The Supreme Court of India, comprising a bench of Justice K. V. Viswanathan and Justice Alok Aradhe, has held that an award debtor—a party that has lost in arbitral proceedings—can invoke Section 9 of the Arbitration and Conciliation Act, 1996, post-award in rare and compelling cases to prevent irreparable prejudice and preserve the efficacy of the challenge under Section 34. Dismissing an appeal filed by National Projects Construction Corporation Ltd., the apex court upheld the Delhi High Court’s directions requiring the public sector enterprise to deposit ₹3.5 crore in the High Court Registry pending the outcome of Section 34 proceedings.
Background of the Case
On August 16, 2002, National Projects Construction Corporation Ltd. (NPCC) entered into a Memorandum of Understanding (MoU) with Ishvakoo (India) Pvt. Ltd. for infrastructure work involving bus terminals at Taj Mahal Bus Stand, UPST Bus Stand, Idgah Bus Stand, and the development of the Taj Trapezium Zone (TTZ) Heritage Corridor in Agra for the Government of Uttar Pradesh. In December 2002, NPCC released ₹3.5 crore as a Mobilisation Advance to Ishvakoo against bank guarantees issued by Canara Bank.
When disputes arose, Ishvakoo invoked arbitration. Pending arbitral proceedings, Ishvakoo filed a Section 9 application (OMP No. 363/2003) seeking to restrain NPCC from encashing bank guarantee nos. 109/2002 to 124/2002 totaling ₹3.5 crore. On December 15, 2005, the Delhi High Court disposed of the application after recording NPCC’s undertaking not to invoke the bank guarantees provided Ishvakoo kept them alive until the award became executable under Section 36, and clarifying that if the arbitrator found NPCC entitled to recover any amount, NPCC could encash them.
In September 2017, Ishvakoo was unable to keep the bank guarantees alive, prompting NPCC to encash the entire amount of ₹3.5 crore. On December 5, 2017, the sole arbitrator rendered an award dismissing Ishvakoo’s claims. NPCC had not filed any counter-claim before the arbitrator.
Ishvakoo subsequently challenged the award under Section 34 and filed a post-award Section 9 petition [O.M.P.(I)(COMM) No. 57/2019] seeking direction against NPCC to refund or deposit the ₹3.5 crore encashed amount. A Single Judge of the Delhi High Court directed NPCC to deposit ₹3.5 crore with the Registry, which was later affirmed by a Division Bench on May 21, 2019. NPCC appealed this decision before the Supreme Court.
Arguments of the Parties
Counsel for NPCC argued that an award debtor whose claims were dismissed in toto possesses no award or adjudicated sum in its favor and cannot invoke Section 9 post-award to recover monies realized through bank guarantees. NPCC asserted that Section 9 cannot be utilized for final adjudication of rights pending under Section 34, that encashment of bank guarantees was lawful, and that the High Court had impermissibly conducted a merits review of the arbitral award at an interlocutory stage. NPCC further contended that the absence of a counter-claim did not alter the fact that Ishvakoo’s primary claim was rejected.
Counsel for Ishvakoo contended that NPCC filed no counter-claims before the arbitrator and that there was no finding in the arbitral award stating that Ishvakoo failed to utilize the mobilization advance. Ishvakoo submitted that permitting NPCC to retain ₹3.5 crore without an affirmative award or counter-claim in its favor would amount to unjust enrichment. It was further argued that Section 9 confers wide powers on courts to issue interim measures to balance equities.
Court’s Analysis and Cited Precedents
The Supreme Court examined whether the courts below were justified in ordering NPCC to deposit ₹3.5 crore in the High Court Registry pending Section 34 proceedings.
Addressing the maintainability of a Section 9 petition by an award debtor, the bench relied on its recent decision in Home Care Retail Marts Pvt. Ltd. vs. Haresh N. Sanghavi (2026), observing:
“In fact, if the Court declines to entertain an application of a losing party for interim relief, there 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.”
The Court further cited Home Care Retail Marts:
“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.”
“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.”
Referencing Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited (2022) and Adhunik Steels Ltd. vs. Orissa Manganese and Minerals (P) Ltd. (2007), the Court affirmed that Section 9 confers broad discretionary powers under the “just and convenient” clause to pass interim measures to secure the amount in dispute, guided by principles of a prima facie case, balance of convenience, and irreparable injury. The court also took note of principles summarized in Jagdish Ahuja v. Cupino Ltd. (2020) and Nimbus Communications Ltd. v. BCCI (2012).
Applying these principles, the bench held that Ishvakoo satisfied the necessary parameters:
- NPCC had filed no counter-claim in the arbitration.
- The arbitrator recorded no finding that Ishvakoo failed to utilize the mobilization advance against which bank guarantees were given.
- The arbitrator appeared unaware during award formulation that the bank guarantees had already been encashed, leaving Issue No. 3 regarding the discharge/operation of bank guarantees unaddressed in light of changed circumstances.
- Permitting NPCC to retain the money pending Section 34 would result in unjust enrichment and violate the High Court’s December 15, 2005 order, which permitted encashment only against an executable award in NPCC’s favor.
The Supreme Court observed:
“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;”
“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.”
Decision of the Court
The Supreme Court found no merit in the appeal and dismissed it. The Court granted NPCC four weeks’ time to deposit ₹3.5 crore with the Registry of the High Court of Delhi.
Upon deposit, the High Court Registry was directed to invest the amount in an auto-renewal interest-bearing Fixed Deposit with a nationalized bank until the disposal of the Section 34 application. The Court clarified that its observations were strictly limited to deciding the Section 9 petition and would not influence the final decision of the Section 34 application on its merits.
Case Details:
Case Title: National Projects Construction Corporation Ltd. v. Ishvakoo (India) Pvt. Ltd.
Case No.: Civil Appeal No. 5819 of 2025
Bench: Justice K. V. Viswanathan, Justice Alok Aradhe
Date: August 11, 2026
