Interim measures under the Arbitration Act can be sought by the MSME after mandatory conciliation fails and the dispute proceeds to arbitration. – Calcutta High court.

Court’s Observations:

👉The court noted that section 9 of the Arbitration Act allows a party to seek interim measures before, during, or after arbitration but before enforcement under Section 36.

👉However, “party” under Section 2(h) refers to one in an arbitration agreement. Since no such agreement exists in this case, the petitioner cannot invoke Section 9.

👉It further added that section 77 of the Arbitration Act bars parties engaged in conciliation from initiating arbitration or judicial proceedings on the same dispute, to avoid conflicting actions during conciliation.

👉It further added that however, an exception allows such proceedings if necessary to preserve rights, but only in exceptional cases. This reflects the legislature’s intent to promote non-adversarial dispute resolution. In this case, the petitioner has already issued a notice under the Negotiable Instruments Act following cheque dishonour.

👉The court further said that once conciliation is terminated, arbitration begins and is governed by the Arbitration Act, as if an arbitration agreement exists between the parties. Only then does Section 9 become applicable.

👉The Arbitration Act applies only after the Council terminates conciliation and refers the dispute to arbitration. The legislative intent is clear and unambiguous.

👉The court held that “the object is to minimise judicial intervention at the stage of conciliation.