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National Projects Construction Corporation Ltd. v. Ishvakoo (India) Pvt. Ltd.

Civil Appeal · 2026 INSC 828Decided 11 Aug 2026
Civil Appeal No. 5819 of 2025
Justice K.V. Viswanathan · Justice Alok Aradhe · Justice Arun Palli

Background

The two companies had a 2002 agreement for bus terminus and heritage-corridor works in Agra, under which Ishvakoo received a Rs. 3.5 crore mobilisation advance backed by bank guarantees. After disputes went to arbitration, National Projects invoked and encashed the bank guarantees in 2017 because Ishvakoo failed to keep them alive as it had undertaken to the Delhi High Court back in 2005. The arbitrator later dismissed Ishvakoo's claims (including for discharge of the guarantees), but did not address whether the guarantee amount should nonetheless be returned once the underlying advance was found to have been used. Ishvakoo then went to the High Court under Section 9 seeking return of the Rs. 3.5 crore pending its Section 34 challenge to the award, and won at both the Single Judge and Division Bench stage.

Decision Breakdown

The Supreme Court examined whether an unsuccessful party in arbitration (an "Award Debtor" of sorts, here really the losing claimant) can even seek Section 9 interim relief after losing, and relied on its recent ruling in Home Care Retail Marts v. Haresh N. Sanghavi holding that such relief is legally permissible in rare and compelling cases, though subject to a higher threshold. Applying that standard, the Court found several factors favoured Ishvakoo: no counter-claim had ever been filed by National Projects, the arbitrator's findings did not actually decide whether Ishvakoo was entitled to discharge of the guarantees, and the arbitrator appeared unaware the guarantees had already been encashed before the award was even passed. Since letting National Projects keep the money pending the Section 34 challenge would amount to unjust enrichment and would also conflict with the 2005 High Court order's own terms, the Supreme Court held the High Court had properly exercised its Section 9 discretion. The appeal was dismissed, and National Projects was directed to deposit Rs. 3.5 crore with the High Court Registry within four weeks, to be kept in an interest-bearing fixed deposit until the Section 34 proceedings are decided.

Lesson Learnt

Even a party that has lost in arbitration can, in rare and compelling cases, still seek interim protection from the courts (under Section 9) while its challenge to the award is pending, losing an arbitration does not automatically leave a party without any interim remedy, especially where allowing the other side to keep disputed money would amount to unjust enrichment.

Official source (sci.gov.in)View Judgment (PDF)

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