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Municipal Corporation of Delhi v. Himalayan Flora and Aromas Pvt. Ltd., 2025 SCC OnLine Del 6380

 I.   Introduction:

1. The Hon’ble Delhi High Court in the present case dealt with an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”). The said appeal challenged an order passed by an Emergency Arbitrator under the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2023. The main question before the Delhi High Court was whether an Emergency Arbitrator has the power to extend the operation of an emergency order beyond ninety days, or whether this power lies only with the Arbitral Tribunal after it is constituted.
2. The Appellant argued that the Emergency Arbitrator had gone beyond his authority by allowing the emergency order to continue beyond the ninety-day period provided under Rule 14.13 of the Rules of 2023. The Respondent opposed this view and claimed that the Rules permit such an extension. The Court therefore examined the structure and purpose of emergency arbitration under the Rules of 2023 to clearly define the limits of the Emergency Arbitrator’s powers and to distinguish them from the powers of the Arbitral Tribunal.
3. The Hon’ble Delhi High Court in the present case dealt with an appeal filed under Section 37 of the Arbitration and Conciliation Act, 1996 (“the Act”). The said appeal challenged an order passed by an Emergency Arbitrator under the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2023. The main question before the Delhi High Court was whether an Emergency Arbitrator has the power to extend the operation of an emergency order beyond ninety days, or whether this power lies only with the Arbitral Tribunal after it is constituted.

       II. Facts & Procedural History:

3. Disputes arose between the parties, following which the Respondent invoked the emergency arbitration mechanism under the Rule 14 of the Delhi International Arbitration Centre (Arbitration Proceedings) Rules, 2023 (“Rules of 2023”) and sought interim relief which, according to the Respondent, could not wait until the constitution of the Arbitral Tribunal. Pursuant to this request, an Emergency Arbitrator was appointed by the Delhi International Arbitration Centre. After hearing both parties, the Emergency Arbitrator passed an order dated 11.12.2024 and granted interim relief in favor of the Respondent (“Emergency Order”).
4. The Emergency Order was passed as a temporary measure to protect the subject matter of the dispute until a regular Arbitral Tribunal could be constituted. However, despite the lapse of ninety days from the date of the Emergency Order, the emergency relief continued to remain in force. Although the Arbitral Tribunal had not yet initiated arbitral proceedings or issued any orders pertaining to the emergency relief, the Emergency Arbitrator prolonged the operation of the Emergency Order past the ninety-day period.
5. Aggrieved by the continuation of Emergency Order beyond the prescribed period, the Appellant filed the present appeal under Section 37 of the Arbitration and Conciliation Act, 1996. The appellant sought setting aside of the Emergency Order on the ground that it had become invalid by operation of law after the expiry of ninety days from the date of its issuance.

      III.  Issues

1. In accordance with Rules of 2023, whether the power to extend the duration of an emergency order lies with the Emergency Arbitrator himself or is reserved exclusively for the Arbitral Tribunal after it is constituted.

 IV. Contentions: Appellant:

6. The Appellant argued that the Emergency Arbitrator acted beyond his authority by extending the operation of the Emergency Order beyond ninety days. It was submitted that Rule 14.13 of the Rules of 2023 clearly limits the life of an emergency order to ninety days unless it is extended by the Arbitral Tribunal.
7. The Appellant contended that the language of Rule 14.13 expressly confers the power to modify, vacate, or extend an Emergency Order only on the Arbitral Tribunal and not on the Emergency Arbitrator. According to the Appellant, once the Emergency Order is passed, the Emergency Arbitrator becomes functus officio and cannot continue to exercise jurisdiction over the matter. It was further argued that permitting the Emergency Arbitrator to extend the duration of the emergency order would defeat the very purpose of emergency arbitration, which is intended to provide temporary and short-term relief only until the Arbitral Tribunal is constituted.

Respondent(s):

8. The Respondent opposed the Appellant’s submissions and argued that a narrow interpretation of Rule 14.13 was incorrect. According to the Respondent, the Emergency Arbitrator has the power to modify and extend the operation of his own order, even beyond ninety days, particularly in circumstances where the Arbitral Tribunal has not yet commenced proceedings. The respondent relied on Rule 2(c) of the Rules of 2023, which defines the term “Arbitral Tribunal” to include an Emergency Arbitrator. On this basis, it was argued that the powers granted to the Arbitral Tribunal under Rule 14.13 should also be available to the Emergency Arbitrator.
9. The Respondent further submitted that all requirements for grant of interim relief were satisfied in the present case, including the existence of a prima facie case, balance of convenience, and irreparable harm. It was contended that there was no illegality or perversity in the Emergency order and that the emergency relief had rightly continued in order to protect the Respondent’s interests pending the constitution of the Arbitral Tribunal.

       V.  Findings and Observations of the Supreme Court:

10. The Delhi High Court (“Court”) examined Rule 14.13 of the Rules of 2023 and held that the language of the Rule is clear and unambiguous. The Court observed that an order passed by an Emergency Arbitrator can remain in force only for a period of ninety days from the date it is passed, unless it is modified, substituted, vacated, or extended by the Arbitral Tribunal. The Court rejected the Respondent’s argument that the Emergency Arbitrator and the Arbitral Tribunal can be treated as the same for the purposes of Rule 14.13.
11. It was noted that the expression “Emergency Arbitrator” carries a specific meaning and is intended to address urgent situations that cannot wait until the constitution of the Arbitral Tribunal. The Court emphasized that the emergency nature of such proceedings itself indicates that the relief granted is temporary and limited in duration.
12. The Court further relied on Rule 14.11 of the Rules of 2023, which provides that an Emergency Arbitrator becomes functus officio after passing the order and cannot be part of the Arbitral Tribunal unless the parties agree otherwise. Since no such agreement existed in the present case, the Court held that the Emergency Arbitrator could not be treated as the Arbitral Tribunal for the purpose of extending the emergency order.
13. The Court also noted that although a petition for constitution of the Arbitral Tribunal had been allowed, the arbitral proceedings had not yet commenced and no orders were passed concerning the emergency relief. As a result, the Emergency Order had remained in force for nearly eleven months, which was contrary to the Rules of 2023. In view of these findings, the Court held that the emergency order dated 11.12.2024 had lost its legal force after the expiry of ninety days and was liable to be set aside. However, considering the peculiar facts of the case, the Court directed maintenance of status quo for a period of seven days to allow the Respondent to seek appropriate relief under Section 9 or Section 17 of the Act.

         VI.  Conclusion

14. In summary, this judgment clearly settles the position that an Emergency Arbitrator appointed under the Rules of 2023 has no authority to extend the operation of an emergency order beyond ninety days. The Court reaffirmed the limited and temporary nature of emergency arbitration and drew a clear distinction between the powers of an Emergency Arbitrator and those of a duly constituted Arbitral Tribunal. By strictly interpreting Rule 14.13, the judgment reinforces procedural discipline in emergency arbitration and ensures that long-term interim protection is sought only through the Arbitral Tribunal or under Sections 9 or 17 of the Act.

This Case Brief is authored by Anu Sura, Associate Partner and Anam Khan, Associate.