Section 9 interim protection and restitution applied where share-sale performance became impossible in law and tax-indemnity issues stayed for arbitration.

Section 9 arbitration relief may secure an admitted or substantially undisputed amount where contractual performance has become impossible in law and one party retains substantial consideration, with restitutionary principles supporting interim protection; disputed loss, interest, compensation, and consequential adjustments remain for the arbitral tribunal. A share sale arrangement also raised whether contractual indemnity and hold-harmless language required reasonable steps to address an income-tax offence by compounding or similar action, and the court treated the scope of that obligation as a matter still subject to arbitration rather than finally determined at the interim stage.

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Issues: (i) Whether, in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, the petitioners were entitled to protection of the amount already paid under the share sale arrangement when issuance of warrants and CRPS had become impossible in law; (ii) Whether the respondents were required to take steps for compounding the income-tax offence under the contractual indemnity and hold-harmless obligations.

Issue (i): Whether, in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996, the petitioners were entitled to protection of the amount already paid under the share sale arrangement when issuance of warrants and CRPS had become impossible in law.

Analysis: The contractual structure showed that the petitioners had paid substantial consideration under the share purchase arrangement, while the respondents retained the monies and failed to give effect to the contemplated allotment of warrants and CRPS. The Court treated the respondents' own stand, together with the position taken by BSE and SEBI, as showing that issuance of warrants under the old application had become impossible. In that situation, the Court held that the dispute attracted the principles of impossibility and restitution, and that the admitted or substantially undisputed amount required interim protection to prevent the arbitral claim from becoming nugatory. However, the Court declined to secure the entire claimed loss, interest, and compensation at the interim stage, leaving disputed adjustments and consequential claims to the arbitral tribunal.

Conclusion: The petitioners were entitled to interim protection of the undisputed amount, but not to the full claimed compensation or interest at this stage.

Issue (ii): Whether the respondents were required to take steps for compounding the income-tax offence under the contractual indemnity and hold-harmless obligations.

Analysis: The SPA and the company's letter imposed an obligation to defend and hold harmless the petitioners from penal consequences arising from non-payment of statutory dues. The Court accepted that the obligation was not confined to a bare defence and could include taking reasonable steps to address the pending statutory proceedings, subject to the rights and liabilities to be finally adjudicated in arbitration. At the same time, the Court treated the precise extent of the obligation and the underlying liability as matters for the arbitral tribunal, and did not grant a separate coercive final direction on compounding in the interim order.

Conclusion: The respondents were expected to cooperate in taking steps concerning compounding, but the issue remained subject to arbitration and was not finally determined against the respondents at the interim stage.

Final Conclusion: The petitions were allowed in part by directing interim security of the undisputed amount, while leaving the substantive contractual, restitutionary, and tax-related disputes for adjudication by the arbitral tribunal.

Ratio Decidendi: Where contractual performance has become impossible in law and substantial consideration remains with one party, the Court may grant interim protection under Section 9 to secure the undisputed amount, while leaving disputed restitutionary and compensatory claims to arbitration.

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