Section 9 interim protection may secure an arbitration claim despite mortgage non-arbitrability objections where facts justify asset preservation.

Section 9 interim relief can be maintained even where a broader mortgage-enforcement issue may be non-arbitrable, so long as the relief sought does not amount to a final mortgage suit and the claim can proceed as a monetary or personal remedy in arbitration. Territorial jurisdiction may be established where a material part of the cause of action arises from the loan transaction and related acts within the forum, even if the mortgaged property is elsewhere. Applying Section 9 principles and the approach underlying Order 38 Rule 5 CPC, the Court also recognised a prima facie need for security and asset-preserving relief where default, financial stress, creditor pressure and risk of dissipation were shown.

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Issues: (i) Whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 could be refused on the ground that the underlying claim may involve enforcement of a mortgage, which is said to be non-arbitrable. (ii) Whether the Court had territorial jurisdiction to entertain the petitions. (iii) Whether the petitioners had made out a case for interim measures, including security, injunction, receiver and attachment before judgment.

Issue (i): Whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 could be refused on the ground that the underlying claim may involve enforcement of a mortgage, which is said to be non-arbitrable.

Analysis: The distinction drawn in the authorities on arbitrability was applied to hold that a mortgage suit for sale of mortgaged property is an action in rem and is to be tried by a court. However, the petitions before the Court were not Section 8 proceedings in a pending suit, and no statement of claim seeking mortgage enforcement was before the Court. The Court held that it could not refuse interim relief on a presumption that the petitioners would necessarily pursue a non-arbitrable mortgage claim in arbitration. It further held that a claimant may choose to pursue a money claim or other personal remedies in arbitration, and that jurisdictional objections on arbitral competence could be addressed before the arbitral tribunal under Section 16 if required.

Conclusion: The objection based on non-arbitrability of mortgage enforcement did not bar relief under Section 9, and the petitions remained maintainable.

Issue (ii): Whether the Court had territorial jurisdiction to entertain the petitions.

Analysis: The Court found that the loan transaction, execution of documents, issuance of promissory notes, and part of the payment obligations had sufficient connection with Mumbai. On the pleaded facts, a material part of the cause of action had arisen within the Court's territorial jurisdiction. The mere location of mortgaged property outside Mumbai did not, by itself, deprive the Court of jurisdiction where the relief sought was not confined to enforcement of the mortgage.

Conclusion: The Court had territorial jurisdiction to entertain and decide the petitions.

Issue (iii): Whether the petitioners had made out a case for interim measures, including security, injunction, receiver and attachment before judgment.

Analysis: The Court applied the governing principles for interim relief under Section 9, guided by the underlying approach of Order 38 Rule 5 of the Code of Civil Procedure, 1908 and the general principles governing interim injunctions. It found material showing default, a substantial and undisputedly large claim, adverse financial condition of the respondents, multiple creditor pressure, and a real apprehension that assets may be dissipated. On those facts, the Court held that protection was necessary to secure the amounts in dispute and preserve the efficacy of the arbitral process. The objections that the reliefs were excessive or that the petitioners had not shown the precise elements of Order 38 Rule 5 were rejected.

Conclusion: The petitioners were entitled to interim protection, including security, receiver and injunction orders, and in one matter attachment of bank accounts.

Final Conclusion: The Court granted substantive interim protection in both arbitration petitions, preserving the respondents' assets and securing the petitioners' monetary claims pending arbitration.

Ratio Decidendi: A Section 9 court may grant interim protection to secure a monetary claim even where a broader mortgage-enforcement issue is said to be non-arbitrable, provided the relief sought is not itself a final adjudication of a mortgage suit and the facts justify protection of the arbitral claim.

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