Ramakrishnan Krishnan vs Gluhend India Private Limited on 22 July, 2026

Bombay High Court

Ramakrishnan Krishnan vs Gluhend India Private Limited on 22 July, 2026

Author: Amit Borkar

Bench: Amit Borkar

                                                                CNR No : HCBM020159142026


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                   Shabnoor
                          IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                              ORDINARY ORIGINAL CIVIL JURISDICTION

                                     IN IT'S COMMERCIAL DIVISION

                       COMMERCIAL ARBITRATION PETITION NO. 766 OF 2026


                   Ramakrishnan Krishnan,
                   Adult, Indian Inhabitant,
                   residing at B-44, II Floor,
                   Gulmohar Park, New Delhi 110 049                ... Petitioner

                              V/s.

                     1. Gluhend India Private Limited,
SHABNOOR
AYUB                    A company incorporated under the
PATHAN
                        Companies Act, 1996 and having
Digitally signed
by SHABNOOR             its registered office at 23, Floor 2,
AYUB PATHAN
Date:
2026.07.22
                        Plot #59/61 Arsiwala Mansion,
11:35:31 +0530
                        Nathalal Parikh Marg, Colaba,
                        Mumbai - 400 005

                     2. Sage Metals US HoldCo LLC,
                        A limited liability company formed
                        under the Laws of State of Delware
                        and having its registered office at
                        1209, Orange Street, Wilmington,
                        New Castle, Delaware - 19801
                        United States of America                   ... Respondents



                   Mr. Ashish Kamat, Sr. Advocate a/w Mr. Abhishek Kale,
                   Mr. Aroon Menon, Mr. Aditya Khare, Mr. Shreyas
                   Maheswari, Mr Atharva Bhilare i/b Naik Naik and Co.,
                   Advocates for the Petitioner.



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Mr. Sharan Jagtiani, Sr. Advocate a/w Ms. Smiti Tewari,
Mr. Paresh Lal, Mr. Shreyas Lele, Mr. Aditya Nair, Ms.
Samridhi Lodha, Ms. Surabhi Agarwal i/b Khaitan Legal
Associates, Advocates for the Respondent No. 1.
Mr. Shyam Kapadia a/w Ms. Smiti Tewari, Mr. Paresh Lal,
Mr. Shreyas Lele, Mr. Aditya Nair, Ms. Nimisha Nagpal i/b
Khaitan Legal Associates, Advocates for the Respondent
No. 2.


                      CORAM                : AMIT BORKAR, J.

                      RESERVED ON          : JULY 15, 2026.

                      PRONOUNCED ON        : JULY 22, 2026

1. By this Petition, the Petitioner has asked this Court to grant
interim protection under Section 9 of the Arbitration and
Conciliation Act, 1996. According to the Petitioner, the
Respondents are continuously not following the obligations
accepted by them under the Third Framework Agreement dated 13
July 2022 and the earlier agreements made between the parties.
The Petitioner says such protection is necessary till the arbitration
proceedings are started.

2. The facts leading to this Petition are these. On 10 November
2017, a Share Purchase Agreement (SPA) was signed between
Delos Sage HoldCo Cooperatief UA (DSHC), Sage Metals Limited
(Sage), the Petitioner and others for purchase of Sage at an
enterprise value of about ₹470 crores. Under Clause 2.1 of the
SPA, DSHC agreed to form a special purpose company for
purchasing 90% shares of Sage. Under Clause 1.1.26, the

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Petitioner was described as the “Continuing Shareholder” and was
to keep the remaining 10% shares. The other shareholders
received their full sale consideration under the SPA. However, the
Petitioner’s payment was arranged in a different way. A large part
of his consideration was postponed and was to be paid through
Redeemable Optionally Convertible Preference Shares (ROCPS).
Thereafter, GIPL was incorporated on 22 December 2017 by DSHC.
On 23 February 2018, GIPL signed a Deed of Accession and
accepted all the rights and obligations of DSHC under the SPA.
Later, on 11 March 2018, DSHC, GIPL, Sage, AR2 LLC, Fortress
Metals LLC and the Petitioner entered into a Framework
Agreement deciding their respective rights and duties. Under this
Agreement, Sage was to merge with GIPL within eighteen months
from the Closing Date. After the merger, the Petitioner was to
receive equity shares equal to 10% of the fully diluted share capital
of GIPL and ROCPS for the remaining rolled over consideration. It
was also agreed that the ROCPS would carry agreed returns and
would be redeemed in stages so that the Petitioner received at
least ₹5 crores every year along with accrued returns. The ROCPS
were to be fully redeemed within the agreed time. DSHC also
agreed that during the period of the ROCPS it would not charge
any management fees from the Group Companies so that enough
money remained available for making these payments. The parties
further agreed that any dispute between them would be referred to
arbitration before the Singapore International Arbitration Centre
(SIAC), with India as the legal seat and Mumbai as the venue.
The transactions under the SPA were completed on 13 March

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2018, which became the Closing Date. Thereafter, on 18 December
2018, the parties signed a Supplemental Share Purchase
Agreement by which the purchase price of Sage was increased by
₹27.5 crores. As a result, the Petitioner’s share also increased by
₹2.75 crores. This additional amount was also to be paid through
the ROCPS arrangement and the value of the ROCPS became
about ₹28.60 crores. On 20 June 2019, the National Company
Law Tribunal, Mumbai approved the Scheme of Amalgamation
between Sage and GIPL. Because of this order, the obligations
under the SPA and the Framework Agreement became effective.
GIPL then became responsible for issuing the agreed equity shares
and ROCPS to the Petitioner as part of the balance consideration.
After the amalgamation was completed on 25 November 2019, the
Petitioner received 3,08,93,134 ROCPS. Later, on 31 January 2020,
the parties signed an Amended and Restated Framework
Agreement, which is referred to as the Second Framework
Agreement. Under this Agreement, some of the ROCPS were
converted into Class D CCPS and the Petitioner’s ROCPS holding
came down to 2,80,35,419 ROCPS. The Agreement again stated
that the ROCPS would earn returns at the rate of 15% per year
with yearly compounding. It also provided that the Petitioner
would receive yearly payments of not less than ₹5 crores together
with accrued returns, along with a special dividend. DSHC also
agreed to continue waiving management fees so that these
payments could be made.

3. On 26 March 2021, GIPL’s Company Secretary, Ms. Isha
Gupta, sent an email to the Petitioner. In that email, it was

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accepted that because the ROCPS had been allotted late, the
Special Return payable for the period from 13 March 2018 to 24
November 2019 had increased to ₹7,36,15,376. According to the
Petitioner, this email clearly shows that GIPL admitted its liability
towards him. During the financial years 2021 to 2022, GIPL went
through restructuring with its lenders. As part of that process, Sage
Metals US HoldCo LLC (US HoldCo) acquired 90% shareholding in
GIPL. After this restructuring, only US HoldCo and the Petitioner
remained as shareholders of GIPL. The Petitioner says that even
though the agreements clearly required yearly payments under the
ROCPS arrangement, the Respondents did not make any such
payments. By an email dated 1 September 2021, the Petitioner
requested the Respondents to perform their obligations. In reply,
the Respondents stated that payment of the Petitioner’s dues was
“not on the radar” and explained that they were not making
payment because they did not have sufficient funds. Thereafter, the
parties made certain limited changes to the agreements during
January and May 2022. After the restructuring, the Petitioner’s
securities were reorganised into equity shares, Class D CCPS and
2,43,33,349 Final ROCPS.

4. On 13 July 2022, the parties entered into the Third
Framework Agreement. This Agreement replaced the earlier
Framework Agreements but at the same time continued and
confirmed the Petitioner’s important contractual rights. It again
provided that the Final ROCPS would carry annual returns at 15%
compounded every year and that the Petitioner would also receive
the Agreed Special Return. It further stated that the ROCPS would

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be redeemed in such a way that the Petitioner received at least ₹5
crores every year and that all obligations relating to the ROCPS
would be completed on or before 30 June 2024. Clause 3.3.6 also
required US HoldCo and the shareholders of GIPL, other than the
Petitioner, either to provide enough funds to GIPL for meeting
these obligations or themselves purchase the ROCPS if GIPL did
not have enough money. According to the Petitioner, this created
an independent and absolute liability on US HoldCo. Before the
redemption date, the Petitioner, by letters dated 21 December
2023 and 28 May 2024, again reminded the Respondents about
their obligations and requested them to redeem the ROCPS and
pay the accrued annual returns together with the Agreed Special
Return.

