Arbitration and Conciliation Act, 1996

Arbitration — Interpretation of Negative Interest Clause — Clause 54 of NEEPCO GCC — State of U.P. v. Harish Chandra distinguished - Clause 54 of the GCC provided: "No claims for interest or damages will be entertained by the Corporation with respect to any money or balance which may be lying with the Corporation owing to any dispute, OR with respect to any delay on the part of the Engineer-in-Charge making periodical or final payments or in any other respect whatsoever - The clause construed in State of U.P. v. Harish Chandra and Co., (1999) 1 SCC 63, operated only where money was withheld owing to a dispute in making payments, and did not bar interest where money was simply delayed without any dispute - Clause 54 creates two distinct, disjunctive categories joined by "or" - (i) money withheld due to a dispute, and (ii) any delay in making payments standing independently on its own - Because delay in payment is expressly made an independent ground, Clause 54 operates as a complete contractual prohibition against the grant of pre-reference interest, aligning squarely with Sayeed Ahmed & Co. v. State of U.P. and THDC-II - The arbitral award granting pre-reference interest was contrary to Section 31(7)(a) and exceeded jurisdiction - the High Court's order restoring pre-reference interest set aside. [Relied on Sayeed Ahmed & Co. v. State of U.P., (2009) 12 SCC 26; Jaiprakash Associates Ltd. v. Tehri Hydro Development Corpn. (India) Ltd. (THDC-II), (2019) 17 SCC 786; Pam Developments Pvt. Ltd. v. State of West Bengal, (2024) 10 SCC 715; Distinguished from State of U.P. v. Harish Chandra and Co., (1999) 1 SCC 63; Paras 16 - 23] North Eastern Electric Power Corporation Ltd. (NEEPCO) v. Astra Construction Pvt. Ltd., 2026 LiveLaw (SC) 980 : 2026 INSC 1036

Arbitration and Conciliation Act, 1996 — Section 31(7)(a) — Pre-reference and Pendente Lite Interest — Contractual Bar — Regime shift from the 1940 Act to the 1996 Act - Under Section 31(7)(a) of the 1996 Act, the power of an arbitral tribunal to award interest for the pre-reference and pendente lite period is expressly subject to party autonomy ("Unless otherwise agreed by the parties") - Unlike the strict-construction approach under the 1940 Act, under the 1996 Act, an express contractual bar in the agreement excludes the jurisdiction of the tribunal to award pre-reference and pendente lite interest, even if the clause is not specifically directed against the arbitrator - While pendente lite interest is procedural, pre-reference interest is substantive and cannot be awarded when explicitly prohibited by the contract. [Paras 13-23] North Eastern Electric Power Corporation Ltd. (NEEPCO) v. Astra Construction Pvt. Ltd., 2026 LiveLaw (SC) 980 : 2026 INSC 1036

Arbitration and Conciliation Act, 1996 — Section 11(6) read with Section 42 — Reference by High Court does not confer exclusive jurisdiction on the District or Commercial Court where the High Court is physically situated - The High Court exercises territorial jurisdiction over the entire State - Merely because an arbitrator is appointed by the High Court under Section 11(6) whose principal seat is at Cuttack, it does not confer exclusive supervisory jurisdiction under Section 42 on the District Court or Commercial Court at Cuttack to entertain a petition under Section 34 - In the absence of a designated seat or an established Commercial Court (where the cause of action substantially arose and the contract was executed), the Section 34 petition was maintainable before the District Judge under Section 2(1)(e) of the Act. [Relied on Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO), (2012) 9 SCC 552; Indus Mobile Distribution Pvt. Ltd. v. Datawind Innovations Pvt. Ltd., (2017) 7 SCC 678; BGS SGS Soma JV v. NHPC Ltd., (2020) 4 SCC 234; Paras 22-32] Mahanadi Coalfields Ltd v. GSCO (Gurmeet Singh and Company) Infrastructure Pvt. Ltd., 2026 LiveLaw (SC) 978 : 2026 INSC 1038

