NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED VS. ISHVAKOO (INDIA) PVT LTD

2026 INSC 828Page 1 of 26

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5819 OF 2025

National Projects Construction

Corporation Ltd. …….Appellant (s)

Versus

Ishvakoo (India) Pvt. Ltd. ……. Respondent(s)

J U D G M E N T

K. V. Viswanathan, J.

1) The present appeal calls in question the correctness of

the order dated 21.05.2019 passed by a Division Bench of the

High Court of Delhi at New Delhi in FAO(OS)(COMM) No.

113/2019. By the said order, the Division Bench dismissed

the appeal filed by the appellant and confirmed the order of

the learned Single Judge dated 05.04.2019 in

OMP(I)(COMM.) No. 57/2019 filed under Section 9 of the

Arbitration and Conciliation Act, 1996, (hereinafter referred

to as ‘the 1996 Act’).

Page 2 of 26

2) The respondent filed OMP (I)(COMM.) No. 57/2019

before the High Court seeking the following reliefs:-

"(a) Allow the present application and further direct the

Respondent to immediately refund the amount of

Rs.3,50,00,000/- to the Petitioner (in terms of order dated

20.09.2018) being the amount appropriated by it by

wrongfully encashing the Bank Guarantees in question, along

with interest at the rate of 18% per annum from 14.09.2017 till

the amount is refunded, and

(b) Award costs of the proceedings in favour of the Petitioner

and against the Respondents, and/or ... "

BRIEF FACTS: -

3) On 16.08.2002, the appellant and the respondent

entered into a Memorandum of Understanding (MoU) for the

work of Bus Terminus at Taj Mahal Bus Stand, UPST Bus Stand,

Idgah Bus Stand and development of Taj Trapezium Zone

(TTZ) Heritage Corridor for Agra, Government of Uttar

Pradesh. In December 2002, the respondent was provided

Rs. 3.5 crores as Mobilisation Advance against the bank

guarantees furnished by it.

4) Disputes arose between the parties. The arbitration

clause was invoked by the respondent and an Arbitrator

came to be appointed to adjudicate the disputes.

Page 3 of 26

5) At that stage, a Section 9 application came to be filed in

OMP No. 363/2003 before the High Court, by the respondent.

The prayer made in the application was to restrain the

appellant from invoking Bank Guarantee Nos. 109/2002 to

124/2002 for a total sum of Rs. 3,50,00,000/- issued by the

Canara Bank. The said Section 9 application was disposed of

on 15.12.2005, in the following terms: -

“OMP No. 363/2003

Present petition is filed under Section 9 of the Arbitration

and Conciliation Act, 1996 (in short 'the Act') seeking

restraint against the respondent from invoking bank

guarantees No.109 to 124/2002 for a total sum of Rs. 3

crores 50 lacs issued by Canara Bank, H-Block,

Connaught Circus, New Delhi in favour of the respondent.

The arbitration proceedings are underway. On 16th

September, 2003 order was passed recording the

undertaking of the petitioner to renew these bank

guarantees and directing the respondent not to press for

encashment of these bank guarantees during the

extended period of the bank guarantees. This order was

extended from time to time and on 19th August 2004, it

was directed that the bank guarantees shall be kept alive

by the petitioner till the disposal of this petition. Since the

counsel for the petitioner thereafter on 7th July 2005 gave

an undertaking that the bank guarantees shall be kept

alive till the arbitrator gives the award, the learned

counsel for the respondent sought time to have the

instructions in the matter.

Mr. Taneja, learned senior counsel appearing for the

respondent, states on instructions that the respondent

shall not invoke these bank guarantees provided the

Page 4 of 26

bank guarantees are kept alive till the arbitrator gives

the award and further till the award becomes

enforceable as a decree under Section 36 of the Act.

However, it is subject to the condition that if after

adjudication by the arbitrator it is found that the

respondent has to recover the amount from the

petitioner, the respondent will be entitled to recover

such amount by invoking the bank guarantees. This

suggestion is acceptable to learned counsel for the

petitioner. The Managing Director of the petitioner is

present and statement by the learned counsel for the

petitioner is made on instructions from his client.

