Delhi High Court
Parsvnath Developers Limited & Ors vs Asset Reconstruction Company India … on 19 February, 2026
Author: Jasmeet Singh
Bench: Jasmeet Singh
$~J
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 08.12.2025
Judgment pronounced on: 19 .02.2026
+ O.M.P. (I) (COMM) 330/2025, I.A. 20016/2025, I.A. 26706/2025
PARSVNATH DEVELOPERS LIMITED & ORS. ...Petitioners
Through: Mr. Rajat Joneja, Mr. Manoranjan
Sharma, Mr. Arpit Dwivedi, Mr.
Karan Rajpurohit and Ms. Sakshi
Kapoor, Advs.
versus
ASSET RECONSTRUCTION COMPANY INDIA LIMITED &
ORS. ...Respondents
Through: Mr. Rajiv Nayar, Sr Adv., Mr.
Dayan Krishnan, Sr. Adv. with
Mrs Meghna Mishra, Mr Karan
Luthra, Ms Ujjwala Gupta and Mr
Shubham Madaan, Advs. Mr
Siddharth Joshi, Adv.
+
O.M.P. (I) (COMM) 367/2025
NOIDA MARKETING PRIVIATE LIMITED. ...Petitioner
Through: Mr. Rajat Joneja, Mr. Manoranjan
Sharma, Mr. Arpit Dwivedi, Mr.
Karan Rajpurohit and Ms. Sakshi
Kapoor, Advs.
versus
ASSET RECONSTRUCTION COMPANY INDIA LIMITED &
ORS. ... Respondents
Through: Mr Rajiv Nayar, Sr Adv., Mr.
Dayan Krishnan, Sr. Adv. with
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 1 of 46
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Mrs Meghna Mishra, Mr Karan
Luthra, Ms Ujjwala Gupta and
Mr Shubham Madaan, Advs. Mr
Siddharth Joshi, Adv.
CORAM:
HON'BLE MR. JUSTICE JASMEET SINGH
JUDGMENT
O.M.P. (I) (COMM) 330/2025
1. This is a petition filed under Section 9 of the Arbitration and
Conciliation Act, 1996 (“the Act”) seeking the following reliefs:
―a) Pass an interim Order staying the effect of Email dated
16.07.2025 issued by Respondent No. 1 whereby
Respondent No. 1 has unilaterally rejected the
Restructuring Proposal of the Petitioners and/or all actions
arising therefrom;
b) Pass an interim order restraining the Respondents, their
employees, officers and agents from alienating or creating
any third-party rights on the securities, guarantees and
shares pledged by the Petitioners in favour of the
Respondents under the Loan Agreements and/or taking any
coercive steps qua the Petitioners and/or its assets;
c) Pass an interim order restraining the Respondents from
taking any action(s) qua Petitioner No.10 to 12, who have
extended Personal Guarantees to secure the Amount
payable to the Respondents;
d) Pass an interim order staying the further proceedings in
the revival application filed by Respondent No.1 under
Section 7 of the Insolvency and Bankruptcy Code, 2016
before the Hon’ble National Company Law Tribunal, New
Delhi;
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 2 of 46
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e) Pass an interim order restraining the Respondents from
taking any coercive steps under the Loan Agreements,
security documents or any other contractual arrangement;
f) Pass ad-interim ex-parte order in terms of prayer clause
(a), (b), (c), (d) and (e) above;
…‖
2. When the matter came up before this Court on 26.09.2025, this Court
observed as under:-
―1. Without prejudice to the rights and contentions of the
Petitioners, Mr. Tanmay Mehta, learned counsel for the
Petitioners, on instructions, submits that in order to show
the bona fides of the Petitioners, they will deposit a sum of
Rs.75 crores in this Court within four weeks from today.
2. Mr. Rajiv Nayar, learned Senior Counsel appearing on
behalf of Respondent No.1, on instructions, submits that a
request will be made before National Company Law
Tribunal, New Delhi, on 28.09.2025 when the petition filed
under Section 7 of IBC, 2016 is listed, not to pass a final
order since this Court is hearing the present petitions.
3. Let an affidavit be filed on behalf of the Petitioners on
or before 06.10.2025, undertaking that a sum of Rs.75
crores will be deposited in this Court within four weeks
from today.
4. List for further hearing on 17.10.2025.‖
3. The said order continued till 29.10.2025 when Mr. Nayar, learned
senior counsel for respondent No. 1 on instructions stated that he is
unable to extend the concession made on 26.09.2025.
4. Consequently, this Court on 29.10.2025 was pleased to direct as
under:-
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 3 of 46
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―1. Arguments heard in part.
2. On 26.09.2025, learned counsel for the respondent No.1
made a statement before this Court that a request would be
made to the National Company Law Tribunal (NCLT) not to
pass the final order since this Court is hearing the present
petition.
3. Mr. Nayar, learned senior counsel for respondent No.1,
states that he is unable to extend that undertaking any
further.
4. Mr. Mehta, learned counsel for the petitioners, states that
Rs. 75 crores will be deposited within 3 weeks from today.
5. I am of the view thatsince the matter has been heard at
some length, it would be in the fitness of things that the
interim order dated 26.09.2025 should continue till the next
date of hearing. Additionally, on 26.09.2025, the interim
order was passed on the assurance that the amount would
be deposited within 4 weeks from the date of the order. Mr.
Mehta, learned counsel for the petitioners, assures that the
amount will be deposited within 3 weeks.
6. Hence, the directions in the order dated 26.09.2025 are
continued till the next date of hearing.
7. List for further arguments on 22.11.2025.‖
5. The said order was challenged and the Division Bench in FAO (OS)
(COMM)180/2025 while setting aside the order dated 29.10.2025
directed this Court to pass an appropriate order and thereafter in terms
of the directions of the Division Bench, the matter has been taken up
for hearing on 06.11.2025.
FACTUAL BACKGROUND AS PER THE PETITION
6. Petitioners and its group companies availed various loan facilities
aggregating 4861.25 crores from respondent Nos. 2 and 3 for the
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 4 of 46
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purposes of financing their real estate projects, out of which Rs.
4,153.26 crores were disbursed. The petitioners repaid a sum of about
Rs. 4.696.01 crores including interest. Out of the disbursed amount, a
sum of Rs. 394.36 Crores (grossed-up for TDS) was either deducted
prior to disbursal or taken back immediately thereafter again, without
any proper explanation or reconciliation. Despite having deducted and
despite having charged a significant amount of Rs. 394.36 Crores
(gross-up TDS), the respondent Nos. 2 and 3 have neither adjusted Rs.
394.36 Crores towards the total outstanding dues nor refunded the same
to the petitioners along with applicable interest. Even thereafter the
respondent Nos. 2 and 3 claimed that a sum of 489.32 crores was
pending for payment.
7. The following chart shows the loan structure:
S. No. Particulars Amount (Cr.)
1. Amount of Loans sanctioned 4,861.25
2. Amount of Loans disbursed 4,153.26
3. Amount of Principal Repaid 3,689.98
4. Amount of Interest paid 1,006.03
5. Principal outstanding as per Respondent 463.28
No. 2 demand
6. Interest Demanded by Respondent No. 2 26.04
7. Amount of Upfront payments retained 394.36
by respondent No. 2
8. Interest on Upfront payments @ interest 1054.92
payable on respective loans till June
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 5 of 46
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2024
Balance receivable from the 959.97
Respondents (5+6-7-8)
SECTION 7 IBC PROCEEDINGS
8. In 2022, respondent No. 2 initiated proceedings under Section 7 of the
Insolvency and Bankruptcy Act, 2016 (“IBC”) against the petitioners
with the intent to coerce payment of disputed amounts; however, upon
the petitioners demonstrating that all dues stood cleared and
highlighting the respondent Nos. 2 and 3 contractual breaches, the
proceedings were withdrawn and dismissed by the NCLT on
11.04.2022, followed by withdrawal of all recall notices on 20.04.2022
with an express admission of no outstanding dues.