Arbitration and Conciliation Act, 1996 — Section 34 read with Sections 2(1)(e) and 42 — Territorial Jurisdiction — Distinction between "Seat" and "Venue" — Sittings of the tribunal held at Cuttack merely for convenience — High Court seat physically located at Cuttack does not make Cuttack the juridical seat of arbitration - There is an established distinction between the "Seat" and the "Venue" of arbitration - While the "seat" determines the court exercising supervisory jurisdiction over the arbitral proceedings, the "venue" merely denotes the physical location where sittings are held for administrative convenience - Where the order under Section 11(6) did not designate Cuttack as the seat, and there was no agreement between the parties conferring exclusive supervisory jurisdiction on the courts at Cuttack, the mere conduct of arbitral proceedings at Cuttack for the convenience of the arbitrator does not constitute Cuttack as the juridical seat. [Paras 26-29] Mahanadi Coalfields Ltd v. GSCO (Gurmeet Singh and Company) Infrastructure Pvt. Ltd., 2026 LiveLaw (SC) 978 : 2026 INSC 1038

Arbitration and Conciliation Act, 1996 — Section 34(3) — Limitation - Where the arbitral award was passed on 25.10.2021 and the objection petition under Section 34 was presented before the court on 08.12.2021, the petition was filed well within the statutory period of three months prescribed under Section 34(3) - the finding of the High Court that it was time-barred was factually and legally erroneous. [Paras 17-21] Mahanadi Coalfields Ltd v. GSCO (Gurmeet Singh and Company) Infrastructure Pvt. Ltd., 2026 LiveLaw (SC) 978 : 2026 INSC 1038

Arbitration and Conciliation Act, 1996 — Asymmetry in Handling Court Deposits & Reference to Law Commission - Highlighting severe disparities and lack of uniform rules across various High Courts regarding court deposits, registry investments, and the time value of money, the Supreme Court requested the Law Commission of India to study global frameworks (such as the US Court Registry Investment System [CRIS] and the Canadian Consolidated Revenue Fund model), consult the RBI, Ministry of Finance, and Ministry of Law & Justice, and propose comprehensive legislation. [Relied on Gurpreet Singh v. Union of India, (2006) 8 SCC 457; Delhi Development Authority v. Bhai Sardar Singh & Sons, 2020 SCC OnLine SC 1450; Nepa Ltd. v. Manoj Kumar Agrawal, 2022 SCC OnLine SC 1736; DLF Limited & Anr. v. Koncar Generators & Motors Limited, (2025) 1 SCC 343; Paras 27–46] National Seeds Corporation Ltd. v. National Agro Seed Corporation (India), 2026 LiveLaw (SC) 958 : 2026 INSC 1017

Arbitration and Conciliation Act, 1996 — Conditional Withdrawal Does Not Halt Interest: Where the award-debtor resists the release of deposited funds, or where the court permits withdrawal only upon furnishing security (such as title deeds), the deposit does not constitute satisfaction of the award under Order XXI Rule 1 - liability to pay interest continues to run until the date the awarded funds are unconditionally made available to the award-holder – i. Distillation of Principles Govering Interest on Court Deposits - The Supreme Court synthesized nine binding principles governing interest liability during deposit in court - (i) The 1996 Act incorporates CPC principles for enforcement under Section 36; (ii) Court must have regard to CPC provisions on money decree stays when staying an award [Section 36(3)]; (iii) Deposit merely places money beyond reach of the parties; (iv) Deposit must be unconditional and freely withdrawable; (v) Withdrawal permitted only against security is not payment in satisfaction of the decree; (vi) If deposit is non-compliant with Order XXI Rule 1, interest continues to run; (vii) Failure by the decree-holder to seek withdrawal when funds are freely available amounts to deemed refusal, stopping interest; (viii) If deposited sums are placed in a fixed deposit at the decree-holder's instance, only FD interest accrues; (ix) Partial unconditional deposit arrests interest only pro tanto on the deposited component. [Paras 21-28] National Seeds Corporation Ltd. v. National Agro Seed Corporation (India), 2026 LiveLaw (SC) 958 : 2026 INSC 1017