The petition is accordingly disposed of recording

undertaking of the petitioner to the effect that the bank

guarantees shall be kept alive till the matter is

adjudicated upon by the arbitrator and even thereafter

if petition under Section 34 of the Arbitration Act is

filed till the disposal of the said petition. It is also

made clear that on the award becoming executable if

under the said award the respondent has to recover

the amount, the respondent shall be entitled to encash

the bank guarantees.

IA also stands disposed of”.

(Emphasis supplied)

6) It will be noticed that in the order it is clearly recorded

that the appellant undertook not to invoke the bank

guarantees, provided the bank guarantees were kept alive. It

is further recorded that if after adjudication by the Arbitrator,

it is found that the appellant [referred to as Respondent in the

said Order] had to recover the amount from the Respondent

[referred to as the Petitioner in the said Order], the appellant

Page 5 of 26

shall be entitled to recover the amount by invoking the bank

guarantees.

7) The Arbitrator proceeded with the arbitration and

rendered an Award on 05.12.2017. In the meantime, it

transpires from the record that since the respondent herein

was unable to keep the bank guarantees alive, the appellant

herein invoked the bank guarantees, in and about

September, 2017.

8) Before the Award was pronounced and after the

encashment of bank guarantees, the respondent moved a

petition under Section 9 of the 1996 Act before the High

Court. That petition was disposed of on 01.11.2017 by

holding that since the respondent failed to keep the bank

guarantees alive after September, 2017, there was no fault in

the conduct of the appellant, and no further orders were

required to be made.

9) Before the arbitrator, the respondent herein was the

claimant and the appellant herein was the respondent.

Page 6 of 26

Admittedly, no counter-claim was filed by the appellant. The

arbitrator framed several issues, of which, Issue Nos. 3 and 4

are relevant for our purpose, which read as under:-

“3. Whether the Claimant is entitled to discharge of bank

Guarantees? OPC

4. Whether the Claimant is entitled to Bank Charges of Rs.

77,27,225/- for keeping the Bank Guarantees? OPC”

10) In the Award, the arbitrator dismissed the claims of the

respondent. Dealing with Issue Nos. 3 and 4, the arbitrator

recorded as under: -

“Issues No. 3 and 4

Issues No. 3 and 4 are whether the Claimant is entitled to

discharge of the Bank Guarantee and also whether the

Claimant is entitled to the sum of Rs. 77,27,225/- towards

the bank charges for keeping the Bank Guarantee alive.

230. Without adverting to the submissions made by the

Parties, the Tribunal finds that the High Court of Delhi,

vide Order dated 15.12.2005, passed in O.M.P. No.

363/2003 had disposed of the Petition in the following

terms:

"The Petition is accordingly disposed of with the

undertaking of the petitioner to the effect that the

bank guarantees shall be kept alive till the matter

is adjudicated by the arbitrator and even

thereafter if petition under section 34 of the

arbitration act is filed till the disposal of the said

petition. It is also made clear that on the award

becoming executable if under the said award the

respondent has to recover the amount, the

respondent shall be entitled to encash the bank

guarantees. IA also stands disposed of".

Page 7 of 26

231. Therefore, it can be seen that by its own undertaking,

the Claimant was bound to keep the BG alive in terms of

the above order.

232.In any event, due to the fraudulent and collusive

conduct of the Claimant, the Respondent cannot be

fastened with any liability and as such the Tribunal is not

inclined to grant any relief in this regard. Respondent is

accordingly, not, liable to pay any bank charges.”

11) The respondent herein filed a Section 34 application. An

order came to be made on 20.09.2018 while permitting the

parties to complete pleadings, to the effect that the appellant

ought to return the amount, equivalent to the bank

guarantees to the respondent, within three weeks.

