Reasoned interim restraint on pledged shares required before section 9 protection can continue; suspension of orders granted.

Interim restraint on invocation of pledged shares in section 9 proceedings should be supported by a reasoned prima facie assessment showing why the measure is warranted. A bare order restraining enforcement of contractual security rights, without recording the parties' pleas or explaining the basis for interim protection, is vulnerable to suspension. Here, the appellate court suspended the operation of the restraint orders while leaving the pending section 9 petitions to be decided afresh on merits by the Single Judge, without prejudice to those proceedings.

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Issues: Whether the interim orders restraining invocation of pledged shares, passed in proceedings under section 9 of the Arbitration and Conciliation Act, 1996, should be suspended.

Analysis: The order dated 26.03.2021 restrained invocation of pledged shares without recording the parties' pleas or any prima facie findings explaining why such an interim restraint was warranted. An interim measure affecting contractual and security rights must rest on a reasoned prima facie assessment. Since the section 9 petitions remained pending before the learned Single Judge, the appellate court refrained from examining the merits in depth and directed that its directions should not prejudice the proceedings below.

Conclusion: The operation of the impugned orders dated 26.03.2021 and 08.04.2021 was suspended.

Final Conclusion: The appellant obtained interim relief by suspending the restraint orders, while the substantive section 9 proceedings were left to be decided afresh by the learned Single Judge on merits.

Ratio Decidendi: An interim restraint affecting enforcement of pledged securities should not continue unless supported by at least a prima facie finding and reasons justifying the measure.

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