5. According to the Petitioner, it was only in June 2024 that the
Respondents, for the first time, tried to explain their default by
saying that approval of the lenders was required before any
payment under the ROCPS could be made. The Petitioner
repeatedly asked for copies of the alleged restrictions imposed by
the lenders. However, no documents were supplied to show that
the Respondents had honestly tried to obtain such approvals. On
20 August 2024, GIPL, through its authorised officer Mr. Sandeep
Chotia, again informed the Petitioner that the outstanding
principal amount under the ROCPS was about ₹24.3 crores and
that the interest accrued up to June 2024 was about ₹38.2 crores.
It was also stated that no deductions had been made from the
accrued interest and that the earlier calculation error had been
corrected. According to the Petitioner, this communication is

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another clear admission of liability by the Respondents. The
Petitioner states that, acting in good faith and without giving up
his legal rights, he agreed by a letter dated 29 August 2024 to
extend the redemption period till 30 September 2025, subject to
certain conditions. The Respondents neither accepted those
conditions nor fulfilled their obligations. Therefore, the Petitioner
withdrew the conditional extension on 5 November 2024. After
this, although the Respondents had acknowledged the Petitioner’s
claim for several years, they, for the first time, disputed the
calculation of interest by saying that the accrued returns had been
overstated. The Petitioner immediately denied this allegation and
maintained that the calculations were always made according to
the agreement and were the same as those earlier accepted by the
Respondents. Between February 2025 and September 2025, the
Petitioner repeatedly requested the Respondents to pay the
amounts which, according to him, were already admitted.
However, the Respondents continued to avoid payment and only
relied upon the alleged restrictions imposed by the lenders. The
Petitioner says that during this period the Respondents never
disputed his main contractual entitlement.

6. Since repeated demands did not result in payment, the
Petitioner issued a final legal notice on 19 December 2025 asking
the Respondents to clear the admitted liabilities under the Third
Framework Agreement. By their reply dated 9 January 2026, the
Respondents, for the first time, contended that redemption of the
ROCPS was not permissible under Section 55 of the Companies
Act, 2013 because there were no distributable profits. The

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Petitioner says this stand is without merit, contrary to the
obligations accepted by the Respondents and cannot relieve them
from their separate obligation under Clause 3.3.6 of the Third
Framework Agreement. The Petitioner submits that although the
Respondents repeatedly admitted their liability, gave contractual
assurances and received several demands for payment, they have
still failed to perform their obligations. According to the Petitioner,
the conduct of the Respondents shows that they intend to keep
delaying the payment while continuing to enjoy the benefit of the
Petitioner’s investment. In these circumstances, the Petitioner
states that he had no other option but to invoke the arbitration
agreement and file the present Petition. By this Petition, he seeks
urgent interim protection so that the subject matter of the
arbitration is preserved, and his contractual claims are secured till
the Arbitral Tribunal finally decides the dispute.

7. Mr. Kamat, learned Senior Advocate appearing for the
petitioner, invited my attention to the Framework Agreement
dated 11 March 2018. He submitted that under Clauses 3.3, 3.3.2
and 3.4 of the said Agreement, the petitioner was entitled to
receive the returns agreed between the parties. He further
submitted that the correspondence exchanged between the parties,
especially the email dated 1 September 2021, clearly shows that
the respondent itself accepted that the question of repayment had
arisen after completion of forty two months from the date of the
transactions, as provided under the Agreement. According to him,
although it was agreed that the petitioner would receive ₹5 crore
every year, the respondent admitted that such payment could not

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be made because of the conditions imposed under its loan
agreements with the lenders and because the company did not
have enough cash available. Learned counsel then invited my
attention to the email dated 20 August 2024. He submitted that by
this email the respondent admitted that an amount of ₹24.3 crore
towards the principal value of the ROCPS and ₹38.2 crore towards
accrued returns or interest up to June 2024 was payable to the
petitioner. He also referred to the earlier email dated 11 June 2024
and submitted that even in that communication the respondent
accepted that no payment could be made to the petitioner because
the lenders had not granted their approval. According to him, the
respondent itself stated that under Clauses 3.3.6 and 3.5 of the
Framework Agreement it was not authorised to make any payment
without such approval. The respondent further informed the
petitioner that the company had defaulted in repayment of its
loans and, unless that default was first resolved and the consent of
the lenders was obtained, neither the company nor USHC would
be in a position to arrange funds for making payment. The
respondent also requested the petitioner to cooperate in extending
the maturity of the loans so that the company could improve its
position and protect the interests of all stakeholders, including the
shareholders.

8. Learned Senior Advocate also relied upon the email dated 9
July 2025 and submitted that even by this communication the
respondent again refused to make payment of the amounts
claimed by the petitioner. He further referred to the balance sheets
of the respondent company and pointed out that the amounts

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payable to the petitioner have been shown therein as borrowings.
Referring to Paragraph 18 of the Indian Accounting Standards (Ind
AS), he submitted that the real nature of a financial instrument is
more important than the name given to it while deciding how it
should be shown in the financial statements. According to him,
where a preference share is required to be redeemed by the
company for a fixed amount, or where the holder has a right to
demand redemption on or after a fixed date for a fixed amount,
such an instrument is treated as a financial liability. In support of
this submission, learned Senior Advocate relied upon the judgment
of the Supreme Court in J.K. Industries Ltd. v. Union of India,
reported in (2007) 13 SCC 673, particularly paragraph 138. He
submitted that under Section 211(3A) of the Companies Act, 1956,
the Accounting Standards framed on the recommendation of the
National Advisory Committee on Accounting Standards under
Section 210A have been made compulsory. According to him, the
purpose of making these standards mandatory is to ensure that the
financial statements present the true financial position of the
company and correctly reflect its income and profits.

9. Dealing with the respondent’s reliance on Section 55 of the
Companies Act, 2013, learned counsel submitted that the
respondent cannot take advantage of that provision because it has
itself shown the amounts payable to the petitioner as borrowings
in its financial statements. According to him, once the liability has
been treated in that manner, Section 55 would have no
application. He further submitted that even if it is assumed that
redemption of the ROCPS is governed by Section 55, the payment

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of the assured return and the special return under the Framework
Agreement is a separate contractual obligation and is not
controlled by the said provision. He lastly submitted that the
financial statements of the respondent company show that its
financial condition has continued to weaken and that it has been
suffering losses. Therefore, according to him, the interim
protection prayed for by the petitioner deserves to be granted.

10. Mr. Jagtiani, learned Senior Advocate appearing for the
Respondents, opposed the Petition. At the beginning, he submitted
that the entire case of the Petitioner proceeds on a wrong
understanding of the Third Framework Agreement dated 13 July
2022 (“TFA”). According to him, the Petitioner assumes that
immediately after the Redemption Period expired on 30 June
2024, all the amounts automatically became payable. He
submitted that such interpretation is contrary to the plain
language of the Agreement. Drawing attention to Clause 3.3.6 of
the TFA, he pointed out that the clause itself starts with the words
“Subject to Clause 3.5 below.” According to him, these opening
words are important because they make every obligation regarding
redemption of the Final ROCPS, payment of the Agreed Annual
Return and payment of the Agreed Special Return dependent upon
Clause 3.5. He submitted that while interpreting a contract, the
Court must read the agreement as a whole and give effect to every
clause. In this regard, he relied upon the principles laid down by
the Supreme Court in Nabha Power Ltd. v. Punjab State Power
Corporation Ltd., (2018) 11 SCC 508, and Arnold v. Britton,
(2015) AC 1619, wherein it has been observed that contractual

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terms must ordinarily be understood in their plain and ordinary
meaning and every part of the agreement must be given effect.
Learned Senior Advocate then referred to Clause 3.5 of the TFA.
According to him, the clause clearly provides that redemption,
repurchase or conversion of the ROCPS, as well as payment of the
Agreed Annual Return, Agreed Special Return or any other amount
under the Agreement, can be made only in the manner decided by
the Board. He submitted that such payment must also be in
accordance with the Financing Documents and, till the Final
Settlement Date arrives, can be made only after obtaining prior
written consent of the lenders or with the approval of the Koi
Director and the COII Director. He submitted that these conditions
were consciously accepted by all parties while entering into the
Agreement and cannot now be ignored. Proceeding further,
learned Senior Advocate submitted that the Petitioner’s rights
under Clause 3.3 are not absolute. According to him, those rights
become enforceable only after all the conditions mentioned in
Clause 3.5 are fulfilled. Unless those conditions are first satisfied,
no legal obligation to make payment can arise. He submitted that
the Court cannot separate one clause from another and enforce
only a part of the agreement while ignoring the remaining
provisions. In support of this principle, reliance was placed upon
Nabha Power Ltd.

11. Learned Senior Advocate further submitted that the
Petitioner accepts that prior written consent of the lenders is a
mandatory requirement under the Agreement. According to him,
the Petitioner’s own grievance is that the Respondents failed to

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obtain such consent. Having accepted that lender approval is a
condition precedent, the Petitioner cannot at the same time argue
that payment became automatically payable on 30 June 2024. He
submitted that the Financing Documents also independently
prohibit redemption of the ROCPS or any payment relating thereto
without prior approval of the lenders. He pointed out that Clause
2.30 of the Second Amended and Restated Debenture Trust Deed
prohibits payment of any dividend or other distribution on the
ROCPS and also prohibits redemption without prior approval of
the Debenture Trustee. Similarly, Clause 21.24 of the Second
Amended SII Facility Agreement contains a similar restriction
requiring prior approval of the Agent before any redemption or
payment can be made. Learned Senior Advocate submitted that
these restrictions were not introduced for the first time after
execution of the TFA. According to him, Clause 1.1.33 of the TFA
defines the expression “Financing Documents” in wide terms so as
to include all documents relating to the Debentures and the SII
Facility. He submitted that the documents executed in July 2023
merely amended and restated the earlier Financing Documents
and, therefore, they continue to remain part of the contractual
arrangement between the parties.