Thereafter, on 30.10.2018, a further order came to be made

in the Section 34 application. While reiterating that the

appellant herein ought to bring back the money, equivalent

to the amount of bank guarantees, the learned Single Judge,

in the Order of 30.10.2018, after overruling the objection of

the appellant, directed the appellant to remit the amount to

the respondent within 10 days, failing which, the concerned

officer of the appellant was directed to be present in Court.

Page 8 of 26

12) These orders of the learned Single Judge (dated

20.09.2018 and 30.10.2018), were carried in appeal before

the Division Bench in FAO (OS)(COMM) 271/2018, whereby

a consent order dated 29.11.2018 was passed, which reads as

under: -

“The challenge in this appeal is to the orders dated

20.09.2018 and 30.10.2018.

After some hearing in the matter, it is agreed that without

prejudice to the rights and contentions of the parties which

have been raised by them in petition filed under Section 34

of the Arbitration and Conciliation Act, 1996, the impugned

orders may be set aside and the questions raised may be

left open to be decided along with objections filed under

Section 34 of the Arbitration and Conciliation Act, 1996, by

the respondent.

This order will not come in the way of the respondent, in

case the respondent chooses to file a fresh petition under

Section 9 of the Arbitration and Conciliation Act, 1996.

Legal objections of the appellant herein are kept open.

The present appeal is accordingly disposed of, in the above

terms.

All pending applications also stand disposed of.”

13) Pursuant thereto, O.M.P.(I)(COMM) No. 57/2019 came

to be filed (pending the Section 34 application) by the

respondent herein praying for return of the amount

equivalent to the bank guarantees. This petition under

Page 9 of 26

Section 9 came to be disposed of on 05.04.2019 by the

learned Single Judge. The learned Single Judge, while

allowing the Section 9 application, recorded the following

crucial findings: -

“11.3 Before I proceed further, I must note that during the

course of the arguments, Mr. Nandrajog submitted that

the bank guarantees had been issued against mobilization

advance which was not utilized. This submission was

made before me on 30.10.2018 as well. I had, in that

proceeding, put a pointed question to the learned counsel

for the respondent as to whether there was any finding in

the award that the petitioner had failed to utilize the

mobilization advance. I had received a candid answer, on

that date, from Mr. Rajat Arora, the Advocate instructing

Mr. Nandrajog, that there was no such finding.

11.4 Upon a perusal of the award, I noticed that there is no

such finding recorded by the Arbitral Tribunal. Therefore,

this query again was put by me at the hearing held today,

lest I missed something. While Mr. Nandrajog was not

able to show anything which would answer this query, he

did refer to paragraphs 158 to 160 of the Award.

11.5 I have examined the observations made by the

learned Arbitrator in those paragraphs. None of the

observations, however prejudicial they may be, indicate

that the petitioner had contended that the bank

guarantees furnished by the petitioner against

mobilization advance was not utilized by the petitioner.

The observations made in the paragraphs referred to by

Mr. Nandrajog do not answer the query that I posed to the

learned Senior Counsel.

12. Therefore, the question before me is: whether without

a claim, can the respondent, by any stretch of

imagination, hope to keep the money with it. Mr.

Nandrajog points out that Issue No.3 was related to

discharge of bank guarantee while Issue No.4 was related

Page 10 of 26

to the petitioner's claim for bank charges. According to

the learned Senior Counsel, both the issues were decided

by the learned Arbitrator against the petitioner.

12.1 I tend to disagree with Mr. Nandrajog that Issue No. 3

was, at all, decided by the learned Arbitrator. A careful

perusal of Paragraphs 229 to 232 of the award dated

5.12.2017 would show that the learned Arbitrator did not

decide Issue No. 3 which pertained to discharge of bank

guarantees. The learned Arbitrator after quoting the

order dated 15.12.2005 passed by this Court, had only

stated the following:

"231. Therefore, it can be seen that by its own

undertaking, the Claimant was bound to keep the

bank guarantee alive in terms of the above order.

