Ad-Interim Orders, Section 37(1)(b), and Article 227: Analysing the Missed Opportunity in Jindal Steel v. Bansal Infra
Introduction
The Supreme Court’s (‘SC’) recent decision in M/s Jindal Steel & Power Ltd. v. Bansal Infra Projects Pvt. Ltd. (the ‘Judgment’) critically examines the permissible level of judicial interference and the appealability of interim measures under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996 (the ‘A&C Act’). This is critical for Indian arbitration jurisprudence because the Court left fundamental questions unanswered, namely, the proper legal standard for invoking Article 227 of the Constitution when an adequate alternative statutory remedy exists, and the continued necessity of the “patent lack of jurisdiction” or “exceptional rarity” tests for constitutional intervention.
This analysis of the Judgment proceeds through a structured approach: Part I provides the factual context of the background, the submissions of the parties, and the decision laid down by the court; Part II explores the broader doctrinal failure to define appealability under Section 37(1)(b) and the erosion of judicial restraint under Article 227; Part III analyses the SC’s failure to apply the well-established “patent lack of jurisdiction” and “exceptional rarity” tests; Part IV addresses the resultant problem of parallel litigation and the “unruly horse” risk; and finally last part provides interpretive clarifications and policy measures to ensure stability and predictability in India’s arbitral process. Through this analysis, the author aims to contribute to the dialogue opened by the judgment and encourage reflection on its consequences rather than argue for a particular view.
Factual Background Of The Case
The dispute arose when the Bansal Infra (“Respondent”) sought an ex parte injunction under Section 9 of the A&C Act . The Commercial Court, in a lawful exercise of judicial discretion, merely declined the ex parte relief, holding that an order restraining the invocation of the bank guarantee could not be passed without hearing the opposite party and accordingly directed issuance of notice for the appearance of Jindal Steel (‘Appellant’). Crucially, the Respondent, dissatisfied with this outcome, immediately bypassed the specific statutory appeal under Section 37(1)(b) and approached the High Court (‘HC’) under Article 227 of the Constitution, contending that the Commercial Court had failed to exercise jurisdiction by not granting urgent interim protection and that immediate constitutional intervention was required to prevent encashment of the bank guarantee.
While the HC intervened and granted a status quo, the resultant challenge before the SC was a perfect opportunity to clarify the law. The Appellant argued that the HC’s interference was impermissible given the specific appeal mechanism under Section 37 and the statutory bar to judicial interference under Section 5 of the A&C Act . Yet, the SC deliberately refrained from determining the two core procedural issues: whether Article 227 was rightly invoked and, more fundamentally, whether the initial refusal of ex parte relief was appealable under Section 37(1)(b) at all.
Instead, SC limited its focus to the substantive question of bank guarantee enforcement, reaffirming the established principle that such guarantees may be restrained only in instances of fraud or irretrievable injustice. Nevertheless, while adhering to these doctrinal standards, the SC upheld the HC’s interim order maintaining the status quo, viewing it as a measure intended to preserve the parties’ interests until the matter could be finally resolved.
This narrow reasoning left the procedural framework unresolved. By choosing to address the merits of the bank guarantee while refraining from engaging with the core jurisdictional issues, the SC’s silence left open the question of how interim orders under Section 9 may be challenged. It also left uncertain the precise limits of constitutional supervision in arbitral proceedings.
Ambiguity in Appealability under Section 37 (1) (b): Divergent High Court Views and the Missed Opportunity in Jindal Steel
The first core issue left unresolved is the appealability of an ad-interim or ex parte order under Section 9, specifically whether it qualifies as an appealable “measure” under Section 37(1)(b). This issue is further complicated by conflicting HC decisions.
