Award Debtor Protection Under Section 9 Arbitration Act In Exceptional Cases

The Supreme Court in National Projects Construction Corporation Ltd v. Ishvakoo India Pvt Ltd (2026 INSC 828) clarified that an award debtor can seek protection under Section 9 of the Arbitration and Conciliation Act, 1996 in rare cases to prevent irreparable prejudice. The judgment upheld an order directing refund or deposit of encashed bank guarantee amounts pending a Section 34 challenge to an arbitral award, establishing that such interim relief is available where the award debtor faces irreparable harm and no counterclaim or finding on mobilization advance exists. This ruling modifies the traditional understanding that only award creditors seeking enforcement can invoke Section 9 protections, extending defensive remedies to debtors challenging awards. The decision has significance for parties contesting arbitral awards who face immediate execution of bank guarantees or security deposits before their Section 34 challenge is decided. Businesses involved in construction, infrastructure, and commercial arbitration should recognize that they may now seek interim relief to preserve assets pending award challenges, rather than losing security immediately upon encashment. The ruling narrows the gap between award enforcement and award challenge procedures under Indian arbitration law.