Interim protection over disputed escrow funds pending arbitration where receivables were collected during an assignment arrangement.

Receivables collected under an assignment arrangement did not lose their disputed character merely because the related lease arrangement had later ended, where collections were admittedly made during the subsistence of the arrangement. The court treated construction of the contractual clauses and determination of the final amount payable as matters for the arbitral tribunal, and preserved the subject matter by granting limited interim restraint over the specified escrow account. That protection remained in place until constitution of the tribunal and recourse to Section 17 of the Arbitration and Conciliation Act, 1996.

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Issues: Whether the petitioner was entitled to interim protection restraining the respondent from dealing with the escrow account pending constitution of the arbitral tribunal and recourse under Section 17 of the Arbitration and Conciliation Act, 1996.

Analysis: The dispute arose from two assignment agreements under which the respondent was to collect receivables and segregate the GST component for the petitioner. The objection that the lease arrangement with the renters had ended did not displace the petitioner's claim in full, because receivables had admittedly been collected during the subsistence of the arrangement. The proper forum for determining the amount ultimately payable under the agreements, and for construing the contractual clauses, was the arbitral tribunal. Pending such adjudication, limited protection was warranted to preserve the subject matter.

Conclusion: Interim restraint on dealing with the specified escrow account was granted in favour of the petitioner until the arbitral tribunal was constituted and the parties approached it for further relief under Section 17 of the Arbitration and Conciliation Act, 1996.

Final Conclusion: The proceeding was finally disposed of with limited interim protection to preserve the disputed funds and with the merits of entitlement left for determination by arbitration.

Ratio Decidendi: Where receivables have been collected during the subsistence of an assignment arrangement, a subsequent end to the related lease arrangement does not by itself defeat the assignor's claimed entitlement, and interim preservation of the disputed funds may be ordered pending arbitration.

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