Written By: Apoorv Agarwal, Vrinda Tripathi
I. Introduction
The Indian Infrastructural landscape has been exponentially growing. Over the years, the synergy between public and private sector has enabled parties to execute various projects such as roads, airports and ports etc. The relationships between parties has also significantly changed the way commercial contracts operate. Nowadays, projects are supplemented with complex high value contractual arrangements involving multiple stakeholders which are intrinsically involved in mobilizing resources and raising capital. In such a scenario, disputes amongst parties can have far reaching consequences on the viability of future projects. Furthermore, construction contracts are inherently risky and are affected by uncertainties which cannot be predicted or controlled by any party. For instance, financial funding, compliances with various regulatory authorities and availability of labour often result in delays. Due to the complex nature of disputes and the commercial necessity of prompt resolution, arbitration has become a popular way of resolving construction disputes in India. However the effectiveness of the arbitral process is not guaranteed with just the presence of a forum but is also dependent on the legal system that facilitates the same. Indian courts for the past decade have taken a pro arbitration approach and have supported the legislative structure through decisions which have helped to resolve the ambiguity regarding provisions in the Arbitration and Conciliation Act, 1996 (Act )[1] and made arbitration an effective means of settling disputes.
One such important judicial development is the judgment in the recent case of Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghav [2] (hereinafter referred to as “Home Care”). In this landmark judgement the Hon’ble Supreme Court resolves the question of the ambit of Section 9 of the Act and addresses whether the unsuccessful party of an award can be granted interim relief after they have challenged the award. This ruling is significant in the realm of construction contracts and arbitration where; the execution of the award often overlaps with the challenge of the award. This essentially allows protection of project assets and maintenance of status quo.
II. Section 9: The Traditional Legal Position
Interim relief plays a crucial role in protecting the rights and interests of the parties. As per section 9 of the Act [3]courts are empowered to grant relief to parties before, during the arbitral proceedings or at any time before the arbitral award is enforced under Section 36 of the Act.[4] These interim orders may include appointment of a guardian in the arbitral proceeding or for the protection and preservation of assets/monetary claims which form the subject matter of the arbitration agreement. Prior to the Home Care (supra), the understating of the provision was narrow and only reserved for the party which had secured the arbitral award. This was logically being done to ensure that during the pendency of an application under section 34 or an appeal section 37, interim protection must be provided to the award holder, in order to ensure that the assets which form the subject matter of the dispute are not alienated. Therefore effectively safeguarding the “fruits of the arbitral award”.[5] This remedy was almost exclusively used by award holders to secure the awarded amount. Subsequently courts continued to enforce the perception that the losing party would only have a remedy under section 34/37 of the Act.
This contention was also raised before the Hon’ble Supreme court in the Home care (supra)wherein it was argued that remedy under section 9 was not available to the losing party. The respondent argued that where one party suffers an unfavorable arbitral award, it cannot at the same time avail itself of the relief provisions in the statute while exercising its right of challenging the award.
III. The Judicial shift: Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi
The judgment marks a significant shift in jurisprudence by holding that in certain circumstances, the relief under section 9 can also be granted to the losing party of an arbitral proceeding. Therefore establishing that the power to seek interim relief does not exclusively lie to the award holder and can be sought by either party. The court’s reasoning is founded on three key considerations. Firstly, the Hon’ble court considered the definition of “parties” as given under section 2(1)(h)[6] of the Act. It was observed that no such inference can be drawn from section 9 to conclude that the term “parties” refers exactly to the successful party. It was broad enough to include the unsuccessful party where circumstances warrant the grant of a relief. Moreover, Section 9[7] in its original enactment departs from the conventional text of the UNCITRAL Model Law [8] as it allows for post award interim orders to be granted. Therefore, such a deviation clearly shows that the Parliament was trying to confer larger powers through Section 9 when compared to those that were anticipated in the Model Law. Hence to interpret the law in any other way would limit its powers and would run contrary to the legislative intent.
Secondly, the court looked at the scheme of the act to conclude that section 9,36[9] and section 34[10] all operate in distinctive spheres. While section 34 and section 36 pertain to challenging the award and the enforcement. Section 9 has an independent purpose to protect the subject matter of the dispute. Thus, the Court ultimately decided that the provision of relief in section 9 was not limited by the status of the parties in terms of the award rendered.
