The authors, Deepali Vashist and Devansh Shrivastava, are fifth-year B.A. LL.B. (Hons.) students at the National Law School of India University, Bengaluru
The standard for granting interim reliefs in the nature of attachment before judgment remains uncertain. Indian Courts have adopted varying approaches to granting this relief. This variation creates doctrinal uncertainty and unpredictable judicial outcomes. This blog traces the conflicting judicial reasoning that has contributed to the current state of flux and identifies recent efforts by courts to harmonise the standard. It further addresses the normative question of what standard the court ought to apply while granting relief of attachment.
The current confusion stems from two conflicting Supreme Court decisions delivered just two weeks apart.
The Flexible Standard: Essar House
On September 14, 2022, the Supreme Court in Essar House, while determining whether the strict standards of Order XXXVIII Rule 5 apply to Section 9 proceedings, clarified that courts exercising powers under Section 9 of the Arbitration and Conciliation Act, 1996 (“A&C Act”) are not rigidly constrained by the Civil Procedure Code, 1908 (“CPC”). Nonetheless, it emphasised that the CPC cannot be entirely disregarded.
According to the Court, to secure interim relief such as pre-award attachment, a party must at least present a prima facie case suggesting likely success in arbitration, along with establishing that the balance of convenience favours them. These were deemed the core requirements for interim relief. A party need not prove actual asset dissipation intended to defeat an arbitral award. A reasonable apprehension of such conduct is adequate.
The Strict Standard: Sanghi Industries
Just two weeks later, on September 30, 2022, another Supreme Court Division Bench in Sanghi Industries Limited v. Ravin Cables Ltd. took the opposite view. It held that Order XXXVIII Rule 5 of the CPC applies directly to Section 9 applications seeking pre-award attachment. The Court clarified that unless the prerequisites of Order XXXVIII Rule 5 CPC are fulfilled, including credible evidence and specific claims showing the respondent’s intent to obstruct enforcement by alienating assets, interim protection under Section 9 cannot be granted.
Furthermore, the Court observed that while Section 9 allows protective orders, such measures must adhere strictly to the standards of Order XXXVIII Rule 5. Only if the applicant proves that the other party is attempting to defeat a future award by transferring assets can the Commercial Court justifiably intervene.
We are now faced with two decisions of the Supreme Court, delivered by benches of equal strength, that take diametrically opposite positions on the issue.
How Have the High Courts Responded?
Following the contradictory verdicts in Essar House and Sanghi Industries, Indian courts have adopted divergent approaches to interim relief under Section 9.
In one case, the Court did not cite Sanghi Industries and instead reiterated Essar House’s view that Section 9 relief need not satisfy the strict requirements of Order XXXVIII Rule 5 CPC. In another case, the court interpreted Essar House broadly to hold that CPC conditions must be satisfied, thereby adopting the stricter framework articulated in Sanghi Industries.
In some cases, courts sidestepped Sanghi Industries entirely, either by not citing it or by confining its applicability to its specific facts. For instance, the court in Manmohan Kapani v Kapani Resorts Pvt Ltd and Others (2025) SCC OnLine Bom 599 explicitly held that the strict principles of the CPC need not apply, without even referencing Essar House.
Conversely, in cases where High Courts considered both Supreme Court decisions, the divergence in interpretation becomes more evident. In Dr Vivek Jain v. Prepladder Private Limited, the court reasoned that since both rulings came from benches of equal strength, the more recent decision (Sanghi Industries) should prevail, as it reflects the most recent articulation of the law.
However, in Indiabulls, the court took the opposite view when it directly engaged with the conflicting precedents. It relied on the Constitution Bench ruling in Pranay Sethi, which says that when two benches of equal strength disagree, the earlier view should be followed. A position reaffirmed in UT of Ladakh v. J&K National Conference.
In yet another case, the Bombay High Court acknowledged Sanghi Industries but declined to apply it because the decision had not been cited before the lower court and distinguished it on facts. It held that raising it for the first time on appeal was procedurally unfair. The court instead relied on Essar House and Sepco Electric, which permits a more flexible approach under Section 9.
A similar preference for Essar House appeared in Godrej Properties Limited v. Frontier Home Developers Pvt. Ltd. and Ors., the court agreed with the counsel’s reliance on Essar House, affirming that interim relief, such as attachment before judgment, can be granted when the court is satisfied. However, in this case, such circumstances were clearly absent. Despite Sanghi Industries being relevant for two years, the court did not even mention it in this ruling.
Since these two judgments were delivered within a fortnight of each other, examining Manupatra’s citation summaries for both can offer insight into prevailing judicial trends in India. Sanghi Industries has been cited only 24 times, whereas Essar House has been cited 47 times by various High Courts. While citation frequency alone does not definitively establish which precedent is being followed, it does suggest which judgment is being more actively engaged with and discussed in judicial discourse.
Notably, Essar House adopts a more liberal approach and, unlike Sanghi Industries, contains a detailed examination of the law relating to interim reliefs in arbitration in India. In practice, Indian courts have shown a clear tilt towards the more liberal Essar House framework whenever they have a choice. Courts frequently avoid or distinguish Sanghi Industries, treating it as a narrow, fact-specific ruling.Instead, they rely on Essar House’s more flexible “reasonable apprehension” standard, making it the dominant precedent for Section 9 relief.
The promise of arbitration lies in its ability to offer swift, effective, and predictable dispute resolution, but inconsistent interim relief standards have eroded these virtues. It leaves lower courts and counsel guessing which test applies, wasting judicial time debating standards and delaying outcomes. This uncertainty delays interim orders, increases litigation costs, and strains court resources. It can lead to orders that are overturned on appeal. A clear standard can help in ensuring similar cases yield consistent outcomes, which brings us to the question of what this standard ought to be in regard to attachment before judgment.
