Unreasoned ex parte Section 17 status quo orders passed without demonstrated urgency cannot stand.

The National Highways Authority of India (“NHAI”) awarded the respondent an Engineering, Procurement and Construction contract dated 19 January 2024 for construction of a section of the Vadodara–Mumbai Expressway in Gujarat.

Disputes concerning performance of the works led to successive settlement agreements and termination notices.

After the Division Bench permitted NHAI to pass an appropriate order pursuant to its termination notice and, if necessary, issue a fresh tender, NHAI terminated the contract on 17 January 2026 and issued a request for proposal for completing the balance works.

A three-member arbitral tribunal was subsequently constituted.

During the arbitration, NHAI issued a show-cause notice dated 6 July 2026 proposing to declare the respondent a “Non-Performer” and initiate debarment proceedings. The respondent replied on 16 July 2026 and sought a personal hearing.

On 28 July 2026, the respondent filed an application under Section 17 of the Arbitration and Conciliation Act, 1996 (“the Act”), seeking, inter alia, suspension of the termination and restraint against its declaration as a Non-Performer or debarment.

Although the application was served on NHAI by email on 28 July 2026, the arbitral tribunal, without hearing NHAI or receiving its response, passed an ex parte ad-interim order on 30 July 2026 directing the parties to “maintain status quo” as existing on 28 July 2026.

NHAI challenged that order under Section 37(2)(b) of the Act.

The respondent contended that immediate protection was necessary because a debarment order could cause serious and irreversible reputational and commercial harm.

Whether the arbitral tribunal was justified in granting ex parte ad-interim relief under Section 17 of the Act without affording NHAI an opportunity of hearing or considering its response?

Whether the tribunal’s direction to “maintain status quo” could be sustained when the impugned order contained no reasons, did not consider urgency or a prima facie case, and failed to define the scope of the direction?

Whether the expansive reliefs sought under Section 17, including relief concerning a termination effected in January 2026, were appropriate for interim adjudication?

The Court applied Section 37(2)(b) of the Arbitration and Conciliation Act, 1996, which permits an appeal against an order of an arbitral tribunal granting or refusing to grant an interim measure under Section 17.

Section 17 empowers an arbitral tribunal to grant interim measures, but such relief must be judicially exercised on the basis of relevant considerations, including urgency, a prima facie case, and the applicable principles governing interim relief.

An ex parte interim order must be supported by reasons, must be narrowly and precisely framed, and ordinarily cannot be sustained where the affected party has not been heard despite the absence of demonstrated urgency.

Relief under Section 17 is interim in character and should not ordinarily assume the form of substantive or final relief, particularly in relation to a termination already effected.

The Court found that the tribunal’s order dated 30 July 2026 was unreasoned and did not examine either urgency or the existence of a prima facie case.

NHAI had received the Section 17 application only two days earlier and had not been afforded an opportunity to respond or be heard.

Although the respondent claimed urgency on the ground that debarment could be ordered at any time after the reply to the show-cause notice, NHAI stated that no debarment order would be passed before 12 August 2026 and that a hearing on debarment had not yet been fixed.

In these circumstances, the Court considered that the parties could be adequately heard by the tribunal on the already-fixed date.

The Court also expressed doubt regarding the omnibus prayers seeking, among other reliefs, suspension of a termination completed in January 2026, observing that such reliefs were substantive and final in nature rather than genuinely interim.

The tribunal’s undefined “status quo” direction was therefore unsustainable, particularly since one co-arbitrator had indicated that he had not consented to the ex parte protection.

The High Court set aside the arbitral tribunal’s ad-interim order dated 30 July 2026 directing NHAI to maintain status quo.

The parties were directed to complete pleadings concerning the Section 17 application by 11 August 2026 and advance full arguments before the tribunal on 12 August 2026; the tribunal was requested to hear and decide the application on that date without granting an adjournment or indulgence.

The order was set aside in view, particularly, of NHAI’s undertaking that the respondent would not be debarred before 12 August 2026.

The Court clarified that its observations were confined to the appeal and would not influence the tribunal’s independent adjudication on the merits.