Unsuccessful Party Seeking Post-Award Interim Relief Under Section 9 Faces 'Higher Threshold', Must Show Rare & Compelling Circumstances: Bombay High Court

"Where the applicant is faced with an adverse award, the threshold for obtaining interim protection becomes much higher... the applicant must demonstrate existence of exceptional circumstances which are capable of justifying departure from the normal rule," Bombay High Court, in a significant judgment, held that while an unsuccessful party in an arbitration is not barred from seeking interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, such a party must satisfy a much higher threshold of "rare and compelling circumstances."

A bench of Justice Amit Borkar observed that findings recorded by an Arbitral Tribunal continue to operate unless set aside, and courts must exercise extreme caution before granting relief that effectively extends an arrangement the Tribunal has already rejected.

The case arose from a dispute between Oil and Natural Gas Corporation Limited (ONGC) and Swiber Offshore Construction Pte. Limited (Swiber), a Singapore-based company currently in liquidation. Following an arbitral award dated September 30, 2025, which rejected ONGC’s claim for liquidated damages and directed the return of a bank guarantee worth approximately USD 14.8 million, ONGC moved the High Court seeking to keep the bank guarantee alive pending its challenge to the award.

Primary Legal Questions Before The Court

The primary question before the court was whether ONGC, as an unsuccessful party facing an adverse award, could invoke Section 9 to preserve a security that the Tribunal had expressly ordered to be returned. The court was also called upon to determine whether the respondent’s liquidation status constituted an "exceptional circumstance" and the impact of the petitioner's non-disclosure of prior "Consent Terms" that limited the duration of the bank guarantee.

Higher Threshold For Unsuccessful Parties Under Section 9

The court analyzed the interplay between Section 9 and the challenge proceedings under Sections 34 and 36 of the Arbitration Act. Relying on the Supreme Court’s recent clarification in Home Care Retail Marts (P) Ltd. v. Haresh N. Sanghavi, the bench noted that the mere availability of a remedy under Section 34 does not prevent a party from invoking Section 9. However, the court emphasized that once an award is delivered, the legal landscape changes significantly for the losing party.

The court observed that if interim protection were granted routinely to every unsuccessful party merely because they challenged the award, the distinction between a challenge proceeding and an appeal would become insignificant. The bench noted that the findings of a Tribunal carry weight and cannot be ignored during the pendency of a Section 34 petition unless the case crosses the "higher threshold" of being extraordinary.

"The inquiry before this Court is whether the present case crosses the higher threshold contemplated by the Supreme Court. An unsuccessful party cannot point out that a petition under Section 34 has been filed and seek continuation of interim arrangement as a matter of right."

Impact Of Non-Disclosure Of Consent Terms

A pivotal factor in the court's refusal to grant relief was ONGC's failure to disclose Consent Terms entered into in 2016. These terms, recorded by the High Court in previous proceedings, specifically provided that the bank guarantee would remain valid only for 120 days after the issuance of the arbitral award. The court found that this period had already expired in January 2026, months before the present petition was filed.

The bench held that in matters involving discretionary jurisdiction, a party is expected to approach the court with complete openness and disclose all material facts, even those that might not support their case. Justice Borkar remarked that the omission of the Consent Terms was not a "minor lapse" but a significant factor that affected the court's assessment of equities, as ONGC was essentially seeking to enlarge its rights beyond what it had voluntarily agreed to.

Court On Discretionary Relief And Openness

"A litigant seeking discretionary relief is expected to approach the Court with openness. Failure to disclose an agreement where a party seeks continuation of a security beyond the period which it had itself agreed upon becomes a relevant factor. This omission goes against ONGC."

Liquidation Not Automatically A 'Compelling Circumstance'

Addressing ONGC’s argument regarding Swiber’s insolvency, the court acknowledged that recoverability is a valid concern when a company enters liquidation. However, it clarified that the bank guarantee in question was furnished for a specific contractual purpose—to secure liquidated damages—and was not intended to be a "blanket security" for all potential future claims ONGC might have against the Singaporean firm.

The court held that while financial uncertainty or liquidation of the opposite party is a relevant consideration, it cannot, standing alone, elevate a case to the "rare and compelling" category. The bench noted that since the Tribunal had categorically rejected the claim for liquidated damages, there was currently no "crystallized entitlement" in favor of ONGC that warranted the preservation of the bank guarantee.

"The possibility that recovery may become difficult is a relevant factor, but that circumstance alone cannot elevate the matter into a rare and compelling case. If liquidation by itself were treated as sufficient, the higher threshold prescribed by the Supreme Court would lose its significance."

Self-Created Urgency And Lack Of Promptness

The court also scrutinized the timing of the petition, noting that ONGC filed for Section 9 relief in May 2026, just weeks before the bank guarantee was set to expire on June 15, despite having knowledge of the award since October 2025. The bench observed that "delay and urgency do not move together" and that equitable relief is generally reserved for the vigilant litigant who acts with reasonable speed.

While ONGC cited the Supreme Court’s April 2024 decision in Home Care Retail Marts as the catalyst for filing the petition, the court noted that ONGC had already sought similar relief in its Section 36(3) application in January. Therefore, the concern regarding the preservation of the guarantee was not a new development, and the intervening delay was largely unexplained.

Final Directions Of The Court

The High Court ultimately dismissed the petition, refusing to direct the extension or renewal of the bank guarantee. It clarified that its observations were limited to the Section 9 stage and would not influence the merits of the pending challenge under Section 34 or the stay application under Section 36(3). The court allowed the respondent and its liquidators the liberty to act in accordance with the arbitral award, subject to any future orders in the pending proceedings.

Date of Decision: June 15, 2026