232. In any event, due to the fraudulent and

collusive conduct of the Claimant, the Respondent

cannot be fastened with any liability and as such,

the Tribunal is not inclined to grant any relief in

this regard. The respondent is accordingly, not

liable to pay any bank charges."

(emphasis is mine)

12.2 What is plainly evident, when one reads the award, is

that, the learned Arbitrator was unaware of the fact that

the bank guarantees had already been encashed. As a

result, the learned Arbitrator held the view that the bank

guarantees continued to remain in operation on account of

an undertaking to that effect, given by the petitioner, by

which it was bound. In this regard, the obvious reference

of the Arbitral Tribunal was to the order dated 15.12.2005

passed by this Court. More importantly, this observation

was made in the context of Issue No. 4, which required the

Arbitral Tribunal to determine as to who would bear the

financial burden of keeping the bank guarantees alive.

12.3 The Arbitral Tribunal, clearly, failed to deal with the

direction contained in order dated 15.12.2015 which

required the petitioner to keep the bank guarantees alive

only to enable the respondent to encash the bank

guarantees against an executable award, if any, passed in

its favour. In view of the fact that there was no

counterclaim lodged by the respondent, the Arbitral

Page 11 of 26

Tribunal, in my view, had to decide, in the changed

circumstances, whether or not the condition put in place

by this Court via order dated 15.12.2015 would continue

to operate. The Arbitral Tribunal, clearly, did not decide

this aspect of the matter and, thus, Issue No. 3 remain

unaddressed.

12.4 The Arbitral Tribunal, though, for whatever it is

worth, did decide Issue No. 4 which related to "liability",

purportedly borne by the petitioner on account of bank

charges for keeping the bank guarantees alive.

13. Therefore, I am confronted with two undeniable facts.

First, no counterclaims were filed. Second, however

irrelevant it may be, there is no finding that the bank

guarantees were encashed on account of non-utilization of

mobilisation advance.

14. Given this position, in my view, if I were to permit the

respondent to continue to hold on the money, it would not

only result in the respondent unjustly enriching itself but

would also be contrary to the purpose and object with

which order dated 15.12.2005 was passed by this Court

when arbitration had not commenced. Thus, the argument

that the respondent is good for its money, given the facts

obtaining in this case, is untenable and hence is

rejected.”

15.2 Thus, in view of the fact that I have still not

adjudicated upon the Section 34 petition, equities, to my

mind, would be balanced if an appropriate direction is

issued to the respondent to deposit the money in Court,

which is also the alternative relief that Mr. Verma has

prayed for. This direction appears to be wholesome as

deposit of money in Court will enable accrual of interest

which will ultimately benefit the party which succeeds in

the main matter.”

“17. Thus, for the foregoing reasons, I am inclined, for the

moment, insofar as this petition is concerned, to direct the

respondent to deposit the monies, which, I am told, is an

amount equivalent to a sum of Rs.3.5 Crores with the

registry of this Court. The said amount will be deposited

within two weeks from today. Upon such amount being

deposited with the Registry of this Court, the same shall

Page 12 of 26

be invested in an interest-bearing fixed deposit,

maintained with a nationalized bank.”

It is this Order, which the Division Bench, vide the impugned

order has upheld.

14) We have heard Mr. Rajat Arora, learned counsel for the

appellant and Mr. Ajay Bansal, learned counsel for the

respondent.

CONTENTIONS OF THE APPELLANT: -

15) Learned counsel for the appellant submits that under

Section 9, a Court cannot grant relief which amounts to a final

adjudication of rights that are pending consideration at the

Section 34 stage. It is submitted that post award, Section 9

power is exercised only to protect the fruits of the Award in

aid of its enforcement. It is submitted that a claimant whose

claim has been dismissed in toto holds no Award, has no

adjudicated “amount in dispute” surviving in its favour, and

has no fruits of its own to protect. Learned counsel submitted

that the respondent herein is seeking a mandatory direction

to claw back monies already realised lawfully under the

Page 13 of 26

bank guarantees. It is submitted that the legality of

encashment stands concluded by the order dated

01.11.2017. Learned counsel submits that the High Court has

undertaken a merits review of the Award at the interlocutory

stage, which was illegal. Learned counsel, after referring to

the Award, submitted that the arbitrator had declined the

claim for discharge of bank guarantees and had refused

expressly the relief on account of the respondent’s own

undertaking and its fraudulent and collusive conduct.

