Suppression of material facts, Section 22 embargo, and strict limits on pre-award attachment defeat equitable interim relief.

Equitable interim relief under Section 9 was denied where the petitioner had suppressed earlier Section 17 proceedings and the dismissal of an identical application, because nondisclosure of material facts defeats discretionary protection. A restraint operating against the assets and prospective receipts of a sick company was held to attract the statutory embargo under Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985, absent the required consent. Pre-award attachment or preservation was also refused because such drastic relief requires a clear showing of likely dissipation or removal of property, which was not established before the arbitral claims were adjudicated.

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Issues: (i) Whether the petitioner, having suppressed the earlier Section 17 proceedings and the order thereon, was disentitled to equitable interim relief under Section 9; (ii) whether Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred the restraint sought against a sick company; (iii) whether the petitioner had made out a case for pre-award attachment or preservation of the alleged escalation amount.

Issue (i): Whether the petitioner, having suppressed the earlier Section 17 proceedings and the order thereon, was disentitled to equitable interim relief under Section 9.

Analysis: The petitioner's omission to disclose that an identical interim application had earlier been moved before the arbitral tribunal and dismissed was treated as a deliberate suppression of material facts. The relief sought was equitable in nature, and such suppression was considered sufficient to deny discretionary protection. The nondisclosure also showed that the ex parte interim order had been obtained without full disclosure of the relevant background.

Conclusion: The petitioner was disentitled to the equitable relief sought on account of suppression of material facts.

Issue (ii): Whether Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 barred the restraint sought against a sick company.

Analysis: The respondent was undisputedly a sick company. The restraint sought would operate against the respondent's assets and prospective receipts in a coercive manner akin to distress or similar proceedings. Applying the broad interpretation of Section 22, such proceedings were held to fall within the statutory embargo unless the consent of the competent board or appellate authority was obtained.

Conclusion: The interim restraint was held to be hit by Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985.

Issue (iii): Whether the petitioner had made out a case for pre-award attachment or preservation of the alleged escalation amount.

Analysis: The relief sought was in substance an attachment before judgment or pre-award attachment. Such relief is drastic and requires a clear showing that the opposite party is about to dispose of or remove property with intent to obstruct execution. The arbitral tribunal had not yet adjudicated the claims and counterclaims, the petitioner's entitlement remained unestablished, and the request was therefore premature. The conditions for grant of such extraordinary interim protection were not satisfied.

Conclusion: No case for pre-award attachment or similar interim protection was made out.

Final Conclusion: The petition failed on suppression, statutory bar, and absence of the conditions necessary for extraordinary interim relief, so the interim protection was vacated and the proceeding was dismissed.

Ratio Decidendi: A party seeking equitable interim relief must disclose all material facts, and a coercive restraint against a sick company that operates like distress or attachment cannot be granted in the face of the statutory embargo under Section 22 absent the required consent and satisfaction of the stringent conditions for attachment before judgment.

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