𝐀𝐚𝐝𝐫𝐢𝐤𝐚𝐚 𝐋𝐞𝐠𝐚𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞𝐬 (𝐀𝐋𝐒)

Tag: #Arbitrator

Bombay High Court Allows Housing Society to Replace Developer in Major Redevelopment Dispute
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 22.08.2026

Bombay High Court Allows Housing Society to Replace Developer in Major Redevelopment Dispute

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

A recent judgment by the Bombay High Court has brought clarity to the rights and obligations of cooperative housing societies and developers in redevelopment projects. The dispute between Om Vithal Cooperative Housing Society and Trilogy Infra Pvt. Ltd. centered on the termination of a redevelopment agreement, delays, and the right to proceed with redevelopment.

Background of the Dispute
1. Initial Appointment and Defaults
  - Om Vithal Cooperative Housing Society, located in Borivali (West), Mumbai, initially appointed a different developer in 2015. After repeated defaults and abandonment, the society terminated that arrangement in 2023.
  - Following a fresh tender process, Trilogy Infra Pvt. Ltd. was appointed as the new developer in November 2023, with a Development Agreement and Power of Attorney executed.
2. Obligations Under the Development Agreement
  - Trilogy Infra was required to obtain all necessary approvals, execute alternate accommodation agreements, pay rent to members, and complete the project within 18 months (plus a 6-month grace period).
  - The society alleged that the developer failed to meet these obligations, including non-payment of rent and lack of construction progress.
3. Termination and Legal Proceedings
  - After repeated defaults and failed assurances, the society issued a Cure Notice and, upon non-compliance, terminated the agreement in May 2026.
  - Both parties filed arbitration petitions: the society sought to restrain the developer from interfering with redevelopment, while the developer sought to stay the termination and prevent dispossession.
Key Arguments
- Society’s Stand:
  - The developer failed to obtain approvals, pay rent, and show financial readiness.
  - Despite a 24-month extension, there was no meaningful progress.
  - The society lost confidence in the developer and sought to proceed with redevelopment independently or with a new developer.
- Developer’s Stand:
  - Delays were attributed to a stay by MahaRERA and the complexity of parking structure construction.
  - Claimed readiness to clear arrears and continue the project if allowed.
  - Sought compensation if forced to exit the project.
Court’s Analysis and Reasoning
- The court recognized that while delays due to regulatory stays and construction complexities are valid, the developer’s continued defaults—especially non-payment of rent and lack of progress—even after extensions, justified the society’s loss of confidence.
- The court emphasized that the rights of society members to safe and habitable homes outweigh the developer’s commercial interests.
- The court cited precedents affirming that societies should not be indefinitely bound to non-performing developers and that developers’ remedies for wrongful termination are primarily monetary.
Interim Orders and Directions
1. Society Permitted to Proceed:
  - The society is allowed to continue redevelopment, either by self-development or by appointing a new developer, subject to legal compliance.
2. Developer Restrained:
  - Trilogy Infra and its agents are restrained from interfering with the society’s possession or redevelopment activities.
  - The developer cannot create third-party rights or represent itself as having ongoing rights under the terminated agreement.
3. Document Handover:
  - The developer must hand over all original project documents to the society within two weeks, retaining only copies.
4. Preservation of Claims:
  - The developer’s claims for damages or compensation due to alleged wrongful termination remain open for arbitration.
  - The society must maintain proper accounts and records to facilitate any future arbitral award.
5. No Final Declaration:
  - The court did not grant a final declaration on the validity of the termination; this will be decided in arbitration.
Implications for Redevelopment Projects
- Balance of Interests: The judgment balances the need for timely redevelopment with the protection of developers’ financial interests through arbitration.
- Precedent for Societies: Societies facing non-performing developers can seek similar interim reliefs, provided they maintain transparency and proper documentation.
- Developers’ Remedies: Developers are entitled to claim damages if termination is found wrongful, but cannot indefinitely stall redevelopment.
Conclusion

This judgment reinforces the principle that the welfare and housing rights of society members take precedence in redevelopment disputes. It provides a clear roadmap for societies and developers on handling defaults, terminations, and interim reliefs, ensuring that redevelopment projects do not remain stalled due to unresolved disputes.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

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Source: Bombay High Court

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August 22, 2026
Bombay High Court on Interim Relief in Transport Contract Termination
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 21.08.2026

Bombay High Court on Interim Relief in Transport Contract Termination

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

A recent judgment by the Bombay High Court has brought clarity to the legal landscape surrounding the termination of transport contracts by public sector undertakings, specifically in the context of LPG transportation tenders. The case involved multiple arbitration petitions filed by transport contractors against Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOCL), challenging the termination of their contracts and the forfeiture of caution money.

Background of the Dispute

The dispute arose from a tender issued by BPCL for the transportation of bulk LPG in Tamil Nadu. The tender allowed participation by contractors who had trucks under an Agreement to Sell (ATS), with a requirement to transfer ownership and the PESO (Petroleum and Explosives Safety Organisation) licence within 120 days of the Letter of Intent (LOI). Failure to comply could result in penal actions, including termination and forfeiture of caution money.

Several contractors, including P. Perumal Transports, faced termination after minor delays in transferring the PESO licence, despite having completed the transfer of the Registration Certificate within the stipulated period. The contractors argued that the delay was minimal and that BPCL’s actions were disproportionate, especially since the company continued to allot loads even after the deadline.

