Section 9 Arbitration Act Not For Interim Recovery Based On Bill Certification: Delhi High Court

The Delhi High Court on 1 July held that certification or processing of bills does not, by itself, amount to crystallised liability warranting interim monetary directions under Section 9 of the Arbitration and Conciliation Act, 1996, particularly where disputes relating to deductions, delays and adjustments remain unresolved.

A Division Bench of Justices Anil Kshetrapal and Amit Mahajan dismissed SLR Construction Pvt. Ltd.'s appeal against the order refusing interim relief for release of Rs. 2.08 crore in relation to a pipeline terminal works contract awarded by GAIL (India) Ltd. It observed:

“Mere certification or processing of bills by the Project Management Consultant, or internal processing of invoices by GAIL, cannot by themselves be treated as conclusive determination of inter se contractual rights and liabilities so as to justify grant of payment directions under Section 9 of the A&C Act.”

GAIL issued a tender on 15 June 2017 for execution of Terminal Station Works at Gorakhpur under the Phulpur-Haldia Pipeline Phase-I Project and awarded the contract to SLR Construction for Rs. 18.01 crore (excluding GST) under a Letter of Acceptance dated 28 May 2018.

SLR alleged that execution was delayed due to non-availability of encumbrance-free sites, restricted access, delayed drawings, pipeline interferences and COVID-19 disruptions. It stated that it completed the work on 30 November 2022 and that the defect liability period expired on 29 November 2023.

It further submitted its 24th and final bill on 14 February 2024 for Rs. 4.32 crore. It claimed that MECON Ltd., the Project Management Consultant, certified the bill on 25 February 2025 and recommended release of Rs. 2.74 crore. It relied on deduction of TDS on 31 March 2025, issuance of a provisional completion certificate and processing of invoices on the Bhim portal to contend that liability stood acknowledged.

Moreover, it contended that instead of releasing payment, GAIL sought cross-adjustments against two unrelated DDPL contracts, prompting it to approach the High Court under Section 9. That petition was disposed of on 23 May 2025 after GAIL undertook not to make such recoveries.

SLR later claimed that the final bill was reprocessed and re-certified on 6 August 2025, reflecting Rs. 2,08,07,652.57 as payable, but payment was still not released. It again approached the Court under Section 9 seeking release of the amount and protection against cross-recoveries.

A Single-Judge dismissed the petition on 23 April 2026, leading to the present appeal under Section 37.

Before the Division Bench, SLR argued that the amount constituted admitted dues, relying on certification of the final bill, TDS deduction and invoice processing. GAIL countered that disputes relating to delays, deductions, retentions, performance and financial liabilities required adjudication through arbitration and that no exceptional circumstances justified interim monetary relief.

The Bench accepted GAIL's stand and reiterated that Section 9 is intended to preserve the subject matter of arbitration and not to grant final relief. It rejected SLR's contention that no dispute existed, noting that the pleadings themselves disclosed claims regarding wrongful withholding, illegal deductions, arbitrary retentions and cross-adjustments requiring adjudication. It observed:

“Indeed, the very foundation of the petition proceeds on assertions of wrongful withholding, illegal deductions, arbitrary retentions and improper conduct on the part of GAIL, all of which unmistakably demonstrate existence of disputes requiring adjudication.”

Further, the judges held that TDS deduction, completion certificates and GST-related assertions were merely evidentiary factors and could not substitute arbitral determination. They also noted that SLR had not demonstrated any imminent dissipation of assets or risk of the award becoming unenforceable.

Accordingly, the Division Bench found no perversity, patent illegality or jurisdictional error in the order of the Single Judge, and dismissed the appeal. It clarified that its observations would not influence the merits of the arbitral proceedings.

Appearances for appellant (M/s SLR Construction Pvt. Ltd.): Advocates Rajesh Mohan Sinha, Prateek Mohan Sinha, Namita Sinha, Nandini Harsh and Krishnendu Das.

Appearances for respondents (GAIL (India) Ltd. & Anr.): Advocates Deepayan Mandal, Mridul Bansal, Monu, Naman Varma and Aryan Ahmed.