Post-Award Section 9 Relief Permissible for Unsuccessful Counter-Claimant Based on Factual Findings and Contractual Security

The Petitioner, ONGC, entered into a contract with the Respondent Joint Venture for the construction and commissioning of a process platform.

Due to a delay of over 220 days, disputes arose regarding liquidated damages (LD). Per an amendment to the Contract (Clause 6.3.4), the Respondent furnished Bank Guarantees (BGs) covering 110% of the LD claim to be kept alive until the dispute was "finally settled".

On March 10, 2026, an Arbitral Tribunal issued an award rejecting ONGC’s counterclaim for LD and directed the return of the BGs.

ONGC challenged this award under Section 34 of the Arbitration and Conciliation Act, 1996, and filed the present Section 9 petition seeking to restrain the return of the BGs and ensure their renewal pending the Section 34 proceedings.

1. Whether an unsuccessful party in an arbitration can seek interim protection under Section 9 of the Act after the passing of the award.

2. Whether the Petitioner has established "rare and compelling circumstances" to justify the continuation of Bank Guarantees despite the Arbitral Tribunal directing their return.

Section 9 of the Arbitration and Conciliation Act, 1996, which allows a party to seek interim measures until an award is enforced under Section 36.

The principle established in Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi, that while an unsuccessful party may invoke Section 9 post-award, they must meet a higher standard of "rare and compelling circumstances".

Section 74 of the Indian Contract Act, 1872 regarding liquidated damages.

The doctrine from Kailash Nath Associates v. DDA (requiring proof of loss unless impossible) versus Construction & Design Services v. DDA (presuming loss in public utility projects).

The Court noted that the Arbitral Tribunal paradoxically found the Respondent responsible for the delay and ONGC entitled to LD under the contract, yet rejected the claim solely for lack of proof of actual loss.

The Court reasoned that the Section 34 challenge was "exceptionally strong" because the project involved national energy infrastructure (public utility), where the Construction & Design Services precedent might allow for presumed loss.

The Court distinguished the Swiber case, noting that here, Clause 6.3.4 was a specific agreement to substitute cash deductions with BGs until "final settlement".

The Court found the balance of convenience favoured ONGC because one JV partner is a foreign Indonesian entity, making future recovery difficult if the BGs—the only available security—were allowed to lapse.

The Court directed the Respondent to renew and keep alive all Bank Guarantees furnished under Clause 6.3.4 until the Section 34 petition is finally decided; renewal must occur at least 15 days before expiry, and Respondents are restrained from canceling security.

ONGC was restrained from invoking the BGs solely on the basis of this order.