9. Despite this, respondent Nos. 2 and 3 again issued notices dated
30.01.2023 and unilaterally enhanced interest without reconciliation of
accounts, release of securities, or issuance of NOCs, which the
petitioners duly objected to. Thereafter, loan recall notices dated
01.09.2023 were issued, and although in a meeting held on 14.09.2023
the respondent Nos. 2 and 3 agreed to keep the recalls in abeyance,
they acted in bad faith by filing a fresh Section 7 petition (C.P. (IB) No.
690/ND/2023).
10. Upon being confronted with their own defaults and payments made by
the petitioners under protest and duress, the said Section 7 petition was
disposed of by the NCLT vide order dated 01.02.2024. In parallel,
respondent No. 2 had also filed a Section 9 petition under the Act,
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 6 of 46
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which was disposed of by the order dated 20.12.2023, referring
disputes to arbitration and treating the petition as one under Section 17;
nevertheless, respondent Nos. 2 and 3 subsequently sought to withdraw
the arbitral proceedings on 20.04.2024.
PRESENT DISPUTE
11. Towards the end of 2024, the parties commenced settlement talks and
numerous agreements/documents were exchanges between the parties.
During this period, respondent Nos. 2 and 3 assigned the entire loan
exposure of the petitioners to respondent No. 1, Asset Reconstruction
Company (India) Limited (“ARCIL”) through an Assignment
Agreement.
12. Following the assignment, fresh settlement negotiations were initiated
between the petitioners and respondent No. 1, which culminated in a
mutual understanding that the entire outstanding loan exposure of the
Parsvnath Group would be settled for an aggregate amount of ₹750
Crores already negotiated with respondent Nos. 2 and 3 earlier. Out of
this, petitioner No. 1 was to pay ₹310 Crores, while the remaining
amount was to be paid by other group entities.
13. In pursuance of the said understanding, respondent No. 2 withdrew the
pending insolvency proceedings filed under Section 7 of the IBC on
17.02.2025. On the same day, the petitioners handed over two demand
drafts as part of the settlement consideration totalling to 75 crores.
14. Demonstrating their bona fides and commitment to the settlement, the
petitioners made total payments aggregating to ₹125 Crores (including
75 crores) on the strength of the assurances given by respondent No. 1
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 7 of 46
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that the restructuring and settlement would be formalised shortly and
all disputes would stand amicably resolved.
15. Pursuant to the mutual understanding, the petitioners submitted a
detailed restructuring proposal to the respondent No.1 vide letter dated
26.03.2025 and an email dated 19.06.2025. It is the case of the
petitioners that the said proposal was consistent with earlier discussions
and included a clear roadmap for final closure, timelines, and payment
schedules. Multiple meetings were held between the parties, and further
drafts were exchanged to finalise the restructuring documentation. The
same was also recorded in Order dated 17.02.2025 of the NCLT and
30.04.2025 of the High Court.
16. In furtherance of the same, and acting in good faith, the petitioners
withdrew their pending Section 9 petition before this Hon’ble Court,
relying on the representations of the respondent No. 1.
17. However, respondent No. 1, vide email dated 16.07.2025, unilaterally
withdrew from the settlement process, stating that it would not proceed
with the restructuring and would instead take action in accordance with
law.
18. Hence, the present petition to preserve the subject matter of the arbitral
dispute.
SUBMISSIONS ON BEHALF OF THE RESPONDENT NO.1
19. Mr. Rajiv Nayar and Mr. Dayan Krishnan, learned senior counsels for
the respondent No. 1, at the outset, objected to the maintainability of
the petition and presented a four-fold submission, which is as follows:
No Arbitration Agreement Exists
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 8 of 46
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20. It is argued, that the petition is not maintainable as an Arbitration
Agreement must be in writing under Section 7 of the Act.
Consequently, no arbitration agreement can arise from the alleged oral
agreement relied upon by the petitioners. Even otherwise, the Draft
Restructuring Agreement does not contain any arbitration clause.
21. Further, the arbitration clause in the Loan Agreement cannot be
invoked, as there is no specific incorporation of the same into the Draft
Restructuring Agreement; a general reference is insufficient in law. On
the contrary, Clause 7(b) of the Draft Restructuring Agreement
expressly confers jurisdiction on the Courts at New Delhi, and Clause
7(m) provides that its terms shall prevail over the Loan Agreements,
clearly evincing an intention not to arbitrate.
22. Additionally, the Draft Restructuring Agreement extends beyond the
petitioners’ Loan Agreements and covers multiple entities like PDL,
Noida, Enormity and Congenial, rendering the arbitration clauses in the
individual Loan Agreements inapplicable to the present disputes.
No Concluded Contract Between the parties
23. The second limb of the argument is based on the premise that there is
no Contract between the parties, and if this Court were to grant Prayer
A, of the petitioners, which is seeking stay of email dated 16.07.2025,
then the same would be in the nature of a mandatory injunction at an
interim stage and will lead to creation of a contract where none exists.
24. Learned Senior Counsels submit that it is settled law that a concluded
contract requires certainty of terms and consensus ad idem, the burden
of establishing which lies squarely on the petitioners. Even assuming
that the parties had arrived at an agreement, any post-agreement
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By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 9 of 46
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negotiations would be relevant to determine whether such agreement
continued to subsist or stood rescinded.
25. In this context, they bring my attention to the impugned email
communication dated 16.07.2025, issued by respondent No. 1, which
was in response to the email dated 04.06.2025 whereby the petitioners
had circulated a “revised draft” of the restructuring agreement seeking
the concurrence of respondent No. 1. However, vide email dated
16.07.2025, respondent No. 1 rejected the proposal forwarded by the
petitioners.
26. It is also stated that the petitioners’ pleaded case was of an alleged oral
Agreement; however, in rejoinder, they impermissibly shifted their case
to contend that an email dated 30.12.2024 constituted an “offer” and a
court-recorded statement on 17.02.2025 amounted to “acceptance”.
This new case, being contrary to their own pleadings, is liable to be
rejected.
27. Even otherwise, it is stated the undisputed correspondence post-
17.02.2025 demonstrates continuous negotiations spanning several
months, including exchange of proposals, drafts, counter-drafts and
open issues, culminating in rejection of the proposal on 16.07.2025. It
is argued that this conclusively shows that there was neither a
concluded contract nor any subsisting settlement, rather, any prior
understanding, assuming it existed, stood rescinded. The Draft
Restructuring Agreement itself is inchoate, with all essential terms,
settlement amount, repayment schedule, interest and securities left
blank, thereby negating any consensus ad idem.
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 10 of 46
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28. Additionally, it is submitted that the petitioners’ failure to make any
payment beyond Rs.125 crores under the alleged payment schedule
further belies their claim of a concluded settlement. Their attempt to
alternately rely on the email/order as a concluded contract and the Draft
Restructuring Agreement when confronted with non-payment amounts
to approbation and reprobation. In such circumstances, neither specific
performance nor interim relief under Section 9 of the Act can be
granted.
Bar on Civil Courts for proceedings falling under IBC
29. The third limb of the argument of learned senior counsels, deals with
express bar of Civil Courts under Sections 231 and 238 of the IBC
from granting injunctions restraining proceedings initiated by a
financial creditor under Section 7 of the IBC. While the petitioners’
claim for specific performance may lie elsewhere, no civil court can
interdict or stay duly instituted IBC proceedings before the NCLT.
30. Any injunction restraining proceedings before the NCLT would be
barred by Section 41(b) of the Specific Relief Act, 1963 and would
impermissibly restrain respondent No.1 from pursuing its statutory
remedies.
Prayers are in teeth of legal remedies present under SARFAESI and
RDB Act
31. The last leg of the respondent No. 1’s submission is that the injunctions
sought in the prayers of the petition effectively restrains respondent
No.1 (a secured creditor) from exercising its statutory recovery powers
under the SARFAESI Act, 2002 and the Recovery Of Debts And
Bankruptcy Act, 1993 (“RDB Act”). Enforcement actions and
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 11 of 46
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objections thereto are exclusively governed by these special
enactments, which constitute a complete code and confer sole
jurisdiction on the DRT, expressly barring civil court injunctions.