Learned counsel submitted that the relief granted to the

respondent is not encompassed within the framework of

Section 9(1)(ii)(e). Learned counsel submitted that the

absence of a counter claim did not make any difference to

the dispute. The dismissal of Claim No. 1 itself removed the

substrata in the case of the respondent to seek the bank

guarantee amounts back. It was submitted that the principles

of Order XXXVIII Rule 5 of the Code of Civil Procedure, 1908,

were not satisfied.

Page 14 of 26

CONTENTIONS OF THE RESPONDENT: -

16) Learned counsel for the respondent contended that no

counter claims were filed by the appellant and further there

is no finding in the Award as to the non-utilization of

mobilization advance. Learned counsel contended that Issue

Nos. 3 before the arbitrator remained unaddressed. Learned

counsel submitted that the finding on collusion against the

respondent is subject matter of challenge in the Section 34

proceedings. Learned counsel reiterated the finding of the

learned Single Judge that permitting the appellant to retain

the amount would only result in unjustly enriching the

appellant. Learned counsel submitted that Section 9 of the

1996 Act confers wide powers to pass orders of the nature

passed by the Single Judge and the Division Bench.

QUESTION FOR CONSIDERATION: -

17) In the above background, the question for consideration

is whether the courts below were justified in directing the

appellant to deposit a sum of Rs. 3.5 crores in the Registry of

Page 15 of 26

the High Court, pending disposal of the Section 34

application filed by the respondent, challenging the Award

of the arbitrator?

ANALYSIS AND DISCUSSION: -

18) This is a case where the Award Debtor has, post the

Award, invoked the jurisdiction under Section 9. Insofar as

the maintainability of a Section 9 application by the Award

Debtor is concerned, the issue is no longer res integra.

Recently, in Home Care Retail Marts Pvt. Ltd. vs. Haresh N.

Sanghavi, 2026 SCC Online SC 670, this Court, speaking

through Manmohan, J., held as under: -

“2. The substantial question of law that arises for

consideration in the present batch of appeals is whether a

petition under Section 9 of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as ‘the Act’)

at the post-award stage, by a party that has lost in the

arbitral proceedings and has no enforceable award in its

favour, is maintainable in law?

43. Sections 34 as well as 36 provide remedies against an

award or a stay thereof, whereas Section 9 ensures

protection of the subject matter or the amount in dispute.

An unsuccessful party cannot secure protection of its

claim under Section 34 or Section 36. To deny interim

relief under Section 9 would leave such a party

remediless. In fact, if the Court declines to entertain

an application of a losing party for interim relief, there

Page 16 of 26

would be no forum available for protection of the

subject matter, even where the award under challenge

is stayed and potentially liable to be set aside.

Moreover, the ultimate outcome may alter the rights

of parties and, therefore, distinction between a

‘winning’ and a ‘losing’ party cannot govern access to

the remedy under Section 9 of the Act.

49. Even applying the test of purposive interpretation, ‘a

party’ must mean any party to the arbitration agreement.

This Court can envisage situations where a party that has

lost in arbitration may nonetheless require interim

protection. For instance, where an arbitral award has

been rendered without proper notice to a party, or where

a party is able to prima facie demonstrate that the award

has been induced or tainted by fraud or corruption. In

such situations, the Court may not only stay the award but

also grant interim measures under Section 9 of the Act to

balance the equities. Similarly, in certain cases, an

unsuccessful party may have obtained interim

protection during the arbitral proceedings, such as an

order restraining invocation of a bank guarantee.

