Unsuccessful Party Can Seek Interim Relief Under Arbitration Act: Supreme Court

The Supreme Court of India on Friday held that any party to an arbitration agreement, including one that has been unsuccessful in arbitral proceedings and has no enforceable award in its favour, is entitled to seek interim relief under Section 9 of the Arbitration and Conciliation Act, 1996.

It clarified that such relief can be sought at the post-award stage but before enforcement.

A Bench of Justice Manmohan and Justice Manoj Misra observed that “Section 9 of the Act commences with the expression 'a party', which, by virtue of Section 2(h) of the Act, is defined as 'a party to an arbitration agreement'. Neither Section 2(h) nor Section 9 of the Act draws any distinction between a successful and an unsuccessful party in arbitration proceedings.”

"The object of incorporating definitions within a statute is to assign a precise and particular meaning to terms in the context of that enactment. It is only in situations where a term remains undefined in the statute that the Court assumes the duty of ascertaining and delineating its meaning through principles of interpretation", it added.

The court said reading such a distinction into the law would create an anomalous situation.

“Moreover, to assign a different meaning to the same expression, namely 'a party', in the context of interim measures sought after the arbitral award has been rendered but prior to its enforcement, would result in an anomalous situation. Such an approach would imply that before the award is delivered, the term 'a party' encompasses all parties to the arbitration agreement, whereas after the award, the same expression would acquire a narrower connotation, referring only to the successful party in the arbitration. This Court is of the view that the statutory framework does not prescribe any qualification that would confine the availability of post-award relief under Section 9 solely to award-holders.,” it added.

The bench grounded its conclusion in a plain reading of the statute, noting that Section 9 itself draws no line between a winning party and one that has lost before the tribunal.

The dispute traces back to arbitration between Home Care Retail Marts Pvt. Ltd. and Haresh N. Sanghavi, where the company did not succeed in its claims.

Even so, once the award was delivered, it approached the court seeking interim protection to preserve the subject matter while its challenge to the award remained open.

That question, whether a losing party can still invoke Section 9 after the award, came up before the Supreme Court in a batch of appeals arising from special leave petitions. These were heard together to resolve the divergence in views taken by different High Courts.

The court framed the issue squarely. It had to decide whether a party that has been unsuccessful in arbitration and holds no enforceable award can maintain a Section 9 petition at the post-award stage.

Home Care Retail Marts argued that the statute deliberately uses the expression “a party” without qualification. It pointed out that if an award is eventually set aside, parties regain the ability to assert their rights, making it necessary to preserve the subject matter in the meantime.

Sanghavi, on the other hand, maintained that post-award interim relief serves a limited purpose. According to him, it is meant to secure the “fruits of the award” and should therefore be available only to the successful party. Allowing otherwise, he argued, would dilute finality and prolong disputes.

The Supreme Court was not persuaded by this narrower reading. It pointed out that Section 9 expressly allows interim measures before arbitration, during proceedings, and after the award but before enforcement. Nowhere does it carve out a separate rule for parties based on the outcome of arbitration.

Where the statutory language is clear, the court said, there is no room to introduce limitations through interpretation. Doing so would effectively rewrite the provision.

The court also noted that even on a purposive reading, situations can arise where a losing party requires protection. These may include cases involving lack of notice, allegations of fraud, or the risk that safeguards such as restraints on bank guarantees may lapse, causing irreparable harm while a challenge is pending.

Denying access to Section 9 in such circumstances, the court observed, could leave a party remediless. It noted that Sections 34 and 36 do not secure protection of the subject matter or the amount in dispute.

At the same time, the court underlined that the grant of such relief must be exercised with care, caution and circumspection. It said that in rare and compelling cases, an unsuccessful party may be permitted to seek interim protection, subject to established principles such as a prima facie case, balance of convenience, and irreparable harm.

Ultimately, the Supreme Court held that the judgments of the Bombay, Delhi, Madras, and Karnataka High Courts, insofar as they deny an opportunity to unsuccessful parties to apply for relief under Section 9, do not lay down good law.

It affirmed that the contrary views expressed by the Telangana, Gujarat, Punjab, and Haryana High Courts correctly reflect the statutory position.

For Petitioner: Advocates Mr. K.M. Nataraj, ASG; Senior Advocate Mr. Abhimanyu Bhandari

For Respondent: Senior Counsel Dr. Menaka Guruswamy