The Bombay High Court has clarified the scope of Section 9 of the Arbitration and Conciliation Act, 1996 in post-award scenarios, holding that interim protection remains available even when the award is under challenge under Section 34. However, the Court emphasized that such relief must be protective, not executory, and requires material evidence of potential asset dissipation.
Background & Facts
The Dispute
The petitioner, Leap India Limited (formerly LEAP India Private Limited), entered into an agreement with the respondent, Radhakrishna Foodland Private Limited, on 3 November 2015 (with an addendum on 30 March 2017) for the supply and hire of pallets used in supply chain management. The petitioner alleged that the respondent used the pallets but failed to return them properly and stopped making payments after June 2019, leaving several invoices unpaid. Disputes between the parties were referred to arbitration, and a Sole Arbitrator passed an award on 28 October 2025, partly in favour of the petitioner.
Key Facts
- The agreement involved the hire of pallets for supply chain management.
- The respondent allegedly stopped payments after June 2019 while continuing to use the pallets.
- The arbitral award dated 28 October 2025 granted partial relief to the petitioner.
- The petitioner challenged part of the award in separate proceedings but sought interim protection under Section 9 for the portion in its favour.
- The respondent received the signed copy of the award only on 22 January 2026, after the petitioner filed the present petition.
Procedural History
- 28 October 2025: Arbitral award passed.
- 22 January 2026: Respondent received the signed copy of the award.
- June 2026: Petitioner filed the present Arbitration Petition (L) No. 5482 of 2026 under Section 9 seeking disclosure of assets, deposit of the awarded amount, and restraint on asset transfers.
- 18 June 2026: Arguments reserved.
- 6 July 2026: Judgment pronounced.
The Parties' Positions
Petitioner's Contentions
- The respondent acted dishonestly by delaying collection of the award and may frustrate its execution.
- The respondent should disclose its assets to prevent dissipation.
- The petitioner sought deposit of the awarded amount or security and an injunction restraining the respondent from transferring its properties.
Respondent's Contentions
- The petition is an indirect attempt to recover the awarded amount, which is not permissible under Section 9.
- The award is under challenge under Section 34, and the petitioner cannot seek coercive relief while simultaneously challenging the award.
- The respondent denied allegations of improper conduct and contended that it is financially sound with no intention of dissipating assets.
Relief Sought
The petitioner sought:
- Disclosure of the respondent's movable and immovable assets, balance sheets, bank statements, and income tax returns.
- Deposit of the awarded amount or furnishing of suitable security.
- An injunction restraining the respondent from creating encumbrances or transferring its properties.
The Legal Issue
The central question was whether Section 9 of the Arbitration and Conciliation Act, 1996 permits interim protection, such as disclosure of assets, deposit of the awarded amount, or restraint on asset transfers, after the passing of an arbitral award but during the pendency of a challenge under Section 34.
Arguments Presented
For the Petitioner
- The respondent's conduct showed an intention to delay or defeat recovery under the award.
- The petitioner relied on the arbitral award, which granted partial relief in its favour, and contended that interim protection was necessary to secure the awarded amount.
- The petitioner argued that the respondent's delay in collecting the award and lack of financial transparency justified the relief sought.
For the Respondent
- Section 9 is not a tool for execution or recovery of the decretal amount but only for interim protection.
- The petitioner's challenge to the award under Section 34 precluded it from seeking coercive relief under Section 9.
- The respondent relied on precedents such as Telford Marine DMCC v. Bhambhani Shipping Limited and Essar Oil Limited v. United India Insurance Company Limited to argue that the petition was premature and not maintainable.
The Court's Analysis
The Court examined the scope of Section 9 in post-award scenarios and held:
"The language used in Section 9 makes it clear that the Court has power to grant interim measures not only before commencement of arbitration and during the arbitral proceedings, but also after making of the arbitral award and before it is enforced in accordance with Section 36. Therefore, because the arbitral proceedings have ended by passing of an award, it cannot be said that the jurisdiction under Section 9 comes to an end."
The Court relied on the Supreme Court's decision in Hindustan Construction Co. Ltd. v. Union of India, which held that post-award protection under Section 9 remains available until enforcement, and pendency of Section 34 proceedings does not bar such jurisdiction.
However, the Court clarified that Section 9 confers discretionary jurisdiction, and the mere existence of an award does not entitle the award holder to automatic relief. The Court must examine whether the facts justify interim protection, as Section 9 is not a substitute for execution proceedings. The object is to preserve the fruits of the award, not to permit its premature execution.
The Court observed:
"The award creates an adjudicated liability subject of course to the challenge permissible under Section 34. Therefore, the threshold for grant of protective relief after the award may not be the same as at the pre-award stage."
The Court emphasized the distinction between securing the award and enforcing it. While the award strengthens the petitioner's position, it does not dispense with the necessity of establishing circumstances that make protective orders necessary. The Court must ensure that the relief sought remains protective and does not result in execution of the award.
The Court noted that the petitioner's allegations of dishonest conduct and attempts to delay recovery were not sufficient to justify a direction for deposit of the awarded amount or restraint on asset transfers. Mere apprehensions of asset dissipation, without supporting material, cannot justify drastic interim orders.
The Verdict
The Court partly allowed the petition with the following directions:
- The respondent must file an affidavit within four weeks disclosing its movable and immovable assets, bank accounts, investments, and any encumbrances or transfers of assets after the award date.
- The prayer for deposit of the awarded amount was rejected, as the material on record did not establish a likelihood of asset dissipation.
- The prayer for an injunction restraining the respondent from dealing with its assets was also rejected for the same reason.
- The Court clarified that the petitioner could seek appropriate interim reliefs in the future if it placed material showing the respondent's attempts to alienate or dissipate assets.
- No order as to costs was passed.
What This Means For Similar Cases
Post-Award Protection Under Section 9 Remains Available
- The judgment reaffirms that Section 9 jurisdiction continues to be available even after the passing of an arbitral award and during the pendency of a Section 34 challenge.
- Practitioners can rely on this judgment to argue that interim protection is not barred merely because the award is under challenge.
Material Evidence of Asset Dissipation Is Crucial
- Courts will not grant drastic reliefs like deposit of the awarded amount or restraint on asset transfers based on mere allegations or apprehensions.
- Petitioners must provide concrete material showing a real likelihood of asset dissipation or frustration of recovery to justify such reliefs.
Protective Relief Must Not Cross Into Execution
- The Court emphasized that Section 9 relief must remain protective and cannot be used as a tool for premature execution of the award.
- Practitioners should frame their prayers carefully to ensure they seek preservation of the award's efficacy, not satisfaction of the award itself.
