Party cannot seek specific performance of a contract under the garb of an application under section 9 of the arbitration and conciliation act, 1996

The Delhi High Court (“DHC”), in a recent judgment titled Pink City Expressway Private Limited vs. the National Highways Authority of India & Anr1, declined to allow the relief of specific performance under an Application filed for interim relief under the Arbitration and Conciliation Act, 1996 (“Act”). It held that the same would be akin to a final relief which cannot be granted under Section 9 of the Act and that the same would also violate the rights of parties under Specific Relief Act, 1963 (“SRA”).

The brief facts of the present case involve a Concession Agreement (“Agreement”) which was entered into/between the Appellant and the National Highways Authority of India (“NHAI”) for carrying out certain construction and to maintain and operate the toll plaza on a part of National Highway (NH)-8.

When the Agreement was nearing the expiry term, the Appellant sought an extension of the concession period, to which, the Respondent-NHAI did not accede. Instead it granted part extension for a limited time period.

When the extended term of the Agreement was on the verge of completion, the Respondent by the way of fresh tender, awarded the contract to a third party. The Appellant filed a Petition under Section 9 of the Act, seeking interim protection of its rights as a concessionaire, pending arbitral proceedings. The same was dismissed by an order of a Single Judge of the DHC.

Pursuant to the dismissal, the Appellant filed an appeal against the order of the Single Judge. Meanwhile, the Appellant, also filed a Writ Petition W.P.(C) 8321/2022 challenging the tendering process, which was, dismissed as withdrawn, on account of pendency of the arbitration proceedings (under Section 9/37 of the Act).

The Division Bench of the DHC, while adjudicating upon various factual and legal issues, dismissed the appeal and observed that granting an order of extension of the concession agreement would result in providing specific relief which is beyond the powers of the court under Section 9 of the Act which has been provided for a limited purpose of preservation of the subject matter of the dispute, till the award is passed by the Arbitral Tribunal. The Hon’ble Bench further held that the scope under this Section cannot be extended to include the relief in nature of specific performance. The Hon’ble Bench, while interpreting the scope of Section 9 of the Act held that the language of Section 9 limits itself to interim relief to a party before commencement of the proceedings, or during the arbitral proceeding, or before the actual arbitral award is granted.

While the interpretation of Section 9 of the Act is sufficiently wide to take any measure of protection, which includes preservation, custody and sale of goods, which are subject matter of an arbitration, it cannot possibly be construed to grant an interim relief which would be akin to a final relief and thereby make the entire arbitration proceedings academic and infructuous.

By - Devesh Bhatia and Ratnadeep Raha

  1. FAO(OS) (COMM) 158/2022, Delhi High Court.