32. Learned senior counsels’ state that the dispute, being one of recovery
and quantification of dues, squarely falls within the domain of the RDB
Act. Even assuming any independent counter-claim exists, no interim
relief can interdict recovery proceedings provided by a statute.
SUBMISSIONS ON BEHALF OF THE PETITIONERS
Existence of a Concluded Contract
33. Mr. Tanmaya Mehta, learned counsel for the petitioners, submits that in
the present case, the parties had arrived at a settlement through a
Composite Restructuring Agreement, which was negotiated and
finalised after extensive discussions between the parties. The said
settlement was duly accepted by the respondent No. 1, who also acted
upon it; hence, a concluded and binding contract came into existence
between the parties.
34. To buttress his argument, he states that the petitioners, by email dated
30.12.2024, made an offer proposing a settlement schedule, expressly
conditioned upon payment of ₹125 crores by March 2025. The
respondent No. 1 accepted the said offer subject to the same
contingency, and upon the petitioners remitting ₹125 crores on
17.02.2025, the condition precedent stood fulfilled, thereby resulting in
a concluded and enforceable contract.
35. As per him, the existence and implementation of the contract is further
evidenced by the respondents’ acceptance of the said amount, the joint
recording of settlement in the order dated 17.02.2025 passed by the
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 12 of 46
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NCLT, the consequential vacation of the interim status quo order dated
21.10.2024, and the subsequent recording of the settlement by this
Court vide order dated 30.04.2025. He states, these acts constitute
unequivocal acceptance by conduct and clearly demonstrate that the
parties gave full effect to the offer dated 30.12.2024, leaving no manner
of doubt that a binding contract stood concluded between them.
36. He further states that on 04.06.2025, the petitioners shared the Draft
Composite Restructuring Agreement detailing the restructured payment
obligations and the agreed mechanism for monetization of group assets.
This was followed by a reiteration on 19.06.2025 of respondent No.1’s
readiness and willingness to pay, along with securities and an updated
payment schedule, culminating in a meeting on 09.07.2025 where the
date for execution of the documents was fixed for 16.07.2025,
evidencing that all material terms stood crystallized. It is his
submission that the respondent No. 1 has failed to place on record any
correspondence showing that the petitioners’ email dated 04.06.2025
was ever declined.
37. Despite this, respondent No. 1 unilaterally withdrew from the
settlement without justification, compelling the petitioners to approach
this Court, with the existence and effect of the concluded settlement
being matters to be finally decided in arbitration.
38. He also states that it is a settled principle that execution of formal
documentation is not a sine qua non for contract formation, and
absence of agreement on formal documentation does not negate an
otherwise concluded contract. In the present case, upon fulfilment of
the contingency by payment of ₹125 crores on 17.02.2025, the
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By:MAYANK
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settlement stood concluded and became operative, and thereafter the
parties proceeded not on the basis of negotiations but on the footing
that a binding settlement had been arrived at. Reliance is place on
Trimex International v. Vedanta, (2010) 3 SCC 1 and Kollipara
Sriramulu v. T, Aswatha, 1968 SCC OnLine SC 87.
Existence of an Arbitration Clause
39. Mr. Mehta, learned counsel, further states that it is undisputed that all
the original Loan Agreements contain an arbitration clause, including
Clause 22(a), which provides for reference of all disputes arising out of
or in connection with the loan documents to arbitration. The relevant
portion of Clause 22 of the Loan Agreements reads as under:
―This Loan Documents is/shall be governed by Indian Laws
and the Court mentioned in Schedule-1 hereunder shall
have exclusive jurisdiction relating to any matter/issue
under or pursuant to the Loan Documents. Notwithstanding
anything to the contrary:
a. if any dispute/disagreement/differences (“Dispute”) arise
between the Parties (including any Obligor(s)) during the
subsistence of the Loan Documents and/or thereafter, in
connection with, inter alia, the validity, interpretation,
implementation and/or alleged breach of any provision of
the Loan Documents, jurisdiction or existence/appointment
of the arbitrator or of any nature whatsoever, then, the
Dispute shall be referred to a sole arbitrator who shall be
appointed by the Lender only. It is expressly agreed that in
any circumstance, the appointment of the sole arbitrator asDigitally Signed
By:MAYANK
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aforesaid shall be and shall always deemed to be the sole
means for securing the appointment/nomination of the sole
arbitrator, without recourse to any other alternative mode
of appointment of the sole arbitrator. The place of the
arbitration shall be New Delhi and the arbitration
proceedings shall be governed by the Arbitration &
Conciliation Act, 1996 (or any statutory re-enactment
thereof for the time being in force) and shall be in the
English language. The award shall be binding on the
Parties subject to the applicable laws in force and the
award shall be enforceable in any competent court of law.‖
40. It is also submitted that at the stage of a petition under Section 9 of the
Act, the Court is only required to prima facie satisfy itself as to the
existence of an arbitration agreement, and not to undertake any detailed
inquiry into the scope or arbitrability of the disputes. Questions as to
whether the disputes fall within the ambit of the arbitration clause
involve complex factual issues and are exclusively within the domain
of the Arbitral Tribunal. Reliance is placed on SBI General Insurance
Co. Ltd. v. Krishh Spinning, 2024 SCC OnLine SC 1754.
41. He further submits that the question of whether the arbitration clause
contained in the earlier Loan Agreements has been superseded or
novated by any subsequent arrangement is a matter for the Arbitral
Tribunal to determine and cannot be conclusively adjudicated at this
preliminary stage.
42. Learned counsel also emphasises that a signed agreement is not
required where the parties have acted upon the terms of a draft
Digitally Signed
By:MAYANK
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agreement by conduct; such conduct is sufficient to infer the existence
of a valid arbitration agreement by incorporation or reference. Reliance
is placed on the judgment of the Hon’ble Supreme Court in Inox Wind
Limited v. Thermocables Limited, (2018) 2 SCC 519 wherein it was
held that incorporation by reference is legally permissible and binding
when the parties have demonstrated intent through performance.
43. Lastly, it is submitted that the issue as to whether the arbitration clause
contained in an earlier agreement stands superseded or novated is a
matter to be determined by the Arbitral Tribunal, and cannot be
adjudicated at the stage of proceedings under Section 9 of the Act
Bar on Jurisdiction by NCLT under Section 63 and 231 of IBC
44. Mr. Mehta, learned counsel, submits that the jurisdiction of a civil court
under Section 9 of the CPC is wide and can be excluded only by
express statutory bar or by necessary implication. Such exclusion, he
contends, must be construed strictly and only to the extent of the
powers specifically conferred upon the Tribunal under the relevant
statute. According to him, it is therefore essential to first examine the
scope and ambit of the authority vested in the NCLT under the IBC,
and thereafter determine whether the reliefs sought in the present
petition fall within that statutory domain.
45. He also argued that the NCLT, being a creature of statute, exercises
limited and circumscribed powers and is not competent to grant
declaratory reliefs, enforce specific performance of a concluded
settlement agreement at the instance of a borrower, or entertain
independent claims, cross-claims, set-offs, or unliquidated counter-
claims by a debtor against a creditor.
Digitally Signed
By:MAYANK
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46. It is further contended that the IBC does not envisage a borrower
approaching the NCLT as a petitioner in order to agitate such disputes,
nor does it provide a mechanism for adjudication of substantial
defences or counter-claims in insolvency proceedings, which are
summary in nature. In such circumstances, where issues fall outside the
statutory jurisdiction of the NCLT, the civil court’s jurisdiction under
Section 9 CPC remains intact. Reliance is also placed on the principle
that courts may grant anti-suit or anti-tribunal injunctions to prevent
abuse of insolvency proceedings, and that the statutory bars under
Sections 63, 231 and 238 of the IBC or Section 41 of the Specific
Relief Act, 1963 would not operate where the relief sought lies beyond
the competence of the NCLT.
