Section 9 Powers Not Constrained by Order XXXVIII Rule 5: Bombay High Court Grants Interim Protection in London-Seated Arbitration, Emphasizes Asset Diminution Test

1. Case Snapshot

Case Name: Norvic Shipping Asia Pte Ltd vs Zigma International

Citation: COMM Arbitration Petition (L) No.15734 of 2026

High Court: High Court of Judicature at Bombay, Ordinary Original Civil Jurisdiction

Bench: Hon'ble Mr. Justice Amit Borkar

Date of Judgment: 2nd July, 2026

Area of Law: Arbitration Law, International Commercial Arbitration, Interim Relief

2. Judgment in Brief

The Bombay High Court partly allowed a Section 9 petition filed by Norvic Shipping Asia Pte Ltd seeking interim protection in support of arbitration proceedings seated in London under the LMAA. The dispute arose from a Repayment Schedule Agreement where the respondent acknowledged a debt of USD 215,310.01 but defaulted on payments. The Court held that the petition was maintainable despite constitution of the Arbitral Tribunal, as an interim order from a foreign tribunal would not be enforceable against assets situated in India under Section 17. The Court applied the "strong possibility of diminution of assets" test from Essar House, rejecting the respondent's argument that Order XXXVIII Rule 5 requirements must be strictly met. The Court directed the respondent to either deposit USD 262,837.98 plus GBP 9,400 or furnish a bank guarantee, restrained disposal of assets, and ordered asset disclosure. The Court rejected the more drastic reliefs of receiver appointment and attachment at this stage.

3. Relevant Facts

The Agreement

• The parties executed a Repayment Schedule Agreement dated 09.01.2025.

• Under Clause 2, the respondent acknowledged that USD 215,310.01 was payable towards demurrage.

• Clause 3 provided that default in payment of any instalment would render the entire balance payable.

• The first instalment became due on 15.01.2025.

Default and Correspondence

• The respondent did not pay the first instalment.

• Despite several reminders and emails, no payment was made.

• The respondent repeatedly requested more time and cited financial difficulties, inward remittance delays, and banking sanctions.

• The respondent did not dispute the existence of liability in these communications.

Arbitration Proceedings

• Arbitration was invoked by email dated 27.03.2026.

• The respondent raised a defence of settlement through Bulk Commodities (Bulkcom) and claimed a pledge/adjustment.

• The petitioner's English solicitors called upon the respondent to substantiate these claims.

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