Can a party that has lost the arbitral award obtain interim relief under Section 9?

Yes. The Supreme Court held that a losing party may invoke Section 9 where a rare and compelling case exists, but the threshold is higher - the applicant must demonstrate a breach of undertaking, risk of unjust enrichment, and that the relief is necessary to preserve the efficacy of the pending Section 34 challenge.

What factors does the Court consider when granting interim relief under Section 9?

The Court looks at (i) the existence of a prima facie case, (ii) balance of convenience, (iii) likelihood of irreparable injury, and (iv) whether the applicant has approached the court with reasonable expedition.

Does the absence of a counter-claim affect the grant of Section 9 relief?

The Supreme Court observed that the lack of a counter-claim does not per se preclude relief; the court will still assess the overall equities and the applicant’s compliance with the statutory yardsticks.

Equitable interim relief can be ordered under Section 9 even for a losing party | Arbitration Act Section 9 : SC

Q: What is the scope of Section 9 of the Arbitration and Conciliation Act, 1996?

Section 9 confers a wide power on the court to pass interim measures to protect the subject-matter of the arbitration, including orders to keep assets alive, restrain disposal, or deposit money, both before and after the award, provided the applicant shows a prima facie case, balance of convenience and risk of irreparable harm.

The Supreme Court affirmed the High Court's order directing the appellant to deposit Rs 3.5 crore pending the Section 34 challenge, thereby clarifying the scope of Section 9 interim relief for parties who have lost an arbitral award.

Background & Facts

The Dispute

The appellant, National Projects Construction Corporation Ltd., entered into a Memorandum of Understanding on 16.08.2002 with the respondent, Ishvakoo (India) Pvt. Ltd., for the development of bus termini and the Taj Trapezium Zone Heritage Corridor in Agra, Uttar Pradesh. In December 2002 the respondent was provided a mobilisation advance of Rs 3.5 crore against bank guarantees issued by Canara Bank (Nos. 109/2002 to 124/2002).

Key Facts

16.08.2002: MoU executed for bus terminus and heritage corridor work.
Dec 2002: Respondent received mobilisation advance of Rs 3.5 crore, secured by the bank guarantees.
Dispute arose; arbitration clause invoked and an arbitrator appointed.
15.12.2005: High Court, in OMP No. 363/2003 filed by the respondent, ordered the appellant not to invoke the bank guarantees and undertook to keep them alive until the arbitral award became enforceable.
05.12.2017: Arbitrator rendered award, dismissing the respondent’s claims for discharge of the guarantees and bank charges.
Sep 2017: The appellant invoked the bank guarantees, alleging the respondent failed to keep them alive.
01.11.2017: Single Judge disposed of a Section 9 petition, finding no fault in the appellant’s conduct.
20.09.2018: Single Judge ordered the appellant to return the amount equivalent to the bank guarantees within three weeks.
30.10.2018: Single Judge reiterated the order, directing remittance within ten days and directing the appellant’s officer to appear in court.
29.11.2018: Division Bench, in FAO (OS)(COMM) 271/2018, consented to set aside the orders of 20.09.2018 and 30.10.2018, leaving the questions open for determination under Section 34.
05.04.2019: Single Judge allowed the Section 9 application (OMP (I)(COMM) No. 57/2019), directing the respondent to deposit Rs 3.5 crore in the Delhi High Court registry within two weeks, to be kept in a fixed deposit until the Section 34 petition is decided.
21.05.2019: Division Bench of the Delhi High Court dismissed the appellant’s appeal and confirmed the Single Judge’s order.
11.08.2026: Supreme Court delivered the present judgment.

Procedural History

16.08.2002: MoU executed.
Dec 2002: Mobilisation advance paid.
15.12.2005: OMP No. 363/2003 disposed; undertaking to keep guarantees alive.
05.12.2017: Arbitral award rendered.
Sep 2017: Bank guarantees invoked by appellant.
01.11.2017: Single Judge disposed of earlier Section 9 petition.
20.09.2018: Single Judge order to return amount within three weeks.
30.10.2018: Single Judge order to remit amount within ten days.
29.11.2018: Consent order in FAO (OS)(COMM) 271/2018.
05.04.2019: Single Judge order directing deposit of Rs 3.5 crore.
21.05.2019: Division Bench dismisses appeal, upholds deposit order.
11.08.2026: Supreme Court judgment.