12. He further submitted that even before the amendments
made in July 2023, the earlier Financing Documents, which were
already in existence when the TFA was signed, contained
substantially similar restrictions requiring lender approval before
redemption or payment. According to him, copies of those
documents have now been supplied to the Petitioner. Therefore,

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the contention raised for the first time in the Rejoinder that the
amended Financing Documents are not binding upon the
Petitioner is, according to him, without any basis and deserves to
be rejected. Learned Senior Advocate further submitted that none
of the conditions required under Clause 3.5 has yet been fulfilled.
According to him, there is no decision of the Board approving
payment, no written consent from the lenders and no compliance
clearance under the Financing Documents. He also submitted that
the Final Settlement Date, as defined in Clause 1.1.30 of the TFA,
has admittedly not yet occurred. Under that definition, the Final
Settlement Date will arise only when the Debentures are fully
redeemed and the SII Facility is completely repaid to the
satisfaction of the lenders. Since both those financial arrangements
are still continuing, Clause 3.5, according to him, continues to
govern every payment relating to the ROCPS.

13. Learned Senior Advocate also relied upon the audited
financial statements of Respondent No.1, which have been
produced by the Petitioner itself. Referring to Note 16(D) of the
Consolidated Financial Statements, he submitted that the
management, acting on legal advice, has specifically recorded that
Clauses 3.3.6 and 3.5 continue to govern repayment of the ROCPS
even after 30 June 2024. According to him, therefore, the
Petitioner’s own documents show that the contractual obligations
did not become unconditional merely because the Redemption
Period expired. Learned Senior Advocate submitted that before
the Redemption Date itself, Respondent No.1 had written letters
dated 24 June 2024, 26 June 2024 and 28 June 2024 to the

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nominees of the lenders requesting approval for redemption of the
ROCPS. Thereafter, according to him, the Debenture Trustee and
the Loan Agent, by their letters dated 25 June 2026, informed
Respondent No.1 that the Debenture Lenders as well as the Facility
Lenders were not granting consent for redemption of the ROCPS
or for making any payment relating to it. According to learned
Senior Advocate, these communications only formally record the
same stand consistently taken by the Respondents since June
2024. He submitted that once lender approval has been expressly
refused, the Respondents cannot lawfully proceed with redemption
or payment. According to him, no Court can direct a party to
commit breach of an express contractual condition knowingly
accepted by all parties.

14. Without prejudice to the above submissions, learned Senior
Advocate argued that the Petitioner’s claim is independently barred
by Section 55 of the Companies Act, 2013. He submitted that
Section 55(2) specifically provides that redeemable preference
shares can be redeemed only out of profits available for dividend
or from the proceeds of a fresh issue of shares made for that
purpose. According to him, Respondent No.1 satisfies neither of
these statutory requirements. Referring to the audited financial
statements, he submitted that the company had accumulated
losses exceeding Rs.6,832.56 million as on 31 March 2026 and had
no distributable profits available. He also submitted that there had
been no fresh issue of shares for redemption. Therefore, according
to him, even if all contractual conditions were assumed to have
been fulfilled, redemption itself would still be prohibited by law.

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Learned Senior Advocate then relied upon the judgment of the
Supreme Court in EPC Constructions India Limited v. Matix
Fertilizers and Chemicals Limited, 2025 SCC OnLine SC 2293 and
submitted that the Supreme Court has held that preference shares
form part of the share capital of a company and do not amount to
a loan or debt. According to him, the Supreme Court has also held
that merely because the redemption date has arrived, the holder of
preference shares does not become a creditor of the company. He
further submitted that the Supreme Court has clarified that the
accounting treatment under Ind AS 32 cannot change the legal
nature of the relationship between the parties. On the strength of
the said judgment, learned Senior Advocate submitted that the
Petitioner’s reliance upon the description of the ROCPS as
“borrowings” or “financial liabilities” in the balance sheets is
misplaced. According to him, accounting entries cannot override
either the provisions of the Companies Act or the contractual terms
agreed between the parties. In this regard, he also relied upon J.K.
Industries Ltd., to submit that Accounting Standards are meant for
proper financial disclosure and cannot alter substantive legal rights
created by statute or contract.

15. Learned Senior Advocate further submitted that the Agreed
Annual Return and the Agreed Special Return are also not
independent debt obligations. Referring to Clause 3.3.1, he
pointed out that the Agreed Annual Return itself is described as an
annual dividend or similar return on the Final ROCPS. Likewise,
Clause 3.3.2 provides for the Agreed Special Return in relation to
the Final ROCPS. According to him, both these payments are in the

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nature of returns on preference share capital and, therefore,
continue to remain governed by Sections 55 and 123 of the
Companies Act, 2013. In the absence of distributable profits, such
payments, according to him, cannot legally be made. Learned
Senior Advocate also submitted that the Petitioner’s reliance upon
the order of the National Company Law Tribunal approving the
Scheme of Amalgamation is misplaced. According to him, that
order only records the allotment of ROCPS pursuant to the Scheme
and does not determine or modify the contractual conditions
governing redemption. He submitted that the relevant contractual
obligations were separately negotiated and finally incorporated
under the Third Framework Agreement executed nearly three
years later.

16. Learned Senior Advocate submitted that the Respondents
have throughout acted honestly and in accordance with the
contractual arrangement. According to him, before the
Redemption Date Respondent No.1 approached the lenders for
approval, placed the matter before its Board and consistently
maintained that payment relating to the ROCPS could be made
only after obtaining lender consent and complying with the
Financing Documents. Therefore, according to him, there has been
no breach or default on the part of the Respondents. In these
circumstances, learned Senior Advocate submitted that there is
presently no enforceable debt or crystallised liability in favour of
the Petitioner. According to him, the reliefs sought under Section 9
are, in substance, in the nature of attachment before an arbitral
award or securing a money claim in advance. Such relief,

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according to him, cannot be granted unless there exists a clear and
presently enforceable claim. In support of this submission, reliance
was placed upon Raman Tech. & Process Engg. Co. v. Solanki
Traders, (2008) 2 SCC 302, wherein the Supreme Court explained
that orders securing money claims cannot be granted merely
because a claim has been made. He therefore submitted that the
present Petition is premature, misconceived and deserves
dismissal.

17. Learned Senior Advocate further submitted that after filing
of the present Petition, Respondent No.1 again addressed letters
dated 24 June 2026 to the Debenture Trustee and the Loan Agent
seeking their written stand regarding redemption of the ROCPS.
According to him, these communications were issued only to
formally place the matter on record and obtain written
confirmation from the lenders. He submitted that Respondent No.1
had already sought lender approval before the Redemption Date
itself and, therefore, the letters issued in 2026 were only a
continuation of the earlier correspondence and not a fresh attempt
to obtain consent. Learned Senior Advocate submitted that by their
respective letters dated 25 June 2026, both the Debenture Trustee
and the Loan Agent declined to grant approval for redemption of
the ROCPS or for making any payment relating to it. According to
him, this clearly shows that the contractual pre-condition
contained in Clause 3.5 of the TFA still remains unfulfilled.Learned
Senior Advocate then dealt with the interpretation of the Third
Framework Agreement. He submitted that apart from ignoring
Clause 3.5, the Petitioner has also wrongly calculated the Agreed

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Special Return at Rs.7,36,15,376 instead of the crystallised
contractual amount of Rs.6,71,39,249. According to him, the
Petitioner wrongly relies upon the email dated 20 August 2024
stating that an accounting difference of about Rs.64 lakhs had
been corrected. He submitted that a correction made for
accounting purposes cannot change the contractual rights and
liabilities agreed between the parties. Learned Senior Advocate
pointed out that Clause 3.3.2 of the TFA specifically provides that
the Agreed Special Return of Rs.6,71,39,249 payable for the period
from 13 March 2018 till 25 November 2019 is not subject to any
further change and shall remain crystallised throughout the
duration of the Agreement until full redemption of the ROCPS.
According to him, the contract itself fixes the amount finally. He
therefore submitted that once the parties themselves have fixed
the amount under the contract, neither subsequent accounting
entries nor later correspondence can increase or alter that amount.
According to him, the Petitioner’s claim for Rs.7,36,15,376 is
directly contrary to Clause 3.3.2 and is therefore unsustainable.

