ONGC Cannot Seek Re-Deposit Of ₹42.89 Crore Withdrawn With Its “No Objection”: AP High Court

The Andhra Pradesh High Court on 7 May held that Oil and Natural Gas Corporation Ltd. (ONGC) cannot compel Deep Industries Ltd. (DIL) to re-deposit Rs. 42.89 crore or furnish security for amounts withdrawn in arbitration proceedings, particularly since ONGC had earlier given a written “no objection” permitting withdrawal without any condition.

A Division Bench of Justices Ravi Nath Tilhari and Balaji Medamalli dismissed ONGC's interim application in its pending Section 37 appeal against an arbitral award in favour of Deep Industries Ltd. It held:

“It is for the first time after filing the counter in I.A.No.2 of 2025 that the stand has been taken in the rejoinder affidavit that, the deponent of the counter, official of ONGC had not been instructed to give „no objection‟ to withdraw the amount by DIL. Under the circumstances, the plea taken appears to us to be well afterthought to get over the "no objection" made before the learned Special Judge by way of writing in the counter to permit withdrawal to DIL.”

The dispute arose from commercial contracts between ONGC and Deep Industries Ltd. in the oil and gas sector, which led to arbitration proceedings and an arbitral award dated 19 May 2022 partly allowing claims in favour of Deep Industries.

During the Section 34 proceedings, the Commercial Court directed ONGC to deposit 75% of the awarded amount, and ONGC deposited Rs. 42,89,88,897.37 accordingly.

In its counter dated 8 May 2023, ONGC stated that it had no objection to Deep Industries withdrawing the amount. It also noted that Deep Industries continued executing ONGC contracts worth over Rs. 1,000 crore and had undertaken to re-deposit the amount if directed later. Based on this stand, the Commercial Court permitted withdrawal without insisting on security. The Commercial Court dismissed ONGC's Section 34 challenge on 30 December 2024 and upheld the arbitral award.

ONGC then filed the present appeal under Section 37 read with Section 13 of the Commercial Courts Act, 2015 and sought a direction to Deep Industries to re-deposit the amount or furnish a bank guarantee.

Appearing for ONGC, Solicitor General Tushar Mehta argued that the officer who gave the earlier “no objection” lacked authority and that unconditional withdrawal violated settled principles governing arbitral awards. ONGC also relied on Deep Industries' financial statements showing losses.

Deep Industries, represented by Senior Advocate S. Sriram, argued that ONGC never challenged the withdrawal order for nearly three years and raised objections only at the rejoinder stage. It further submitted that the losses were accounting losses and that ongoing ONGC contracts exceeded Rs. 1,000 crore.

The High Court accepted Deep Industries' submissions and held that ONGC failed to show any change in circumstances warranting interference with the earlier order. The Bench noted that no condition for security was sought when withdrawal was permitted and held that finality must attach to judicial orders. It held:

“We are of the view that some sanctity is to be attached to the Court proceedings, and its Orders to the Order dated 08.05.2023, which was passed almost three years back, recording thereunder what could not be proved to be incorrect. The finality is also to be given to the Court's order which should not be reopened on unfounded averments.”

Accordingly, the High Court rejected the application. However, it clarified that Deep Industries would remain bound by its undertaking to re-deposit the amount if so directed in the pending appeal.

Appearances for petitioner (Oil and Natural Gas Corporation Ltd.): Solicitor General of India Tushar Mehta and Advocate D.S. Sivadarshan.

Appearances for respondent (Deep Industries Ltd.): Senior Advocate S. Sriram; Advocates A. Akash and Vivek Chandrasekhar.