Section 9 of the Arbitration and Conciliation Act, 1996 provides for interim measures to be granted by a Court. While granting such an interim measure, the courts might be faced with a situation where the interim measure would have to be granted against a third party who is not a signatory to the arbitration agreement. The position of third parties under section 9 of the Act needs to be analysed in the perspective of whether an interim measure can be granted against such a third party by the Court. 

In Shoney Sanil v Coastal Foundation, (AIR 2006 Ker 206) there was an arbitration agreement between respondents 1 to 4. The Writ Petitioner had bought the property in question and was in possession of the property. On an application filed by Respondent No. 1 under section 9 of the 1996 Act, the district court passed an order of injunction restraining the writ petitioner and respondents 2 to 4 or their agents from doing any work or challenging or altering the present nature of the property and the piles in the said property. The Petitioner challenged this order and the question which arose before the Kerala High Court was whether the writ petitioner, admittedly, a third party to an alleged arbitral agreement between the respondents and who has, in his favour, a confirmed court sale and certificate of such sale and delivery of possession, following and arising under an independent decree, could be dispossessed, injuncted or subjected to other court proceedings under Section 9 of the Act? The Court looked into the definition of ‘parties’ as per Section 2(1)(h), the meaning of arbitration agreement under section 7 and the wording of section 9 and answered the question in the negative.  The court held that on a plain reading of Section 9 of the Act and going by the scheme of the said Act, there is no room to hold that by an interim measure under Section 9, the rights of third party, holding possession on the basis of a court sale could be interfered with, injuncted or subjected to proceedings under Section 9 of the Act. Section 9 of the Act contemplates issuance of interim measures by the court only at the instance of a party to an arbitration agreement with regard to the subject-matter of the arbitration agreement. This can be only as against the party to an arbitration agreement, or at best, against any person claiming under him. The writ petitioner is a third party auction purchaser in whose favour is a sale certificate, followed by delivery of possession. He cannot therefore be subjected to proceedings under Section 9. 

However, a Division Bench decision of the Bombay High Court in Girish Mulchand Mehta & Durga Jaishankar Mehta v Mahesh S. Mehta and Harini Cooperative Housing Society Ltd.  [(2010) 1 Bom CR 31]took the opposite view and held that an interim measure under section could also be directed against a third party who was a non signatory to the arbitration agreement. The Court distinguished the case of Shoney Sanil and held that the Kerala High Court had clearly opined that an interim measure may be passed against a ‘person claiming under any party’ to the agreement. According to the Court, in the given factual situation the interim measure was granted against a third party who was claiming under a party to the arbitration agreement. The Court went on to observe that the right conferred by Section 9 is on a party to an Arbitration Agreement. That Section 9 has relevance to the locus standi as an applicant. A person not party to an arbitration agreement cannot enter the Court for protection under Section 9 of the Act. Section 9 has nothing to do with the relief which is sought for from the Court or the right which is sought to be canvassed in support of the relief. The relief sought in such application is neither in a suit nor a right arising from a contract. The Court under Section 9 only formulates interim measures so as to protect the right under adjudication before the Arbitral Tribunal from being frustrated .Such an interim measure could also be granted against a third party. 

Conclusion: 

No general principle of maintainability/applicability or non-maintainability/non-applicability can be laid down. It will have to be determined by the Court in the facts of each case whether for the purpose of interim measure of protection, preservation, sale of any goods, securing the amount in dispute and order affecting the third party can be made or not.