Interim order for deposit of entire claim cannot be ordered unless conditions of Order 38 Rule 5 are satisfied.

In the matter of Dr. Vivek Jian versus Prepladder Private Ltd., OMP(I) COMM. 397 OF 2022 decided by the Hon’ble High Court of Delhi on 09.10.2023. Universal citation: 2023 DHC 7263

FACTS:

The parties entered into a License Agreement whereby the Petitioner was principally required to create and curate content in the shape of educational videos which could then be placed on the portal of the Respondent-PrepLadder. It was stated that the Respondent did not pay the Petitioner their dues.

A Petition under Section 9 of the Arbitration and Conciliation Act (hereinafter referred to as Act) 1996 was instituted praying for an interim measure requiring the Respondent to deposit the entire amount payable towards License Fee and sale of “content” upto January 2023.

OBSERVATIONS:

Delhi High Court held negatived the plea that deposit of entire dues can be ordered in proceedings under Section 9 of the Act by holding that the Court in a proceedings under Section 9 of the Act may not be strictly bound by the requirements of Order XXXVIII Rule 5 of the Code, however, the same would in itself not justify the framing of such a direction even if the case were tested on principles analogous to those which guide the power conferred by Order XXXVIII Rule 5 of the Code and those are found to be totally absent.

The provisions of Section 9(1)(ii)(b) of the Act which speak of an interim order securing the amount in dispute would necessarily have to be considered on principles similar to those which guide the exercise of power under Order XXXVIII of the Code. Notwithstanding, the Section 9 Court not being confined by the technicalities which imbue the provisions of the Code, it would not lead to the Court jettisoning or ignoring the fundamental principles which must guide and inform an order for attachment before judgment. Even the residual clause of Section 9 of the Act and which empowers a Court to frame such interim measure of protection as may be considered just and convenient cannot be read as justifying the framing of an order for attachment before judgment even though the foundational grounds for the issuance of such directions be found to be totally absent.

It was further held the issuance of a direction for release would entail not only a conclusive and final adjudication on the right of the petitioner to receive such a sum but also perhaps amount to the framing of an interim Award itself that cannot possibly be said to all within the ambit of the Section 9 power that the Court is called upon to exercise.