The Arbitrator Never Knew The Guarantees Had Already Been Cashed
Rs 3.5 crore of bank guarantees were invoked in September 2017. The award came in December, silent about it. The Supreme Court has left the money in the High Court's Registry.
The Court dismissed the appeal and upheld the direction that the appellant deposit Rs 3.5 crore with the Registry of the High Court. Prima facie there was no counter claim and no finding that the mobilisation advance was not used, so letting the appellant hold the money pending the Section 34 challenge would unjustly enrich it. This was a rare and compelling case where relief under Section 9 was needed even on the higher post-award threshold.
- Section 9 survives the award. It is available after an award, on a higher threshold.
- The award was silent on the encashment, and that silence is what made the case rare.
- Deposit, not payment. The money goes to the Registry, so the Section 34 challenge stays worth making.
- Moving with reasonable expedition mattered — the respondent did, and the Court said so.
- Court
- Supreme Court of India
- Bench
- Justice Alok Aradhe, Justice K.V. Viswanathan
- Citation
- 2026 INSC 828
- Reported
- [2026] 8 S.C.R. 623
- Case
- Civil Appeal No. 5819 of 2025
- Decided
- 11 August 2026
- Outcome
- Appeal dismissed; Rs 3.5 crore to be deposited with the High Court Registry
How the money moved
Under a memorandum of understanding the respondent was given Rs 3.5 crore as mobilisation advance against bank guarantees. A dispute arose and arbitration was invoked.
On a first Section 9 application the High Court recorded that the appellant would not invoke the guarantees provided they were kept alive, and that if the arbitrator found the appellant entitled to recover, they could be invoked.
The respondent could not keep them alive, and they were invoked in September 2017. The award came on 5 December 2017, dismissing the respondent's claims — and completely oblivious of the encashment.
Why the money was ordered into court
There was prima facie no counter claim by the appellant, and no finding by the arbitrator that the mobilisation advance against which the guarantees were given had not been utilised. Whether such a finding exists will finally be decided in the Section 34 application.
In that light, permitting the appellant to hold on to the money pending the Section 34 application would unjustly enrich it, and would also run against the High Court's own earlier order.
The earlier order of 1 November 2017 did not stand in the respondent's way, because these proceedings arose from a Section 9 application made after the award.
The threshold after an award
Section 9 relief after an award is judged on a higher threshold. Even applying it, this was a rare and compelling case where the directions made below were required to prevent irreparable prejudice and to preserve the efficacy of the Section 34 challenge.
The High Court had not acted arbitrarily. It was a judicious exercise on a prima facie case, balance of convenience and irreparable prejudice, and the respondent had moved with reasonable expedition.
Relief of this kind, the Court said, furthers the efficacy of arbitration as a form of dispute resolution and keeps faith with the purpose of interim measures under Section 9.
Who argued it
Appearances as recorded in the judgment of the Court.
Frequently asked
Can I apply under Section 9 after the award is made?
Yes, but on a higher threshold. The Court found this a rare and compelling case that met it.
What happened to the Rs 3.5 crore?
The appellant was directed to deposit it with the Registry of the High Court, pending the Section 34 application.
Seeking Section 9 relief once the award is out
- Move quickly. Reasonable expedition was expressly counted in the respondent's favour.
- Show what the award does not decide; silence in the award was the whole foundation here.
- Frame the relief as preservation, not recovery — a deposit with the Registry, not payment over.
- Address the higher post-award threshold head-on rather than arguing the ordinary Section 9 standard.
Source. Supreme Court of India, 2026 INSC 828, [2026] 8 S.C.R. 623, Civil Appeal No. 5819 of 2025, decided 11 August 2026 by Justice Alok Aradhe, Justice K.V. Viswanathan. This explainer is written from the judgment text as reported.
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