Section 9 interim relief denied where the petitioner was in breach and tribunal stay could not bar High Court jurisdiction.

A High Court considering a Section 9 petition held that an NCLAT stay order in IL&FS-related proceedings did not bar its jurisdiction to entertain interim relief under the Arbitration and Conciliation Act, 1996. The tribunal order under Sections 241 and 242 of the Companies Act could not override the statutory scheme for arbitral interim protection. On merits, the Court refused to restrain enforcement of the event of default and pledge invocation notices, finding that the petitioner was in substantial breach of its commercial obligations and was effectively seeking to rework the bargain. Interim equitable relief was therefore declined and the petition was dismissed.

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Issues: (i) Whether the petition under Section 9 of the Arbitration and Conciliation Act, 1996 was barred by the National Company Law Appellate Tribunal's stay order passed in proceedings concerning the IL & FS group. (ii) Whether the petitioner made out a case for interim protection restraining enforcement of the event of default notice and pledge invocation notice.

Issue (i): Whether the petition under Section 9 of the Arbitration and Conciliation Act, 1996 was barred by the National Company Law Appellate Tribunal's stay order passed in proceedings concerning the IL & FS group.

Analysis: The stay order relied on by the respondent was held not to oust the High Court's jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996. The order of the National Company Law Appellate Tribunal, passed in proceedings under Sections 241 and 242 of the Companies Act, 1956, could not extend to restraining this Court from entertaining a petition under the Arbitration and Conciliation Act, 1996. The Court held that such an order could not override the statutory scheme governing arbitral interim relief and could not operate as a bar to proceedings before a court not subject to the tribunal's superintendence.

Conclusion: The objection to maintainability based on the National Company Law Appellate Tribunal's stay order was rejected.

Issue (ii): Whether the petitioner made out a case for interim protection restraining enforcement of the event of default notice and pledge invocation notice.

Analysis: Interim relief under Section 9 was declined because the petitioner was found to be in substantial breach of the commercial arrangements. The Court treated the petition as an attempt to rework contractual obligations, noting defaults in payment, absence of the pledged shares, and non-creation of the agreed hypothecation. It applied the principle that equitable relief under Section 9 is not ordinarily available to a party in breach, and that the relief sought must be one that could legitimately be sustained in arbitration. The Court also noted that the request for relief was too late and insufficient to justify interference with contractual enforcement.

Conclusion: No interim protection was warranted and the petition for relief was rejected.

Final Conclusion: The petition under Section 9 was dismissed, the respondent's contractual enforcement was left undisturbed, and costs were awarded against the petitioner.

Ratio Decidendi: A court exercising jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996 will not grant interim equitable protection to a party in breach of its commercial bargain, and a tribunal order under Sections 241 and 242 of the Companies Act, 1956 cannot, by itself, bar the High Court from entertaining such a petition.

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