Tag: #WELLORETAILPVTLTD

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 30.09.2026

Delhi High Court: Arbitrator Must Give Reasons While Rejecting Section 17 Interim Relief

The Delhi High Court has held that an arbitral tribunal cannot reject an application for interim protection merely on the ground that the relief sought is co-extensive with, or overlaps with, the final relief claimed in arbitration.

Allowing an appeal filed by Wello Retail Pvt. Ltd., Justice Tushar Rao Gedela set aside the effect of the Arbitrator’s rejection of its Section 17 application and directed that the application for interim measures be heard afresh and disposed of expeditiously.

The Court emphasised that although arbitral orders are not expected to contain reasoning at the same level as judgments of courts, the reasons forming the basis of an arbitral decision must nevertheless be discernible. In a significant observation, the Court stated that “reasons are the bedrock of any order, be it judicial or quasi judicial.”

Importantly, the High Court did not grant Wello Retail the substantive interim injunctions itself and did not decide the merits of the underlying lease dispute. The Section 17 application has been remitted for fresh consideration by the Arbitrator.

Background of the Dispute

• Wello Retail Pvt. Ltd. was the lessee of a 605.76 sq. ft. space inside Sant Parmanand Hospital Blind Relief Mission Hospital under a registered Lease Deed dated 20 April 2023, carrying a monthly rent of ₹12 lakh.
• The contractual arrangements concerning pharmaceutical supplies were primarily governed by Clauses 11 and 12 of the Lease Deed, while Clause 15 provided for a five-year lock-in period, subject to stipulated conditions and exceptions.
• Disputes subsequently arose concerning the supply and pricing of medicines and pharmaceutical products to patients of the hospital.
• Wello Retail alleged that the hospital had started procuring pharmaceutical products from third-party sources in breach of the contractual arrangement. The hospital, on the other hand, alleged that Wello Retail had inflated the Maximum Retail Price of medicines and other pharmaceutical goods, causing substantial financial loss and compelling the hospital to procure products from third parties.

Wello Retail Alleged Parallel Procurement and Billing

• According to Wello Retail, its revenue from the hospital’s Inpatient Department (IPD) declined significantly because the hospital began sourcing medicines and allied products from third parties.
• The company claimed that such parallel sourcing violated Clause 12 of the Lease Deed.
• It stated that repeated communications were sent to the hospital on 10 July, 11 August, 18 September, 17 November and 3 December 2025, asking it to discontinue parallel procurement and billing.
• The hospital disputed this interpretation. By a communication dated 11 December 2025, it alleged contractual breaches by Wello Retail and asserted that pharmaceutical supplies falling within “internal use” of the hospital, including IPD supplies, should have been billed at cost price rather than MRP.

Section 9 Petition Converted Into Section 17 Application

• Apprehending termination or revocation of the Lease Deed, Wello Retail approached the Delhi High Court on 11 February 2026 under Section 9 of the Arbitration and Conciliation Act, 1996, seeking urgent interim protection.
• By an order dated 19 February 2026, the High Court directed that the Section 9 petition be treated as an application under Section 17, to be considered by the learned Arbitrator.
• However, on 8 June 2026, the Arbitrator dismissed the Section 17 application.
• Wello Retail then approached the Delhi High Court by way of an appeal under Section 37(2)(b) of the Arbitration and Conciliation Act.

What Interim Protection Did Wello Retail Seek?

• Before the Arbitrator, Wello Retail sought several forms of protection pending adjudication of its Statement of Claim.
• It sought an injunction restraining the hospital from terminating the Lease Deed during the arbitration. It also sought to restrain the hospital from opening another pharmacy, directly or through a third party, within its Civil Lines premises for supplying IPD or OPD requirements.
• Wello Retail further sought restraints against parallel procurement of pharmaceutical supplies and against billing IPD patients in the name of third-party suppliers.
• The Arbitrator declined these requests essentially on the ground that granting them would amount to granting the final relief itself and would pre-judge the disputes relating to Clauses 11 and 12 of the Lease Deed.

Final Claims Included More Than ₹5.39 Crore Along With Specific Performance

The High Court compared the interim prayers with the reliefs sought in Wello Retail’s Statement of Claim.

Among other things, the company had claimed:

• ₹4,06,29,294 towards alleged loss of anticipated profits arising from breach of Clause 12;
• ₹1,32,86,248 towards alleged unpaid trade receivables;
• interest at 12% per annum;
• specific performance of the Lease Deed until expiry of the lock-in period on 30 June 2028;
• mandatory injunction restraining breach of Clause 12; and
• costs under Section 31A of the Arbitration Act.

The High Court observed that, apart from specific performance and mandatory injunction, several of the final claims were monetary in nature.

This distinction became important in deciding whether the interim reliefs necessarily amounted to granting the final relief.