Arbitration and Conciliation Act, 1996 — Section 36 — Code of Civil Procedure, 1908 (CPC) — Order XXI Rules 1 & 4, Order XLI Rules 5 & 6 — Enforcement of Arbitral Award — Conditional Court Deposit vs. Satisfaction of Decree — Cessation of Post-Award Interest - Deposit in Court Not Synonymous with Payment - A deposit is not payment; placing money beyond the debtor's reach neither extinguishes liability nor places it at the creditor's disposal - Under Section 36(1) of the Arbitration Act, an award is enforced as a decree under the CPC - For a deposit in court to arrest the accrual of interest under Order XXI Rule 1, it must be made unconditionally, accompanied by notice under Rule 1(2), and be freely and immediately available for withdrawal by the award-holder. [Paras 21-25] National Seeds Corporation Ltd. v. National Agro Seed Corporation (India), 2026 LiveLaw (SC) 958 : 2026 INSC 1017

Arbitration and Conciliation Act, 1996 — Section 2(1)(h) read with Section 7 — Definition of "Parties" — Binding Non-Signatories - The requirement of a written arbitration agreement under Section 7 does not preclude binding a non-signatory party - The subjective intention and mutual consent of parties to be bound by an arbitration clause can be gathered from surrounding circumstances, negotiation, execution of composite documents, and conduct. Modern commercial arbitration mechanisms must remain elastic enough to accommodate multi-party and multi-contract arrangements without compromising party autonomy. [Relied on ASF Buildtech Private Limited v. Shapoorji Pallonji and Company Private Limited, (2025) 9 SCC 76; Ajay Madhusudan Patel and Others v. Jyotrindra S. Patel and Others, (2025) 2 SCC 147; Cox and Kings Limited v. SAP India Pvt. Ltd., (2024) 4 SCC 1; Inox Wind Limited v. Thermocables Limited, (2018) 2 SCC 519; Paras 20-28] National Skill Development Corporation v. Surya Wires, 2026 LiveLaw (SC) 930 : 2026 INSC 977

Arbitration and Conciliation Act, 1996 — Section 7(5) — Arbitration agreement — Incorporation by reference — Composite transaction — Interconnected agreements — Personal Guarantee forming an integral part of Loan Agreement - Where parties structure a single commercial transaction through several interconnected instruments and the ancillary agreement (Personal Guarantee) is contractually defined as a "Facility Agreement" forming an integral and inseparable part of the principal agreement, the arbitration clause in the principal agreement stands incorporated by reference under Section 7(5) into the ancillary agreement - The Supreme Court held that the phrase "shall be deemed to be part of this Agreement as if the provisions thereof were set out herein in extension" operates as an internal deeming fiction that binds every facility agreement including the Personal Guarantee within the same legal and arbitral framework as the principal Loan Agreement - A personal guarantee exacted as a mandatory pre-disbursement condition precedent to secure public funds cannot be severed for the purpose of dispute resolution alone while remaining tethered to the main contract for every other purpose, including liability - the guarantor, despite signing the Loan Agreement only in an official capacity and executing the Personal Guarantee in a personal capacity, is bound to submit to arbitration. [Paras 24-29] National Skill Development Corporation v. Surya Wires, 2026 LiveLaw (SC) 930 : 2026 INSC 977