Upon the rendering of the arbitral award, such interim

protection ordinarily stands vacated. However, the

unsuccessful party may challenge the award under

Section 34 of the Act and obtain a stay on the

enforcement of the arbitral award under Section 36(3)

of the Act. In such circumstances, immediate removal

of interim protection, for example, in relation to a

bank guarantee, may result in irreversible prejudice

to the unsuccessful party whose challenge to the

arbitral award is pending adjudication.

52. Consequently, in rare and compelling cases, it

may be necessary to permit the unsuccessful party to

invoke Section 9 of the Act to seek continuation of the

existing interim protection. This assumes greater

significance, as noted earlier, in light of the decision in

Gayatri Balasamy (supra) which recognises the Court's

power under Section 34 of the Act to modify an arbitral

award, including the power to sever ‘the “invalid” portion

from the “valid” portion of the award’.

Page 17 of 26

59. Needless to say, the grant of interim relief under

Section 9 of the Act will continue to be guided by well-

established principles, namely, the existence of a

prima facie case, balance of convenience, and

likelihood of irreparable harm or injury. This Court, in

Essar House Private Limited v. Arcellor Mittal Nippon

Steel India Limited, (2022) 20 SCC 178, has held as under:

“47. Section 9 of the Arbitration Act confers wide power

on the Court to pass orders securing the amount in

dispute in arbitration, whether before the commencement

of the arbitral proceedings, during the arbitral

proceedings or at any time after making of the arbitral

award, but before its enforcement in accordance with

Section 36 of the Arbitration Act. All that the Court is

required to see is, whether the applicant for interim

measure has a good prima facie case, whether the

balance of convenience is in favour of interim relief as

prayed for being granted and whether the applicant

has approached the court with reasonable

expedition.”

60. Undoubtedly, the threshold for grant of interim

relief will be higher in the case of an unsuccessful

party in arbitration seeking such relief. In rare and

compelling cases, permitting the unsuccessful party

to invoke Section 9 of the Act would prevent

irreparable prejudice and preserve the efficacy of the

challenge proceedings. However, the rights of such a

party cannot be curtailed merely on the apprehension

of possible misuse of a statutory provision.”

[Emphasis supplied]

19) This Court, while holding the application to be

maintainable, has sounded a note of caution that the

threshold for grant of interim relief will be higher in case the

application is moved by an Award Debtor and that a court

Page 18 of 26

may, in rare and compelling cases, permit the unsuccessful

party to invoke Section 9 to prevent irreparable prejudice

and to preserve the efficacy of the challenge under Section

34.

20) This Court, also reiterated the holding in Essar House

Private Limited vs. Arcellor Mittal Nippon Steel India

Limited., (2022) 20 SCC 178 emphasizing the principle that

the existence of a prima facie case and balance of

convenience have to be seen along with the aspect whether

party has approached the Court with reasonable expedition

or not.

21) In Essar House (supra), this Court laid down the

guiding principles while interpreting Section 9 especially

Clause (ii) (e) which enabled the Court to pass such other

interim measure of protection as may appear to the Court to

be just and convenient.

22) This Court held that while couching a relief under the

“just and convenient” clause, the discretion has to be

Page 19 of 26

exercised judiciously and not arbitrarily and that such an

exercise of power must promote the efficacy of arbitration as

a form of dispute resolution.

23) In Essar House (supra), this Court held as under: -

41. As argued by Mr Kaul, besides the specific power of

securing the amount in dispute, the courts have been

empowered to pass any interim measure of protection,

keeping in view the purpose of the proceedings before it.

The said provision confers a residuary power on the

Court to pass such other interim measures of protection

as may appear to be just and convenient.

44. In Jagdish Ahuja v. Cupino Ltd. [2020 SCC OnLine

Bom 849], the Bombay High Court correctly summarised

the law in para 6 extracted hereinbelow :

“6. As far as Section 9 of the Act is concerned, it cannot

be said that this Court, while considering a relief

thereunder, is strictly bound by the provisions of Order

38 Rule 5. As held by our Courts, the scope of Section

9 of the Act is very broad; the court has a discretion

to grant thereunder a wide range of interim

measures of protection “as may appear to the court

to be just and convenient”, though such discretion

has to be exercised judiciously and not arbitrarily.

