Bombay HC Grants Extensive Section 9 Protection Despite Contract Termination
Order dated 12.8.2026 of the High Court of Bombay in Arbitration Application (L) No.17791 of 2026 of Arkawelle Infra Pvt Ltd Vs. Carbon Minus Energy Pvt Ltd.
The Arbitrator is appointed in the above petitioin.
Judgment dated 31.7.2026 of the High Court of Bombay in Commercial Arbitration Petition (L) No.294 of 2026 of Arkawelle Infra Pvt Ltd Vs. Carbon Minus Energy Pvt Ltd. And others
The present Petition is filed under Section 9 of the Arbitration and Conciliation Act, 1996 seeking urgent interim protection before commencement of the proposed arbitral proceedings. The petitioner prays that respondent No.1 should not transfer, either fully or partly, the obligations arising from the Letter of Award dated 25 March 2025 and the Agreement of Association dated 14 April 2025 and, if such transfer has been made, the same should remain subject to the final decision in arbitration. The petitioner has also claimed protection over its alleged 30% interest in the shares of respondent No.1 and has sought restraint against any dealing with those shares. Further prayers are made for appointment of a Court Receiver over the assets of the respondents, disclosure on oath of their assets, bank accounts, financial records, liabilities and pending litigations, production of details and copies of contracts allegedly executed with respondent Nos.4 and 5 concerning the project, and a direction that respondent No.1 should maintain status quo in respect of its assets and business operations, including those of respondent No.2, till the arbitral proceedings are finally decided. 2. The petitioner is a Private Limited Company. A Letter of Award dated 25 March 2025 was issued in its favour and thereafter an Agreement of Association dated 14 April 2025 was also executed with it. Respondent No.1 is the company which, on behalf of respondent No.2, issued the Letter of Award dated 25 March 2025 in favour of the petitioner. It also entered into the Agreement of Association dated 14 April 2025 with the petitioner. Respondent No.2 is a Special Purpose Vehicle. It is a subsidiary company formed under respondent No.1. Respondent No.3 is also a party to the Agreement of Association. According to the petitioner, respondent No.3 acted as a facilitator for the petitioner in the project. Respondent Nos.4 and 5 are the parties to whom 2 Uploaded on – 31/07/2026 Downloaded on – 23/10/2026 15:31:21 carbpl294-2026-J.doc respondent No.1 is alleged to have reallocated parts of the project after terminating the petitioner’s contract. According to the petitioner, this termination and reallocation were illegal and arbitrary because the work originally awarded to the petitioner was later given to these respondents.
The petitioner further states that throughout the transaction it had shared several confidential documents and information with respondent No.1, including designs, proposals, pricing details, technical information and particulars of its vendors and clients. According to the petitioner, such information was protected under the Letter of Award and the Agreement of Association, both of which prohibited respondent No.1 from dealing with the petitioner’s clients, partners, or vendors. In spite of this, respondent No.1 allegedly entered into arrangements with the other respondents and directly awarded 168 MW EPC work to respondent No.5, who was the petitioner’s vendor, without its consent. A part of the remaining work was also awarded to respondent No.4. On 5 November 2025, the petitioner issued a legal notice to respondent No.5 with a copy marked to respondent No.1. Respondent No.5, through its Advocate, replied to the said legal notice on 12 November 2025. According to the petitioner, handing over of the land was a mandatory condition before the EPC work could begin. Since respondent No.1 did not hand over even a single parcel of land, performance of the contract became impossible. Therefore, according to the petitioner, the termination dated 21 June 2025 is arbitrary and cannot be sustained.
The contract was awarded on 25.3.2025 and the Agreement of Association was executed on 14.4.2025.
The project of more than Rs.1000 crores related to development of 1052 MW grid connected Solar Photovoltaic Power Projects on lands belonging to the Water Resources Department of Maharashtra for lift irrigation schemes situated in different districts of the State.
The Agreement of Association was executed on 14 April 2025. Its recitals show that all parties agreed to work together for successful execution and maintenance of the project awarded under the MSEDCL tender. The agreement records that each party would contribute according to its own experience and expertise for successful completion of the project. Therefore, at least at this stage, it appears that the Letter of Award and the Agreement of Association are connected documents forming part of one commercial transaction. One document cannot be properly understood by keeping the other document outside consideration. Prima facie, both documents appear to supplement each other and regulate different parts of the same commercial arrangement.
One circumstance, however, requires careful consideration. On the same day on which respondent No.1 issued the Termination Letter, another communication was also issued stating that “as a one time gesture of goodwill and good faith,” respondent No.1 was willing to consider allotment of a 53 MW project to the petitioner. Prima facie, if respondent No.1 had really formed an 16 Uploaded on – 31/07/2026 Downloaded on – 23/10/2026 15:31:21 carbpl294-2026-J.doc opinion that the petitioner’s conduct was so serious that every relationship deserved immediate termination, then issuance of another proposal on the same day for allotting a fresh project may require explanation. Whether that communication amounted to revival of negotiations, merely a fresh commercial proposal, or only an independent offer, is a matter which will have to be examined by the learned Arbitral Tribunal. Nevertheless, this conduct of respondent No.1 on the same day cannot be ignored while examining whether the petitioner has established a prima facie case.
On 21.6.2025, the the contract was terminated.
However, throughout the period till termination the petitioner had shared several confidential documents and information with respondent no.1, including designs, proposals, pricing, details, technical information, vendors and clients. This was protected the letter of Award and the Association Agreement and also prohibited the respondent no.1 from dealing with its clints, partners or vendors.
Surprisingly, after termination, the respondent no.1 directly awarded the part of the said project to the respondent no.5 – vendor of the petitioner, without its consent. Part of the project work was given to the respondent no.4.
However, merely because the project relates to public infrastructure, it does not take away the jurisdiction of this Court under Section 9 of the Arbitration and Conciliation Act. The Court is required to balance the competing interests of both sides. While ensuring that the public project is not delayed, the Court must also see that rights of the parties are not defeated before the disputes are adjudicated by the learned Arbitral Tribunal.