Applicability of Section 41(b) of Specific Relief Act, 1961
47. Mr. Mehta, learned counsel, submits that Section 41(b) of the Specific
Relief Act, 1963 does not bar the relief sought by the petitioners
because the provision applies only to courts and not to tribunals like
the NCLT. The NCLT is a statutory tribunal, subordinate to this Court,
and is not empowered under the IBC to entertain borrower-initiated
claims or counterclaims, making its proceedings entirely creditor-
centric. Interpreting “Court” to include tribunals would be contrary to
the plain language of the statute and would leave the petitioners
without any effective remedy, resulting in irreversible prejudice.
Present Proceedings are not barred under SARFAESI and RDB Act
48. Mr. Mehta, learned counsel, states that the present petition is not barred
by the SARFAESI Act, 2002 or the RDB Act, as the dispute does not
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 17 of 46
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concern recovery under the original loan agreements but arises from a
subsequent settlement which allegedly novated those agreements.
49. This settlement, said to be evidenced by the email dated 30.12.2024
read with the draft restructuring agreement, was substantially acted
upon, including payment of Rs.125 crores and withdrawal of IBC
proceedings. The principal relief sought is specific performance of this
settlement, which, according to the petitioners, falls outside the
statutory domain of SARFAESI and the RDB Act. It is argued that
these statutes provide enforcement mechanisms and do not bar recourse
to civil or arbitral remedies, particularly when no independent forum
exists for a borrower to institute a primary claim.
50. It is further contended that there was no default in relation to the
proposed deposit of Rs.75 crores as recorded in Order dated
26.09.2025, as the obligation was contingent and the relevant order was
subsequently set aside. Lastly, it is stated that the settlement
contemplated reciprocal, step-by-step performance: the respondent
No.1 was first required to release securities and grant no-objection for
sale of assets, failing which the petitioners cannot be held responsible
for non-adherence to the payment schedule.
ANALYSIS AND FINDINGS
51. I have heard learned senior counsels/counsels for the parties and
perused the material on record.
52. Before adverting to the merits of the present petition it is important to
address the maintainability aspect.
53. The first issue that arises for consideration is whether the present
petition, insofar as it seeks interim reliefs, is maintainable under
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Section 9 of the Act. The respondent No.1 has questioned the
maintainability of the petition on the ground that the claims are covered
under the IBC and the SARFAESI Act, which provide for adjudication
by specialised tribunals, and that the reliefs sought would effectively
interdict proceedings under those statutes.
54. Even assuming, for the sake of argument, that the petitioners’ case is
accepted at face value and that the dispute falls outside the purview of
such specialised tribunals and is otherwise capable of being determined
by this Court, the threshold requirement under Section 9 still remains to
be satisfied. At the prima facie stage, the Court must first be satisfied
about the existence of an arbitration agreement between the parties.
55. It is well settled that the scope of inquiry under Section 9 cannot be
broader than that under Section 11 of the Act. Therefore, applying the
same test, the Court must, at the outset, ascertain the existence of a
valid and binding arbitration agreement before proceeding to consider
the grant of any interim relief.
Existence of an Arbitration Agreement
56. It is a settled position of law that the Court under Section 9 of the Act is
to preserve the substratum of the arbitral dispute. Additionally, the
Court at Section 9 stage is only required to see a prima facie case. The
Court at Section 9 stage is not required to go into detailed hearing of
the parties and give findings on fact which can only be given by the
Arbitral Tribunal after recording detailed evidence and going through
the documents. What needs to be seen by this Court at this stage is
whether an Arbitration Agreement exists between the parties.
57. In SBI General Insurance Co. Ltd. (supra) it was observed as under:
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“96. Thus, the position after the decisions in Mayawati
Trading [Mayavati Trading (P) Ltd. v. Pradyuat Deb
Burman, (2019) 8 SCC 714 : (2019) 4 SCC (Civ) 441]
and Vidya Drolia [Vidya Drolia v. Durga Trading Corpn.,
(2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] is that
ordinarily, the Court while acting in exercise of its powers
under Section 11 of the 1996 Act, will only look into the
existence of the arbitration agreement and would refuse
arbitration only as a demurrer when the claims are ex facie
frivolous and non-arbitrable.
…
(iii) What is the effect of the decision of this Court in
Interplay Between Arbitration Agreements under the
Arbitration Act, 1996 & the Stamp Act, 1899, In re on the
scope of powers of the Referral Court under Section 11 of
the 1996 Act?
97. …Some of the relevant observations made by this Court
in Interplay Between Arbitration Agreements under the
Arbitration Act, 1996 & the Stamp Act, 1899, In
re [Interplay Between Arbitration Agreements under the
Arbitration Act, 1996 & the Stamp Act, 1899, In re, (2024) 6
SCC 1 : 2023 INSC 1066] are extracted hereinbelow: (SCC
pp. 95-97, paras 190 & 196-97)
―190. … However, the effect of the principle of
competence-competence is that the Arbitral Tribunal
is vested with the power and authority to determine its
enforceability. The question of enforceability survives,
pending the curing of the defect which renders the
instrument inadmissible. By appointing a tribunal or
its members, this Court (or the High Courts, as the
case may be) is merely giving effect to the principle
enshrined in Section 16. The appointment of an
Arbitral Tribunal does not necessarily mean that the
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agreement in which the arbitration clause is
contained as well as the arbitration agreement itself
are enforceable. The Arbitral Tribunal will answer
precisely these questions.
***
196. The corollary of the doctrine of competence-
competence is that courts may only examine whether
an arbitration agreement exists on the basis of the
prima facie standard of review. The nature of
objections to the jurisdiction of an Arbitral Tribunal
on the basis that stamp duty has not been paid or is
inadequate is such as cannot be decided on a prima
facie basis. Objections of this kind will require a
detailed consideration of evidence and submissions
and a finding as to the law as well as the facts.
Obligating the court to decide issues of stamping at
the Section 8 or Section 11 stage will defeat the
legislative intent underlying the Arbitration Act.
197. The purpose of vesting courts with certain
powers under Sections 8 and 11 of the Arbitration Act
is to facilitate and enable arbitration as well as to
ensure that parties comply with arbitration
agreements. The disputes which have arisen between
them remain the domain of the Arbitral Tribunal
(subject to the scope of its jurisdiction as defined by
the arbitration clause). The exercise of the
jurisdiction of the courts of the country over the
substantive dispute between the parties is only
possible at two stages:
(a) If an application for interim measures is filed
under Section 9 of the Arbitration Act; or
(b) If the award is challenged under Section 34.
…
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(c) Judicial interference under the 1996 Act
110. The parties have been conferred with the power to
decide and agree on the procedure to be adopted for
appointing arbitrators. In cases where the agreed upon
procedure fails, the courts have been vested with the power
to appoint arbitrators upon the request of a party, to resolve
the deadlock between the parties in appointing the
arbitrators.
…
113. The scope of examination under Section 11(6-A) is
confined to the existence of an arbitration agreement on the
basis of Section 7. The examination of validity of the
arbitration agreement is also limited to the requirement of
formal validity such as the requirement that the agreement
should be in writing.
114. The use of the term ―examination‖ under Section 11(6-
A) as distinguished from the use of the term ―rule‖ under
Section 16 implies that the scope of enquiry under Section
11(6-A) is limited to a prima facie scrutiny of the existence
of the arbitration agreement, and does not include a
contested or laborious enquiry, which is left for the Arbitral
Tribunal to ―rule‖ under Section 16. The prima facie view
on existence of the arbitration agreement taken by the
Referral Court does not bind either the Arbitral Tribunal or
the Court enforcing the arbitral award.
115. The aforesaid approach serves a twofold purpose —
firstly, it allows the Referral Court to weed out non-existent
arbitration agreements, and secondly, it protects the
jurisdictional competence of the Arbitral Tribunal to rule on
the issue of existence of the arbitration agreement in depth.
(Emphasis added)
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58. A conspectus of the aforesaid judgment establishes that judicial
intervention at the pre-arbitral stage is narrowly circumscribed.