18. Learned Senior Advocate further submitted that the
interpretation placed by the Petitioner in the Rejoinder on Clause
3.3.6 is completely incorrect. According to him, the Petitioner
argues that if Respondent No.1 had no funds, the shareholders
were bound either to provide funds or themselves purchase the
ROCPS. The Petitioner also argues that Clause 3.5 only controls
payment by Respondent No.1 and does not affect the obligations of
the other shareholders, and that Clause 3.3.6(ii) creates an
independent obligation on Respondent No.2. Learned Senior

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Advocate submitted that none of these interpretations can be
accepted. According to him, Clause 3.3.6 itself begins with the
words “Subject to Clause 3.5 below”, thereby making the entire
clause subordinate to the conditions contained in Clause 3.5. He
pointed out that similar words are also used in Clauses 3.3.2, 3.3.3
and 3.3.4. Therefore, according to him, the intention of the parties
is clear that every payment, redemption obligation and return
under Clause 3.3 is controlled by Clause 3.5. Learned Senior
Advocate submitted that the provisions of a contract must be
understood according to their plain and ordinary meaning. The
Court cannot insert words which the parties themselves have not
used or create exceptions which do not exist. In support of this
principle, reliance was placed upon Nabha Power Ltd.. According
to him, even if Clause 3.3.6 is read separately, the qualifying words
“Subject to Clause 3.5 below” govern the entire clause including
sub-clauses (i) and (ii). Therefore, according to him, no distinction
can be made between the obligations of Respondent No.1 and
Respondent No.2.

19. Learned Senior Advocate next submitted that the Petitioner
has failed to satisfy the settled principles governing grant of
interim protection under Section 9 of the Arbitration and
Conciliation Act, 1996. He submitted that the party seeking
interim protection must establish a strong prima facie case and
must also show that the opposite party is attempting to remove or
dissipate its assets with an intention to defeat the arbitral award.
He further submitted that merely expressing an apprehension
regarding the financial condition of the Respondents is not

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sufficient for grant of injunction or attachment.

20. Learned Senior Advocate submitted that the judgment of the
Supreme Court in Essar House Private Limited v. ArcelorMittal
Nippon Steel India Limited, (2022) 20 SCC 178, relied upon by the
Petitioner, has no application to the present case. According to
him, in that case there was no substantial defence to the claim,
whereas in the present matter the Respondents have raised several
contractual, statutory and factual disputes requiring detailed
adjudication. Learned Senior Advocate submitted that the
Petitioner’s request for deposit of about Rs.79.77 crores is, in
reality, nothing more than enforcement of a money claim. He
argued that it is well settled that where the dispute relates only to
payment of money and the claim itself is disputed, the requirement
of irreparable injury is ordinarily not satisfied because the dispute
can be finally decided in arbitration.

21. Learned Senior Advocate also submitted that the Petitioner’s
apprehension regarding a possible future sale of the shareholding
of Respondent No.1 has no connection with the contractual
dispute under the TFA. According to him, such apprehension
cannot be used for seeking restraint orders against genuine
corporate transactions or for asking wide disclosure regarding the
Respondents’ assets and liabilities.

22. Learned Senior Advocate further submitted that the SIAC
Rules, 2025, particularly Rule 12 read with Schedule I, provide an
effective remedy through appointment of an Emergency Arbitrator
for urgent interim relief. According to him, when the parties

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themselves have agreed to such a mechanism, the Petitioner ought
to pursue that remedy instead of seeking extraordinary relief from
this Court.

23. Learned Senior Advocate submitted that even if the
Petitioner ultimately succeeds before the Arbitral Tribunal, its
claim remains adequately protected because Respondent No.1
continues to be solvent, and the lenders have also furnished the
necessary undertakings. On the other hand, directing deposit of
money at this stage would seriously prejudice the Respondents
because it would compel them to violate their contractual
obligations towards secured lenders and divert funds meant for
repayment of secured debts.

24. Learned Senior Advocate lastly submitted that the conduct of
the Petitioner shows that there was no real urgency requiring
exercise of powers under Section 9. According to him, although
the Redemption Date was 30 June 2024 and the Petitioner
admittedly knew on 29 June 2024 that lender approval had not
been obtained, the legal notice was issued only on 19 December
2025, almost eighteen months later. He further pointed out that
although the Petition was electronically filed on 30 April 2026, no
immediate steps were taken for circulation and the praecipe
seeking circulation was filed only on 8 June 2026, after which the
matter came to be circulated on 18 June 2026.

25. Learned Senior Advocate submitted that this sequence of
events is inconsistent with the Petitioner’s present contention that
immediate protection was necessary. According to him, the

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chronology itself shows that the present Petition is an afterthought
filed after considerable delay and only with a view to enforce
claims which, according to the Respondents, remain contractually
conditional and are also barred by the Companies Act, 2013. He
therefore submitted that no case has been made out for grant of
either ad interim or interim relief under Section 9 of the
Arbitration and Conciliation Act, 1996 and that the Petition
deserves to be dismissed.

REASONS AND ANALYSIS:

Whether the amounts under the Third Framework Agreement
became payable on expiry of the Redemption Period. Effect of
Clauses 3.3, 3.3.6 and 3.5. Effect of Financing Documents and
lender consent.

26. I have carefully seen the pleadings, Third Framework
Agreement dated 13 July 2022, earlier Framework Agreements,
emails and other correspondence between parties, Financing
Documents produced before this Court and also submissions made
by both learned counsel. At this stage, this Court is not finally
deciding who is right or wrong. Still, while considering petition
under Section 9 of the Arbitration and Conciliation Act, 1996, the
Court cannot avoid looking whether petitioner has shown basis for
making its claim.

27. At present, there is no dispute that the Third Framework
Agreement was executed. Both parties accept that this Agreement
governs their relationship. The dispute is about what Clauses 3.3,
3.3.6 and 3.5 mean. Petitioner says that after 30 June 2024, every

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obligation under the Agreement became enforceable and
respondents were bound to make payment. Respondents say this is
not correct because only expiry of Redemption Period does not
make payment due, as every payment is controlled by Clause 3.5.
Therefore, first thing which needs consideration is how these
clauses should be read together.

28. Mr. Kamat argued that Clause 3.3 gives clear rights to the
petitioner. According to him, petitioner became entitled to
redemption of Final ROCPS, along with Agreed Annual Return and
Agreed Special Return. He submitted that the correspondence
exchanged after execution of the Agreement, respondents never
denied these obligations. In many emails they mentioned principal
amount outstanding, returns which had accumulated and
explained why payment was not being made. According to him,
this shows that liability had come into existence and only actual
payment got delayed because respondents were facing financial
problems.

29. On the other side, Mr. Jagtiani submitted that petitioner is
reading Clause 3.3 and ignoring rest of the Agreement. According
to him, Clause 3.3.6 starts with words “Subject to Clause 3.5
below.” Therefore, every obligation mentioned after these words
becomes conditional and cannot be treated as absolute. He
submitted that once parties themselves have used such language,
the Court cannot treat them as if they have no purpose. According
to him, entire Agreement has to be read together as one document.

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30. In my opinion, submission of the respondents that whole
Agreement has to be read together deserves acceptance. It is now
settled that while interpreting a commercial contract, one sentence
cannot be picked up by leaving remaining provisions aside. Every
clause has to be read with other clauses so that all parts of the
Agreement are given some meaning. The Supreme Court in Nabha
Power Ltd. v. Punjab State Power Corporation Ltd. , (2018) 11 SCC
508 has observed that intention of parties has to be gathered from
words they have used and every clause should be harmoniously
understood. Therefore, Clause 3.3 cannot be looked at by
forgetting the opening qualification contained in Clause 3.3.6. But
only because Clause 3.3.6 starts with words “Subject to Clause 3.5
below” it cannot mean that no contractual obligation came into
existence unless lender consent was first received. These words
show that performance or working of one obligation is controlled
by another clause. They do not mean that obligation is not created.
Whether such words postpone the liability or only regulate when
and how that liability is to be performed depends on reading the
whole Agreement. Clause 3.3 says that petitioner shall receive
redemption of Final ROCPS together with Agreed Annual Return
and Agreed Special Return. These are not shown as optional
benefits depending upon wish of respondents. They form part of
commercial understanding accepted by all parties. Throughout the
Third Framework Agreement mandatory words are used while
describing these entitlements. Therefore, it is difficult to say that
Clause 3.3 creates no obligation at all.

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31. Real question is whether this obligation became enforceable
on 30 June 2024 without looking at Clause 3.5. Here, Clause 3.5
becomes important. Reading this clause shows that redemption,
repurchase or conversion of ROCPS and payment of Annual
Return, Special Return or any other amount is to be made in
manner decided by the Board, shall remain subject to Financing
Documents and, till Final Settlement Date, shall also require prior
written consent of lenders or other approvals mentioned there.
These conditions are not disputed by either side. Petitioner tried to
argue that Clause 3.5 controls the manner of payment by
Respondent No.1 and does not reduce the obligation created
against Respondent No.2 under Clause 3.3.6(ii). According to
petitioner, even if Respondent No.1 did not have sufficient funds,
Respondent No.2 had an duty either to bring funds into
Respondent No.1 or itself purchase the ROCPS. Therefore,
according to petitioner, lender approval could not defeat this
contractual promise.

