Arbitration Invocation Waived and Section 9 Petition Converted to Section 17 Application Upon Party Consensus

In brief

The question

1. Whether interim protection should be granted to secure the encashed Bank Guarantee amounts pending arbitration

The court held

The Court directed Respondent No. 1 to deposit the encashed amounts into the Petitioner’s ICICI Bank account, with the Petitioner prohibited from withdrawing the funds pending a decision by the Arbitral Tribunal

It also directed

The Court waived the requirements of Section 21 and Section 11, appointing a three-member Tribunal consisting of Mr. Justice G.P. Mittal (Retd.) and Mr. S.D. Sharma (Retd. Director, CPWD), who are to appoint a Presiding Arbitrator within two weeks. The Section 9 petition was directed to be treated as a Section 17 application before the Tribunal, to be decided within two months of the Tribunal's constitution. The petition was disposed of with all contentions left open

01Facts

The Petitioner filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain Respondent No. 1 (RVNL) from encashing five Bank Guarantees totaling approximately ₹22.7 crores

pp. 1-2

Despite a stay order granted by the Court on 21.04.2026, the Respondents encashed the guarantees, claiming the action occurred prior to receiving the formal court order

p. 2

The dispute arose from a Contract Agreement dated 30.08.2024 involving claims of approximately ₹170 Crores

pp. 3-4

02Issues

i.1. Whether interim protection should be granted to secure the encashed Bank Guarantee amounts pending arbitration

pp. 2-3

ii.2. Whether the dispute should be referred to an Arbitral Tribunal despite the absence of a Section 21 notice and a Section 11 petition

pp. 3-4

03Law Applied

The Court primarily applied Section 9 of the Arbitration and Conciliation Act, 1996, which empowers the Court to grant interim measures of protection

p. 1

Section 17 of the Act, which allows an Arbitral Tribunal to order interim measures

p. 5

The principle of Party Autonomy was utilized to waive the statutory requirements of Section 21 (Notice of Arbitration) and Section 11 (Appointment of Arbitrators) because the parties were ad idem (in agreement) regarding the reference to arbitration

p. 4

Clause 20.3 of the General Conditions of Contract (GCC) served as the underlying arbitration agreement

p. 3

Provisions in the judgment · 5 · Linked ones open on LawLens

Arbitration and Conciliation Act, 1996 Section 9 Section 11 Section 12 Section 17 Section 21

04Reasoning

The Court noted that since the Bank Guarantees had already been encashed despite a stay, a restorative interim measure was necessary. Respondent No. 1 offered to deposit the encashed funds into the Petitioner’s account, and the Petitioner undertook not to utilize those funds until the Arbitral Tribunal issued further directions

pp. 2-3

Regarding the constitution of the tribunal, the Court observed that since both parties agreed to arbitrate and had already identified their respective nominee arbitrators, insisting on the formal procedure of a Section 21 notice and a Section 11 petition would cause "undue delay"

p. 4

Consequently, the Court exercised its discretion to fast-track the tribunal's formation to ensure the Section 9 petition could be effectively converted into a Section 17 application

p. 5