Four Days After Home Care: ONGC v Larsen & Toubro and the Price of a Stay

Introduction

On 17 April 2026 an award debtor applied under Section 36(3) of the Arbitration and Conciliation Act, 1996 for a stay and for continuation of a bank guarantee. Seven days later the Supreme Court decided Home Care Retail Marts v Haresh N Sanghavi, holding that an unsuccessful party may invoke Section 9 after an award. Four days after that the debtor abandoned its Section 36(3) prayer, moved under Section 9, and obtained the relief. Counsel argued in both forums that Section 9 was being used to escape the conditions Parliament attached to a stay.

This post reads the Bombay High Court’s decision in ONGC v Larsen & Toubro Ltd as the first working test of Home Care. The objection was rightly rejected on those facts. One answer has been offered so far: that courts should police the threshold at which post-award relief becomes available. This post argues that the answer addresses the wrong question. A threshold decides whether relief issues at all. It says nothing about what that relief should cost. Parts I to IV set out the sequence, the price Parliament attached to a stay, and why the objection was answered as it was. Parts V and VI argue that the answer travels too far, and what should replace it.

Part I: Four Days - The Sequence in ONGC v Larsen & Toubro

The sequence in ONGC v Larsen & Toubro Ltd repays setting out by date. A tribunal awarded L&T roughly INR 271 crore and ONGC roughly INR 43 crore, and directed ONGC to return a bank guarantee of about INR 150 crore furnished by L&T against liquidated damages. ONGC challenged the award and, on 17 April 2026, applied under Section 36(3) for an unconditional stay and for renewal of the guarantee. Home Care came on 24 April. On 28 April, when the Section 36(3) application was called, ONGC declined to press the renewal prayer and sought liberty to move under Section 9. It filed the next day, and Justice Sandeep Marne granted relief on 6 May.

Senior counsel for L&T put the reason for the switch on the record: the Section 9 petition was filed ‘with a view to avoid pressing stay in Section 36 application which would require deposit of awarded sum by the Petitioner’. That is an adversary’s account of a motive; the judgment records an innocent one beside it, that the law had changed on 24 April. The objection failed, and rightly; what follows is about structure, not conduct. The sequence exposes an arrangement open to every award debtor: one route on which a stay is bought with a deposit, another on which comparable protection may be sought with none.

Part II: The Price Parliament Attached to a Stay

Before 2015, a petition under Section 34 stayed enforcement automatically. The Arbitration and Conciliation (Amendment) Act, 2015 ended that: an award is now enforceable unless the court grants a stay on a separate application, and Section 36(3) permits that stay ‘subject to such conditions as it may deem fit’. Parliament left protection from enforcement to be priced, and that price is a concrete thing: the conditions a court attaches to relief which holds up an award, in practice a deposit or security of equivalent value furnished while the challenge is heard. The Supreme Court marked the line in Popular Caterers v Ameet Mehta, five months before Home Care: staying a money award without requiring anything in return revives the automatic stay the amendments were passed to bury, and the debtors were told to deposit the principal sum.

Part III: The Objection Was Not New - What Home Care Decided

The objection was not new. It had been put to the Supreme Court in Home Care: Section 36(3) lets a court impose conditions on a stay, whereas Section 9 ‘contains no comparable safeguards’, so a rejected counter-claimant who secured relief under it would ‘circumvent the statutory scheme’.

The split it settled was over the meaning of ‘a party’ in Section 9: whether it covers a party against whom the award has gone, or only the one in whose favour it runs. One line, beginning with Dirk India, reasoned that enforcement runs in favour of the successful party alone, so an award debtor has nothing left to secure; Nussli Switzerland and NHAI v Punjab National Bank followed. The other line, Saptarishi Hotels, GAIL (India) and DLF Home Developers v Orris, held that an unsuccessful party can maintain a Section 9 petition. Home Care approved that view and held that the first line does not lay down good law, on the statutory language: Section 2(1)(h) defines a party as a party to an arbitration agreement, and the meaning cannot be modulated by the outcome of the arbitration.

Most commentary has stayed with standing, welcoming the restoration of interpretive discipline or warning that post-award relief may blur the line between interim protection and a stay. The comment that goes further answers the Section 36 problem by policing the threshold: Section 9 must not become a substitute for Section 36, so an applicant whose real object is a stay is sent back there. The diagnosis is correct. The difficulty now lies in Section 36, not in standing. Part VI explains why the remedy proposed for it does not fit.

Part IV: Why the Objection Was Rightly Rejected

Home Care did not leave the objection unanswered. Paragraph 43 holds that Sections 34 and 36 ‘provide remedies against an award or a stay thereof, whereas Section 9 ensures protection of the subject matter or the amount in dispute.’ The provisions do different work, so resort to one is no circumvention of the other. Justice Marne applied that: the ‘Petitioner cannot expect interim relief from Section 34 Court as that Court can merely stay execution of the Award subject to deposit of the full or net awarded sum. Therefore, Section 9 is the correct remedy available for the Petitioner for the purpose of securing ancillary rights’.

