The Bombay High Court, in a significant ruling, has clarified that parties seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, must do so with "reasonable expedition." The court highlighted that excessive delay without a valid explanation can be a decisive factor against granting such relief.
This decision came from the Division Bench of Justice A. S. Chandurkar and Justice Rajesh Patil in the matter of Ashoka Buildcon Ltd. vs. Maha Active Engineers India Pvt. Ltd. & Anr. The court dealt with Commercial Arbitration Appeal No. 10 of 2024, concerning a dispute arising out of subcontracting arrangements between the parties.
Case Background:
The core dispute stemmed from a contract awarded by Maharashtra State Electricity Distribution Company Limited (MSEDCL) to Ashoka Buildcon Limited (ABL), which in turn subcontracted parts of the work to Maha Active Engineers India Pvt. Ltd. (MAEIPL). According to MAEIPL, they completed the work as early as March 31, 2011, but received only partial payment from ABL despite several follow-ups.
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MAEIPL initially invoked arbitration in December 2019 and re-invoked it in January 2024, after alleging non-compliance by ABL and failure to settle dues. Following this, MAEIPL filed a Section 9 application seeking protection of its claim amount and restriction on ABL's handling of assets.
The trial court ruled in favor of MAEIPL, directing ABL to deposit ₹63.27 crores and imposed various restraints, including a prohibition on asset transfers and a requirement to disclose assets.
Senior Advocate Mr. Nikhil Sakhardande, representing ABL, strongly opposed the trial court’s decision, arguing that MAEIPL approached the court after an unreasonable and unexplained delay. He pointed out that:
- The contract concluded in 2011, and the first claim was raised only in 2016.
- The delay continued, with the arbitration notice being issued eight years later, in 2019.
- MAEIPL remained inactive between December 2016 and December 2019 without substantial action.
He relied on the Supreme Court judgment in B and T AG v. Ministry of Defence, asserting that mere negotiations or exchange of correspondence cannot extend the limitation period. He further criticized the trial court’s order for lacking justification regarding the sum directed to be deposited.
He also argued that even if strict requirements under Order XXXVIII Rule 5 CPC were not met, interim relief could still be granted in the interest of justice.
The court cited the precedent set in Wander Ltd. v. Antox India Pvt. Ltd., noting that an appellate court should not interfere with discretionary orders unless the lower court exercised discretion in an arbitrary or unreasonable manner.
The judges noted that the delay between the initial completion of work in 2011, the first invocation in 2019, and further steps in 2024 was significant. This delay impacted MAEIPL’s entitlement to urgent relief.
While the High Court acknowledged that some protection to MAEIPL was justified, it found the earlier directions excessive. Thus, it partly modified the trial court’s order:
ABL shall deposit ₹9.74 crore and provide a bank guarantee for ₹14.61 crore within six weeks.
The court maintained that such relief was sufficient to safeguard MAEIPL’s interest without causing undue hardship to ABL.
Case Title: Ashoka Buildcon Ltd. vs. Maha Active Engineers India Pvt. Ltd. & Anr.
Case No.: Commercial Arbitration Appeal No. 10 of 2024 along with I.A. No. 8120 of 2024 and I.A. No. 313 of 2025.
For the Appellant-Applicant: Mr. Nikhil Sakhardande, Senior Advocate, with Mr. Hrishikesh Chitale, Mrs. Shubra Swami, i/by Mr. Hitesh B. Sangle and Mr. Abhinav Vyas.
For the Respondent No. 1: Mr. Sharan Jagtiani, Senior Advocate, with Mr. Vishal Kanade, Ms. Bindi Dave, Mr. Aayesh Gandhi and Mr. Gaurang Samel, i/by Wadia Ghandy & Co.
For Respondent No. 2- MSEDCL: Mr. Rahul Sinha, Advocate, i/by DSK Legal.
Date of Judgment: 30.04.2025