Whether under Section 8, Section 11, or even while considering interim
relief under Section 9, the Court is not required to undertake a detailed
adjudication on disputed questions of fact or on the substantive merits
of the claims. The enquiry is confined to a prima facie examination of
the existence of an arbitration agreement in terms of Section 7 of the
Act. All contentious issues touching upon enforceability, validity,
jurisdiction, stamp duty, accord and satisfaction, or other defences are
to be determined by the Arbitral Tribunal in exercise of its kompetenz-
kompetenz under Section 16 of the Act. The legislative intent, as
reinforced by the 2015 Amendment, is to minimise judicial interference
and to ensure that arbitration is facilitated rather than stultified by
prolonged preliminary scrutiny.
59. Mr. Mehta, learned counsel, has vehemently contended that the scope
of enquiry under Section 9 of the Act is limited to examining the prima
facie existence of an arbitration agreement and that this Court cannot
adjudicate upon the scope or ambit of the arbitration clause at this
stage. In support of this submission, reliance has been placed on the
judgments of the Hon’ble Supreme Court in Cox & Kings Ltd. v. SAP
India (P) Ltd., (2024) 4 SCC 1; SBI General Insurance Co. Ltd.
(supra), and ASF Buildtech (P) Ltd. v. Shapoorji Pallonji & Co. (P)
Ltd., (2025) 9 SCC 76. It is urged that at this stage, the Court is only
required to determine the existence of an arbitration agreement and
ought not to undertake a detailed or expansive inquiry into disputed
questions.
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60. The aforesaid principles, however, would apply only after the Court
arrives at a prima facie finding that a valid and binding arbitration
agreement exists between the parties.
61. Therefore, the first issue before this Court is not the scope or
applicability of the arbitration agreement, but its very existence. The
petitioners’ stand, however, is not entirely clear. While at one place it is
suggested that the original Loan Agreements stood novated, at other
places the case appears to be one of alteration of terms of the existing
loan documents. Even otherwise, assuming arguendo that the
petitioners intend to set up a case of novation, such contention does not
prima facie inspire confidence. For a novation to take place, a new
agreement must come into existence after negotiations, which
substitutes and replaces the earlier agreement, rendering the previous
contract no longer binding on the parties. The effect of novation, as
recognised under Section 62 of the Indian Contract Act, 1872 is that the
original contract stands completely discharged and becomes void and
unenforceable upon being substituted by a new contract.
62. It is also difficult to reconcile the petitioners’ stand that, on the one
hand, the original contracts stood novated by a fresh arrangement
which, admittedly, was only a draft agreement and did not contain any
arbitration clause, and yet, on the other hand, for disputes arising out of
the alleged draft restructuring exercise, the petitioners seek to invoke
the arbitration clause contained in the original loan agreements. If the
original agreements stood novated, the arbitration clause contained
therein would also cease to have effect; conversely, if the original
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agreements continue to subsist, the plea of novation cannot be
sustained.
63. The petitioners’ case further appears inconsistent and shifting. At
different stages, it has oscillated from an alleged oral settlement, to a
draft restructuring proposal communicated by email and projected as
the new agreement, and thereafter to the contention that the email dated
30.12.2024 constituted an offer and that a statement made by counsel
for respondent No. 1, as recorded in the order dated 17.02.2025,
amounted to acceptance, thereby resulting in a concluded contract.
Such shifting stands seriously undermine the plea of a clear and
binding agreement between the parties.
64. While this Court is conscious of the position that questions relating to
novation of an arbitration clause may ultimately fall within the domain
of the Arbitral Tribunal that stage arises only after the foundational
requirement is met. At the threshold, the petitioners must prima facie
establish the existence of an arbitration agreement. In that context, the
submission that an arbitration clause has been incorporated by
reference requires closer scrutiny before any further relief can be
considered.
65. Mr. Mehta, learned counsel, has argued at length that the Original
Arbitration Clause has been incorporated by reference, I cannot agree.
The law on incorporation of Arbitration Clause is well settled. In Elite
Engg. &Construction (Hyd.) (P) Ltd. v. Techtrans Construction India
(P) Ltd., (2018) 4 SCC 281, it was held as under:
“14. In M.R. Engineers and Contractors (P) Ltd. case [M.R.
Engineers and Contractors (P) Ltd. v. Som Datt BuildersDigitally Signed
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Ltd., (2009) 7 SCC 696 : (2009) 3 SCC (Civ) 271] , this
Court considered the true intent and scope of Section 7 of
the Act which deals with ―arbitration agreement‖. Relevant
portion of Section 7 reads as under: (SCC p. 703, para 13)
―13. … ‗7. Arbitration agreement.–(1) In this Part,
―arbitration agreement‖ means an agreement by the
parties to submit to arbitration all or certain disputes
which have arisen or which may arise between them
in respect of a defined legal relationship, whether
contractual or not.
***
(5) The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing and
the reference is such as to make that arbitration
clause part of the contract.’ ‖
(emphasis in original)
15. As per sub-section (5), an arbitration clause contained
in an independent document can also be imported and
engrafted in the contract between the parties, by reference
to such independent document in the contract, even if there
is no specific provision for arbitration. However, the Court
noted that (SCC p. 703, para 13) such a recourse can be
adopted only ―if the reference is such as to make the
arbitration clause in such document, a part of the contract.‖
This interpretation to sub-section (5) of Section 7 was
elaborated in the following manner: (M.R. Engineers
case [M.R. Engineers and Contractors (P) Ltd. v. Som Datt
Builders Ltd., (2009) 7 SCC 696 : (2009) 3 SCC (Civ) 271] ,
SCC pp. 703-04, paras 14-16)
―14. The wording of Section 7(5) of the Act makes it
clear that a mere reference to a document would not
have the effect of making an arbitration clause fromDigitally Signed
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that document, a part of the contract. The reference to
the document in the contract should be such that
shows the intention to incorporate the arbitration
clause contained in the document, into the contract. If
the legislative intent was to import an arbitration
clause from another document, merely on reference to
such document in the contract, sub-section (5) would
not contain the significant later part which reads:
‗and the reference is such as to make that arbitration
clause part of the contract’, but would have stopped
with the first part which reads:
‗7. (5) The reference in a contract to a document
containing an arbitration clause constitutes an
arbitration agreement if the contract is in writing….’
15. Section 7(5), therefore, requires
a conscious acceptance of the arbitration clause from
another document, by the parties, as a part of their
contract, before such arbitration clause could be read
as a part of the contract between the parties. But the
Act does not contain any indication or guidelines as
to the conditions to be fulfilled before a reference to a
document in a contract can be construed as a
reference incorporating an arbitration clause
contained in such document into the contract. In the
absence of such statutory guidelines, the normal rules
of construction of contracts will have to be followed.
16. There is a difference between reference to another
document in a contract and incorporation of another
document in a contract, by reference. In the first case,
the parties intend to adopt only specific portions or
part of the referred document for the purposes of the
contract. In the second case, the parties intend to
incorporate the referred document in entirety, into theDigitally Signed
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contract. Therefore when there is a reference to a
document in a contract, the court has to consider
whether the reference to the document is with the
intention of incorporating the contents of that
document in entirety into the contract, or with the
intention of adopting or borrowing specific portions
of the said document for application to the contract.‖
(emphasis in original)
16. After some further discussion on this aspect with
reference to the existing case law as well as extracts
from Russell on Arbitration, the Court summed up the
position as under: (M.R. Engineers case [M.R. Engineers
and Contractors (P) Ltd. v. Som Datt Builders Ltd., (2009) 7
SCC 696 : (2009) 3 SCC (Civ) 271] , SCC p. 707, para 24)
―24. The scope and intent of Section 7(5) of the Act
may therefore be summarised thus:
(i) An arbitration clause in another document, would
get incorporated into a contract by reference, if the
following conditions are fulfilled:
(1) the contract should contain a clear reference to
the documents containing arbitration clause,
(2) the reference to the other document should clearly
indicate an intention to incorporate the arbitration
clause into the contract,
(3) the arbitration clause should be appropriate, that
is capable of application in respect of disputes under
the contract and should not be repugnant to any term
of the contract.