The Parties' Positions

Appellant (National Projects Construction Corp. Ltd.) argued that Section 9 cannot be used to grant relief that amounts to a final adjudication of rights pending the Section 34 challenge, contending that the respondent had no enforceable award and therefore no “amount in dispute” to protect.
Respondent (Ishvakoo (India) Pvt. Ltd.) maintained that Section 9 confers wide powers to protect the subject-matter of the arbitration, that equity demanded the deposit to prevent unjust enrichment, and that the higher threshold for a losing party was satisfied.

Relief Sought

The appellant sought quashing of the High Court’s direction to deposit Rs 3.5 crore and restoration of the earlier orders allowing it to retain the guarantees.
The respondent sought enforcement of the deposit order to secure the amount pending the Section 34 proceedings.

The Legal Issue

What is the correct scope of Section 9 of the Arbitration and Conciliation Act, 1996 when invoked by a party that has lost the arbitral award, and were the lower courts justified in directing the appellant to deposit Rs 3.5 crore pending the Section 34 application?

Arguments Presented

For the Appellant

The appellant relied on the proposition that Section 9 is intended to protect the “subject-matter” of the arbitration before a final award is made, and that a party without a pending award or enforceable amount cannot invoke it. It cited Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi and argued that the High Court’s order amounted to a merits review of the award, which is impermissible.

For the Respondent

The respondent argued that Section 9 is a residuary power allowing the court to pass any interim measure “as may appear to the court to be just and convenient”. It relied on Essar House Private Limited v. Arcelor Mittal Nippon Steel India Ltd. and emphasized the need to prevent unjust enrichment and to preserve the efficacy of the pending Section 34 challenge.

The Court's Analysis

The Supreme Court began by reiterating the purpose of Section 9 - to secure the subject-matter of the arbitration before the award is enforced. It noted that the provision is not confined to pre-award or during-award stages; it can be invoked post-award where equities demand protection.

"The substantial question of law that arises for consideration ... is whether a petition under Section 9 of the Arbitration and Conciliation Act, 1996 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?"

The Court quoted Home Care Retail Marts to affirm that an unsuccessful party may obtain interim relief where a prima facie case exists, balance of convenience favours protection, and irreparable prejudice is likely. It stressed that the threshold is higher for a losing party but not prohibitive.

Applying these principles, the Court observed:

The High Court’s 15.12.2005 order expressly bound the appellant to keep the guarantees alive until the award became enforceable, creating a continuing obligation.
No counter-claim was filed, and the arbitrator had not decided the issue of discharge of the guarantees, leaving the matter unsettled.
The appellant’s invocation of the guarantees in September 2017, contrary to the undertaking, gave rise to a risk of unjust enrichment.
The respondent satisfied the established yardsticks - a prima facie case of breach, balance of convenience favouring the respondent, and a real possibility of irreparable loss if the money remained with the appellant.
The Supreme Court emphasized that the High Court’s direction to deposit the amount in the registry, to be kept in a fixed deposit earning interest, was a proportionate and judicious exercise of the “just and convenient” discretion under Section 9.

The Court distinguished any view that the deposit order amounted to a merits review, holding that the order merely preserved the status-quo pending the Section 34 challenge and did not adjudicate the award itself.

The Verdict

The appeal is dismissed. The appellant must deposit Rs 3.5 crore with the Delhi High Court registry within four weeks. The deposited amount shall be placed in a fixed-deposit with a nationalised bank on an auto-renewal basis until the Section 34 application is finally decided. No order as to costs was made.

What This Means For Similar Cases

Section 9 Relief to an Unsuccessful Party Is Not Barred

The Supreme Court confirms that a party that has lost an arbitral award can still invoke Section 9, provided it meets a higher evidentiary threshold. Practitioners must be prepared to demonstrate a prima facie breach, balance of convenience, and risk of irreparable prejudice.

File Section 9 applications promptly after the award.
Highlight any contractual undertakings that remain unfulfilled.
Emphasise the danger of unjust enrichment.

Higher Threshold Requires Robust Evidence

While the Court recognises the residuary nature of Section 9, it stresses that the applicant must show a stronger case than a winning party. Evidence of breach of undertaking, non-payment of advances, or collusive conduct will be crucial.

Gather documentary proof of undertakings and their breach.
Prepare detailed affidavits on the consequences of non-deposit.

Deposit of Money in Court as Protective Measure

Directing the money to be kept in a fixed-deposit ensures that interest accrues for the eventual winner and prevents the appellant from retaining the funds. This mechanism is likely to be replicated.

Advise clients to seek court-ordered deposits rather than ad-hoc arrangements.
Ensure the deposit is made in a neutral, interest-bearing account.

Equitable interim relief can be ordered under Section 9 even for a losing party | Arbitration Act Section 9 : SC