Interim security in arbitration depends on interlocutory principles and a fact-specific risk of frustrating enforcement.

Section 9(ii)(b) of the Arbitration and Conciliation Act permits interim security for the amount in dispute, but the discretion is informed by ordinary interlocutory principles and the underlying rationale of Order 38 Rule 5 rather than its strict preconditions. On the facts discussed, the court found a strong prima facie contractual claim, insufficient prima facie defences, and a real risk to enforcement given the respondent's financial strain and possible asset diversion. Security was therefore justified, but the protective order was moderated by requiring a solvent bank guarantee instead of a cash deposit.

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Issues: (i) Whether the power to secure the amount in dispute under Section 9(ii)(b) of the Arbitration and Conciliation Act, 1996 is controlled by the principles underlying Order 38 Rule 5 of the Code of Civil Procedure, 1908. (ii) Whether, on the facts, the direction requiring the first respondent to furnish security for the claimed amount was justified.

Issue (i): Whether the power to secure the amount in dispute under Section 9(ii)(b) of the Arbitration and Conciliation Act, 1996 is controlled by the principles underlying Order 38 Rule 5 of the Code of Civil Procedure, 1908.

Analysis: The provision for securing the amount in dispute is an interim measure of protection, but it is not exercised in isolation from the ordinary principles governing interlocutory relief. The court must have regard to the general procedural principles that inform the grant of interim orders. At the same time, the strict preconditions of Order 38 Rule 5 cannot be imported as an absolute fetter; rather, its underlying rationale remains a relevant guide while the court exercises a judicial discretion in aid of arbitration.

Conclusion: The power under Section 9(ii)(b) is not independent of ordinary interlocutory principles, but it is also not rigidly controlled by Order 38 Rule 5 as if that provision applied in full.

Issue (ii): Whether, on the facts, the direction requiring the first respondent to furnish security for the claimed amount was justified.

Analysis: The record showed a strong prima facie contractual claim for the unpaid amounts. The defence based on cancellation of a proposed series and alleged team-selection breaches was found, at least prima facie, to be insufficient. The court also considered the admitted financial strain, the dependence of the business on the relevant media rights, the value of the shareholding in the second respondent, and the risk that assets or receivables could be diverted in a manner prejudicial to eventual enforcement. In these circumstances, a security order was considered necessary, though its form was moderated by directing a bank guarantee rather than a cash deposit.

Conclusion: The direction to furnish security was justified, but it was modified to require a solvent bank guarantee of Rs. 305 crores.

Final Conclusion: The appeals were disposed of with modification of the interim protection order, the amendment being permitted and the security direction retained in a moderated form.

Ratio Decidendi: While Section 9(ii)(b) empowers the court to secure the amount in dispute in arbitration, that discretion must be exercised on established interlocutory principles and on a fact-specific showing that protective relief is necessary to preserve the efficacy of any eventual award.

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