Two applications for interim protection were pending before an arbitral tribunal. One sought disclosure and protection of assets. The other sought deposit of alleged rent arrears. Alongside them sat a counterclaim of approximately ₹16.78 crore.
Then the tribunal stopped hearing all three.
The reason was arbitral fees.
In Orbit In-Te-Rio v. American Epay Services Pvt. Ltd1., the Sole Arbitrator had directed Orbit to deposit its entire share of arbitral fees before its two applications under Section 17 of the Arbitration and Conciliation Act, 1996 and its counterclaim would be heard. Against an assessed amount of approximately ₹39.03 lakh, Orbit deposited ₹14 lakh. On 27 March 2026, the Tribunal closed Orbit’s right to pursue the Section 17 applications and counterclaim for non-payment of the remaining fees.
For Orbit, the practical consequence appeared straightforward. Its applications seeking interim measures would no longer be heard. It therefore approached the Delhi High Court under Section 37(2)(b), which permits an appeal against an arbitral order “granting or refusing to grant an interim measure under Section 17”.
The question before the Court was consequently sharper than a dispute over arbitral fees:
When a tribunal closes a Section 17 application without deciding the interim relief sought, has it effectively “refused” the relief for the purpose of Section 37(2)(b)?
The Delhi High Court’s answer turns on the distinction between the consequence of an arbitral order and the legal character of what the tribunal actually decided.
Procedural Closure under Sections 17, 37(2)(b) and 38 of the Arbitration Act
Orbit’s argument began with the effect of the Tribunal’s order.
Its Section 17 applications stood closed. According to Orbit, that closure finally deprived it of consideration of the interim measures sought and therefore operated as a refusal within Section 37(2)(b). Relying on SREI Infrastructure Finance Ltd. v. Tuff Drilling Pvt. Ltd2., it also distinguished a tribunal’s inherent power of procedural review from a review on merits and argued that the alleged legal error could not simply be reconsidered by the Arbitrator.
Orbit also relied on Sections 38 and 39 of the Arbitration Act and the applicable DIAC Rules. Its case was that the statutory and institutional framework governing unpaid deposits contemplated consequences for claims or counterclaims, and did not authorise closure of independent Section 17 applications merely because arbitral fees remained unpaid.
The High Court approached the controversy from a different point: what had the Tribunal actually adjudicated?
The answer lay in the Section 17 applications themselves.
The Tribunal had never examined whether Orbit had established the requirements for interim protection. There was no consideration of the prima facie case, balance of convenience, irreparable harm, securing of the disputed amount or any other substantive requirement governing Section 17 relief. The adjudicatory exercise had stopped before those questions were reached.
The order therefore concerned Orbit’s procedural entitlement to continue prosecuting the applications, rather than its substantive entitlement to the interim measures sought.
That distinction drew support from the Delhi High Court’s decision in H.S. Nag v. Asian Hotel (North)3. The test identified there rests on two considerations: finality and substantive issue determination. An arbitral order may affect a valuable right and carry serious consequences while retaining its procedural character where it regulates the conduct of proceedings without conclusively determining an underlying claim, defence or entitlement.
Applied to Orbit, the consequences were certainly significant. Yet the Tribunal had determined no substantive Section 17 issue. The applications had been closed because a fee direction remained uncomplied with.
The nature of that fee direction reinforced the conclusion.
In ONGC Ltd. v. Afcons Gunanusa JV4, the Supreme Court, while interpreting Section 38, characterised deposits towards arbitral expenses as provisional amounts intended to secure future costs of the arbitration. An order requiring such a deposit is procedural because it does not finally determine costs or substantive rights.
The Delhi High Court carried that reasoning forward. The direction to deposit arbitral fees was procedural. The subsequent closure caused solely by non-compliance with that direction retained the same procedural character.
The question then became one of remedy.
Here, Harshbir Singh Pannu v. Jaswinder Singh5 supplied the route. The Supreme Court had considered termination of claims and counterclaims following fee default and held that the appropriate first remedy was an application for recall before the tribunal. The tribunal possesses a limited inherent power of procedural review to correct procedural errors without reopening substantive determinations on merits.
Orbit therefore had a procedural route back to the Tribunal.
Its arguments under Sections 38 and 39 and the DIAC Rules, including whether the Tribunal possessed the power to close Section 17 proceedings for fee default, could be raised in that recall application. The Delhi High Court left those questions available for consideration while holding that they could not transform the closure order into an adjudicatory refusal under Section 17.
Section 37(2)(b) consequently remained confined to what its language permits: an appeal where the tribunal has actually granted or refused an interim measure.
The appeal was dismissed with liberty to Orbit to seek recall before the Tribunal.
Conclusion:
Orbit In-Te-Rio develops an important distinction for Section 37 practice: the practical severity of an arbitral order does not determine its appealability; the nature of the issue actually adjudicated does.
A Section 17 application may disappear from the tribunal’s docket and still remain substantively undecided. Where its closure results from procedural default and the tribunal never examines entitlement to interim protection, Section 37(2)(b) does not convert that procedural consequence into a refusal of interim relief.
For arbitration practitioners, the judgment makes the sequence of remedies particularly important. The first question following an adverse arbitral order should therefore be whether the tribunal has determined a substantive entitlement with finality or merely regulated the procedure through which that entitlement may be pursued.
That classification can decide whether the next forum is the appellate court or the arbitral tribunal itself.
Citations
Expositor(s): Adv. Megha S Pillai