32. I am not able to accept this submission. Clause 3.3.6 begins
with qualifying words “Subject to Clause 3.5 below.” These words
appear to control the whole clause. If parties wanted only
Respondent No.1 to remain governed by Clause 3.5 and intended
Respondent No.2 to stand outside that clause, appropriate words
could have been inserted in the Agreement. No such distinction is
seen from the language used by parties. At the same time,
respondents’ submission that no obligation came into existence
until lender consent was obtained appears stated too broadly. If
such interpretation is accepted, then large part of Clause 3.3

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would become useless. Normally commercial parties do not
execute detailed agreements creating rights which may never
become enforceable because one outside approval is not received.
Such interpretation should not be accepted unless language of
Agreement forces the Court to take that view. One distinction
needs to be kept in mind between existence of contractual liability
and right to recover payment. In commercial agreements, these
two ideas are not same. A party may accept an obligation under
the contract, but actual performance of that obligation may
depend upon happening of certain events. Therefore, merely
because payment could not be made, it cannot be said that no
liability had ever arisen.

33. Conduct of parties after signing the Agreement gives
guidance on this issue. From material placed before the Court,
especially emails dated 1 September 2021, 11 June 2024 and 20
August 2024, it appears that respondents informed petitioner that
payment could not be made because lender approval had not been
received or because financial difficulties were continuing. It is
important that these communications did not say petitioner had no
contractual rights. Explanation given was that payment could not
be made because contractual conditions and financing restrictions
were standing in the way. In email dated 20 August 2024
Respondent No.1 recorded outstanding principal amount of
around Rs.24.3 crores and accrued returns of around Rs.38.2
crores till June 2024. Respondents say this was only an accounting
exercise. Petitioner says this email acknowledges liability under the
Agreement.

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34. Prima facie, this communication cannot be brushed aside.
Language used in that email does show that respondents had
calculated amounts payable under contractual formula. At the
same time, respondents continued saying that payment required
lender approval. Therefore, when correspondence is read together,
it supports both sides to some extent. It supports petitioner’s case
regarding calculation of contractual dues. It also supports
respondents’ stand that payment was considered by them as
contractually restricted.

35. Learned Senior Advocate for respondent relied upon
Financing Documents. According to him, Clause 2.30 of the
Debenture Trust Deed and Clause 21.24 of the SII Facility
Agreement prohibited redemption or payment relating to ROCPS
without prior lender approval. He further submitted that these
documents were existing before execution of Third Framework
Agreement and amendments made in July 2023 restated those
earlier documents.

36. On looking at contractual definition of “Financing
Documents”, it appears that this expression has been given a wide
meaning. Prima facie, it is not easy to accept petitioner’s argument
that amended Financing Documents fall outside this definition. If
later documents restate earlier Financing Documents without
changing their basic character, then they would continue to remain
covered within contractual definition. To this extent, submission
made by respondents deserves prima facie acceptance. But at the
same time, respondents cannot say that these Financing
Documents answer every contractual obligation arising under the

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Third Framework Agreement. Financing Documents govern
relationship between company and its lenders. Third Framework
Agreement governs contractual relationship between petitioner
and respondents. One cannot wipe out the other. Lender
restrictions may explain why payment was delayed, but they do
not destroy petitioner’s contractual rights.

37. Respondents submitted that before Redemption Period
expired they had approached lenders seeking approval and such
approval was refused. Communications exchanged during June
2024 and June 2026 have been relied upon for this purpose. Prima
facie, these documents show that requests for lender consent were
in fact made. Therefore, petitioner’s submission that respondents
made no effort to obtain lender approval does not appear correct.
At the same time, whether respondents acted with diligence while
pursuing lender approval cannot finally be decided on present
material. Petitioner says respondents did not make any effort and
continued using lender restrictions as an excuse. Respondents deny
this allegation. Such disputed factual issues would require
evidence before the learned Arbitral Tribunal.

38. Mr. Kamat, learned Senior Advocate relied upon Note 16(D)
forming part of audited financial statements, where reference is
made to legal opinion stating that Clauses 3.3.6 and 3.5 continue
to govern repayment even after 30 June 2024. In my opinion, this
note shows how respondents understood the Agreement. But such
accounting note cannot decide correct interpretation of the
contract. Interpretation of contractual terms is a matter for the
Court to decide.

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39. Therefore, after considering rival submissions, this Court is
of prima facie opinion that Clause 3.5 cannot be ignored.
Requirement of lender approval and compliance with Financing
Documents forms part of contractual arrangement accepted by
parties. To that extent, respondents’ submission deserves
acceptance. But I am unable to accept their argument that no
contractual liability came into existence until lender consent was
obtained. Clause 3.3 creates substantive rights in favour of
petitioner, whereas Clause 3.5 regulates the manner in which those
rights can be performed. Therefore, expiry of Redemption Period
did not make every amount immediately recoverable without
considering Clause 3.5. At the same time, non-receipt of lender
approval does not wipe away petitioner’s entitlement under the
Agreement. What is the effect of refusal of lender consen and what
remedies flow from such situation are matters requiring
examination before the learned Arbitral Tribunal after evidence is
recorded.

Whether Section 55 of the Companies Act, 2013 stops the
petitioner’s claim. Nature of ROCPS. Effect of accounting
treatment. Whether Agreed Annual Return and Agreed Special
Return are separate contractual obligations.

40. The next question which needs consideration is what effect
Section 55 of the Companies Act, 2013 has on the petitioner’s
claim. Respondents argued that even if everything stated by the
petitioner under the Third Framework Agreement is accepted,
redemption of the Final ROCPS still cannot take place because
Section 55 permits redemption only in the manner provided under

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that provision. According to them, Respondent No.1 has no profits
and no fresh issue of shares has been made for redemption.
Therefore, they submit that this restriction comes in between and
because of that the petitioner’s claim cannot be enforced.
Petitioner has taken different stand. According to him, either
Section 55 does not apply to the present transaction or, even if it
applies, it does not affect the separate promise regarding payment
of the Agreed Annual Return and Agreed Special Return.

41. Before considering these rival submissions, it is necessary to
understand the scheme of Section 55. This provision permits a
company to issue redeemable preference shares but at the same
time lays down conditions regarding redemption. It provides that
such shares can be redeemed from profits available for dividend or
from proceeds of a fresh issue of shares made for that purpose.
Therefore, unlike an loan or debt, redemption of preference share
capital is not left to agreement between parties but is regulated by
the provisions of the Companies Act.

42. Learned Senior Advocate appearing for the respondents
placed reliance upon the recent judgment of the Supreme Court in
EPC Constructions India Ltd. According to him, principles laid
down in that judgment answer the controversy arising in the
present proceedings. Because of this submission, it becomes
necessary to examine that judgment closely.

43. In paragraph 25 of EPC Constructions, the Supreme Court
observed that Section 55 of the Companies Act requires
redeemable preference shares to be redeemed only from profits

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available for dividend or from proceeds of a fresh issue of shares
made for such redemption. Thus, the Supreme Court recognised
that redemption of preference shares is not governed only by
contract between parties but also remains subject to restrictions
imposed by the Companies Act. Thereafter, the Supreme Court
referred to the observations in Lalchand Surana v. Hyderabad
Vanaspathy Ltd., (1990) 68 Comp Cas 415 (AP), and approved the
legal principle stated therein. Paragraphs 26 and 27 of EPC
Constructions explain that even after the date fixed for redemption
has passed, holder of redeemable preference shares does not
become creditor of the company. Such holder still continues as
shareholder because redemption remains controlled by conditions
contained in Section 55. The Supreme Court accepted the view
that merely because redemption has not taken place, preference
share capital does not become debt recoverable from the company.
In paragraph 28, the Supreme Court explained the distinction
between debt and equity by referring to Gower’s Principles of
Modern Company Law. It observed that although preference
shareholders enjoy certain preferential rights, they continue to
remain members of the company. A person holding debt gets an
enforceable right to receive payment irrespective of profits,
whereas payment relating to preference share capital still governed
by restrictions applicable to dividend and redemption. Therefore,
accounting practice or commercial description cannot remove the
distinction between debt and equity.

44. Respondents thereafter relied upon paragraphs 43 to 45 of
EPC Constructions and submitted that accounting treatment

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adopted by the company has no legal consequence. According to
them, ROCPS have been shown as borrowings because Ind AS 32
requires such classification. Therefore, petitioner cannot claim any
right because those entries appear in financial statements. This
submission requires consideration. Paragraph 43 of EPC
Constructions records that Accounting Standard Ind AS 32 requires
certain redeemable preference shares to be shown as liabilities in
financial statements. However, at the same time, the Supreme
Court observed that such accounting treatment does not decide
the relationship between the parties. The real nature of the
transaction has to be gathered from contractual documents and
the statute.