(ii) When the parties enter into a contract, making a
general reference to another contract, such general
reference would not have the effect of incorporating
the arbitration clause from the referred document into
the contract between the parties. The arbitrationDigitally Signed
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clause from another contract can be incorporated into
the contract (where such reference is made), only by a
specific reference to arbitration clause.
(iii) Where a contract between the parties provides
that the execution or performance of that contract
shall be in terms of another contract (which contains
the terms and conditions relating to performance and
a provision for settlement of disputes by arbitration),
then, the terms of the referred contract in regard to
execution/performance alone will apply, and not the
arbitration agreement in the referred contract, unless
there is special reference to the arbitration clause
also.
(iv) Where the contract provides that the standard
form of terms and conditions of an independent trade
or professional institution (as for example the
standard terms and conditions of a trade association
or architects association) will bind them or apply to
the contract, such standard form of terms and
conditions including any provision for arbitration in
such standard terms and conditions, shall be deemed
to be incorporated by reference. Sometimes the
contract may also say that the parties are familiar
with those terms and conditions or that the parties
have read and understood the said terms and
conditions.
(v) Where the contract between the parties stipulates
that the conditions of contract of one of the parties to
the contract shall form a part of their contract (as for
example the general conditions of contract of the
Government where the Government is a party), the
arbitration clause forming part of such generalDigitally Signed
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conditions of contract will apply to the contract
between the parties.‖‖
(Emphasis supplied)
66. A bare reading of the above mentioned conditions clearly show that in
case of incorporation the arbitration clause has to be specifically
incorporated and there cannot be a general reference. The Hon’ble
Supreme Court categorically held that a mere reference to another
document containing an arbitration clause does not ipso facto result in
incorporation of the arbitration clause contained therein. The reference
must be clear, specific, and must unequivocally demonstrate the
intention of the parties to incorporate the arbitration clause as a part of
the contract.
67. Tested on the aforesaid settled principles, the contention of the
petitioners cannot be sustained. The reliance placed on Clause 7(i) of
the Draft Restructuring Agreement to contend that the arbitration
clause from the original Loan Agreements stands incorporated is
misplaced. Clause 7(i) reads as under:
―Unless otherwise stated herein, all the terms and
conditions of the Assigned Facility Documents and/or the
Transaction Documents shall remain unchanged and in full
force and effect and shall continue to remain applicable and
binding on the Parties.‖
68. A plain reading of Clause 7(i) reveals that it is in the nature of a general
clause. It neither makes any specific reference to the arbitration clause
contained in the original Loan Agreements nor evinces an intention to
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incorporate the same into the Draft Restructuring Agreement. Such a
general reference falls squarely within the category of references
which, as held in Elite Engg. & Construction (supra), is insufficient to
incorporate an arbitration clause.
69. Significantly, Clause 7(i) itself is prefaced with the expression “unless
otherwise stated herein”, thereby indicating that where the Draft
Restructuring Agreement provides separately for any matter, such
provision of the Draft Restructuring Agreement would prevail. This
position is further fortified by Clause 7(m), which stipulates:
―In the event of conflict between the terms of this Agreement
and the provisions of the Restructuring Documents, the
provisions of this Agreement shall prevail in relation to the
matters set out herein.‖
70. A conjoint reading of Clauses 7(i) and Clause 7(m) clearly
demonstrates that the Draft Restructuring Agreement is intended to
operate as a self-contained instrument to the extent of matters expressly
provided therein.
71. More importantly, Clauses 7(a) and 7(b) of the Draft Restructuring
Agreement contains an independent dispute resolution framework,
which reads as under:
―(a)Governing Law: This Agreement and all questions of its
interpretation shall be construed in accordance with the
laws of India.
(b)Jurisdiction: The Parties hereby agree that this
Agreement shall be subject to the exclusive jurisdiction of
courts situated in New Delhi.‖Digitally Signed
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72. The presence of a jurisdiction clause, consciously agreed to by the
parties, is wholly inconsistent with any intention to submit disputes
arising under the Draft Restructuring Agreement to arbitration. Had the
parties intended to incorporate the arbitration clause from the original
Loan Agreements, the same would have found explicit reflection in the
jurisdiction clause of the Draft Restructuring Agreement.
73. The same is in line with the reasoning of NBCC (India) Ltd. v. Zillion
Infraprojects (P) Ltd., (2024) 7 SCC 174. The relevant paragraphs read
as under:
―29. As already discussed hereinabove, when there is a
reference in the second contract to the terms and conditions
of the first contract, the arbitration clause would not ipso
facto be applicable to the second contract unless there is a
specific mention/reference thereto.
30. We are of the considered view that the present case is
not a case of ―incorporation‖ but a case of ―reference‖. As
such, a general reference would not have the effect of
incorporating the arbitration clause. In any case, Clause
7.0 of the LoI, which is also a part of the agreement, makes
it amply clear that the redressal of the dispute between
NBCC and the respondent has to be only through civil
courts having jurisdiction of Delhi alone.‖
(Emphasis added)
74. The above mentioned case was further relied in Deepa Chawla v.
Raheja Developers Ltd., 2024 SCC OnLine Del 4489 wherein the
Court refused to refer the parties to arbitration and held as under:
―23. Further, the judgment of NBCC (supra) in para 12
clearly stipulates that under sub-section (5) of section 7 of
the Arbitration and Conciliation Act, 1996 a conscious
acceptance by way of a specific reference of the arbitrationDigitally Signed
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clause is required. In the present case, clause 9 of the
Second Agreement categorically contains that
this agreement shall have an overall overriding effect over
the Flat Buyer’s Agreement, including the settlement of any
dispute, meaning thereby that there is a specific exclusion of
the arbitration clause for settlement of any dispute. Both the
parties have agreed to the said clause and therefore cannot
at this stage seek a remedy that they have waived of by way
of this express condition in the Second Agreement.‖
75. In view of the above, I have no hesitation in holding that there is
neither a specific reference nor a clear intention to incorporate the
arbitration clause from the original Loan Agreements into the Draft
Restructuring Agreement. On the contrary, the express conferment of
exclusive jurisdiction on the Courts at New Delhi unequivocally
negates any intention to arbitrate.
Existence of a Concluded Settlement Agreement
76. The fulcrum of the petitioners’ case stems from the fact that there was a
valid settlement entered into between the parties by way of the Draft
Restructuring Agreement and now the respondent No. 1 cannot step
away from its obligations effected under the Draft Restructuring
Agreement.
77. A bare perusal of the record shows as follows:
S. No. EMAIL PARTICULARS
1. 26.03.2025 Petitioner No. 1 shared the settlement proposal
with Respondent No. 1.
2. 29.03.2025
3. 09.04.2025 Reminder emails from Petitioner No. 1 requesting
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Respondent No. 1 to revert with the draft of the
Settlement Agreement.
4. 14.04.2025 Petitioner No. 1 proposed an All Party Call to
discuss and finalize documents at the earliest.
5. 22.04.2025 Respondent No. 1 sought clarity in relation to the
properties to be mortgaged by Petitioner No. 1.
6. 22.04.2025 Petitioner No. 1 gave its comments to the points
made in Respondent No. 1 e-mail dated
22.04.2025.
7. 05.05.2025 Respondent No. 1 requested a joint call to discuss
points relating to the proposed property.
8. 25.05.2025 Respondent No. 1 attached a draft composite
restructuring agreement with comments and
scheduled nothing entity wise draft can follow once
finalized and stated the certain open points require
discussion over a call.
9. 25.05.2025 Petitioner No. 1 stated that they will revive and
revert and requested the final schedules and enable
simultaneous revive of the agreement and
schedules to avoid further delay.
10. 28.05.2025 Petitioner No. 1 shared the revised draft of the
agreement with comments and changes.
11. 30.05.2025 Respondent No. 1 shared preliminary/working draft
of the schedules with the note that the schedules are
yet to be finalized and subject to internal approval.
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12. 04.06.2025 Petitioner No. 1 shared the revised draft
restructuring agreement.
