Limited interference with arbitral interim security orders where the tribunal's prima facie view is reasonably possible and non-perverse.

In an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, interference with a tribunal's interim security order is confined to cases where the exercise of discretion is arbitrary, capricious, perverse, or implausible. The court found the tribunal had reasonably assessed the contractual matrix, the vulnerability of the asset holders, and the need to preserve the subject matter of the arbitration. Its prima facie treatment of the Broker Agreement, the force majeure clause, and the proposed socialisation of losses was held to be a reasonably possible view, and the calibrated approach to compromised token exposure was not perverse. The interim protective arrangement was therefore left undisturbed.

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Issues: (i) Whether the interim security directions passed by the arbitral tribunal under Section 17 of the Arbitration and Conciliation Act, 1996 called for interference in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996; (ii) whether the tribunal's prima facie treatment of the contractual framework, including the Broker Agreement, the force majeure clause, and the proposed socialisation of losses, was perverse or implausible.

Issue (i): Whether the interim security directions passed by the arbitral tribunal under Section 17 of the Arbitration and Conciliation Act, 1996 called for interference in an appeal under Section 37 of the Arbitration and Conciliation Act, 1996.

Analysis: The challenge was tested on the limited appellate standard governing interference with discretionary interim relief. The record showed that the tribunal had considered the contractual matrix, the vulnerability of the asset holders, and the need to preserve the subject matter pending arbitration. The court held that, at the Section 37 stage, interference would be warranted only if the tribunal's approach was arbitrary, capricious, perverse, or otherwise implausible.

Conclusion: No ground for interference with the interim directions was made out.

Issue (ii): Whether the tribunal's prima facie treatment of the contractual framework, including the Broker Agreement, the force majeure clause, and the proposed socialisation of losses, was perverse or implausible.

Analysis: The tribunal's view that the Broker Agreement made Zanmai the operative counterparty for brokers, that cyber-attack could excuse performance but did not justify eroding users' assets, and that a loss-socialisation scheme rooted in a Singapore arrangement could not override the parties' Indian contractual relationship was held to be a reasonable prima facie assessment. The tribunal also applied a calibrated haircut to the compromised token exposure rather than granting blanket protection, which reinforced the view that its interim order was measured and preservative rather than punitive. Applying the settled principle that an appellate court does not substitute its own discretion where the first instance view is reasonably possible, the court found no perversity.

Conclusion: The tribunal's reasoning was neither perverse nor implausible, and the interim security directions were sustained.

Final Conclusion: The appellate challenge to the interim measures failed, and the arbitral tribunal's protective arrangement remained undisturbed.

Ratio Decidendi: In an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, interference with an arbitral tribunal's interim measure is justified only where the tribunal's exercise of discretion is arbitrary, capricious, perverse, or implausible, and a reasonably possible prima facie view preserving the subject matter of arbitration will not be disturbed.

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