The High Court of Andhra Pradesh has rejected an interlocutory application filed by the Oil and Natural Gas Corporation Ltd (ONGC) seeking to direct Deep Industries Ltd (DIL) to either re-deposit Rs 42.89 crore or furnish a bank guarantee for the said amount. The division bench, comprising Justice Ravi Nath Tilhari and Justice Balaji Medamalli, held that since ONGC had voluntarily given its “no objection” to the unconditional withdrawal of the amount during the Section 34 proceedings before the Special Commercial Court, it could not now demand security at the appellate stage. The High Court characterized ONGC’s subsequent plea—that the officer who conceded the withdrawal lacked proper authorization—as a “well afterthought.”
Background of the Case
The dispute originates from an arbitral award dated May 19, 2022, passed by an Arbitral Tribunal in favor of the claimant, Deep Industries Ltd (DIL). The tribunal allowed Claims A, B, C, and D, and dismissed Claims E, F, and G, while directing the parties to bear their own costs under Claim H.
Aggrieved by the award, ONGC filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 (CAOP No. 17 of 2022) before the Special Court for Trial and Disposal of Commercial Disputes, Visakhapatnam. During these proceedings, the Special Court, via an order dated September 30, 2022, in I.A. No. 212 of 2022, granted a stay on the execution of the award on the condition that ONGC deposit 75% of the awarded amount.
ONGC complied with the order and deposited the required sum. Subsequently, DIL filed an application (I.A. No. 200 of 2023) requesting the online transfer of the deposited Rs 42,89,88,897.37 to its bank account, furnishing a legal undertaking to re-deposit the amount as and when directed by the court.
ONGC filed a counter-affidavit on May 8, 2023, stating it had “no objection” to the withdrawal. The counter-affidavit noted:
“Further, this Respondent-Owner submits that, the Petitioner-Claimant, is still working as Contractor with this Respondent-O.N.G.C.Ltd. doing work worth Crores of Rupees. Hence, this Respondent-Owner has ‘NO OBJECTION’, to allow the Petitioner-Claimant, for withdrawing the amount…”
Relying on this, the Special Court permitted DIL to withdraw the entire amount without furnishing security. Nearly two years later, on December 30, 2024, the Special Court dismissed ONGC’s Section 34 application, refusing to set aside the arbitral award.
ONGC then filed an appeal under Section 37 of the Arbitration Act read with Section 13 of the Commercial Courts Act, 2015. On July 18, 2025, a coordinate bench of the High Court granted an interim stay on the execution of the remaining 25% of the award, subject to ONGC furnishing security. ONGC complied with this condition. However, ONGC also filed I.A. No. 2 of 2025, praying for a direction to DIL to either re-deposit the withdrawn 75% portion (Rs 42,89,88,897.37) plus interest or furnish an equivalent bank guarantee pending disposal of the appeal.
Arguments of the Parties
Arguments on behalf of ONGC (Petitioner):
- Unauthorized Officer: Sri Tushar Mehta, the learned Solicitor General of India, appearing virtually, argued that the officer who filed the counter-affidavit in I.A. No. 200 of 2023 was not authorized to represent ONGC or to make any statement conceding the withdrawal of the amount without security. He stated that disciplinary action was being initiated against the concerned officer and the statement did not bind ONGC.
- Interpretation of ‘No Objection’: He submitted that the ‘no objection’ was recorded in a limited sense and did not imply consent for unconditional withdrawal without security.
- Prejudicial and Against Settled Law: Relying on the Supreme Court judgment in Kanpur Jal Sansthan v. Bapu Constructions (2015) 5 SCC 267, he argued that permitting an award-holder to withdraw deposited funds without security is contrary to settled principles. If ONGC succeeds in its appeal, it may find it difficult to realize the amount from DIL.
- Financial Stress: Pointing to DIL’s financial statements, the Solicitor General submitted that while DIL made a profit after tax of Rs 125 crore in FY 2023-24, it suffered a loss of Rs 78.76 crore in FY 2024-25, indicating that the company is under “severe financial stress from its core business operations.”