45. The Supreme Court referred to State Bank of India v.
Commissioner of Income Tax, (1985) 4 SCC 585, wherein it was
held that entries in books of account do not determine the nature
of a transaction. Similar observations were also made in Union of
India v. Association of Unified Telecom Service Providers of India ,
(2020) 3 SCC 525, where it was held that accounting standards
merely provide a uniform system for maintaining accounts and
cannot override contractual definitions or statutory provisions.

46. In my prima facie opinion, respondents are correct to the
extent they submit that accounting entries cannot determine the
character of ROCPS. Balance sheet may classify the instrument as
liability because accounting standards require such treatment.
However, merely because such classification has been made,
preference share capital does not become loan if documents and
provisions of the Companies Act indicate otherwise. At the same

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time, I am unable to accept the respondents’ submission that
accounting treatment has no relevance. The Supreme Court in EPC
Constructions has nowhere held that accounting entries possess no
evidentiary value. What it has said is that such entries are not
conclusive. Balance sheet may be one relevant piece of evidence
showing how the company recorded the transaction. But it cannot
alter rights created under statute or contract. Therefore, although
balance sheet cannot override Section 55 or the Third Framework
Agreement, it may be looked into for the limited purpose of
examining admissions or understanding how the parties reflected
the transaction.

47. Learned counsel appearing for the petitioner relied upon J.K.
Industries Ltd. and submitted that Accounting Standards have
been made mandatory under the Companies Act. Therefore,
respondents cannot ignore the classification adopted in their
audited financial statements. There can be no dispute that
compliance with Accounting Standards is mandatory. The Supreme
Court in J.K. Industries explained that these standards are
intended to ensure that financial statements present a true and fair
picture of the affairs of the company. However, J.K. Industries does
not lay down that Accounting Standards alter substantive rights
between parties. On the contrary, EPC Constructions held that
accounting classification cannot determine the legal character of
the relationship between the parties. Therefore, both judgments
can stand together. Accounting Standards regulate preparation of
financial statements. They do not amend rights nor can they
override statute.

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48. Learned Senior Advocate for the respondents relied upon
paragraph 47 of EPC Constructions. There, the Supreme Court
observed that before any liability can qualify as a debt under the
Insolvency and Bankruptcy Code, there must first exist a debt
recognised in law. It observed that amounts invested towards
preference shares do not possess the character of debt and mere
expiry of the redemption date does not alter this position. These
observations support the respondents’ contention that ROCPS
cannot be treated as debt merely because redemption has become
due. Petitioner submitted that the dispute does not arise under the
Insolvency and Bankruptcy Code. According to him, the claim is
founded upon separate promises contained in the Third
Framework Agreement. Therefore, it is argued that observations
made in EPC Constructions while interpreting Sections 5(7) and
5(8) of the Insolvency and Bankruptcy Code cannot decide the
controversy arising in these proceedings.

49. It is true that EPC Constructions arose under the Insolvency
and Bankruptcy Code and the question before the Supreme Court
was whether holder of redeemable preference shares could be
treated as a financial creditor. That question was answered in the
negative. Therefore, ratio of that judgment has to be understood in
the factual background in which it was delivered. At the same
time, while deciding that issue, the Supreme Court explained
principles regarding the nature of redeemable preference shares
and operation of Section 55 of the Companies Act. Those
principles cannot be ignored merely because the present
proceedings arise under Section 9 of the Arbitration and

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Conciliation Act. Consequently, I am of the prima facie opinion
that respondents are justified in contending that redemption of
ROCPS continues to remain governed by Section 55 of the
Companies Act. Petitioner cannot treat ROCPS as unsecured loan
or contend that on expiry of the Redemption Date the shares
became recoverable debt. To that extent, submission made by
respondents deserves acceptance.

50. The next question is what is the real nature of the Agreed
Annual Return and the Agreed Special Return. In my opinion, this
question cannot be answered by seeing the names given by the
parties. Merely because the Agreement calls one payment as
“Annual Return” or “Special Return”, or even says it is dividend or
similar return, that does not decide its character. In commercial
matters, the Court is required to see what is the substance of the
arrangement and not merely the words chosen while drafting the
Agreement. Therefore, the entire Agreement has to be read
together, and its overall purpose cannot be ignored. The petitioner
submitted that the Agreed Annual Return and the Agreed Special
Return do not arise only because Final ROCPS were issued.
According to him, these payments were separately agreed when
the parties restructured their relationship. It is his case that
petitioner agreed to continue the investment and not to ask for its
money, and these returns were agreed as consideration for such
arrangement. Therefore, these payments flow from promises
contained in the Agreement and are not merely dividend payable
because of the Companies Act. On the other hand, learned Senior
Advocate for respondent invited my attention to Clauses 3.3.1 and

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3.3.2, where Agreed Annual Return has been described as dividend
or return carried by the Final ROCPS and Agreed Special Return
has been referred to with the Final ROCPS. According to him,
when parties have connected both these returns with the
preference shares, the Court cannot separate them from the
ROCPS and treat them as independent obligations. According to
the respondents, these payments go together with the preference
shares and cannot continue after separating them from the ROCPS.

51. In my opinion, respondents are correct to some extent. The
language used in the Third Framework Agreement shows a
connection between these returns and the Final ROCPS. Reading
Clauses 3.3.1 and 3.3.2 does not show that parties intended these
payments to stand away from the preference shares. On the
contrary, in the Agreement both returns are connected with the
Final ROCPS. Therefore, prima facie, these payments take their
source from the preference shares and cannot be treated as
independent obligations. However, this does not answer the
controversy. Commercial agreements sometimes create obligations
which are connected with one instrument but still have effect than
the incidents attached to that instrument. Merely because a
payment is calculated with reference to preference shares, it does
not follow that every part of such payment must have the same
character as preference share capital. Much depends upon the
intention of the parties gathered after reading the Agreement as a
whole. It is necessary to notice that the Third Framework
Agreement was not executed at the stage when the investment was
first made. It came after execution of earlier Framework

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Agreements and appears to have formed part of a restructuring
between the parties. The object appears to have been to redefine
their rights and obligations after changes had taken place in the
earlier arrangement. Therefore, every clause of this Agreement
cannot be treated as merely repeating rights available to a
preference shareholder. If that alone had been the intention, there
would hardly have been any necessity for parties to negotiate
provisions relating to Annual Return, Special Return and several
other obligations.

52. At the same time, I find it difficult to accept the petitioner’s
submission that these returns have no connection with Section 55
of the Companies Act. The Agreement does not describe these
payments as damages for breach of contract, interest payable on a
loan or consideration arising under separate arrangement. Instead,
these payments are described by making reference to the Final
ROCPS. Therefore, separating these returns from the preference
shares would also not appear to be consistent with the language
chosen by the parties while drafting the Agreement.

53. Learned counsel for the petitioner submitted that Section 55
regulates redemption of preference share capital and does not deal
with consideration. According to him, even if redemption cannot
take place because statutory conditions are not fulfilled, nothing
contained in Section 55 prevents enforcement of the independent
obligation regarding payment of the Agreed Annual Return and
Agreed Special Return. This submission deserves consideration
because Section 55 deals with redemption of redeemable
preference shares and does not refer to every obligation which

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parties may undertake between themselves. However, the difficulty
in accepting this submission is that the contractual language does
not separate these payments from the Final ROCPS. If the
Agreement had provided that these returns would remain payable
irrespective of redemption, irrespective of restrictions relating to
dividend and irrespective of Section 55, perhaps the matter might
have stood on a different footing. No such provision appears in the
Agreement. The Court cannot rewrite a contract by supplying
words which parties have not inserted.

54. Learned Senior Advocate for Respondent submitted that if
the petitioner’s interpretation is accepted, Section 55 would
become ineffective. According to him, parties would describe
dividend or redemption amount by giving it another name and
thereby avoid the statutory restrictions imposed by the Companies
Act. In my opinion, this submission carries force. Statutory
provisions enacted for protection of company capital cannot be
permitted to be defeated by adopting different labels for the same
payment. At the same time, respondents’ submission proceeds on
the assumption that because these returns are connected with the
Final ROCPS, every obligation disappears whenever redemption
cannot take place under Section 55. Such interpretation does not
appear consistent with the structure of the Agreement. Parties have
devoted separate provisions to these returns and have treated
them as important benefits forming restructuring arrangement.
Such provisions cannot be treated as having no significance.