Lastly, the court looks at the scenario where a losing party is denied the protection under section 9. It was concluded that in such a case, the party would be rendered remediless and won’t be able to restrain the parties from alienating the assets.[11] Therefore to avoid prejudice the court concluded that where the facts of the case are able to conform to the tripartite test of – prima facie evidence, balance of convenience and irreparable damage – parties, irrespective of their status, must be granted relief. Subsequently the court also overruled the line of reasoning taken up under Dirk India Pvt. Ltd. vs. Maharashtra State Electricity Generation Co. Ltd[12]and clarified that the applicability of the section does not rely on the chances of the applicant succeeding or failing before the tribunal but rather if the interim protection is necessary to preserve the subject matter of the dispute.
IV. Significance for Construction Contracts
In the context of construction contracts, the latest ruling is particularly significant. Unlike commercial suits, construction disputes are often layered between parties which involves not just the principal employer and the contractor but also sub-contractors, engineers, financiers etc. Consequently the legal and commercial consequences of an arbitral award extend beyond the immediate parties of the dispute. Therefore even after the award is rendered, challenges under section 34[13] and section 37[14] of the Act run for years before finality can be achieved. During this time period the rights and liabilities of the parties constantly evolve. Therefore, maintenance of status quo becomes essential to ensure that the final outcome of the judicial proceedings are not rendered ineffective due to the actions of the parties. Prior to the judgement of Home care (Supra), there was no remedy available to the parties. For instance issues like immediate invocation of the bank guarantees, termination of concessionaire rights and the rights of sub-contractors against the principal employer are often faced by parties till cases are pending and applications are decided. This causes great prejudice and places the parties challenging the award at a greater disadvantage. However, post the judgement, allowing either party to seek interim protection allows the “fruits of the award” to be preserved irrespective of the outcome.
This ruling is also vital for cases involving partially favorable arbitral awards and parties challenge different aspects of the award. It allows for parties involved to ensure that their respective rights are adequately protected. It is further pertinent to note that many construction contracts in India are sanctioned by the government and more often than not contractors, particularly of small and medium enterprises don’t hold the same bargaining power. They highly depend on the timely certification of work, release of payments and mobilization of funds. Access to site, maintenance of resources and cash flow is vital for the projects to be executed Several companies also face financial distress due to which many become insolvent before the award attains finality. Therefore the application of this judgement in such a situation would help parties maintain status quo specially in ongoing projects. Thus the broader interpretation adopted by the judgement reflects the practical realities of commercial projects. It also preserves the relationship between parties for any projects that would require cooperation for timely completion of the project. This judgement further clarifies that the grant of such a relief has to be used selectively and judiciously on a case-by-case analysis. This allows the court the opportunity to evaluate the facts and circumstances of each case prior to granting interim relief. Lastly, the impact of the judgement also aligns India with the International practice because it adopts an expansive and pro-arbitration reading of parties’ rights.
V. Conclusion
Thus, the ruling makes application Section 9[15] more effective as an instrument of preservation of the dispute subject matter and protection of enforcement of the final award. The Hon’ble Apex Court has ensured that the Act’s pro-arbitration regime is preserved and at the same time promotes equity among the parties. For the construction industry, in which case asset preservation and maintaining the status quo are often important in dispute resolution, this ruling makes more commercial sense than before. The Court further has also upheld the principle that the grant of relief under section 9[16] must be based on the necessity of maintaining the efficacy of the arbitral process and not just rigid rules and procedures. This promotes equity, balance and strengthens the party’s confidence in the arbitration proceedings. It reaffirms the country’s commitment to fostering an arbitral friendly framework which is aligned with the international standards.
[1] Arbitration and Conciliation Act,1996
[2] 2026 SCC OnLine SC 670
[3]Arbitration and Conciliation Act 1996, s 9
[4] Arbitration and Conciliation Act 1996, s 36
[5] 2026 SCC OnLine SC 670
[6] Arbitration and Conciliation Act 1996, s 2 (1)(h)
[7] Arbitration and Conciliation Act 1996, s 9
[8]UNCITRAL Model Law on International Commercial Arbitration (1985)
[9] Arbitration and Conciliation Act 1996, s 36
[10] Arbitration and Conciliation Act 1996, s 34
[11] 2013 SCC OnLine Bom 481
[12] 2013 SCC OnLine Bom 481
[13] Arbitration and Conciliation Act 1996, s 34
[14] Arbitration and Conciliation Act 1996, s 37
[15] Arbitration and Conciliation Act 1996, s 9
[16] Arbitration and Conciliation Act 1996, s 9
