Delhi High Court Extends L&T Finance Interim Protection for 45 Days; Orders Arbitration Commencement and Says Ex Parte Relief Will Automatically Vacate on Non-Compliance Thereafter
Delhi High Court Says Section 9 Petitioner Cannot Indefinitely Enjoy Ex Parte Relief Without Commencing Arbitration or Prosecuting Proceedings Against Respondents
Facts
L&T Finance Ltd. filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 against Isha Trehan and others seeking interim protection.
The Delhi High Court had earlier granted L&T Finance ad interim protection on 13 April 2026.
However, despite repeated opportunities, L&T Finance had not deposited the process fee, with the result that notice had still not been issued to the respondents.
The Court also found no material showing that arbitral proceedings had been commenced within the period contemplated under Section 9(2), nor was there any earlier order extending that period.
The matter therefore came before the Court to determine whether the interim protection should continue despite the petitioner’s failure to proceed with arbitration and effect service.
Issues
The principal issues were:
- Whether a petitioner can continue enjoying an ex parte Section 9 interim order indefinitely without prosecuting the proceedings.
- Whether additional time should be granted under Section 9(2) for commencement of arbitral proceedings.
- What should happen to the existing interim protection if arbitration is not commenced within the extended period.
- Whether the unserved respondents would remain entitled to challenge the interim arrangement after entering appearance.
Petitioner’s Position
The order does not record detailed substantive submissions on behalf of L&T Finance.
The material before the Court nevertheless showed that L&T Finance had obtained interim protection on 13 April 2026 but had neither completed service upon the respondents nor demonstrated commencement of arbitration within the statutory period.
The Court nevertheless considered it appropriate to grant one final opportunity to the petitioner to pursue arbitration.
Respondents’ Position
The respondents had not yet been served or heard when the order was passed.
The Court therefore expressly protected their rights by directing that continuation of the interim arrangement would remain without prejudice to all their rights and contentions.
Analysis of the Law
Section 9(2) — Commencement of Arbitration After Interim Relief
Section 9 permits courts to grant interim measures before or during arbitral proceedings.
Where interim protection is obtained before arbitration begins, Section 9(2) requires arbitral proceedings to be commenced within the prescribed statutory framework, subject to the Court’s power to extend the period.
Here, the Court found no evidence that arbitration had commenced within the contemplated period.
The Court nevertheless exercised its Section 9(2) power and granted L&T Finance a further 45 days from 7 September 2026 to commence arbitration.
Ex Parte Interim Relief Cannot Continue Indefinitely
The Court made a clear procedural observation:
“The Petitioner cannot be endlessly permitted to continue to enjoy an ex parte interim order while failing to prosecute the proceedings.”
Thus, a party that obtains urgent ex parte protection must diligently prosecute both the Section 9 proceedings and the underlying arbitration.
The order therefore makes interim protection conditional rather than open-ended.
Automatic Vacation on Failure to Commence Arbitration
The Court imposed a direct consequence for non-compliance.
If arbitral proceedings are not commenced within 45 days, the interim protection granted on 13 April 2026 will stand vacated automatically.
No further court order would be necessary for the protection to lapse.
Precedent Analysis
The order does not discuss or rely upon reported judicial precedents.
Instead, the Court directly applied the statutory framework of Sections 9(2) and 17 of the Arbitration and Conciliation Act, 1996 to balance:
- the petitioner’s need for temporary protection;
- its obligation to commence arbitration promptly; and
- the rights of respondents who had not yet been served or heard.
Accordingly, the order is principally significant as a procedural application of Section 9(2), rather than for laying down a precedent through detailed consideration of earlier authorities.
Court’s Reasoning
The Court was dissatisfied that L&T Finance had obtained interim protection months earlier but had not deposited process fee, resulting in non-service of the respondents.
At the same time, instead of immediately vacating the interim order, the Court granted the petitioner a final 45-day opportunity to commence arbitration.
This balanced the petitioner’s asserted need for interim protection against the requirement that Section 9 relief must remain connected to genuine and timely pursuit of arbitral proceedings.
The Court further ensured that the respondents would not be prejudiced merely because the interim order was being continued without their having been heard.
Once served, they were expressly permitted to approach the arbitral tribunal under Section 17 seeking vacation, variation or modification of the interim arrangement.
The tribunal was directed to consider such an application expeditiously and without being influenced by the High Court’s existing interim order.
Conclusion
The Delhi High Court disposed of the Section 9 petition by granting L&T Finance a further period of 45 days to commence arbitral proceedings.
The interim protection granted on 13 April 2026 would continue only during that period.
If arbitration is not commenced within 45 days, the protection will automatically stand vacated.
The respondents, once served, remain free to approach the arbitral tribunal under Section 17 for modification, variation or vacation of the interim arrangement.
All rights and contentions of both sides were expressly left open.
Case Details
Case: L&T Finance Ltd. v. Isha Trehan & Ors.
Court: High Court of Delhi at New Delhi.
Case Number: O.M.P.(I) (COMM.) No. 153 of 2026 with I.A. No. 9972 of 2026.
CNR Number: DLHC010149602026.
Judge: Justice Om Prakash Shukla.
Date: 7 September 2026.
Nature of Order: Oral order under Section 9 of the Arbitration and Conciliation Act, 1996.
Subject: Section 9 interim protection, Section 9(2), commencement of arbitration, ex parte interim order, automatic vacation of interim protection and Section 17 remedy before the arbitral tribunal.
Result: Petition disposed of. Interim protection continued for 45 days subject to commencement of arbitration within that period; failing commencement, the protection will automatically stand vacated. Respondents may seek modification or vacation before the arbitral tribunal under Section 17.