Many benches have adopted a broad, inclusive interpretation, rightly arguing that the statutory term “any measure” must be read exhaustively to include ad-interim or ex parte orders. Courts, including the Andhra Pradesh HC in Bilasraika Sponge Iron Pvt. Ltd. v. Devi Trading Company, the Gujarat HC in Aventis Pasteur S.A. v. Cadila Pharmaceuticals Ltd., the Bombay HC in Mrs. Perin Hoshang Davierwalla v. Kobad Davierwalla, and the Delhi HC in Edelweiss Asset Reconstruction Co. Ltd. v. GTL Infrastructure Ltd., have all held that the term “any measure” under section 9 is broad and inclusive, rejecting the distinction between ad-interim and final orders.
This approach is correct, as a restrictive interpretation that excludes such orders would create procedural voids, forcing parties to invoke Article 227 or writ jurisdiction even for minor interim orders. Treating ad-interim orders as “measures” keeps all interim grievances within the A&C Act’s autonomous framework, maintaining both arbitral autonomy and procedural uniformity. Despite their interim nature, these orders can significantly affect substantive rights, stopping payments or disrupting operations, and cannot be treated as inconsequential. Acknowledging their appealability under Section 37(1)(b), therefore, promotes both access to justice and the legislative intent to avoid parallel constitutional proceedings
Per contra, a restrictive view persists. The Karnataka High Court in Symphony Services Corporation (India) Pvt. Ltd. v. Sudip Bhattacharjee, took a narrower view, holding that only final adjudications under Section 9 fall within the scope of Section 37(1)(b). Although that position was later overruled in KLR Group Enterprises v. Madhu H.V., contrary authority exists in NTPC v. Meghalaya Power Distribution Corporation, where it was held that ad-interim orders under Section 9 are not appealable since Section 37(1)(b) permits appeals only against final orders, as emphasised by the phrase “and from no others,” used in the provision. An ad-interim order, like a temporary status quo direction, is merely provisional and not a conclusive determination of rights. These rulings underscore that a degree of ambiguity on this issue continues to persist.
Given this jurisprudential backdrop, the case was a golden opportunity for the SC to resolve the conflict. By disregarding the issue, the Court sustained uncertainty. The phrase “granting or refusing to grant any measure” is sufficiently broad to include all orders, whether final, interim, or ex parte. A restrictive interpretation compels litigants resorting to Article 227 petitions, thereby ultimately undermining the self-sufficient framework of the A&C Act and the principle of minimal judicial interference under Section 5.
The SC, in this judgement, disregarded the directly relevant precedent of Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corporation. In this case, the court held that when a special statute like the A&C Act confers jurisdiction on a civil court; the court is entitled to apply the general procedural framework of the Code of Civil Procedure, 1908 (“CPC”), including Order XXXIX Rules 1 and 2. Accordingly, an ad-interim injunction that had been granted under those provisions, though procedural in form, constitutes a “measure” for Section 9 and is therefore appealable under Section 37 (1) (b).
This reasoning expressly contradicts the narrow interpretation accepted in the current judgment. It is unfortunate that, overlooking Arvind Constructions, the Court missed an opportunity to harmonise Section 9 procedure with Section 37 appeals. Instead, it perpetuated uncertainty, opened floodgates for challenges under Article 227, and shifted arbitration from an autonomous procedure to a court-centric one, contrary to the A&C Act intent.
Failure to Apply the “Patent Lack of Jurisdiction” and “Exceptional Rarity” Tests
The second major flaw lies in the SC’s failure to apply the rigorous, well-established tests for HC interference under the extraordinary power of Article 227, thereby implicitly legitimising the misuse of this constitutional remedy. In reality, the Commercial Court’s refusal of ex parte relief was nothing more than a lawful exercise of jurisdiction under Section 9 and Order XXXIX Rule 3 CPC.
The established tests, developed by the SC in cases like Deep Industries Ltd. v. ONGC, mandate intervention only for orders with a “patent lack of jurisdiction.” Punjab State Power Corp. Ltd. v. EMTA Coal Ltd. adds that the defect must “stare one in the face,” and Nivedita Sharma v. COAI limits such powers to exceptional circumstances, like denial of statutory remedies or clear bad faith. In the judgement’s facts, none of these requirements were met, yet the HC intervened, and the SC failed to set it aside.
