Beyond the Winner's Circle: Bombay High Court Affirms That Unsuccessful Parties Can Seek Post-Award Interim Relief Under Section 9 in Rare and Compelling Cases.

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Case: OIL AND NATURAL GAS CORPORATION LIMITED v. LARSEN AND TOUBRO LIMITED
Court: Bombay High Court
Date: 06-05-2026
Law: Arbitration and Conciliation Act, Indian Contract Act, Constitution of India.

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In the high-stakes arena of Indian arbitration, the prevailing wisdom has long been that the "spoils go to the victor". For years, the legal landscape was dominated by the principle that once an arbitral award was rendered, the "unsuccessful party" lost its standing to seek interim protections under Section 9 of the Arbitration and Conciliation Act, 1996. However, a recent landmark ruling by the Bombay High Court in Oil and Natural Gas Corporation Limited vs. Larsen & Toubro Limited has dismantled this assumption, signaling a profound shift in how we perceive the rights of parties post-award.

The End of the Dirk India Era

For over a decade, the Division Bench judgment in Dirk India Pvt. Ltd. vs. Maharashtra State Electricity Generation Company Limited served as the definitive barrier for losing parties. It held that Section 9 was intended to facilitate the "fruits of the proceedings" for the winner, not to provide a shield for the loser. The recent Bombay High Court decision acknowledges that this era has officially ended. Following the Supreme Court’s recent intervention in Home Care Retail Marts Pvt. Ltd., the court noted that the restrictive interpretation in Dirk India no longer holds the field. This represents a move toward a more inclusive interpretation of the term "a party" within the Act.

"A Party" Means Any Party

One of the most impactful takeaways from this judgment is the court's refusal to "contextually modulate" the plain language of the statute. The court emphasized that Section 9 does not draw a distinction between successful and unsuccessful parties.

"The meaning of the expression ‘a party’ cannot be contextually modulated or varied depending on the outcome of arbitral proceedings."

This textualist approach ensures that the right to approach a court for interim measures remains intact until the entire judicial process—including challenges under Section 34—has reached its final culmination.

The "Rare and Compelling" Threshold

While the door is now open for unsuccessful parties, the court was careful to clarify that it is not a free-for-all. There is a significant "caveat": the threshold for a losing party to obtain relief is substantially higher. The court introduced a "rare and compelling cases" test. To succeed, an unsuccessful party must demonstrate something beyond the standard triple requirement of a prima facie case, balance of convenience, and irreparable injury. They must show that the relief is "non-prejudicial" to the enforcement of the award and necessary to preserve ancillary rights that might otherwise be lost forever.

Securing the Subject Matter vs. Enforcing the Award

The judgment draws a sophisticated distinction between the "fruits of arbitration" and the "subject matter of arbitration". The court reasoned that while Section 36 deals with the execution of the award itself, Section 9 is broader, aimed at protecting the underlying amount in dispute or the subject matter. In this case, even though ONGC was the "unsuccessful party" (owing a net amount to L&T), it was allowed to seek the extension of a bank guarantee. The court viewed this not as an interference with L&T’s win, but as a necessary measure to ensure that if ONGC eventually succeeds in its Section 34 challenge, its original claims—secured by that guarantee for a decade—are not rendered illusory.

The Public Interest and Bank Guarantees

The court’s analysis took a pragmatic turn when considering the nature of the parties and the security involved. As ONGC is a Maharatna PSU, the court recognized the importance of protecting public monies. The fact that the bank guarantee had already been in place for ten years meant that requiring its extension imposed a minimal burden on the Respondent compared to the "manifest disproportion" of letting it lapse.

"Refusal of interim measures would result in a manifest disproportion as the Petitioner would lose the security worth 10% of contract price while Respondent’s only burden is the continued existence of the bank guarantee."

A Forward-Looking Conclusion

This judgment is a masterclass in balancing the finality of arbitral awards with the necessity of equitable protection during the long tail of litigation. By allowing ONGC to maintain its security while promising not to encash it, the court has created a "status quo" mechanism that respects the Arbitral Tribunal's findings while acknowledging that the legal battle is far from over. For practitioners, the message is clear: being "unsuccessful" at the tribunal stage is no longer a jurisdictional bar to seeking equity in the halls of the High Court.