Arguments on behalf of Deep Industries Ltd (Respondent):
- Order of Withdrawal is Final: Sri S. Sriram, learned Senior Counsel for DIL, argued that the withdrawal was permitted by the Special Court’s order dated May 8, 2023, which was passed almost three years ago. Since ONGC never challenged this order, it has attained finality.
- Afterthought Defense: The Senior Counsel pointed out that the “lack of authorization” of the officer was never raised in the main appeal memo or the initial stay application; it was introduced for the first time in ONGC’s rejoinder affidavit in I.A. No. 2 of 2025, proving it was a clear afterthought.
- Factual Clarification of Loss: He clarified that the consolidated loss of Rs 78.76 crore in FY 2024-25 was due to a one-time, non-cash accounting “exceptional item” of Rs 251.05 crore from post-acquisition cleanup activities of acquired entities, and had zero impact on DIL’s operational solvency or liquidity.
- Substantial Live Contracts: He argued that DIL is a listed company with active contracts with ONGC exceeding Rs 1,000 crores. ONGC holds substantial performance bank guarantees and handles monthly billings for DIL, making ONGC fully secured as DIL’s primary debtor.
- Expiry of Undertaking: He also submitted that upon the dismissal of the Section 34 petition, the undertaking given by DIL to the Special Court to re-deposit the amount had automatically come to an end.
Court’s Analysis and Findings
The High Court meticulously evaluated the sequence of events and the record of the Special Court.
On the ‘No Objection’ and the “Afterthought” Plea
The Court noted that ONGC was fully aware of the withdrawal and the contents of the May 8, 2023 order for nearly three years, during which it raised no dispute. The bench observed:
“Under the circumstances, the plea taken appears to us to be well afterthought to get over the ‘no objection’ made before the learned Special Judge by way of writing in the counter to permit withdrawal to DIL.”
Regarding ONGC’s attempt to dispute the correctness of the recorded consent in the Special Court’s order, the bench stated:
“It is a settled principle of law if any statement in any Order of the Court is disputed as not being correct and recorded wrongly by the Court, the appropriate course open to such a party is to approach the same Court.”
Distinction of Legal Precedent
Addressing the reliance on Kanpur Jal Sansthan, the High Court held that the precedent did not apply. In Kanpur Jal Sansthan, the withdrawal order itself was under challenge. In the present case, ONGC never challenged the order of May 8, 2023, which was passed based on its own written consent.
On Financial Status & Stage of Application
The High Court declined to adjudicate the factual disputes concerning DIL’s operational solvency. It emphasized that seeking security after consent is fundamentally different from demanding security at the initial stage:
“Additionally, we are of the view that imposing the condition of furnishing the security for withdrawal of the amount at the initial stage while granting the permission to withdraw, stand on a different footing than in a case where the withdrawal has been made with the consent or ‘no objection’ and application is filed later on for direction either to re-deposit the amount or to furnish the bank guarantee…”
On the Survival of DIL’s Undertaking
Significantly, the High Court disagreed with the argument of DIL’s counsel that the undertaking to re-deposit had expired with the conclusion of the Section 34 proceedings. The bench clarified that since an appeal is a continuation of original proceedings, the undertaking remains active:
“In our view, the DIL shall still be bound by its undertaking to deposit the amount withdrawn by it if so directed by the Court. Appeal it is well settled is continuation of the original proceedings, though may not be for all the purposes, but when the order itself, passed under Section 34 is under challenge in the present appeal filed under Section 37, if and when this Court directs to re-deposit the amount, or consequent upon the result of this appeal the DIL comes under liability to repay… it cannot say ‘not bound by undertaking’.”
Decision
The High Court held that no justifiable reasons or change in circumstances were established by ONGC to warrant a direction to DIL to re-deposit the money or furnish security at this stage.
Accordingly, I.A. No. 2 of 2025 was rejected, and all pending miscellaneous petitions were closed.
Case Details
- Case Title: Oil and Natural Gas Corporation Ltd (ONGC) v. Deep Industries Ltd. & Others
- Case No.: I.A. No. 2 of 2025 in COM.CA. No. 18 of 2025
- Bench: Justice Ravi Nath Tilhari and Justice Balaji Medamalli
- Date of Judgment: 07.05.2026
