Bombay High Court Refuses Interim Relief in Foreign Award Enforcement

Bombay High Court Refuses Interim Relief in Foreign Award Enforcement

Introduction

The Bombay High Court examined whether interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 could be granted against a third party guarantor who had already been deleted from foreign award enforcement proceedings. Justice Sandeep V. Marne held that once the foreign award was found unenforceable against the guarantor and its deletion from enforcement proceedings had attained finality, Section 9 could not be used to indirectly fasten liability upon it.

Factual Background

The Petitioner, Ningbo Aux Imp & Exp Co. Ltd., a Chinese trading company, supplied air-conditioner units to Amstrad Consumer India Pvt. Ltd. (formerly OVOT Pvt. Ltd.) pursuant to a Purchase Order dated 23 October 2020 containing an arbitration clause. A separate guarantee certificate dated 28 February 2020 was issued by Vijay Sales (India) Pvt. Ltd., assuring payment defaults up to USD 10 million. The guarantee, however, did not contain an arbitration clause nor incorporate the arbitration agreement.

Disputes arose when payment under certain proforma invoices remained unpaid. Arbitration was initiated before the Shanghai International Arbitration Centre (SHIAC). Initially, both Amstrad and Vijay Sales were named as respondents. However, upon being advised that Vijay Sales was not party to the arbitration agreement, Ningbo deleted Vijay Sales from the arbitral proceedings.

On 30 November 2023, the SHIAC Tribunal passed an award directing Amstrad to pay USD 1,448,940.91 and RMB 180,533.38 towards dues and arbitration costs.

Procedural Background

Ningbo initiated enforcement proceedings under Sections 47 and 49 of the Arbitration Act before the Bombay High Court against both Amstrad and Vijay Sales. By order dated 4 July 2025, the Court deleted Vijay Sales from the enforcement proceedings, holding that the award was not made against it and therefore could not be enforced against it. That order was not challenged and attained finality.

Subsequently, Ningbo filed the present Commercial Arbitration Petition under Section 9 read with Section 2(2) of the Act seeking interim measures, including deposit of the awarded amount and asset disclosures against both Amstrad and Vijay Sales.

Issues

1. Whether interim measures under Section 9 of the Arbitration Act can be granted against a third party guarantor deleted from foreign award enforcement proceedings?

2. Whether doctrines such as “group of companies” or lifting of corporate veil can be invoked at the Section 9 stage to secure the awarded amount from such third party?

3. Whether a separate Section 9 petition is maintainable when interim reliefs are already sought in pending enforcement proceedings?

Contentions of the Parties

The Petitioner argued that Vijay Sales was closely linked with Amstrad through common shareholding and management, and had executed a guarantee certificate inducing the commercial transaction. Relying on doctrines of lifting the corporate veil and group of companies, it was contended that Section 9 powers are broad enough to secure the “amount in dispute” even against third parties bearing nexus to the transaction. Reliance was placed on decisions such as Eveready Industries, Gatx India, and Chloro Controls to argue that non-signatories may be bound in composite transactions.

It was further submitted that Section 9 relief is maintainable post-award in foreign-seated arbitrations by virtue of the proviso to Section 2(2), and interim protection was necessary to prevent dissipation of assets.

The Respondents contended that Vijay Sales was not a party to the arbitration, no award was passed against it, and its deletion from enforcement proceedings foreclosed any enforceability against it. It was argued that Section 9 cannot be used to indirectly achieve what was expressly rejected in enforcement proceedings. The Respondents also asserted that Section 9 cannot operate as a shortcut to execution and that deposit orders in money awards are exceptional.

Reasoning and Analysis

The Court first affirmed that Section 9 petitions are maintainable even in foreign-seated arbitrations, relying on the Division Bench decision in Heligo Charters. However, maintainability did not imply entitlement to relief.

The Court emphasized that Section 9 is not a standalone remedy but operates in aid of substantive proceedings such as arbitration or enforcement. Where enforcement proceedings have conclusively determined that an award is not enforceable against a third party, Section 9 cannot be invoked to reopen or indirectly contradict that finding.

The Court noted that in the enforcement petition, Vijay Sales had been deleted because it was not a party to the arbitral proceedings and no award existed against it. That order had attained finality. Granting interim relief under Section 9 against Vijay Sales would amount to recording a finding inconsistent with the enforcement court’s determination.

On the applicability of the group of companies doctrine, the Court held that such arguments should have been pursued in enforcement proceedings. A Section 9 court cannot undertake a collateral adjudication of liability contrary to findings in substantive proceedings.

The Court further observed that interim measures against third parties are ordinarily permissible only where such third party claims “through or under” the award debtor. Vijay Sales did not fall within that category; instead, the Petitioner sought to enforce an independent guarantee claim not adjudicated in arbitration.

With respect to Amstrad, the Court held that the Petitioner had already sought interim reliefs in the pending enforcement petition. Filing a separate Section 9 petition seeking additional reliefs, particularly deposit of the awarded amount, was impermissible fragmentation of remedies. Section 9 cannot be used as a shortcut to execution, and deposit orders in money awards are reserved for exceptional circumstances, which were not demonstrated here.

The timing of the petition filed immediately after Vijay Sales was deleted from enforcement proceedings reinforced the Court’s view that the petition was an attempt to circumvent the earlier order.

Decision

The Bombay High Court dismissed the Commercial Arbitration Petition. It held that no interim measures could be granted against Vijay Sales, against whom the foreign award was not enforceable, and no separate Section 9 relief was warranted against Amstrad when enforcement proceedings were pending. No order as to costs was made.

In this case the appellant was represented by Ms. Kshama Loya with Ms. Sankriti Sharma i/b M/s. Link Legal. Meanwhile the respondent was represented by Mr. Karl Tamboly with Mr. Reehan Ajmerwala, Ms. Eshika Chandan and Mr. Siddharth Punj i/b M/s. Lodha and Lodha Advocates.