The court is, no doubt, guided by the principles

which civil courts ordinarily employ for considering

interim relief, particularly, Order 39 Rules 1 and 2

and Order 38 Rule 5; the court, however, is not

unduly bound by their texts. As this Court held

in Nimbus Communications Ltd. v. BCCI [2012 SCC

OnLine Bom 287] (per D.Y. Chandrachud, J.), as the

learned Judge then was), the court, whilst exercising

power under Section 9, ‘must have due regard to the

underlying purpose of the conferment of the power

under the court which is to promote the efficacy of

arbitration as a form of dispute resolution’. The

Page 20 of 26

learned Judge further observed as follows :

‘24. … Just as on the one hand the exercise of the power

under Section 9 cannot be carried out in an uncharted

territory ignoring the basic principles of procedural law

contained in the Code of Civil Procedure, 1908, the

rigours of every procedural provision in the Code of

Civil Procedure, 1908 cannot be put into place to defeat

the grant of relief which would subserve the paramount

interests of justice. A balance has to be drawn between

the two considerations in the facts of each case.’ ”

47. Section 9 of the Arbitration Act confers wide power on the

Court to pass orders securing the amount in dispute in

arbitration, whether before the commencement of the arbitral

proceedings, during the arbitral proceedings or at any time

after making of the arbitral award, but before its enforcement

in accordance with Section 36 of the Arbitration Act. All that

the Court is required to see is, whether the applicant for

interim measure has a good prima facie case, whether

the balance of convenience is in favour of interim relief

as prayed for being granted and whether the applicant

has approached the court with reasonable expedition.

49. Proof of actual attempts to deal with, remove or dispose of

the property with a view to defeat or delay the realisation of

an impending arbitral award is not imperative for grant of

relief under Section 9 of the Arbitration Act. A strong

possibility of diminution of assets would suffice. To assess

the balance of convenience, the Court is required to

examine and weigh the consequences of refusal of

interim relief to the applicant for interim relief in case of

success in the proceedings, against the consequence of

grant of the interim relief to the opponent in case the

proceedings should ultimately fail.

24) Earlier, this Court in Adhunik Steels Ltd. vs. Orissa

Manganese and Minerals (P) Ltd., (2007) 7 SCC 125,

reiterated how the well-known principles governing the

Page 21 of 26

grant of an interim injunction followed by courts are not alien

to Section 9 of the 1996 Act. This Court held as under: -

11. It is true that Section 9 of the Act speaks of the court by

way of an interim measure passing an order for protection,

for the preservation, interim custody or sale of any goods,

which are the subject-matter of the arbitration agreement and

such interim measure of protection as may appear to the

court to be just and convenient. The grant of an interim

prohibitory injunction or an interim mandatory

injunction are governed by well-known rules and it is

difficult to imagine that the legislature while enacting

Section 9 of the Act intended to make a provision which

was dehors the accepted principles that governed the

grant of an interim injunction. Same is the position

regarding the appointment of a receiver since the section

itself brings in the concept of “just and convenient” while

speaking of passing any interim measure of protection. The

concluding words of the section, “and the court shall have the

same power for making orders as it has for the purpose and

in relation to any proceedings before it” also suggest that the

normal rules that govern the court in the grant of interim

orders is not sought to be jettisoned by the provision.

Moreover, when a party is given a right to approach an

ordinary court of the country without providing a special

procedure or a special set of rules in that behalf, the ordinary

rules followed by that court would govern the exercise of

power conferred by the Act. On that basis also, it is not

possible to keep out the concept of balance of

convenience, prima facie case, irreparable injury and the

concept of just and convenient while passing interim

measures under Section 9 of the Act.”

APPLICATION OF LAW TO THE FACTS: -

25) Did the respondent, in the present case, satisfy the

above yardsticks, is the crucial question that arises for

consideration.

