Bombay High Court Holds Indian Courts Can Protect Claims in London-Seated Arbitration Where Foreign Tribunal’s Interim Orders Are Not Enforceable in India
Bombay High Court Grants Section 9 Protection in London-Seated Arbitration; Directs Indian Respondent to Secure Foreign Arbitral Claim Despite Pending LMAA Proceedings
Facts
Norvic Shipping Asia PTE Limited filed a Commercial Arbitration Petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court seeking interim protection in aid of arbitration proceedings pending before the LMAA in London. The dispute arose out of a Repayment Schedule Agreement dated 9 January 2025, under which Zigma International allegedly acknowledged liability of USD 215,310.01 towards demurrage and agreed to repay the amount in instalments. The agreement further provided that upon default in any one instalment, the entire balance would become immediately payable.
According to the petitioner, the first instalment became due on 15 January 2025, but the respondent failed to make payment despite several reminders. The petitioner contended that the respondent had repeatedly acknowledged the liability through emails and had sought time to make payment. Arbitration was invoked by email dated 27 March 2026, after which the respondent allegedly raised, for the first time, a defence that the dispute had been settled and that there was a pledge or arrangement through brokers, Bulk Commodities / Bulkcom.
The petitioner sought directions to secure its claim of USD 262,837.98 plus GBP 9,400, along with interest, by way of deposit, bank guarantee, disclosure of assets, injunction against dealing with assets, and appointment of a receiver.
Issues
The principal issue before the Court was whether the petitioner had made out a case for interim protection under Section 9 of the Arbitration Act in support of a foreign-seated arbitration pending before the LMAA in London.
The Court also considered whether a Section 9 petition would be maintainable after constitution of the arbitral tribunal, particularly when the tribunal was seated outside India and its interim orders may not be enforceable against assets situated in India.
Another issue was whether the petitioner was required to strictly satisfy the requirements of Order XXXVIII Rule 5 CPC, including specific pleading and proof that the respondent was attempting to dissipate or remove its assets.
Petitioner’s Arguments
The petitioner argued that the respondent’s liability was admitted under the Repayment Schedule Agreement, particularly Clause 2, which recorded the amount payable towards demurrage. It was submitted that the respondent had defaulted in payment of the first instalment and had failed to pay any amount despite repeated reminders.
The petitioner further submitted that the respondent’s subsequent defence of settlement, pledge, or adjustment through Bulkcom was unsupported by documents and was raised only after arbitration was invoked. According to the petitioner, the respondent’s conduct showed an attempt to defeat the claim and render the eventual arbitral award ineffective.
The petitioner argued that although Order XXXVIII Rule 5 CPC may guide the Court, the power under Section 9 is wider and is intended to ensure that the arbitral award does not become a paper decree. It was also contended that Section 9(3) did not bar the petition because any interim order passed by the London-seated LMAA tribunal would not be enforceable against the respondent’s assets situated in India.
Respondent’s Arguments
The respondent opposed the petition by relying on Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel (India) Ltd., and submitted that the petition did not contain any specific allegation that the respondent was attempting to remove, transfer, or dissipate its assets. It was argued that unless such material was placed before the Court, no order of deposit, attachment, or restraint could be passed.
The respondent further contended that it had several creditors and that the petitioner could not claim any preferential right over the respondent’s assets. It was also argued that the respondent had raised an oral set-off in respect of part of the amount claimed, and therefore the liability was not as clear or admitted as projected by the petitioner.
The respondent also submitted that it was facing serious financial difficulties and was unable to make payment because of its poor financial condition, not because of any dishonest attempt to defeat the petitioner’s claim.
Analysis of the Law
The Court held that while principles underlying Order XXXVIII Rule 5 CPC are relevant, they do not apply with full technical rigidity to proceedings under Section 9 of the Arbitration Act. Section 9 confers wider powers upon the Court to grant interim protection so that the arbitral process remains effective and the eventual award is not rendered meaningless.
