A Section 36(3) stay application cannot compel the release of bank guarantees.

The petitioner challenged an arbitral award dated 29 November 2025 and obtained an interim stay of the findings against it, subject to keeping certain bank guarantees (BGs) alive.

It sought, under Section 36(3) of the Arbitration and Conciliation Act, 1996, release of BGs for liquidated damages, performance, and interest. In exchange, it offered to deposit ₹43,14,30,091 towards liquidated damages and ₹8,96,79,535 towards interest, and to permit set-off of ₹1,20,24,691 awarded to ONGC.

ONGC opposed the requested directions, arguing that Section 36(3) did not permit mandatory relief and noting that the petitioner had earlier sought similar relief under Section 9, without success.

The Court had disposed of that Section 9 petition after recording ONGC’s undertaking not to act on its email if the BGs were extended.

1. Whether the Court, while considering a stay application under Section 36(3) of the Act, could direct ONGC to release the BGs in return for the petitioner’s proposed deposits and set-off.

2. Whether the petitioner’s earlier Section 9 proceedings affected its request for substantially similar relief under Section 36(3).

Section 36(2) provides that filing a Section 34 application does not by itself make an arbitral award unenforceable; a separate stay order is required. Under Section 36(3), the Court may stay the operation of an award, subject to conditions it considers fit and for reasons recorded in writing; the provision concerns a stay, not affirmative enforcement relief.

Section 36(1) provides for enforcement of an award as a decree in accordance with the CPC, and the Court considered that relief akin to enforcement could be pursued through Section 36(1) and Order XXI of the CPC.

The Court also considered Home Care Retail Mart Pvt. Ltd. v. Haresh N. Sanghavi, which recognised an unsuccessful arbitration party’s ability to seek interim measures under Section 9, but held that it did not support ONGC’s contention on the scope of Section 36(3).

Although the petitioner’s proposed deposits and set-off appeared capable of securing ONGC’s interests, the Court held that equitable considerations could not expand Section 36(3) to authorise mandatory directions releasing the BGs.

The requested relief was akin to enforcement of the award and therefore was not properly sought through an application for stay under Section 36(3); treating it as available under that provision would undermine Section 36(1) and Order XXI of the CPC.

The Court found that Home Care Retail Mart concerned access to Section 9 relief and did not resolve the issue before it.

It also noted the petitioner’s earlier Section 9 application for similar relief, which had been disposed of on the basis of the parties’ recorded statements regarding extension of the BGs.

It granted the petitioner one week to extend the BGs and left open the question whether renewal costs may be imposed on the opposing party if the renewing party ultimately succeeds.

The main petition was listed for 17 November 2026.