Arbitral interim restraint on asset dissipation upheld where prima facie claim and execution risk were shown.

Interim protection under Section 17 of the Arbitration and Conciliation Act, 1996 may extend to restraining transfer or dissipation of assets where the claimant shows a prima facie enforceable claim, admitted liability, repeated promises to pay, dishonoured cheques, and a real apprehension that assets may be moved to defeat recovery. The principles of attachment before judgment under Order XXXVIII Rule 5 CPC can be applied in arbitration for such protection. An unsecured creditor is not, by itself, barred from interim relief, and the restraint does not convert the claimant into a secured creditor or prejudice secured lenders. The restraint order was upheld and no interference was warranted under Section 37.

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Issues: Whether the arbitral tribunal was justified in granting interim protection restraining the petitioners from transferring, alienating, encumbering or disposing of assets under Section 17 of the Arbitration and Conciliation Act, 1996 by applying the principles of Order XXXVIII Rule 5 of the Code of Civil Procedure, 1908.

Analysis: The material on record showed admitted liability, repeated promises to pay, dishonoured cheques, and a prima facie case that the petitioners were attempting to transfer assets in a manner that could frustrate the respondent's claim. The Court held that the principles governing attachment before judgment could be applied in arbitral proceedings where the claimant establishes a bona fide claim, a fair chance of success, and a real apprehension that the opposite party may dispose of assets to defeat recovery. It further held that an unsecured creditor is not denied interim protection merely because recovery may be difficult, and that the impugned order did not convert the respondent into a secured creditor or prejudice rights of secured lenders.

Conclusion: The interim restraint order was validly granted, and no ground for interference under Section 37 was made out.

Final Conclusion: The petitions challenging the arbitral tribunal's interim measure failed, and the respondent's protection against dissipation of assets was sustained.

Ratio Decidendi: In arbitral proceedings, interim protection may be granted under Section 17 when the claimant shows a prima facie enforceable claim and a likelihood that the opposite party may dispose of assets to defeat execution, even if the claimant is an unsecured creditor.

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