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Issues: (i) whether the Additional District Judge, Salem had jurisdiction to entertain the application under section 9 of the Arbitration and Conciliation Act, 1996; (ii) whether the applicant had established a prima facie case and other settled requirements for securing the amount in dispute by interim order.
Issue (i): whether the Additional District Judge, Salem had jurisdiction to entertain the application under section 9 of the Arbitration and Conciliation Act, 1996.
Analysis: Section 9 permits interim relief only through a Court having jurisdiction. The expression "Court" under section 2(1)(e) of the Act had to be read with the then applicable civil court hierarchy. On the date of filing, the petition ought to have been presented before the court of the lowest grade competent to try it, and the relevant civil courts framework showed that the subordinate civil court, not the Additional District Judge, was the proper forum. The jurisdictional objection therefore went to the root of the order.
Conclusion: The Additional District Judge, Salem lacked jurisdiction to pass the impugned order.
Issue (ii): whether the applicant had established a prima facie case and other settled requirements for securing the amount in dispute by interim order.
Analysis: Interim protection under section 9 is discretionary and is granted only on a showing of a prima facie case, balance of convenience, and likelihood of irreparable injury. The Court stressed that such relief is exceptional and requires strong material showing that, without protection, the eventual award may become ineffective or merely a paper decree. On the materials before it, the applicant had not substantiated the claim with acceptable evidence. The dispute was already before the arbitral tribunal, both sides had taken steps in the arbitration, and the request for security was not supported by adequate proof that the respondent would defeat enforcement of any eventual award.
Conclusion: The applicant failed to justify grant of interim security under section 9.
Final Conclusion: The impugned order was set aside because the forum lacked jurisdiction and, in any event, the prerequisites for securing the amount in dispute were not made out on the record.
Ratio Decidendi: Relief under section 9 of the Arbitration and Conciliation Act, 1996 can be granted only by a competent court and only on adequate material establishing a prima facie entitlement to exceptional interim protection.