How ‘Should’ Courts Approach Attachment Before Judgment?
The discussion above places two choices before the courts – one, to import the rigours of Order XXXVIII Rule 5 into arbitral proceedings for interim relief under Section 9, or two, tailor an arbitration-friendly approach. Order XXXVIII Rule 5 of the CPC sets out a very high threshold. It requires the Applicant to demonstrate three conditions: (i) a good prima facie case and that the balance of convenience lies in their favor; (ii) a bona fide claim; and (iii) an actual attempt by the defendant to dispose or remove assets with an intent to nullify a possible decree.
Upon the establishment of a prima facie case by the Applicant, the burden shifts to the other party to counter the grounds for attachment. For the same, Order XXXVIII Rule 6 outlines the consequences when the Respondent fails to provide sufficient cause for not furnishing security. The Court subsequently examines the party’s intention to obstruct or nullify proceedings. Finally, upon submission of an affidavit or substantiating evidence by the Applicant, the Court can choose to attach the Respondent’s property at its discretion. Why are these prior conditions necessary under the CPC? The standard under Order XXXVIII Rule 5 [E211] was specifically designed for civil suits while recognising that attachment before judgment is a more drastic relief sought in contrast to mere maintenance of the status quo. Its extraordinary nature is capable of causing reputational and financial harm to the party against whom it is ordered. Therefore, the standard to obtain the relief itself is heightened under the CPC.
And while the A&C Act does not contain a provision which entirely excludes the applicability of CPC in the context of Section 9, it becomes important to note that arbitral proceedings are not akin to litigation. Nothing in the wording of Section 9 calls for the standard under Order XXXVIII Rule 5 to be utilised in the grant of interim relief. Further, as the Court held in Valentine Maritime Ltd. v. Kreuz Subsea Pte. Ltd., arbitration as a method of dispute resolution was designed to be quicker, reduce judicial interference, and increase party autonomy. A strict application of the CPC’s procedural rigours would, hence, undermine the purpose of the A&C Act.
This is why the Supreme Court in Essar House held that the standard under Order XXXVIII Rule 5 would not apply to proceedings under Section 9. It, however, also held that courts should not disregard the basic principles of procedural law. Therefore, if the Applicant establishes merely the first condition, even in the absence of an actual attempt to dispose of the assets, the possibility of asset diminution is sufficient for the Court to grant interim relief.
On the other hand, as discussed in the previous section, the subsequent decision in Sanghi Industries reaffirming the strict standard under Order XXXVIII Rule 5 has created a divide in the treatment of proceedings under Section 9. So, in the light of this, the question that this section seeks to analyse is – How should Courts proceed? We suggest that, in line with Essar House, the answer lies in adopting a principled middle path. For instance, under s. 16 of the Telecom Regulatory Authority of India Act, 1997 (“TRAI Act”),‘the Tribunal shall not be bound by the CPC and has the power to regulate its own procedure.’ However, the Supreme Court in Union of India v. Tata Teleservices (Maharashtra) Ltd., held that the Section does not exclude the powers of the CPC; it effectively gives the tribunal to right to go outside the procedural shackles imposed by the CPC.
Hence, while Courts need not be bound by the procedures and technicalities of the CPC, they should not abandon the core principles. The rationale behind Order XXXVIII Rule 5 is to prevent abuse of process and to ensure that drastic interim relief on account of attachment is not rendered arbitrarily. The solution, therefore, is for courts to be guided by, rather than be bound to, these standards.
In practical terms, the middle path would entail that the party seeking relief under Section 9 provide more than vague allegations or speculative claims. It would require the Applicant to submit credible material in the form of financial statements, communications or past conduct which affirms a genuine risk to the future enforcement of an arbitral award. Nevertheless, unlike in Order XXXVIII Rule 5, the Applicant need not prove that the Respondent has taken steps to sell the assets with fraudulent intent. Merely the strong possibility of asset erosion may be sufficient.
Further, Courts should also look at whether the attachment before judgment is the least restrictive measure to secure the arbitral claim. Courts should prefer alternative interim measures such as bank guarantees or undertakings, if they are sufficient to protect the Applicant. Thus, attachment should remain a last resort remedy, serving only where no less intrusive alternative is available.
The High Courts have also increasingly leaned towards this flexible yet principled standard. In Ajay Singh v. Kal Airways Pvt. Ltd. & Ors., the Delhi High Court held that under Section 9, courts have wide discretionary powers, and while the courts have substantial latitude in the exercise of interim measures, it is not per se unbounded. Its exercise has to be made in the light of already settled legal principles. It highlighted that although both Orders XXXVIII and XXXIX of the CPC are not strictly binding in terms of procedure, they do constitute useful analogies to ensure that interim relief is not granted arbitrarily. A similar decision was rendered by the Delhi High Court in Dr. Vivek Jain. The Court held that while the residual clause in Section 9 empowers the Court to frame any interim measure as may be considered ‘just and convenient’, the clause cannot justify an order for attachment before judgment where ‘the foundational grounds for the issuance of such directions is found to be totally absent’.
In conclusion, we argue that a standard of this nature that balances flexibility with legal discipline is both consistent with the legislative purpose of the A&C Act and sensitive to the practical realities of arbitration. By requiring the Applicant to substantiate (not merely allege) the risk to the claim but not insisting on full-blown proof of intent to defraud, courts can ensure that Section 9 is not reduced either to a toothless remedy or a blunt instrument.