Overview
In this case, the Bombay High Court considered whether the steel coil attached to an interim order could remain with the Receiver of the Court after the arbitration for which that particular order was passed, had ended.
It was held by the Court that a Section 9 interim measure cannot exist independently of the arbitration proceedings.
Once JSW Steel Ltd. withdrew its arbitration, the basis for continuing the attachment no longer existed. The Court also held that third parties should not suffer because of an interim order which was obtained during the litigation and passed certain directions to JSW to bear the storage costs.
Facts of the Case
JSW, the petitioner herein, supplied steel coils to Delta Iron & Steel Co. Pvt. Ltd. under a Franchise Agreement signed on 1 July 2018. The petitioner filed for non-payment through the Commercial Arbitration Petition no. 1558 of 2019, under Section 9 of the Arbitration and Conciliation Act 1996. On 23 August 2019, an ex parte interim order was passed by the Court after which the Receiver attached, sealed and took possession of 160 coils which were stored in the warehouses.
Aashna Yatin Khanna, the proprietor of Aashna Steel Traders, claimed that eleven of those coils were purchased from Aeon Creations Private Ltd. for value while also claiming that she was a third-party purchaser. She filed an Interim Application No. 542 of 2019 seeking their release. Karu Metals Pvt. Ltd., whose warehouse had stored some coils, also approached the Court seeking payment of its warehousing charges.
The petition filed under Section 9 was disposed of on 13 June 2022 after the Arbitral Tribunal was constituted. The disputes over the subject coils still continued. In August 2024, the Receiver was directed to examine the position leading to the Court Receiver’s Report No. 102 of 2025.
Meanwhile, Delta and Yatin went through the Corporate Insolvency Resolution Process under the IBC. The petitioner withdrew the arbitration proceedings on 11 November 2025.
Legal Issues
- Whether the attachment of the subject coils would still continue after the arbitration proceedings had been withdrawn.
- Whether the Court could determine the ownership of the coils through the proceedings under Section 9 of the act.
- Whether JSW should be held responsible to bear the warehousing and storage expenses arising from the interim order.
Decision
The Court held that relief under Section 9 is an interim measure to protect the subject matter of the arbitration. Since the petitioner withdrew the arbitration and there was no longer a cause of action, the attachment could no longer continue. The Court rejected the attempt of the petitioner to retain control over the subject coils.
It refused to decide the applicant’s title as an ownership dispute. It held that the petitioner ended the arbitration and could no longer use the proceedings under Section 9 to continue contesting the third-party purchaser’s claim. It applied the principle that an act of the Court should prejudice no one.
Accordingly, JSW was directed to bear the storage cost of the coils attached at its request. It must pay Karu for the seven coils which were stored there until 10 November 2022, and Paramshakti and Rishabh Digha for applicable storage periods. Aashna was held responsible for the storage of the eighth coil at Karu before its attachment on 10 November 2022. The interim attachment was brought to an end.
