Debarment Not Amenable to Interim Relief Under Section 9 of the Arbitration Act: Delhi High Court

The Hon’ble Delhi High Court, in NCC Limited v. Airports Authority of India (O.M.P. (I) (COMM.) 140 of 2026), decided on July 1, 2026, held that an order debarring a contractor from participating in future tenders is not a dispute arising out of contractual rights and obligations and, therefore, cannot ordinarily be challenged by way of an application under Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). The Hon’ble Court observed that debarment is an exercise of public law or administrative power affecting a party’s future eligibility to contract, and not a contractual remedy capable of protection through interim measures under the Arbitration Act. Holding the challenge to the debarment order to be non-arbitrable, the Court found that the very foundation for invoking jurisdiction under Section 9 of the Arbitration Act consequently disappeared.

The dispute arose from an Engineering, Procurement and Construction (“EPC”) contract awarded by the Airports Authority of India (“AAI”) to NCC Limited for the construction of the New Domestic Terminal Building and allied structures at Patna Airport. Following delays in execution, the causes of which were disputed between the parties, and subsequent disputes concerning the quality of the works and the rectification of defects, AAI issued a show cause notice proposing debarment and, upon consideration of NCC Limited’s reply thereto, issued a debarment order prohibiting NCC Limited from participating in its future tenders for a period of two years. Aggrieved by the debarment, NCC Limited approached the Hon’ble Delhi High Court under Section 9 of the Arbitration Act seeking a stay on the operation of the debarment order pending commencement of arbitral proceedings.

NCC Limited contended that the debarment arose directly from disputes relating to performance of the EPC contract and was, therefore, arbitrable. It argued that the debarment was intrinsically connected with the contractual relationship between the parties and was liable to be stayed under Section 9 of the Arbitration Act. AAI, on the other hand, submitted that the power to debar contractors was an independent administrative power and did not arise from the contractual rights and obligations under the EPC contract.

The Hon’ble High Court observed that the scope of Section 9 of the Arbitration Act is confined to granting interim measures for the preservation or protection of the subject matter of arbitration. It held that a debarment order does not regulate the parties’ contractual rights under the existing contract but restricts the contractor’s ability to participate in future tenders, thereby operating in the realm of public law. The Hon’ble Court further noted that unless the contract itself expressly provides for debarment as a contractual remedy, such action cannot be treated as forming part of the subject matter of arbitration. Relying on the decisions of the Hon’ble Supreme Court in Vidya Drolia v. Durga Trading Corporation, Patel Engineering Ltd. v. Union of India and Verigamto Naveen v. Government of Andhra Pradesh, the Hon’ble Court held that the power to debar was traceable to the Airports Authority of India Act, 1994 read with the AAI Works Manual and was entirely dehors the contract between the parties. It also noted that the contract had substantially worked itself out, the terminal building having been commissioned and a provisional completion certificate having been issued, and that the impugned action neither terminated the contract nor determined any subsisting contractual right. Consequently, interim relief against a debarment order could not ordinarily be granted under Section 9 of the Arbitration Act.

The Hon’ble Court also distinguished decisions where courts had entertained similar challenges, observing that those cases either involved express contractual provisions governing debarment, challenges founded upon violations of principles of natural justice, or circumstances where the parties had themselves treated the debarment as falling within the contractual dispute resolution framework. It clarified that the maintainability of proceedings under Section 9 of the Arbitration Act must be determined by the legal source of the impugned power and not merely because the underlying facts arose during performance of a contract.

Accordingly, the Hon’ble High Court held that the petition under Section 9 of the Arbitration Act was not maintainable and declined to examine the merits of the debarment order, leaving NCC Limited at liberty to pursue appropriate remedies before the competent forum in accordance with applicable law.