Page 22 of 26

26) An analysis of the facts and the application of the

principles led us to the irresistible conclusion that the

respondent, in fact, did fulfil in ample measure, the

necessary parameters for obtaining relief under Section 9.

We say so for the following reasons: -

(i) Firstly, on 15.12.2005, when OMP No. 363/2003 filed by

the respondent was adjudicated, the High Court directed

that if after adjudication by the Arbitrator, it was found that

the appellant had to recover the amount from the

respondent herein, the appellant herein will be entitled to

recover such amount by invoking the bank guarantees;

(ii) Secondly, no counter-claim was filed by the appellant

before the Arbitrator;

(iii) Thirdly, Issue Nos. 3 and 4 dealt with by the Arbitrator

only concerned the bank charges as to whether

respondent was entitled to the same. The Arbitrator

appears to be oblivious of the fact that prior to the Award,

the bank guarantees were invoked since the respondent

was unable to keep the bank guarantees alive;

Page 23 of 26

(iv) Fourthly, the Section 34 Court is engaged with the

issue whether the Arbitrator has recorded any finding as to

whether the respondent failed to use mobilisation

advance. Though prima facie findings have been recorded

in the current proceedings, to the effect that there is no

such finding by the Arbitrator, it will finally be decided

only in the Section 34 application;

(v) Fifthly, the order dated 01.11.2017 of the learned

Single Judge will not come in the way of the respondent for

the reason that the present proceedings arise out of a

Section 9 application, post Award. In fact, the learned

Single Judge, in the present round, after noticing the order

dated 01.11.2017, observed that the Arbitrator had

reserved the award on 12.12.2016 and pronounced the

Award on 05.12.2017, completely oblivious of the fact of

encashment of bank guarantees. Moreover, the question in

the present round of litigation is really whether in the light

of the contents of the Award, permitting the appellant to

retain the money would tantamount to unjustly enriching

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the appellant? It is in that context that the Order of

01.11.2017 has to be viewed;

(vi) Sixthly, since prima facie it is found that there was no

counter claim by the appellant and no finding that the

mobilisation advance against which the bank guarantees

were given was not utilized, the High Court was justified in

observing that permitting the appellant to hold on the

money pending Section 34 application, would be unjustly

enriching the appellant and would also be in teeth of the

order of 15.12.2005 passed by the High Court in OMP No.

363/2003;

(vii) Seventhly, applying the dictum laid down in Home

Care Retail Marts (supra) and Essar House (supra), the

case of the respondent does provide a rare and a

compelling case where even after applying the higher

threshold, the directions, as made by the courts below,

were required to prevent irreparable prejudice and

preserve the efficacy of the challenge in Section 34;

Page 25 of 26

(viii) Eighthly, the High Court could not be said to have

exercised its jurisdiction arbitrarily. It was a judicious

exercise, keeping in mind the parameters of a prima facie

case and balance of convenience and irreparable

prejudice. The respondent did move the court with

reasonable expedition; and,

(ix) Finally, a relief, as the one fashioned by the courts

below, furthers the efficacy of arbitration as a form of

dispute resolution and is in keeping with the purpose and

object of interim measures contemplated under Section 9.

CONCLUSION: -

27) For the reasons stated above, we find no merit in the

appeal. The appeal is, accordingly, dismissed. We grant 4

(four) weeks’ time to the appellant to deposit the amount of

Rs. 3.5 crores with the Registry of the High Court of Delhi.

On deposit, the Registry of the High Court shall keep the

same in a Fixed Deposit (FD), in any Nationalized Bank, on

auto-renewal basis, till the disposal of the Section 34

application. Needless to state that the observations made in

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these proceedings are only for the purpose of deciding the

Section 9 petition and the Section 34 application will be

decided on its own merits without being influenced by the

observations in the orders of the courts below or in the

present judgment. No order as to costs.

……….........................J.

[K. V. VISWANATHAN]

……….........................J.

[ALOK ARADHE]

New Delhi;

11th August, 2026