13. 16.07.2025 Respondent No. 1 rejected the restructuring
proposal.
78. From the above, it is clear that the Draft Restructuring Agreement was
still being negotiated, with the respondent No. 1. There was no
consensus ad idem between the parties, as the essential terms of the
proposed contract had neither been finalised nor mutually agreed upon.
In fact, several material particulars were left blank, clearly
demonstrating that the parties had not arrived at a concluded and
binding Agreement. The important conditions which are left blank are
reproduced as under:
―The Borrower(s), Obligor(s)-Loan(s), Issuer and/or the
Obligor(s)-Debentures hereby jointly and severally,
irrevocably and unconditionally admit, acknowledge,
declare, confirm, reaffirm and agree that:
a. the Borrower(s) has borrowed the Assigned Debt 1 from
the Assignor 1 which was assigned and transferred to the
Lender in term of the Assignment Agreement 1.
b. the Borrower(s) has borrowed the Assigned Debt 2 from
the Assignor 2 which has been assigned and transferred to
the Lender in terms of the Assignment Agreement 2.
c. The Issuer has validly issued the Debentures under the
Transaction Documents;
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d. there is no outstanding commitment to invest by the
Debenture Holder(s) with respect to the Debentures (or any
part thereof);
e. the various transaction documents and Loan Documents
executed by the Borrower(s) and Obligor(s)-Loan(s) for
availing the Assigned Debt 1 and Assigned Debt 2 or any
part thereof from Assignor 1 and Assignor 2, respectively
including the Assigned Security Documents (as defined
hereinafter) are valid, enforceable and binding on the
Borrower(s) and Obligor(s)-Loan(s) jointly and severally
and the Lender shall be fully entitled thereto, as the
Assignee of the Assigned Debts. The said documents as
modified by this Agreement are hereinafter collectively
referred to as ―Assigned Facility Documents‖.
f. there is no outstanding commitment to lend further or
disburse in respect of the Assigned Debt 1, the Assigned
Debt 2 and/or the Assigned Debts;
g. the Borrower(s) and Obligor(s)-Loan(s), jointly and
severally, owe to the Lender, in respect of the Assigned Debt
1; (i) an aggregate amount of Rs. ______/- (Rupees
__________ Only) as on __________, 2025 (including
principal outstanding, overdue interest, default interest,
accrued interest, other charges) due and payable to the
Assignor 1 as also further interest, default interest and other
charges from __________, 2024 together with underlying
security interest, guarantees, benefits, all right title and
interest thereto, (collectively, ―Assigned Debt Dues 1‖) and
(ii) an aggregate amount of Rs. ______/- (Rupees
__________ Only) as on __________, 2025 (including
principal outstanding, overdue interest, default interest,
accrued interest, other charges) due and payable to theDigitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 36 of 46
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Assignor 2 as also further interest, default interest and other
charges from __________, 2025 together with underlying
security interest, guarantees, benefits, all right title and
interest thereto, (collectively, ―Assigned Debt Dues 2‖) and
that the same is free of and without any set-off, right of set-
off, adjustment, claim, counter-claim, condition, demur or
protest The Assigned Debt Dues 1 and Assigned Debt Dues
2 are hereinafter collectively referred to as ―Assigned Debt
Dues‖. The Assigned Debt Dues are mentioned in detail in
Schedule I hereunder.
h. the Assigned Debt Dues 1 are and shall continue to be
duly secured and guaranteed in favour of Lender with the
mortgage, hypothecation and guarantees executed, the
security interests created on the properties, as mentioned in
Part – I of Schedule V hereto (hereinafter collectively
referred to as ―Assigned Security Interest 1‖); and the
Assigned Security Interest 1 are in full force and effect and
shall continue to be fully valid, enforceable and effective in
favour of the Lender till the Final Restructured Amount…
…
1.3 It is agreed that in consideration of amicable resolution
of all the disputes between the Parties and as restructuring
only with respect to the Assigned Debt Dues and
Debentures Obligations, the Parties have agreed that the
Borrower(s), Issuer and/or the Obligor(s) shall perform the
following actions (―Restructuring Actions‖) in a timely
manner, time being of essence:
(a) on or before [●], the Borrower(s) and/or the Obligor(s)
shall pay the Final Restructured Amount along with an
interest calculated at the rate of [●] per annum payableDigitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 37 of 46
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monthly (with effect from April 01, 2025) in the manner and
as per the timelines set forth in Schedule IV hereunder
(―Composite Payment Schedule‖);
(b) on or before [●], the Borrower(s), Issuer and/or the
Obligor(s) create and/or perfect the Assigned Security
Interests and existing securities mentioned in Part III of
Schedule V hereunder in favour of the Lender and/or the
Debenture Holder(s) (―Security Perfection‖); and
(c) on or before [●], the Borrower(s), Issuer and/or the
Obligor(s) create charge/mortgage over and perfect the
additional securities mentioned in Schedule VI hereunder in
favour of the Lender and/or the Debenture Holder(s) (―New
Security‖).
…
1.8 Simultaneous with the Execution Date, the Parties
hereby agree to take necessary steps to withdraw litigations
more particularly mentioned in Annexure A attached
herewith.. Further, subject to there being no default under
this Agreement, the Parties hereby agree that no fresh
litigation shall be initiated by the Parties against each other
with respect to the Assigned Debt Dues and/or the
Debentures during the subsistence of this Agreement. Also
any notices issued by the Parties against each other shall be
kept in abeyance and no adverse action shall be taken on
the same by the respective Party during the subsistence of
this Agreement. i) Time is of the essence. Without prejudice
to the rights and remedies available to the Lender under the
Assigned Facility Documents, the Debenture Holder(s)
under the Transaction Documents, this Agreement,
applicable laws and/or otherwise, the restructuring under
this Agreement is valid till [●] (―Long Stop Date‖). The
said Loan Stop Date may be extended by the Lender and/or
the Debenture Holder(s), in their sole and absolute
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 38 of 46
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discretion for a period of ___________days only and not
beyond that. and in the event, the Borrower(s), Issuer
and/or the Obligor(s) at anytime: a) fail to remit/pay the
Final Restructured Amount in the manner provided under
this Agreement; b) and/or
c) fail to or commit default in performance of the
Restructuring Actions;‖
79. At this juncture, it is apposite to revisit the fundamental principles
governing the formation of a contract. In Rutu Mihir Panchal v. Union
of India, 2025 SCC OnLine SC 974, it has been held as under:
―10.3. An agreement enforceable by law is a contract.In
turn, every promise and every set of promises forming
part of the consideration for each other, is an
agreement. And then, when, at the desire of the promisor,
the promisee … has done…something, such act is
called consideration. A proposal, when accepted, becomes
a promise. Finally, when a person signifies to another his
willingness to do anything… with a view to obtaining his
assent it is a proposal. While this is the
involution of formation of a contract, evolution in its making
is evident when a proposal, as defined, becomes
a promise and when such a promise is espoused
by consideration it becomes an agreement and if that
agreement is enforceable in law, it becomes a contract.
Between evolution and involution, lies the essential core, the
consideration, without which there is no agreement, and if
there is no agreement, there is no contract.‖
80. Applying these settled principles to the facts of the present case, this
Court finds merit in the submission advanced on behalf of the
respondent No. 1 that the petitioners have failed to demonstrate that the
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 39 of 46
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proposals allegedly submitted by them ever crystallised into a promise
through absolute and unqualified acceptance, as mandatorily required
under Section 7 of the Indian Contract Act, 1872.
81. The material placed on record reveals that the parties were engaged in
continuous negotiations till the very end. Significantly, the last
communication relied upon by the petitioners is their email dated
04.06.2025, which reads:
―Dear Sir – Attached please find the draft settlement
agreements, alongwith details of securities, litigation
matters and payment schedule for perusal.‖
82. The very language employed particularly the description of the
documents as “Draft Settlement Agreements” and their submission “for
perusal” indicates that the proposal was still in a tentative and
negotiable stage. This was followed by a rejection from the respondent
No. 1. Such correspondence, far from evidencing a concluded contract,
demonstrates that the terms were under active consideration and had
not attained finality.