Arbitration and Conciliation Act, 1996 – Sections 16, 18, 31(8), 37(2) – Pre-deposit condition in arbitration clause – Validity and constitutionality under Article 14 of the Constitution of India and Section 28 of the Indian Contract Act, 1872 – Correctness of 3-Judge Bench decision in S.K. Jain v. State of Haryana – Reference to Larger Bench - Doubting the correctness of the three-Judge Bench decision in S.K. Jain v. State of Haryana, (2009) 4 SCC 357 (which upheld a pre-deposit condition requiring a contractor alone to deposit security prior to arbitration as a valid mechanism to prevent frivolous claims), a two-Judge Bench of the Supreme Court has referred the matter to the Hon'ble Chief Justice of India for constitution of a larger Bench – The Supreme Court observed that an arbitration clause cannot impose pre-deposit conditions so onerous as to render the right to sue, at the threshold, illusory or nugatory - A requirement mandating the deposit of a substantial percentage of the claim amount prior to arbitration inevitably suppresses claims, deters recourse to alternative dispute resolution (ADR), and defeats the objective of declogging the court system - Although a two-Judge Bench in ICOMM Tele Ltd. v. Punjab State Water Supply, (2019) 4 SCC 401 struck down a 10% pre-deposit condition as arbitrary under Article 14, and subsequent decisions in Lombardi Engineering Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd., (2024) 4 SCC 341 and the Constitution Bench in Central Organisation for Railway Electrification (CORE) v. M/s ECI-SPIC-SMO-MCML (JV), (2025) 4 SCC 641 reiterated that party autonomy cannot violate fundamental rights or principles of non-arbitrariness, Lombardi Engineering had held there was no conflict between S.K. Jain and ICOMM Tele as the clauses were materially distinct - Mindful of judicial discipline, the Court held that being a two-Judge Bench, it could neither declare the 3-Judge Bench ruling in S.K. Jain to be sub silentio or bad in law, nor override it directly - Following the principles laid down in Central Board of Dawoodi Bohra Community v. State of Maharashtra, (2005) 2 SCC 673 and Aligarh Muslim University v. Naresh Agarwal, (2025) 6 SCC 1, the Bench framed questions on whether one-sided pre-deposit conditions violate Section 18 of the Arbitration Act, Section 28 of the Contract Act, and Article 14 of the Constitution, and referred the issue to the CJI to consider listing before a larger Bench. [Relied on ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board & Anr., (2019) 4 SCC 401; Lombardi Engineering Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd., (2024) 4 SCC 341; Central Organisation for Railway Electrification (CORE) v. M/s ECI-SPIC-SMO-MCML (JV), (2025) 4 SCC 641; Aligarh Muslim University v. Naresh Agarwal & Ors., (2025) 6 SCC 1; Paras 20-32] Santosh Associate v. Haryana State Industrial and Infrastructure Development Corporation Ltd., 2026 LiveLaw (SC) 818 : 2026 INSC 872

Arbitration and Conciliation Act, 1996 – Section 9, Section 9(1)(ii)(e), Section 34 and Section 36 – Maintainability of Section 9 Petition at Post-Award Stage by an Unsuccessful Party / Award Debtor – Threshold and Guiding Principles for Grant of Interim Relief – Securing Amount in Dispute / Deposit of Monies – Rare and Compelling Cases - A petition under Section 9 of the Arbitration and Conciliation Act, 1996 at the post-award stage by an unsuccessful party (award debtor) is maintainable in law - the threshold for granting interim relief to an unsuccessful party is significantly higher - The Supreme Court may grant interim measures in rare and compelling cases to balance equities, prevent irreparable prejudice, and preserve the efficacy of the challenge proceedings under Section 34 - The exercise of power under the "just and convenient" residuary clause under Section 9(1)(ii)(e) must be guided by settled principles namely, existence of a strong prima facie case, balance of convenience, irreparable injury, and reasonable expedition and must promote the efficacy of arbitration without being rigidly bound by the strict procedural technicalities of Order XXXVIII Rule 5 or Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 1908 - In the present case, bank guarantees furnished against mobilisation advance were encashed by the appellant prior to the pronouncement of the arbitral award - The Arbitrator dismissed the respondent's claims in toto without the appellant having filed any counter-claim or the Arbitrator recording any finding regarding non-utilisation of the mobilisation advance - Sustaining the High Court's direction directing the appellant to deposit Rs. 3.5 crores in the Registry to be placed in an interest-bearing Fixed Deposit pending adjudication of the Section 34 petition, the Supreme Court held that permitting the appellant to retain the encashed funds in the absence of an executable award or counter-claim in its favour would result in unjust enrichment and defeat earlier interim undertakings - The case presented rare and compelling circumstances warranting interim deposit to prevent irreparable prejudice and preserve the subject matter of the dispute. [Relied on Home Care Retail Marts Pvt. Ltd. v. Haresh N. Sanghavi, 2026 SCC OnLine SC 670; Essar House Private Limited v. Arcellor Mittal Nippon Steel India Limited, (2022) 20 SCC 178; Paras 18–27]. National Projects Construction Corporation Ltd. v. Ishvakoo (India) Pvt. Ltd; 2026 LiveLaw (SC) 791 : 2026 INSC 828

