Facts: Telford Marine DMCC, the Petitioner, sought interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, to secure a foreign arbitral award against Bhambhani Shipping Limited, Respondent No. 1. The dispute arose from a sub-time charter contract for the vessel NOR GOLIATH, which was involved in an incident causing damage to a Floating Production Storage and Offloading Platform (FPSO). The arbitral tribunal in Singapore issued two partial awards in favor of the Petitioner, totaling USD 11,079,802.58 plus interest. The Petitioner apprehended that Respondent No. 1 was attempting to frustrate the execution of the award by selling its only asset, the vessel MV HALANI-6. Respondent No. 1 claimed to have already sold the vessel to Delta Maritime & Industrial Skill Training Private Limited (Respondent No. 2).
Procedural Posture: The Petitioner filed a Commercial Arbitration Petition in the Bombay High Court seeking a deposit of the awarded sum and an injunction restraining the Respondents from dealing with the vessel. Delta Maritime was later impleaded as Respondent No. 2. The court was considering the petition for final disposal after completion of pleadings.
Issue: Whether the Court should grant interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, to secure a foreign arbitral award, specifically by directing the deposit of the awarded sum or restraining the sale/transfer of the vessel MV HALANI-6, when the Respondent claims the vessel has already been sold to a third party.
Holding: The Court dismissed the petition, holding that no relief could be granted. The Court found that the sale of the vessel had taken place, and therefore, an injunction to prevent the sale was not possible. The Court also rejected the prayer for deposit of the awarded sum, finding no basis for directing such security.
Reasoning: The Court reasoned that while Section 9 allows for interim measures, it cannot be used to circumvent the process of enforcing the award. The Court acknowledged the Petitioner's apprehension about the sale but found sufficient evidence that the sale had occurred, with the proceeds going directly to Saraswat Bank to satisfy Respondent No. 1's loan. The Court noted that the Petitioner had not established that the sale was a sham transaction designed to avoid the award. The Court also considered that the vessel was mortgaged to Saraswat Bank, making the bank a secured creditor with priority over the Petitioner, an unsecured creditor. The court stated, "The limited remit of inquiry in the present proceedings is whether any restraint order can be passed in respect of the sale of the vessel. In conduct of that inquiry, this Court is not supposed to go into the issue of validity of transaction of sale." The Court further held that the remedy under Section 9 is essentially in aid of substantive remedy of either the arbitration or enforcement.