The Court explained that a petitioner is not always required to prove dishonest disposal or actual concealment of assets. What is necessary is objective material showing a strong possibility that the respondent’s assets may diminish, become encumbered, or become unavailable by the time the arbitral award is enforced.
The Court further clarified that “diminution of assets” includes reduction in asset value, creation of encumbrances, increased secured liabilities, transfer of receivables, or any circumstance that may materially reduce the assets available for satisfaction of an arbitral award.
On Section 9(3), the Court held that once the arbitral tribunal is constituted, parties should ordinarily approach the tribunal under Section 17. However, this restriction is not absolute. If the remedy under Section 17 is not efficacious, the Court can still exercise jurisdiction under Section 9.
Precedent Analysis
The Court relied on Essar House (P) Ltd. v. Arcellor Mittal Nippon Steel (India) Ltd., where the Supreme Court held that Section 9 powers are wider than Order XXXVIII Rule 5 CPC and are intended to preserve the effectiveness of arbitration.
The Court also referred to Shanghai Electric Group Co. Ltd., where the Delhi High Court held that if assets are situated in India and an interim order of a foreign-seated tribunal is not enforceable in India, the remedy before the tribunal cannot be treated as efficacious for the purpose of Section 9(3). Applying this principle, the Court held that the petitioner could maintain the Section 9 petition before the Bombay High Court despite pendency of arbitration before the LMAA tribunal in London.
Court’s Reasoning
The Court found that the Repayment Schedule Agreement clearly recorded the respondent’s acknowledgment of liability of USD 215,310.01 towards demurrage. The first instalment had fallen due on 15 January 2025 and had not been paid. The Court also noted that the respondent’s emails referred to financial difficulties and delays in inward remittances but did not dispute the liability under the agreement.
The Court held that the respondent’s subsequent defence of settlement, pledge, or adjustment through Bulkcom was unsupported by documentary material and required evidence before the arbitral tribunal. At the Section 9 stage, such disputed pleas could not defeat the petitioner’s prima facie case.
The Court also considered the respondent’s own statements that it was facing financial difficulties, had multiple creditors, and was unable to honour commitments. While financial difficulty by itself does not prove fraud or dishonest intent, the Court held that it may still be relevant to determine whether there is a real possibility that assets may not remain available for enforcement of the award.
On maintainability, the Court held that although the tribunal was already constituted, the arbitration was seated in London and the respondent had not shown that an interim order passed by the LMAA tribunal would be enforceable against assets situated in India. Therefore, the remedy under Section 17 was not efficacious, and the Section 9 petition was maintainable.
Conclusion
The Bombay High Court partly allowed the Section 9 petition. It directed the respondent to secure the petitioner’s claim by depositing USD 262,837.98 together with GBP 9,400 before the Court, or by furnishing an unconditional and irrevocable bank guarantee issued by a nationalised bank or scheduled commercial bank for the said amount, within four weeks.
Until compliance, the respondent was restrained from transferring, alienating, creating third-party rights, mortgaging, encumbering, or otherwise dealing with its movable or immovable assets to the extent of the petitioner’s claim. The respondent was also directed to disclose its bank accounts, assets, encumbrances, asset transfers in the preceding two years, and pending insolvency or similar proceedings.
The Court rejected the prayer for appointment of a receiver at that stage but granted liberty to the petitioner to seek such relief if subsequent events disclosed violation of the order or further diminution of assets. All observations were held to be prima facie and confined to the Section 9 petition.
Case Details
Case: Norvic Shipping Asia PTE Limited v. Zigma International
Court: Bombay High Court, Ordinary Original Civil Jurisdiction, Commercial Division
Case Number: Commercial Arbitration Petition (L) No. 15734 of 2026
Judge: Justice Amit Borkar
Date: 2 July 2026
Result: Section 9 petition partly allowed; respondent directed to secure petitioner’s claim by deposit or bank guarantee; asset restraint and disclosure directions issued; receiver rejected at this stage.