Arbitration And Conciliation Act, 1996 - Section 11 & Non-Signatory Parties — "Veritable Party" Doctrine — Non-signatory to the primary agreement can be bound by the arbitration agreement contained therein if their conduct, participation, and performance of obligations under interlinked agreements demonstrate a mutual intent to be bound — Principles laid down in Cox and Kings applied - Veritable Parties & Non-Signatories - The Supreme Court held that a non-signatory to a primary settlement agreement (Memorandum of Settlement) can qualify as a "veritable party" to the arbitration clause contained therein if the performance of their individual agreement (Share Purchase Agreement) is fundamental and interwoven with the completion of the main agreement - Equal Treatment of Identically Situated Parties - Where multiple non-signatories execute individual Share Purchase Agreements containing similar or identical exclusion/decoupling clauses, the Court cannot differentiate between them to exclude one from arbitration while referring others - The Court observed that drawing a distinction between identically situated persons without a factual basis is unsustainable - Composite Transactions - Participation of a non-signatory in the performance of the underlying contract is the most critical factor indicating an intention to be bound by the arbitration clause - The composite nature of the transaction and commonality of the subject matter suggest that claims against such non-signatory are inextricably interlinked with the issues under arbitration. [Relied on Cox and Kings Limited v. SAP India Private Limited and Another, (2024) 4 SCC 1; Oil and Natural Gas Corporation Limited v. Discovery Enterprises Private Limited and Another, (2022) 8 SCC 42; Paras 13-22] KKH Finvest Pvt. Ltd. v. Ashiesh Shukla, 2026 LiveLaw (SC) 769 : 2026 INSC 803

Arbitration and Conciliation Act, 1996 - Section 16 — Doctrine of Kompetenz-Kompetenz — Joinder of Non-Signatories — Group of Companies Doctrine — The determination of whether a non-signatory is a veritable party to an arbitration agreement involves a complex inquiry of factual, circumstantial, and legal aspects - True effect must be given to the doctrine of kompetenz-kompetenz under Section 16, which empowers the Arbitral Tribunal to rule on its own jurisdiction, including intricate determinations of whether a non-signatory is bound by the agreement. [Relied on SBP & Co. v. Patel Engineering Ltd. and Another (2005) 8 SCC 618; Deep Industries Ltd. v. Oil and Natural Gas Corporation Ltd. and Another (2020) 15 SCC 706; unjab State Power Corporation Limited v. Emta Coal Limited and Another (2020) 17 SCC 93; Cox and Kings Ltd. v. SAP India Pvt. Ltd. and Another (2024) 4 SCC 1; M/s Tarini Prasad Mohanty v. M/s Sunflag Iron and Steel Company Limited 2026 INSC 566; Paras 21- 32] Manash Kamal Bezboruah v. Bokahola Tea Company, 2026 LiveLaw (SC) 677 : 2026 INSC 701

Arbitration and Conciliation Act, 1996 - Section 16, Section 5, and Section 34 — Constitution of India — Article 227 — Maintainability of Revision Petition against Arbitral Tribunal's order rejecting jurisdictional challenge — Extent of Judicial Intervention — The High Court is not justified in entertaining a revision petition under Article 227 of the Constitution against an order of the Arbitral Tribunal rejecting an application under Section 16 of the Act (seeking deletion from the array of parties as non-signatories) - The statutory scheme of the Act mandates minimal judicial interference during ongoing arbitral proceedings - The remedy against the rejection of a Section 16 application strictly lies under Section 34 of the Act after the pronouncement of the final award. Manash Kamal Bezboruah v. Bokahola Tea Company, 2026 LiveLaw (SC) 677 : 2026 INSC 701