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Ishvakoo India Can Seek Relief Against :
In a significant ruling on , a bench comprising Justice K. V. Viswanathan and Justice Alok Aradhe upheld the ’s order directing to deposit Rs. 3.5 crores into the court registry pending its challenge to an arbitral award under . The Court held that an can seek in rare and compelling cases to prevent .
A Dispute Over Mobilization Advance
The case originated from a Memorandum of Understanding between (appellant) and (respondent) for a bus terminus project in Agra. The respondent received a Rs. 3.5 crores mobilization advance against bank guarantees. In , the recorded an undertaking that the respondent would keep the bank guarantees alive, with the appellant permitted to encash them only if the arbitrator found the appellant entitled to recovery.
In , the appellant invoked the bank guarantees after the respondent failed to extend them. The arbitrator passed its award on , dismissing the respondent's claims—but notably, no counterclaim was filed by the appellant, and the award did not address whether the mobilization advance had been used. The respondent challenged the award under Section 34 and later filed a fresh application seeking return of the amount.
The Legal Question: Post-Award Relief for a Losing Party
The Central question shifted on legal technicalities: whether an unsuccessful party in arbitration can maintain a petition after the award and seek interim protection.
The appellant argued that could not be used to grant final relief pending Section 34 review. It contended that the High Court overstepped by effectively adjudicating the merits of the Section 34 challenge at an interlocutory stage. The respondent countered by emphasizing that no counterclaim at all was filed and that there was no finding of non-utilization of the advance, making the appellant's retention of the amount unjust.
Court’s Analysis: Rare Cases DNA for
The relying on its earlier decisions in Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi (2026) and Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited (2022). In Home Care , the Court had held that an unsuccessful party may invoke in rare and compelling cases to prevent . The Essar House decision further underlines that the presence of a prima facie case, , and test must be satisfied.
Applying these standards, the Court noted that the respondent’s case met a higher threshold. The absence of any counterclaim from the appellant, the award’s silence on the actual utilization of the mobilisation advance, and the specific language of the High Court order—which essentially conditional retention on a on an award finding for recovery—created a rare circumstance. The Court observed that allowing the appellant to hold the money pending the Section 34 challenge would result in “enriching the appellant unjustly.”
Key Observations
“The High Court was justified in observing that permitting the appellant to hold on the money pending Section 34 application, would be unjustly enriching the appellant.”
“This Court, while holding the application to be maintainable, has sounded a note of caution that the threshold for grant of will be higher in case the application is moved by an … a court may, in rare and compelling cases, permit the unsuccessful party to invoke to prevent and preserve the efficacy of the challenge under Section 34.”
The Verdict
The dismissed the appeal, finding that the High Court’s direction to deposit the amount was a just and reasonable interim measure. The Court explicitly rejected the appellant's arguments that the jurisdiction had been misused.
The case was disposed of with a direction to the appellant to deposit the full Rs. 3.5 crores with the Registry within four weeks. The registry shall keep the amount in a fixed deposit until the ultimate disposal of the Section 34 application.
Implication: The judgment reinforces protection of the carefully controlled by the Court, ensuring that bank guarantee amounts are not a windfall for the award holder pending challenge, especially when the original premise for the guarantees—the demonstration of entitlement by award—remains unproven.
This article is based on the judgment in .
