Section 9 of Arbitration Act Is Not a Tool for Recovery of Contractual Dues: Delhi HC

The Delhi High Court has reaffirmed that interim measures under the arbitration law cannot be utilized as a substitute for the final adjudication of monetary claims or as a mechanism for the recovery of alleged admitted dues.

A Division Bench comprising Justice Anil Kshetarpal and Justice Amit Mahajan dismissed an appeal challenging a Single Judge's order, emphasizing that the jurisdiction for interim protection is intended to preserve the efficacy of arbitral proceedings rather than to enforce contractual payments at a preliminary stage.

Protective Nature of Section 9 Jurisdiction

The Court clarified that the scope of Arbitration and Conciliation Act, 1996 is primarily protective and interim. It observed that the provision is not designed for the final adjudication of disputes or for obtaining directions that would effectively decree a principal monetary claim without a full trial. The bench noted that while the Court has the power to secure an amount in dispute, this power is typically exercised only when there is a real risk of the arbitral process being frustrated.

In its reasoning, the Court observed: "Section 9 of the A&C Act empowers the Court to grant interim measures of protection before, during or after arbitral proceedings in aid of arbitration. The provision is essentially intended to preserve the efficacy of arbitral proceedings and to protect the subject matter of arbitration pending adjudication by the arbitral tribunal. The jurisdiction under Section 9 is, therefore, protective and interim in nature. The said provision is not intended either for final adjudication of contractual disputes or for enforcement of monetary claims arising out of contracts."

Absence of Exceptional Circumstances for Interim Relief

The Appellant, a construction firm, sought the release of over Rs. 2 crore, claiming the amount was certified by a consultant and acknowledged by the respondent, a Public Sector Undertaking (PSU). However, the Court found that the mere processing of bills or internal certifications does not equate to a conclusive determination of liability. Furthermore, since the respondent is a PSU, the Court found no evidence of imminent asset dissipation that would render a future award unenforceable.

The Court has the following directions:

"Any observations made herein are confined to adjudication of the present Appeal and shall not be construed as an expression on the merits of the disputes between the parties, which shall remain open for consideration in appropriate proceedings in accordance with law."

Background:

The dispute originated from a contract awarded to M/S SLR Construction Pvt Ltd by GAIL India Ltd in 2018 for terminal station works in Gorakhpur. The appellant alleged that project completion was delayed due to various impediments, including the COVID-19 pandemic and site encumbrances. While the appellant claimed the works were completed in 2022 and the final bill was certified by the Project Management Consultant, GAIL allegedly withheld payments, seeking cross-adjustments from other independent contracts.

The appellant initially moved the Court under Section 9 of the Arbitration and Conciliation Act, 1996, arguing that the dues were "admitted" based on the certification of bills and the deduction of tax under Section 194C of the Income Tax Act, 1961. They also invoked Constitution of India, contending that GAIL, as an instrumentality of the State, acted arbitrarily. The Single Judge dismissed the petition, prompting this appeal.

The High Court upheld the dismissal, ruling that the disputes regarding deductions, retentions, and performance were purely contractual and required resolution through the agreed-upon arbitral mechanism. The bench concluded that allowing the release of funds at this stage would amount to granting final relief at the threshold. The appeal was dismissed, though the appellant retains the liberty to invoke arbitration.

Case Details:
Case No.: FAO(OS) (COMM) 150/2026
Case Title: M/S SLR CONSTRUCTION PVT LTD v. GAIL INDIA LTD AND ANR
Appearances:
For the Petitioner(s): Mr. Rajesh Mohan Sinha, Mr. Prateek Mohan Sinha, Ms. Namita Sinha, Ms. Nandini Harsh and Mr. Krishnendu Das, Advs.
For the Respondent(s): Mr. Deepayan Mandal, Mr. Mridul Bansal, Mr. Monu, Mr. Naman Varma and Mr. Aryan Ahmed, Advs.

Source: 2026 CaseBase(DEL) 465