On the facts of Larsen & Toubro that is convincing. The guarantee was not security ONGC furnished to resist payment; it ran the other way. L&T had furnished it so that ONGC would release liquidated damages already withheld, and the judgment records that ‘part of the amount covered by the bank guarantee is actually ONGC’s money’. That is the ‘non-prejudicial’ relief of paragraph 50, which ‘does not affect the enforceability of the award but merely preserves ancillary rights.’ Home Care neither adopted nor disapproved Wind World (India) Ltd v Enercon GmbH; it used the case twice, both times as an illustration. Paragraph 14 records that the Bombay High Court there, relying on Dirk India, refused a Section 9 application for nothing more than continued confidentiality over documents. Paragraph 50 points to that same prayer as non-prejudicial relief a court may still grant. The reference shows what the category looks like; it supplies no test for deciding whether the relief sought in a later case affects enforceability.

Part V: Why the Reasoning Travels Further Than the Facts

The difficulty is not the result in Larsen & Toubro but the width of the proposition used to reach it. The passages relied on addressed standing: who may apply under Section 9, not what may be granted. The reasoning is not framed as a finding about guarantees held against withheld liquidated damages. It is general in nature since a Section 34 court can only order a stay subject to a deposit and Section 9 is the correct remedy for securing rights pending challenge. So stated, it is equally available to a debtor whose prayer would impede enforcement, and circumvention becomes impossible by definition: Section 36(3) was never the right door.

No reported decision has yet produced that result. The two Bombay decisions that have applied Home Care divide on grounds worth noticing. In ONGC v Swiber Offshore Construction Pte Ltd, the same litigant applied under Section 36(3) in January for an unconditional stay and continuation of a bank guarantee, then filed a Section 9 petition for the guarantee on 15 May, the earlier application still pending. Justice Borkar dismissed it, relying on consent terms limiting the guarantee to 120 days after the award, on ONGC’s failure to disclose them, and on delay.

He distinguished Larsen & Toubro on five grounds: there the Tribunal had upheld part of ONGC’s liquidated damages claim, here it rejected the claim entirely; there the guarantee secured a sum already awarded; no consent terms fixed an outer limit; the compelling circumstances found there were absent; and the relief sought would run against the award and the parties’ own arrangement. All five go to threshold, none to price. The same is evident from earlier decisions: Justice Marne held that the line of authorities refusing ONGC such extensions, including ONGC v Consortium of Sime Darby Engineering Sdn Bhd and Swiber Offshore Construction Pte Ltd, were unsound because they rested on Dirk India and Nussli Switzerland. Two decisions involving one litigant hardly make a trend; both stop at the threshold.

Part VI: Price the Relief Rather Than Refuse It

Home Care’s paragraph 50 divides post-award relief in two: relief that merely preserves ancillary rights, and relief that affects enforceability. Larsen & Toubro was the first kind. This part is about the second. Two responses are then open. A court may refuse at the threshold, holding that an applicant whose real object is a stay belongs under Section 36(3), and leave him to deposit or fail or it may entertain the petition and attach conditions to the relief. A court that refuses cannot impose terms.

Refusal at the threshold is not proposed on its own: in Rishabh Gandhi’s commentary, it is the fourth of five elements in what the piece calls a composite assessment, the others being a strong prima facie case rather than a merely arguable challenge, relief that is protective and proportionate, prejudice that is concrete and irreversible, and the nature of the relief sought. But every element on that list answers one question, whether relief should issue at all, and none reaches the second, what the relief should cost. Put as a rule it also runs into Home Care, which holds that any party may invoke Section 9 post-award (paragraph 62) and that reading the statute by the outcome would be ‘judicial amendment’ (paragraph 33).

Price the relief instead of refusing it, and ask the paragraph 50 question earlier, and separately from the ‘rare and compelling’ assessment. Where the relief is non-prejudicial, Section 9 applies on its own terms and no question of price arises. Where it would impede realisation of the award, the petition should still be entertained, but granted only on terms: that the order run so long as the conditions a Section 34 court would impose under Section 36(3) are met. The measure is the value of the enforcement impeded, not the face value of the award.

In National Projects Construction Corporation Ltd v Ishvakoo (India) Pvt Ltd, the Supreme Court allowed an award debtor’s Section 9 application to recover INR 3.5 crore encashed under a bank guarantee, but directed the sum to be deposited with the High Court Registry until the Section 34 application was decided. The relief was priced, not refused. One step is missing: treat the answer to the paragraph 50 question as fixing the terms.

Conclusion

Home Care decided the question before it correctly, and Larsen & Toubro applied it to a case that deserved the relief. Neither resolved the objection pressed in both, which was never about standing. Section 36(3) exists because an award holder should not lose the benefit of an award during a challenge unless the debtor secures it. Four days after Home Care, a debtor left that route for one on which security is never mentioned, and won. Paragraph 50 already draws the line; what the next court must settle is whether to reach it before asking whether the case is rare and compelling, and on what terms relief should issue.

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This article has been authored by Mohammed Haris and Syed Ahmad Nawaz Zaidi, students at Aligarh Muslim University, Aligarh. This blog is part of RSRR’s Rolling Blog Series.