This civil appeal challenged the judgment of the Delhi High Court’s Division Bench, which had confirmed a Single Judge’s order directing the appellant (National Projects Construction Corporation Ltd.) to deposit an amount of Rs. 3.5 crores into the court registry. The dispute arose from a 2002 Memorandum of Understanding (MoU) under which the respondent received a mobilization advance secured by bank guarantees. After disputes arose, an interim court order in 2005 permitted the appellant to encash the bank guarantees only if an arbitral award determined that an amount was recoverable by the appellant. Although the arbitral tribunal eventually dismissed the respondent’s claims in December 2017, the appellant had already encashed the bank guarantees earlier that year because the respondent failed to keep them alive. Crucially, the appellant had filed no counter-claim in the arbitration, and the tribunal’s award contained no finding that the mobilization advance was unutilized. The Supreme Court held that in such rare and compelling post-award circumstances, an unsuccessful party can maintain a Section 9 petition under the Arbitration and Conciliation Act, 1996, to prevent unjust enrichment and preserve the efficacy of pending Section 34 proceedings.
- Maintainability of Section 9 by an Unsuccessful Party: Reaffirming recent jurisprudence (Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi), the Supreme Court reiterated that an unsuccessful party (award debtor) can invoke Section 9 of the Arbitration and Conciliation Act, 1996, at the post-award stage in rare and compelling cases to seek interim protection, such as preventing irreversible prejudice while a Section 34 challenge is pending.
- Absence of Counter-Claim and Findings: The Court observed that the appellant had failed to file any counter-claim before the arbitrator. Furthermore, the arbitral tribunal’s award lacked any specific finding that the respondent had misappropriated or failed to utilize the mobilization advance against which the bank guarantees were issued.
- Violation of Original Court Intent: The encashment and retention of the Rs. 3.5 crores ran counter to the safeguards established by the High Court’s order dated 15.12.2005, which stipulated that bank guarantees could only be encashed to satisfy an enforceable recovery amount determined through adjudication.
- Prevention of Unjust Enrichment: Allowing the appellant to indefinitely retain the encashed bank guarantee funds—despite the absence of a counter-claim or a concrete finding of non-utilization of funds—would amount to unjust enrichment.
- Balanced Interlocutory Relief: The Supreme Court found that the lower courts exercised their discretionary power judiciously under the “just and convenient” standard of Section 9. Directing the deposit of the money into an interest-bearing Fixed Deposit with the High Court registry fairly balances equities and safeguards the ultimate outcome of the pending Section 34 proceedings.
- Final Outcome: The Supreme Court dismissed the appeal and granted the appellant four weeks to deposit the Rs. 3.5 crores with the High Court Registry, to be kept in an auto-renewing Fixed Deposit pending the final disposal of the Section 34 application.
2026 INSC 828
National Projects Construction Corporation Ltd. v. Ishvakoo (India) Pvt. Ltd. (D.O.J. 11.08.2026)
Loading Viewer...
