Section 9 interim protection preserved disputed apartments to prevent frustration of arbitration and protect the subject matter.

In a Section 9 petition concerning disputed apartment allotment cancellations and alleged re-allotment to third parties, the Delhi HC held that interim preservation of the flats was justified pending arbitration. The Court applied the settled injunction principles of prima facie case, balance of convenience, and irreparable injury, and found that further transfer or possession would undermine the efficacy of the arbitral process. It noted prima facie doubt over the genuineness of the alleged third-party transactions and held that delay did not bar relief on the facts. All substantive disputes, including cancellation, payment schedule, RERA issues, and time being of the essence, were left for the arbitral tribunal.

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Issues: Whether the petitioners were entitled to interim protection under Section 9 to restrain alienation and transfer of the apartments pending arbitration.

Analysis: The petitions arose from disputed cancellation of apartment allotments and alleged subsequent re-allotment to third parties. The Court confined itself to the limited jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996, noting that the merits of the disputes, including the validity of cancellation, the payment schedule, the role of RERA, and whether time was of the essence, were left open for the arbitral tribunal. Applying the well-recognised principles governing interim injunctions, the Court held that the petitioners had shown a prima facie case, that preservation of the subject apartments was necessary to avoid irreparable prejudice, and that allowing further transfer or possession would defeat the efficacy of the arbitral process. The Court also found prima facie doubt regarding the genuineness of the alleged third-party transactions and held that delay did not bar relief in the facts of the case.

Conclusion: Interim restraint was warranted and the petitioners were entitled to protection preserving the apartments until the arbitral proceedings concluded.

Final Conclusion: The Court granted interim preservation of the subject apartments pending arbitration and left all substantive disputes to be decided by the arbitral tribunal.

Ratio Decidendi: In a Section 9 proceeding, interim protection may be granted where the applicant shows a prima facie case, balance of convenience, and risk of irreparable injury, and where preservation of the subject matter is necessary to prevent the arbitral remedy from being rendered ineffective.

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