55. In my opinion, it is necessary to maintain distinction
between existence of a contractual obligation and the stage when

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obligation becomes enforceable. Parties may undertake
contractual obligations even though performance of those
obligations remains regulated by statutory provisions. Merely
because performance is controlled by statute, it does not mean that
the promise ceases to exist. Thus, in my view, Section 55 cannot be
interpreted as wiping away every obligation connected with the
Final ROCPS. What Section 55 regulates is the manner in which
redemption of redeemable preference shares can take place.
Whether parties have also created additional rights which continue
when redemption is temporarily not possible depends upon
interpretation of the Agreement. Prima facie, the Agreed Annual
Return and the Agreed Special Return appear to occupy a middle
position. They are not the same as redemption amount at the same
time, they cannot be treated as independent payments having no
connection with the Final ROCPS. Their character appears to be
associated with the preference shares, at the same time they
appear to form part of the arrangement negotiated between the
parties while entering into the restructuring. The Court cannot
ignore that acceptance of either submission may produce
consequences which the parties never intended. If the petitioner’s
submission is accepted completely, safeguards contained in Section
55 may become capable of being avoided by careful drafting of
language. On the other hand, if respondents’ submission is
accepted entirely, parties may lose rights which they negotiated
while entering into a restructuring. Neither of these consequences
appears consistent with principles governing interpretation of
contracts. Therefore, at this stage, I am of the prima facie opinion

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that the Agreed Annual Return and the Agreed Special Return
cannot be characterised either as dividend governed by the
Companies Act or as independent payments standing outside the
statutory framework. Their character appears to be composite.
They arise from the arrangement in the Third Framework
Agreement, but that arrangement has been structured around the
Final ROCPS. Consequently, their enforceability cannot be
examined by ignoring Section 55, nor can Section 55 provide
complete answer to the controversy without examining the
arrangement as a whole.

56. Thus, following prima facie conclusions emerge. Firstly,
redemption of the Final ROCPS continues to remain governed by
Section 55 of the Companies Act, 2013. Secondly, mere expiry of
the Redemption Date does not convert the petitioner into creditor
of the company. Thirdly, accounting treatment showing ROCPS as
borrowings or financial liabilities is not conclusive and cannot
override either the Companies Act or the contractual terms, though
such accounting treatment may possess limited evidentiary value
depending upon facts established in the case. Fourthly, the Agreed
Annual Return and the Agreed Special Return cannot be
characterised either as dividend governed by the Companies Act or
as independent payments standing outside the statutory
framework. Their character appears to be composite and shall
remain open for adjudication before the learned Arbitral Tribunal.

Scope of jurisdiction under Section 9 of the Arbitration and
Conciliation Act, 1996. Whether petitioner has made a prima facie
case for interim protection. Nature of relief under Section 9.

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Consideration of Essar House.

57. After considering the issues arising under the Third
Framework Agreement and the objections based on Section 55 of
the Companies Act, the next question is whether the petitioner has
made out a case for grant of interim protection under Section 9 of
the Arbitration and Conciliation Act, 1996. Both sides have made
detailed submissions regarding the scope of powers available
under Section 9. It is now well settled that jurisdiction under
Section 9 is equitable in nature. Though the provision gives wide
powers to the Court, the Court has to examine whether the
applicant has shown a prima facie case, whether refusal of
protection is likely to make the arbitral proceedings ineffective,
and whether balance of convenience along with possibility of
irreparable prejudice justify exercise of discretionary jurisdiction.
At the same time, the expression “interim measure of protection”

shows that the intention of the legislature is to ensure that
arbitration does not become meaningless because, during
pendency of the arbitral proceedings, the subject matter becomes
incapable of enforcement. Therefore, while considering relief
under Section 9, the Court is required to see the substance of the
relief claimed.

58. Learned Senior Advocate appearing for the petitioner
submitted that respondents are trying to treat every claim as if it
were a money suit. According to him, the amounts claimed
represent obligations which have been acknowledged by the
respondents. It is further submitted that there exists a real
apprehension that financial position of Respondent No.1 may

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deteriorate to such an extent that even if an arbitral award is
passed, the award may not be capable of enforcement. Therefore,
according to the petitioner, this Court should preserve the
effectiveness of arbitration. Learned Senior Advocate appearing for
the respondents submitted that this argument overlooks the
distinction between securing a claim and granting the final relief.
According to him, petitioner is seeking recovery of the entire
amount even before the learned Arbitral Tribunal has examined
the merits. It is submitted that Section 9 cannot be converted into
an execution proceeding.

59. There can not be dispute regarding the proposition advanced
by the respondents. Interim measures cannot be used as a method
for granting the final relief. This principle does not mean that
every monetary claim stands outside the scope of Section 9. The
statute contemplates securing the amount in dispute wherever
facts justify such protection. Therefore, the real question is
whether the facts of the present case disclose circumstances which
justify exercise of that jurisdiction.

60. Learned Senior Advocate for the petitioner placed reliance
upon the judgment of the Supreme Court in Essar House Private
Limited v. ArcelorMittal Nippon Steel India Limited , (2022) 20
SCC 178. According to him, the Supreme Court has held that
powers available under Section 9 are wider than those contained
in Order XXXVIII Rule 5 of the Code of Civil Procedure. He
submitted that although the principles underlying Order XXXVIII
Rule 5 may provide guidance, they cannot be imported so as to
reduce the scope of Section 9.

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61. Section 9 is meant for preventing a problem before it reaches
a stage where nothing much can be done. The idea behind this
provision is that the Court should step in before the situation goes
out of hand. If the Court waits till the respondent has parted with
all the assets, then granting interim protection may not serve any
purpose. Since dishonest intention is not capable of being proved
by direct evidence, the Court can look into the surrounding
circumstances and see whether there exists a real possibility that
the assets of the respondent may reduce before the arbitral award
becomes capable of being enforced. The words “strong possibility”

mean something more than only a suspicion. At the same time,
they do not mean that absolute proof is required at this stage. The
Court has to satisfy from the material placed before it that there is
a reasonable possibility that the assets of the respondent may
materially reduce before the arbitral award can be enforced. Such
satisfaction should come from the material available on record. At
the same time, Section 9 cannot be invoked merely because
arbitration proceedings are pending. If the respondent is
financially sound, possesses sufficient assets and there is no
material showing that its assets are reducing or are likely to
disappear, then interim protection should not be granted.

62. Learned Senior Advocate for the respondents submitted that
the petitioner is reading Essar House partly. According to him,
even after that judgment, the applicant must establish
circumstances showing necessity for grant of interim protection.
Mere apprehension, existence of a dispute cannot justify freezing
assets worth several hundred crores. This submission carries force.

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Section 9 cannot be invoked merely because one party believes
that recovery may become difficult. Commercial entities undergo
financial ups and downs during the course of business. Every
allegation regarding financial difficulty cannot invite judicial
interference with commercial operations.

63. Having considered the rival submissions, this Court is of the
prima facie opinion that the petitioner has raised substantial
questions requiring adjudication before the learned Arbitral
Tribunal. The interpretation advanced by the petitioner cannot be
described as untenable. Equally, the defence founded upon Section
55 of the Companies Act together with the principles laid down in
EPC Constructions raises arguable questions. Therefore, at this
stage neither side can contend that the controversy admits only
one conclusion. Consequently, existence of a prima facie case
cannot decide the present petition. The real enquiry under Section
9 is whether surrounding circumstances disclose a necessity for
grant of interim protection so that the arbitral proceedings do not
become ineffective. Therefore, the material relating to financial
position of the respondents, allegations regarding dissipation of
assets, the plea of delay, the effect of the Emergency Arbitrator
proceedings and the balance of convenience assume importance.

Whether interim protection is necessary in the facts of the present
case. Delay, Emergency Arbitrator proceedings, financial condition
of the respondents, alleged dissipation of assets, balance of
convenience and irreparable injury.

64. Having held that both parties have raised arguable issues

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which require adjudication before the learned Arbitral Tribunal, it
now becomes necessary to see whether the petitioner has shown
the further circumstances required for grant of interim protection
under Section 9. Learned Senior Advocate appearing for the
petitioner submitted that respondents are trying to present the
dispute as if it is only disagreement. According to him, the facts
disclose a much serious situation. It is submitted that financial
position of Respondent No.1 has become weaker, its liabilities have
increased, lenders have refused permission for redemption and,
therefore, there exists a real apprehension that by the time an
arbitral award is passed, no assets may be available for enforcing
it. According to him, unless protective orders are passed, the
arbitral proceedings may become meaningless. Learned Senior
Advocate appearing for the respondents submitted that the
petitioner has proceeded upon assumptions. According to him,
there is no material showing that respondents are disposing of
assets or acting with intention of defeating arbitral award. Mere
financial difficulty cannot become a ground for freezing assets of a
running company. It is submitted that companies often pass
through periods of financial stress and such circumstances cannot
justify invoking jurisdiction under Section 9.

65. In my opinion, respondents are correct to the extent that
financial stress alone cannot justify grant of interim protection.
Commercial disputes arise because parties face financial
difficulties. If every allegation regarding weakening financial
condition is accepted, then orders securing the entire claim would
become a rule. Such an approach would interfere with ordinary

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business and would not be consistent with the nature of
jurisdiction under Section 9. At the same time, the Court also
cannot ignore the circumstances relied upon by the petitioner.
Material placed on record prima facie shows that Respondent No.1
informed the petitioner that it was unable to redeem the ROCPS
because lender approvals were not available and financing
restrictions continued to remain. Correspondence shows that
substantial liabilities continued after expiry of the Redemption
Period. These circumstances may not establish immediate
dissipation of assets, but they also cannot ignored. The petitioner
has relied upon financial statements to show that liabilities of
Respondent No.1 have increased and its overall financial position
has weakened. Respondents answered by contending that audited
financial statements merely reflect realities of the business and
cannot establish any intention to defeat award.

