Court Directs Disclosure of Assets for Securing Award Amount
In a significant judgment delivered by the Kerala High Court on March 10, 2026, the Division Bench comprising Chief Justice Soumen Sen and Justice Syam Kumar V.M. has partially allowed an appeal by E D & F Man Liquid Products Italia SRL and others, modifying the interim protection measures regarding securing an arbitral award amount. The judgment addresses the scope and ambit of Section 9 of the Arbitration and Conciliation Act, 1996, emphasizing the Court's power to pass orders for securing the amount in dispute even after the arbitral award has been passed but before its enforcement.
The appeal arose from an order dated February 24, 2026, wherein the Single Judge had limited relief to an injunction restraining the respondent, Emil Traders Private Limited, from withdrawing amounts from its bank accounts and alienating or encumbering its properties. The appellants, represented by Senior Advocate Bharucha Zarir Pesi, contended that the fraudulent intent of the respondent necessitated a direction to deposit the entire awarded sum and disclose assets through an affidavit.
The Division Bench, while analyzing the judgment, highlighted the wide powers conferred on courts under Section 9 of the Arbitration and Conciliation Act, 1996. It reiterated that courts could exercise inherent powers to secure the amount in dispute, underscoring the importance of procedural safeguards and balance of convenience. The court further acknowledged the observations from the Supreme Court's judgment in Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited, which affirmed the broad scope of Section 9, allowing interim measures beyond the technicalities of the Civil Procedure Code.
Given the pending execution application and the dismissal of the respondent’s petition for voluntary winding up by the NCLT, the High Court directed Emil Traders Private Limited and its directors to disclose assets, both movable and immovable, along with valuation reports certified by accredited valuers. The affidavit must also include annual accounts and balance sheets for the last three years. This disclosure aims to assess the sufficiency of assets to meet the awarded sum, thereby protecting the appellants' interests until the enforceability of the award is decided.
This judgment not only modifies the earlier order but also sets a precedent for the exercise of judicial discretion in interim reliefs related to arbitration awards, emphasizing equitable justice over procedural technicalities.
Bottom Line:
Arbitration - Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to pass interim measures of protection, including securing the amount in dispute in arbitration, even after the arbitral award is passed but before its enforcement.
Statutory provision(s): Arbitration and Conciliation Act, 1996 Section 9(1)(ii)(b), Section 37(1)(b)