The SC and HC erred by allowing the Article 227 petition despite the Commercial Court acting within Section 9 and CPC Order XXXIX Rule 3. No “exceptional circumstances” existed, and an alternative remedy under Section 37(1)(b) was available. This misapplication undermines arbitral autonomy, dilutes procedural hierarchy, and risks turning Article 227 petitions into surrogate appeals, contrary to Deep Industries and Navayuga Engineering.
The Problem of Parallel Litigation and Misuse of Alternative Remedies
The failure to define the interplay between Section 37(1)(b) appeals and Article 227 supervision creates a potential institutional conflict. Section 37 is a narrow statutory right, restricted exclusively to orders “granting or refusing to grant any measure under Section 9,” whereas Article 227 is a constitutional provision with a potentially limitless ambit.
This doctrinal contrast becomes more problematic when viewed against the legislative intent underlying India’s arbitration framework: Section 5 of the A&C Act expressly forbids judicial intervention, while Sections 8 and 13 of the Commercial Courts Act, 2015, bar revisions against interlocutory orders.
Therefore, when an alternative and effective statutory appeal under Section 37 is available, Article 227 must be invoked with extreme restraint. However, in the judgement, the SC failed to enforce these jurisdictional limits, enabling the HC to treat Article 227 as a parallel appellate route. This risks turning the constitutional remedy into an “unruly horse,” eroding judicial discipline, encouraging parallel litigation, compromising arbitral autonomy, and violating Section 5’s mandate of minimal judicial interference.
Conclusion and The Way Forward
The judgment has serious structural implications. By failing to act, the Court turned a routine interim dispute into a major step backwards, once again encouraging forum shopping and legal uncertainty. This inaction carries significant commercial consequences, notably by weakening the settled principles governing bank guarantees, which must remain largely free from judicial intervention to fulfil their commercial purpose. Judicial restraint is essential because bank guarantees signify transactional certainty; frequent interference would erode their sanctity, discourage commercial risk-taking, and undermine the confidence that businesses and financial institutions place in such guarantees. The larger concern, however, is that the arbitration framework risks reverting to a court-centric model, thereby undermining the legislative intent of establishing a fast and self-sufficient dispute resolution mechanism.
To restore coherence and predictability, both legislative and judicial reforms are indispensable. Firstly, the legislative route, potentially through the proposed Draft Arbitration and Conciliation (Amendment) Bill, 2024, offers the most direct solution. This has been introduced to reduce judicial oversight and support institutional arbitration. The Parliament should seize this opportunity to add an explanation to Section 37(1)(b), clarifying unequivocally that “measure” includes any interim, ad-interim, or ex parte order. Additionally, it should impose a limited statutory bar on Article 227 intervention where an appeal under the A&C Act is available, except in instances of demonstrable mala fide action or orders wholly devoid of jurisdiction.
Secondly, the SC, through a larger bench, must judicially affirm that Section 37 encompasses the full spectrum of Section 9 orders. It must decisively clarify that writ intervention is improper when alternative statutory remedies exist, as implied by previous rulings such as Arvind Constructions.
Until such definitive reform occurs, Jindal Steel remains a cautionary precedent. Its silence creates procedural uncertainty and weakens the distinction between statutory appeal and constitutional supervision. Legislative measures are therefore necessary to restore arbitral autonomy, reaffirm the limited supervisory scope of Article 227, and maintain balance in India’s commercial dispute resolution framework.
*Sharnam Agarwal is a third-year B.A., LL.B. (Hons.) student at the National Law Institute University, Bhopal. He is deeply interested in commercial and arbitration law and regularly writes on contemporary issues shaping India’s corporate and dispute resolution landscape.