is limited in scope and does not function as a first appeal. Interim measures under Section 9 require a strong prima facie case, balance of convenience, and reasonable expedition in approaching the court.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Sections 9, 37
Zion Shipping Ltd. v. Sarala Foods Pvt. Ltd., (Andhra Pradesh)(DB) : Law Finder Doc Id # 2834231
