Calcutta, May 1 (KNN) In a significant ruling, the Calcutta High Court bench of Justice Shampa Sarkar has held that interim relief under Section 9(3) of the Arbitration and Conciliation Act, 1996 cannot be granted unless it is demonstrated that the remedy under Section 17 of the Act is ineffective.

The High Court emphasised that the remedy available under Section 17 must be exhausted before approaching the court under Section 9(1) for interim measures.

Accordingly, the Court dismissed the petition filed by Lakhotia Metalizers Private Limited, terming it premature, as the petitioner had not first applied for relief before the arbitral tribunal.

The Court clarified that under Section 18(3) of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), when conciliation fails, the MSE Facilitation Council may conduct arbitration or refer it to an institution, and such proceedings are governed by the Arbitration Act.

The Court observed that since the arbitral tribunal was already constituted, the petitioner was required to first seek interim relief under Section 17 before approaching the Court.

The petition, filed by Lakhotia Metalizers (a registered MSME), followed the failure of conciliation efforts before the MSE Facilitation Council in a dispute with Matashree Snacks Pvt. Ltd.

Arbitration commenced on May 10, 2024, and the petitioner feared that the respondent may divert assets to avoid settlement of dues. It thus sought attachment, appointment of a receiver, and other protective measures.

However, the Court held that there were no exceptional circumstances justifying bypassing the arbitral tribunal. The application, therefore, stood dismissed.

(KNN Bureau)