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NHPC Limited v. M/s. Patel Engineering Limited

Civil Appeal · 2018 INSC 1124Decided 30 Nov 2018
Civil Appeal No. 11700 of 2018
Dr. Justice D.Y. Chandrachud · Justice M.R. Shah

Background

An arbitral tribunal had made an award in favour of the respondent. While the appellant's statutory limitation period to challenge that award under Section 34 had not yet expired, the High Court allowed the respondent's post-award application under Section 9, directing the appellant to release the awarded amount (against a bank guarantee). The appellant argued this intervention was premature and beyond the scope of Section 9.

Decision Breakdown

During the Supreme Court hearing, it emerged that the arbitral award itself had since been set aside by the Additional District Judge in a Section 34 proceeding. Since the very foundation of the High Court's Section 9 order, a subsisting award, no longer existed, the Court held that the basis for the High Court's order had ceased to survive, and set aside that order. The Court was careful to clarify that this was not an expression of opinion on whether the High Court had otherwise exceeded its jurisdiction, and it kept open all rights and contentions of the parties regarding the challenge to the arbitral award. The appeal was disposed of with no costs.

Lesson Learnt

An interim order granted under Section 9 of the Arbitration Act to protect an arbitral award becomes infructuous once that underlying award is itself set aside in a Section 34 challenge: interim relief cannot outlive the award it was meant to protect.

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

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