Calcutta High Court Dismisses Petition for Reimbursement of Municipal Tax in Post-Arbitral Proceedings

Court Clarifies Limitations of Section 9 of Arbitration Act; Directs Parties to Pursue Claims in Section 34 Proceedings

The Calcutta High Court, presided over by Justice Gaurang Kanth, has dismissed a petition filed under Section 9 of the Arbitration and Conciliation Act, 1996, by Rakesh Kumar Jindal and others, seeking reimbursement of Kolkata Municipal Corporation (KMC) tax from Anoop Kumar Jindal and other partners of a partnership firm. The Court emphasized that Section 9 is limited to interim measures and cannot be used to adjudicate fresh substantive claims arising post-arbitral award.

The petitioners, partners in the firm M/s. Chander Niwas, paid a substantial municipal tax liability to avail of a waiver scheme, and sought reimbursement from their partners. However, the liability arose after the arbitral award, prompting the Court to state that such claims fall outside the scope of Section 9, which is intended for interim reliefs to preserve the subject matter of arbitration or secure the award's fruits.

Justice Kanth noted that the petitioners’ claim constitutes a fresh dispute requiring factual determination, which should be addressed in Section 34 proceedings that are already underway. The judgment underscores the Court's ancillary jurisdiction under Section 9 and reaffirms that it does not extend to determining fresh liabilities or enforcing the award itself.

The decision aligns with previous observations by a Division Bench in related proceedings, which highlighted the necessity of addressing post-award liabilities in the context of the arbitral award's challenge under Section 34. The Court advised the petitioners to pursue their claims in those proceedings, maintaining the integrity of the arbitration process.

The ruling serves as a significant clarification on the limitations of Section 9 of the Arbitration and Conciliation Act, 1996, particularly concerning claims emerging after an arbitral award, and reinforces the procedural path for partners in arbitration-related disputes.

Bottom Line:

Section 9 of the Arbitration and Conciliation Act, 1996, does not extend to adjudicating fresh substantive monetary claims or liabilities arising post-award, as it is confined to interim and protective measures in aid of the arbitration process or enforcement of the award.

Statutory provision(s): Arbitration and Conciliation Act, 1996, Section 9

Rakesh Kumar Jindal v. Anoop Kumar Jindal, (Calcutta) : Law Finder Doc Id # 2814009