66. Financial statements disclose financial condition of a
company. Ordinarily they do not reveal the intention with which
the company is dealing with its assets. Therefore, deterioration
shown in accounts may create concern, but without supporting
material it cannot justify a finding that the company intends to
avoid enforcement of an award.

67. Learned Senior Advocate for the petitioner submitted that
refusal of lenders to permit redemption shows that recovery has
become uncertain. According to him, if the company is unable to
secure lender consent for making payment of agreed obligations,
there is every possibility that any award passed may remain on
paper.

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68. Refusal of lender consent affects the ability of respondents to
make payment. However, inability to perform obligations is not the
same thing as intention to defeat enforcement of a award. The
distinction between commercial inability and dissipation of assets
must be maintained.

69. Learned Senior Advocate for petitioner relied upon
communications exchanged after June 2024 and submitted that
respondents acknowledged their liability but postponed the
payment. According to him, assurances followed by non-payment
show that contractual remedies are ineffective.

70. Prima facie, the correspondence indicates that negotiations
between the parties continued for some time. It shows that
respondents showed their inability to make payment by referring
to financing restrictions and lender approvals. However, these
communications do not disclose any intention on the part of
respondents to transfer assets beyond the reach of the petitioner.

71. Learned Senior Advocate appearing for the respondents
relied upon conduct of the petitioner. According to him, the
Redemption Period expired on 30 June 2024. Even thereafter the
petitioner continued corresponding with respondents for several
months and invoked arbitration later. According to him, such
conduct shows that there was no urgency requiring immediate
intervention by the Court.

72. Delay by itself may not defeat a petition under Section 9.
Commercial parties continue negotiations in the hope that disputes
may be resolved amicably before commencing arbitration. Such

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conduct deserves encouragement rather than criticism. Therefore,
merely participating in settlement negotiations cannot amount to
waiving remedies. At the same time, chronology of events also
cannot be ignored. If the petitioner continued negotiations for a
considerable period without asserting that immediate protection
from the Court was necessary, such conduct becomes relevant
circumstance while considering whether the prejudice was
immediate. This circumstance may not defeat the petition, but it
has bearing while considering the balance of convenience.

73. Another submission advanced by respondents relates to
proceedings before the Emergency Arbitrator. Learned Senior
Advocate submitted that the petitioner had approached the
Emergency Arbitrator and appropriate proceedings had taken
place. According to him, after not obtaining complete relief, the
petitioner has attempted to reopen the same controversy before
this Court. The petitioner contended that jurisdiction of this Court
under Section 9 remains independent of emergency arbitral
proceedings. According to the petitioner, the statute preserves
jurisdiction of the Court and the present petition cannot be
rejected merely because proceedings before the Emergency
Arbitrator were pursued.

74. The submission of the petitioner deserves acceptance to a
limited extent. Mere availability of an Emergency Arbitrator does
not take away the jurisdiction conferred upon this Court under
Section 9. The Court continues to possess jurisdiction wherever
circumstances justify exercise of power. However, proceedings
before the Emergency Arbitrator cannot be treated as irrelevant.

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Nature of relief sought, findings recorded therein and surrounding
circumstances may provide material while this Court exercises its
discretion under Section 9.

75. Respondents submitted that the petitioner has failed to point
out any transaction showing diversion of funds, alienation of assets
or fraudulent conduct. According to them, the petition proceeds
upon apprehensions regarding possible recovery.

76. Courts ordinarily grant interim measures such as disclosure
of assets, injunction against alienation or securing amounts where
material indicates a real possibility that enforcement may become
ineffective. Mere suspicion cannot take the place of evidence.
Having examined the material available, I am unable to record a
prima facie finding that respondents have siphoned assets or
transferred properties with intention of frustrating arbitral
proceedings. The petitioner has relied upon financial indicators,
correspondence regarding inability to make payment and lender
restrictions. These circumstances create commercial concern.
However, they do not establish dissipation of assets. At the same
time, the admitted inability to redeem the ROCPS, dependence
upon lender approvals, financial constraints and the substantial
amount involved together show that the apprehension expressed
by the petitioner cannot be described as baseless. Therefore, the
Court cannot accept either of the positions suggested by the
parties.

77. The balance of convenience requires examination. Granting
the entire relief sought by the petitioner may interfere with

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functioning of Respondent No.1 and may indirectly affect lenders
whose rights are connected with the Financing Documents. On the
other hand, refusal of every protective measure may expose the
petitioner to the possibility that any arbitral award passed in future
may become difficult to enforce. While exercising equitable
jurisdiction, the Court is required to balance these considerations
instead of accepting one side. Interim measures should preserve
effectiveness of arbitration without affecting commercial activities.

78. Learned Senior Advocate for the petitioner submitted that
irreparable prejudice would be caused because the petitioner has
waited beyond the Redemption Period and any delay would
increase the prejudice suffered by it. Learned Senior Advocate for
the respondents answered by submitting that the dispute is
compensatory in nature and any arbitral award can be satisfied if
the petitioner succeeds before the Arbitral Tribunal.

79. The submission that irreparable prejudice can never arise in
a monetary dispute is stated too widely. Commercial arbitrations
involve monetary claims where recovery may become uncertain. In
appropriate cases, Courts have recognised that interim protection
may also be granted even in disputes involving money. At the same
time, petitioner cannot succeed merely by pointing out that the
amount involved is substantial. Necessity for protection must
emerge from the overall facts and surrounding circumstances of
the case. On an overall assessment of the rival submissions, this
Court is of the prima facie opinion that the petitioner has shown
that serious disputes exist, substantial amounts are claimed under
the Third Framework Agreement and financial restrictions

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affecting payment are genuine. These circumstances justify
examination under Section 9. Respondents cannot avoid interim
protection merely by relying upon Section 55 of the Companies
Act, lender restrictions or pendency of arbitration. Contractual
obligations undertaken under the Third Framework Agreement
continue to remain the subject matter of adjudication before the
learned Arbitral Tribunal, and this Court must ensure that such
adjudication does not become ineffective. Therefore, the extent of
interim protection must be shaped by keeping in view these
consideration. Therefore, the Court finds a prima facie case
requiring limited protection but declines to completely stall the
redevelopment.

80. In view of the foregoing discussion, and upon overall
assessment of the material record, the following order is passed:

(i) The Arbitration Petition is partly allowed;

(ii) The relief sought in prayer clause (a) and (c) is
declined at this stage;

(iii) However, Respondent Nos.1 and 2 shall, within four
weeks from today, file an affidavit disclosing:

(a) the assets and liabilities of Respondent No.2
together with particulars of all existing charges and
encumbrances thereon;

(b) the present status of the proposed third-party sale
process, or any other process relating to transfer of
GIPL’s shareholding;

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(c) the steps taken by GIPL for obtaining lender
approvals or consents for redemption of the Petitioners’
Final ROCPS;

(d) the financial statements, audited balance sheets,
profit and loss accounts and other relevant financial
records of GIPL from March 2024 till the date of filing
of the affidavit.

(v) Respondent Nos.1 and 2 shall further disclose in the
said affidavit whether, after filing of the present petition, any
material asset or shareholding has been transferred,
encumbered or otherwise dealt with otherwise than in the
ordinary course of business and, if so, shall furnish complete
particulars thereof;

(vi) Until the learned Arbitral Tribunal considers any
application under Section 17 of the Arbitration and
Conciliation Act, 1996, Respondent Nos.1 and 2 shall
maintain complete accounts of any sale, transfer or
encumbrance of their material assets or shareholding
undertaken in the ordinary course of business and shall
preserve all records relating thereto;

(vii) Respondent Nos.1 and 2 shall not undertake any
transaction outside the ordinary course of business having
the effect of materially reducing their asset base or rendering
enforcement of any arbitral award nugatory, without giving
the petitioners at least two weeks’ prior written notice of
such proposed transaction;

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(viii) The disclosures directed hereinabove are without
prejudice to the rights and contentions of all parties and shall
not be construed as an admission of liability;

(ix) The observations contained in this order are prima
facie and confined to adjudication of the present petition
under Section 9 of the Arbitration and Conciliation Act,
1996. The learned Arbitral Tribunal shall decide all issues
independently and uninfluenced by any observations made
herein;

(x) Upon constitution of the learned Arbitral Tribunal, it
shall be open to either party to apply under Section 17 of the
Arbitration and Conciliation Act, 1996, for continuation,
modification, variation or vacation of the directions
contained in this order. The present directions shall continue
to operate for a period of four weeks after constitution of the
Arbitral Tribunal or until any application under Section 17 is
decided, whichever is earlier;

(xi) The Arbitration Petition is disposed of in the aforesaid
terms. There shall be no order as to costs.

81. At this stage, learned Advocates for the respondents seek stay
of the judgment. However, considering the reasons assigned
herein, the request for stay is rejected.

(AMIT BORKAR, J.)

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