83. At best, the record suggests that there was some broad understanding or
a semblance of agreement on certain aspects. However, there was no
consensus ad idem on the essential terms and conditions of the
proposed restructuring arrangement. The essential elements relating to
securities, payment schedules and other material conditions were still
being deliberated upon and were subject to further modification.
84. On the contrary, the email dated 16.07.2025 issued by respondent No. 1
constitutes a clear and unequivocal rejection of the proposal put forthDigitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 40 of 46
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by the petitioners. Consequently, no binding contract or enforceable
promise was ever concluded or executed by respondent No. 1 in
relation to the alleged settlement of default, as claimed by the
petitioners in the present petition.
85. The reliance placed by learned counsel for the petitioners on Trimex
International FZE Ltd. (supra) and Kollipara Sriramulu (supra) to
contend that non-finalisation of formal contract documentation does not
negate the existence of a binding agreement, is misplaced and clearly
distinguishable on facts.
86. In both the aforesaid decisions, the Hon’ble Supreme Court held that
execution of a formal or definitive agreement may, in a given case, be a
mere formality where the essential and fundamental terms of the
contract have already been conclusively agreed upon between the
parties, and the intention to be bound is evident from unimpeachable
material on record. The Court found that there was consensus ad idem
on all vital terms, and what remained was only the formal embodiment
of the concluded bargain.
87. The present case stands on an entirely different footing. There is no
clear, or undisputed material to demonstrate that the essential terms of
the alleged settlement including the amount payable, the schedule and
time period for repayment, the rate of interest, and the identification
and treatment of secured properties had been finally agreed upon. On
the contrary, the material on record indicates that these aspects were
still under negotiation and subject to further discussion and
documentation.
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 41 of 46
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88. In the absence of a concluded agreement on the fundamental terms, and
in view of the continuing negotiations reflected in the draft
restructuring proposal, the ratio of the aforesaid judgments does not
advance the petitioners’ case.
89. At this stage, Mr. Krishnan, learned senior counsel, also makes a valid
argument regarding the consequences of granting prayer A. He states
that in case the same is granted, it would lead to creation of an
Agreement by the Court which is barred under law, as the same would
be forcing specific performance of the draft restructuring proposal. He
places reliance on Mayawanti v. Kaushalya Devi, (1990) 3 SCC 1,
which reads as under:
―8. In a case of specific performance it is settled law, and
indeed it cannot be doubted, that the jurisdiction to order
specific performance of a contract is based on the existence
of a valid and enforceable contract. The Law of Contract is
based on the ideal of freedom of contract and it provides the
limiting principles within which the parties are free to make
their own contracts. Where a valid and enforceable contract
has not been made, the court will not make a contract for
them. Specific performance will not be ordered if the
contract itself suffers from some defect which makes the
contract invalid or unenforceable. The discretion of the
court will be there even though the contract is otherwise
valid and enforceable and it can pass a decree of specific
performance even before there has been any breach of the
contract. It is, therefore, necessary first to see whether there
has been a valid and enforceable contract and then to see
the nature and obligation arising out of it. The contract
being the foundation of the obligation the order of specific
performance is to enforce that obligation.‖Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 42 of 46
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(Emphasis added)
90. I am in agreement with the aforesaid contention. This Court cannot, in
exercise of its jurisdiction, grant what would in effect amount to
specific performance of a contract, particularly when the material on
record demonstrates that the terms were still under negotiation and had
not attained finality. A party cannot, through judicial intervention,
compel the other side to enter into a contract which never came into
existence in the eyes of law. To grant such relief would be to overlook
one of the fundamental essentials of a binding contract, namely,
consensus ad idem.
91. Further, it is a settled law that this Court under Section 9 of the Act
cannot direct specific performance of a contract. Under Section 9 the
Court is only required to preserve the subject matter.
92. In Pink City Expressway (P) Ltd. v. National Highways Authority of
India, 2022 SCC OnLine Del 1816, the Court held as under:
―19. Law on the scope of interference in a Section 9 petition
is no longer res integra. The learned Single Judge has held
that the prayer made by the Appellant in the Section 9
petition cannot be granted as that would amount to
extending the contract contrary to the decision dated
29.04.2022. It is well-settled that powers under Section 9
can only be exercised for preservation of the subject matter
of the dispute till the decision of the Arbitral Tribunal and
cannot be extended to directing specific performance of the
contract itself. The learned Single Judge has in this context
relied on the judgment of the Division Bench in C.V. Rao
(supra) and in our view rightly so. Reliance was also placed
on the judgment of another Division Bench in DLF Ltd.
(supra). We find no infirmity in the prima facie view that
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 43 of 46
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directing the Respondent to extend the contract for a further
period, beyond 14 months extension granted, would amount
to granting specific relief of the contract and is beyond the
scope of the powers of the Court under Section 9 of the Act.
For a ready reference, we may allude to para 40 of the
judgment in DLF Ltd. (supra), as follows:–
―40. In C.V. Rao v. Strategic Port Investments KPC
Ltd. 2014 SCC OnLine Del 4441, this Court had held
that while exercising jurisdiction under Section 9 of
the A&C Act, the Court cannot ignore the underlying
principles which govern the analogous powers
conferred under Order XXXIX Rules 1 & 2 CPC and
Order XXXVIII Rule 5 CPC. Not only is the court
required to be satisfied that a valid arbitration
agreement existed between the parties, but the powers
under Section 9 of the A&C Act could be exercised
only for orders of an interim measure of protection in
respect of the matters specified in Section 9 (ii)(a) to
(e) of the A&C Act. In other words, the orders must
relate to preservation of the property, which is the
subject matter of the dispute, till the Arbitral Tribunal
decides the same. The scope of relief under Section 9
of the A&C Act cannot be extended to directing
specific performance of the contract itself.‖‖(Emphasis added)
93. In view of the aforesaid, it is evident that specific performance of a
contract cannot be granted in proceedings under Section 9. The
petitioners, by way of this petition, in effect, seek enforcement of an
alleged understanding, despite there being no concluded and binding
contract between the parties. Such a relief would amount to directing
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 44 of 46
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specific performance and compelling the parties to enter into or
continue a contractual arrangement, which is impermissible in law.
This Court cannot, in exercise of its powers under Section 9, compel
the creation of a binding contract where none exists as mentioned
earlier.
94. In the absence of a concluded agreement, the foundational basis for the
reliefs sought in the present petition collapses. Accordingly, on these
foundational facts alone, the petition is liable to fail.
CONCLUSION
95. In view of the above discussion, the other submissions advanced by the
petitioners namely, that the NCLT is not an efficacious forum, and that
the grant of relief would not amount to foreclosing the respondent
No.1’s rights under the SARFAESI Act, 2002 do not require
adjudication in the present case. These issues are left open to be
considered in an appropriate case.
96. Consequently, the question of granting an anti-suit or anti-tribunal
injunction, or of pre-empting proceedings under the SARFAESI Act,
2002 does not arise. To enter into an examination of those issues, in the
absence of even a prima facie finding regarding the existence of an
arbitration agreement, would be a purely academic exercise. This Court
declines to undertake such an exercise at this stage.
97. In view of the reasons above interim recorded on 26.09.2025 stands
vacated, and the said petition is also dismissed.
98. Pending applications, if any, also stand disposed of.
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 45 of 46
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O.M.P (I) (COMM) 367/2025
99. As both the parties are ad idem that O.M.P (I) (COMM) 367/2025 will
be covered by the decision in O.M.P. (I) (COMM) 330/2025, as it
arises from an identical and substantially similar factual matrix.
100. In view of the above, O.M.P (I) (COMM) 367/2025 is also dismissed.
101. Pending applications, if any, also stand disposed of.
JASMEET SINGH, J
FEBRUARY 19, 2026/DE
Digitally Signed
By:MAYANK
Signing Date:19.02.2026 O.M.P. (I) (COMM) 330/2025 & O.M.P. (I) (COMM) 367/2025 Page 46 of 46
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