Unsuccessful Party Cannot Seek Continuation Of Interim Arrangement Merely Because It Has Challenged Arbitral Award: Bombay High Court

The Court held that an unsuccessful party cannot claim interim protection as a matter of course merely because it has instituted proceedings under Section 34 challenging the award.

The Court was hearing a petition under Section 9 of the Arbitration and Conciliation Act, 1996, filed by ONGC seeking continuation of a bank guarantee worth USD 14.82 million after an arbitral tribunal rejected ONGC's claim for liquidated damages and directed the return of the bank guarantee to Swiber.

A Bench of Justice Amit Borkar, relying on the Apex Court’s judgment in Home Care Retail Marts (P) Ltd. v. Haresh N. Sanghavi (2026), observed: “The Supreme Court in Home Care Retail Marts has clarified that even a party which has not succeeded before the Arbitral Tribunal is not barred from invoking Section 9 after the award. At the same time, the Supreme Court has also made it clear that such power cannot be exercised in a routine manner. The Court has observed that where the applicant is faced with an adverse award, the threshold for obtaining interim protection becomes much higher”.

Therefore, the Bench accordingly held: “…an unsuccessful party cannot point out that a petition under Section 34 has been filed and seek continuation of the interim arrangement. If such a principle is accepted, every unsuccessful party would become entitled to interim protection merely because it has challenged the award.”

Zubin Behramkamdin, Senior Advocate, appeared for the petitioner, while Venkatesh Dhond, Senior Advocate, represented the respondents.

Background

ONGC and Swiber had entered into a contract in 2010 for the execution of offshore works in the Bombay High region. The contract contained provisions permitting ONGC to recover liquidated damages in case of delay and required Swiber to furnish a bank guarantee equivalent to the maximum liquidated damages recoverable under the contract.

Disputes between the parties were referred to arbitration. By an award dated 30 September 2025, the arbitral tribunal rejected ONGC's claim for liquidated damages, directed the return of the bank guarantee and awarded a net amount of USD 4,113,200 in favour of Swiber. ONGC challenged the award under Section 34 of the Arbitration and Conciliation Act and subsequently sought continuation of the bank guarantee through the present Section 9 proceedings.

Court's Observations

The Court referred to the Supreme Court's decision in Home Care Retail Marts and observed that while an unsuccessful party is not barred from invoking Section 9 after an award, a significantly higher threshold applies.

The Court observed: “Apart from establishing a prima facie case, balance of convenience and likelihood of irreparable injury, the applicant must demonstrate the existence of exceptional circumstances which are capable of justifying departure from the normal rule.”

Emphasising the limited nature of post-award intervention, the Court further held: “The real question is whether the circumstances are so extraordinary that refusal of interim protection would result in a situation which cannot later be corrected even if the challenge succeeds.”

Rejecting ONGC's principal contention, the Court held that mere filing of a challenge petition against an arbitral award cannot itself justify continuation of pre-award interim arrangements.

The Bench observed: “The Court has observed that where the applicant is faced with an adverse award, the threshold for obtaining interim protection becomes much higher.”

The Court further reiterated: “Therefore, an unsuccessful party cannot point out that a petition under Section 34 has been filed and seek continuation of the interim arrangement.”

A significant factor weighed against ONGC was the existence of consent terms entered into by the parties in earlier proceedings.

The Court noted that under the consent terms recorded by the Court in 2016, the parties had agreed that the bank guarantee would remain valid only for 120 days after issuance of the arbitral award. According to the Court, that period had already expired.

The Bench observed: “The object of Section 9 is to preserve existing securities so that the subject matter of the dispute remains protected pending adjudication. It is not intended to extend existing rights beyond limits agreed upon by the parties.”

The Court held that continuation of the guarantee beyond the agreed period would effectively alter the parties' contractual arrangement.

The Court also found significance in ONGC's failure to specifically disclose the consent terms in the present proceedings despite relying upon them in connected proceedings.

The Bench observed: “In matters involving discretionary jurisdiction, a party approaching the Court is expected to place before the Court all material facts, including facts which may not support its own case.”

The Court further noted: “The Court exercises discretionary powers not only on the basis of legal rights but also on the point of fairness.”

According to the Court, the omission was a relevant factor while considering whether extraordinary post-award relief ought to be granted.

ONGC had argued that Swiber's liquidation proceedings in Singapore justified continuation of the bank guarantee because recovery may otherwise become difficult.

While acknowledging the concern, the Court held that liquidation by itself could not create a legal right to continuation of security.

The Court observed: “The real issue is not whether Swiber is in liquidation. The real issue is whether ONGC presently possesses a legally enforceable right to insist that this particular bank guarantee should continue beyond the period which had been agreed between the parties.”

The Court further held: “The fact of liquidation, standing alone, is insufficient to elevate the present matter to the category of a compelling case contemplated by the Supreme Court in Home Care Retail Marts.”

The Court accepted that ONGC had raised several grounds challenging the arbitral award, including issues relating to liquidated damages and delay analysis.

However, the Bench held that an arguable case alone was insufficient for the grant of post-award interim protection.

The Court observed: “The challenge undoubtedly raises arguable issues. Some of the contentions advanced by ONGC may require examination in the Section 34 proceedings. However, an arguable challenge is not enough.”

The Court further noted: “The judgment in Home Care Retail Marts requires something much more. It requires existence of circumstances which are truly exceptional.”

Conclusion

Holding that ONGC had failed to establish the exceptional and compelling circumstances required for the grant of post-award protection under Section 9, the Bombay High Court declined to direct continuation of the bank guarantee.

The Court held that the existence of a pending Section 34 challenge, coupled with concerns regarding recoverability, was insufficient to override the arbitral award and the parties' own consent arrangement governing the duration of the bank guarantee.

Cause Title: Oil and Natural Gas Corporation Limited v. Swiber Offshore Construction PTE Limited (Neutral Citation: 2026:BHC-OS:13025)

Appearances

Petitioner: Zubin Behramkamdin, Senior Advocate with Shreya Gupta, Abhijeet Sadikale, Sanjana Kattoor.

Respondent: Venkatesh Dhond, Senior Advocate with Vinodini Srinivasan, Ganesh Chandru, Siddharth Agrawal, Dharmesh S. Jain, Shashwat Dhyani and Arpita Tiwari.

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