Interim Relief May Be Co-Extensive With Final Relief

• The High Court disagreed with the proposition that an interim measure must necessarily be refused merely because it overlaps with the relief sought in the main arbitration.
• Justice Gedela observed that some of the interim prayers could still remain open for Wello Retail to seek.
• The Court held that interim measures may sometimes be co-extensive with final prayers, but that fact alone does not automatically mean that granting them would amount to a final determination of the dispute.
• The Court explained that circumstances may require interim orders to preserve equality and balance the competing rights of the parties.

It made an important observation:

• If mere overlap with final relief were sufficient to reject interim protection, temporary injunctions or other interim relief could effectively never be granted.
• The Court categorically stated that “That is not, and cannot be the law.”

Arbitrator Had Relied on Dalpat Kumar and Dunlop India

In rejecting Wello Retail’s application, the Arbitrator had relied upon:

• Dalpat Kumar v. Prahlad Singh, (1992) 1 SCC 719, for the proposition that an interim injunction should not effectively dispose of the main proceedings; and
• Assistant Collector of Central Excise v. Dunlop India Ltd., (1985) 1 SCC 260, concerning caution against interim orders that confer the very relief that should follow only after full adjudication.
• The Delhi High Court did not dispute these principles in the abstract. Its concern was that the Arbitrator had not sufficiently explained how the particular reliefs sought by Wello Retail would actually pre-judge the contractual dispute or make the arbitration redundant.

“Reasons Are the Bedrock of Any Order”

• This is perhaps the most significant legal principle emerging from the judgment.
• After examining paragraph 7 of the Arbitrator’s order, the High Court held that it could not discern sufficient reasoning explaining why grant of all or any of the interim prayers would amount to pre-judging the dispute.

The Court stated:

“reasons are the bedrock of any order, be it judicial or quasi judicial.”

• While recognising that orders passed under the arbitration regime need not satisfy exactly the same threshold of reasoning as a court judgment, the High Court held that some reason or justification for arriving at the conclusion must at least be discernible.

Dyna Technologies: Inadequate Reasons and Absence of Reasons Are Different

• Both parties relied upon the Supreme Court’s judgment in Dyna Technologies Private Limited v. Crompton Greaves Limited, 2019 SCC OnLine SC 1656.
• The hospital relied on the judgment to argue that courts should distinguish between inadequacy of reasons and an unintelligible or legally deficient arbitral decision.
• Wello Retail, on the other hand, relied on Dyna Technologies for the proposition that legal reasoning is necessary to arrive at a conclusion.
• The Delhi High Court harmonised these principles.
• It held that inadequacy of reasons may not by itself justify judicial interference with an arbitral decision. Nevertheless, reasons must exist for the formation of the opinion.

Court Avoids Deciding Meaning of Lease Clauses

• Significantly, the High Court consciously refrained from interpreting Clauses 11, 12, 13 and 15 of the Lease Deed.
• It observed that doing so at the Section 37 stage could prejudice either party’s case before the Arbitrator.
• Thus, the judgment does not decide whether Wello Retail was in fact entitled to exclusive supply rights, whether IPD pharmaceutical supplies were required to be supplied at cost price, whether the hospital breached the Lease Deed by procuring medicines from third parties, or whether the five-year lock-in clause prevented termination.
• Those issues remain open for determination in arbitration.

Final Decision: Appeal Allowed, Section 17 Application to Be Heard Afresh

• The Delhi High Court ultimately allowed Wello Retail’s appeal.
• It directed that the application under Section 17 of the Arbitration and Conciliation Act be heard afresh and disposed of expeditiously.
• At the same time, the Court expressly clarified that its judgment was not an expression on the merits either of the Statement of Claim or the Section 17 application.
• The Arbitrator was directed to decide the interim application uninfluenced by the High Court’s observations on the merits.
• Therefore, the judgment constitutes a procedural victory for Wello Retail, rather than a final determination of its contractual claims or an order granting the interim injunctions sought.

Why the Judgment Matters for Arbitration Practice

• The decision is important because it addresses a recurring problem in applications under Section 17 of the Arbitration and Conciliation Act: whether an arbitral tribunal can refuse interim protection simply because the interim prayer resembles the final relief.
• The Delhi High Court’s answer is more nuanced.
• Overlap or co-extensiveness is relevant, but it is not an automatic bar. The tribunal must examine the nature of the particular interim measure, the final claims and the circumstances requiring preservation of the parties’ rights.
• Equally important is the Court’s insistence upon reasoned arbitral decision-making. Arbitration may provide procedural flexibility and limited judicial interference, but an arbitrator’s conclusion must still disclose an intelligible basis.

Key Takeaway

The Delhi High Court has clarified that an interim measure under Section 17 cannot be rejected solely because it overlaps with the final relief claimed in arbitration.

An arbitral tribunal must provide discernible reasons explaining why granting the particular interim protection would effectively determine the final dispute or render arbitration redundant. Accordingly, Wello Retail’s appeal under Section 37(2)(b) was allowed and its Section 17 application was sent back for fresh and expeditious consideration. However, the High Court did not grant the interim injunction itself or decide the underlying lease dispute on merits.

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Source: Delhi High Court

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