Interim Relief Granted Under Arbitration Act to Preserve Subject Matter of Dispute Between Rishi Chemical and Enviro Cleanroom
In a recent development, the Calcutta High Court has intervened in the ongoing dispute between Rishi Chemical Works Private Limited and Enviro Cleanroom Projects Private Limited by granting an interim relief under Section 9 of the Arbitration and Conciliation Act, 1996. The case, which is currently under conciliation proceedings according to the MSME Act, 2006, saw the appointment of a Special Officer to preserve the subject matter of the dispute without impeding the conciliation process.
The petitioner, Rishi Chemical Works, alleged considerable delays by the respondent, Enviro Cleanroom Projects, in the execution of a clean room laboratory and allied production facility at their Haridwar unit. Despite a significant payment of over one crore rupees and possession being handed over in May 2025, the facility remained incomplete, leading to substantial losses for Rishi Chemical.
Citing a precedent set by the Delhi High Court in Prima Developers v. Lords Co-op. Group Housing Society Ltd., Rishi Chemical sought the appointment of a receiver to inspect and document the current status of the disputed premises. The respondent, however, argued against this application, referencing Supreme Court judgments that emphasize the statutory scheme of the MSME Act, which mandates strict adherence to its procedures once a dispute is referred to the MSME Facilitation Council.
Justice Gaurang Kanth, while acknowledging the ongoing conciliation proceedings, determined that the interim relief was necessary to preserve the dispute's subject matter without disrupting the conciliation process. The court appointed Advocate Mousumi Bhowal as the Special Officer, tasked with inspecting the premises, taking measurements, and documenting any deficiencies in the works and materials supplied by the respondent.
The court ordered that Ms. Bhowal's remuneration be borne by the petitioner, and directed the Officer-in-Charge of the local police station to provide necessary assistance during the inspection process. The case is scheduled for a follow-up hearing on January 27, 2026.
This judgment highlights the judiciary's role in balancing the need for interim protection in arbitration matters with the procedural mandates of the MSME Act, ensuring that the preservation of the dispute's subject matter does not hinder ongoing conciliation efforts.
Bottom Line:
Arbitration and Conciliation Act - Court has authority to grant interim relief, including appointment of a receiver, to preserve the subject matter of the dispute pending adjudication, even during ongoing conciliation proceedings under MSME Act, provided it does not impede the conciliation process.
Statutory provision(s):
- Arbitration and Conciliation Act, 1996 Section 9
- MSME Act, 2006 Section 18