Key Legal Issues
1. Nature of the Contract: Was the contract determinable, allowing BPCL to terminate at will, or did it require strict adherence to procedural fairness and proportionality?
2. Compliance with Deadlines: Did a short delay in transferring the PESO licence justify termination and forfeiture of caution money?
3. Grant of Interim Relief: Should the court grant interim relief to restore the contract and prevent forfeiture of caution money pending arbitration?
Arguments Presented

Petitioners (Transport Contractors)
- The contractors argued that the termination was disproportionate to the minor procedural lapse.
- They emphasized that the essential requirements (ownership and licence transfer) were substantially complied with.
- The continued allotment of loads after the deadline indicated that BPCL did not treat the time limits as strictly mandatory.
- Loss of business, reputation, and the limited operational life of specialized LPG trucks constituted irreparable harm.
Respondents (BPCL/IOCL)
- BPCL maintained that the contract was determinable and that the right to terminate was clearly reserved in the agreement.
- The Corrigendum and General Conditions of Contract formed an integral part of the agreement, and the timeline for compliance was non-negotiable.
- The contractors were aware of the consequences of non-compliance, having executed affidavits to that effect.
Court’s Analysis and Findings
- The Court recognized that the Corrigendum provided a four-month period for compliance, with penal actions for non-compliance, but did not mandate automatic termination.
- The delay in transferring the PESO licence was only four days, and the licence was transferred seven days after the deadline.
- The Court noted that while the delay was short, the contract expressly required compliance within the stipulated period, and the contractors had accepted these terms.
- The contract contained a clause allowing BPCL to terminate with 30 days’ notice without assigning any reason, making it determinable by nature.
- The Court held that granting interim relief to restore the contract would, in effect, amount to specific performance of a determinable contract, which is not permissible under Section 14(d) of the Specific Relief Act.
- However, the Court directed BPCL to maintain the caution money in a separate account and not to appropriate it until the arbitral tribunal decides the dispute.
Implications of the Judgment
1. Strict Enforcement of Contractual Deadlines: Contractors must strictly adhere to timelines for compliance with tender conditions, especially when dealing with public sector undertakings.
2. Determinable Contracts: Contracts that allow termination without cause are considered determinable, limiting the scope for courts to grant interim relief restoring such contracts.
3. Proportionality and Discretion: While minor procedural lapses may not always justify termination, the existence of a determinable contract clause gives significant discretion to the principal (BPCL/IOCL).
4. Preservation of Disputed Sums: Courts may protect caution money or similar sums pending arbitration, ensuring that parties are not prejudiced before the final resolution.
Conclusion

This judgment underscores the importance of compliance with contractual terms and the limited scope for judicial intervention in determinable contracts. While the Court showed sensitivity to the contractors’ predicament, it ultimately upheld the contractual right of BPCL to terminate, subject to the preservation of caution money until arbitration.

The decision serves as a crucial precedent for contractors and public sector undertakings alike, emphasizing the need for clarity, fairness, and adherence to agreed timelines in commercial contracts.

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Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Bombay High Court

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August 21, 2026
Independence, Impartiality, and Equality in Indian Arbitration
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 20.08.2026

Independence, Impartiality, and Equality in Indian Arbitration

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The Supreme Court of India’s recent Constitution Bench judgment in the case involving the Central Organisation for Railway Electrification (CORE) and M/s ECI SPIC SMO MCML (JV) has fundamentally clarified the principles governing the appointment of arbitrators under Indian law. This article provides a comprehensive overview of the judgment, its legal context, and its implications for arbitration in India, especially in public-private contracts.

Background: The Core Issues

The judgment addresses three pivotal questions:
1. Is it lawful for a party with an interest in a dispute to unilaterally appoint a sole arbitrator or curate a panel from which the other party must select?
2. Does the principle of equal treatment apply at the stage of appointing arbitrators?
3. Are such appointment processes in public-private contracts violative of Article 14 of the Constitution (equality before law)?
Legal Framework: Party Autonomy vs. Mandatory Safeguards
- Party Autonomy: The Arbitration and Conciliation Act, 1996 (the Arbitration Act) gives parties significant freedom to design their arbitration process, including the appointment of arbitrators.
- Mandatory Provisions: However, this autonomy is subject to non-derogable principles such as equality of parties (Section 18), independence and impartiality of arbitrators (Section 12), and fairness in procedure.
- 2015 Amendment: Section 12(5) was introduced, making anyone with certain relationships to the parties ineligible to be appointed as arbitrator, unless both parties expressly waive this after a dispute arises.
Key Principles Established by the Judgment

1. Equality at All Stages
- The principle of equal treatment (Section 18) applies not just during the arbitration proceedings but also at the stage of appointing arbitrators.
- Any process that gives one party a dominant or exclusive role in appointing arbitrators is inherently unequal and raises doubts about impartiality.
2. Unilateral Appointments and Curated Panels
- Clauses allowing one party to unilaterally appoint a sole arbitrator or require the other party to select from a panel curated by the first party are generally invalid.
- Such arrangements violate both the equality principle and the requirement for independence and impartiality.
- In public-private contracts, these clauses are also violative of Article 14 of the Constitution.
3. Public Policy and Unconscionability
- Arbitration agreements must not be unconscionable or contrary to public policy.
- The court reaffirmed that contracts induced by undue influence or that restrict access to justice are void.
4. Judicial Intervention: Minimal but Decisive
- Courts should intervene only when necessary, such as when the agreed procedure fails or is manifestly unfair.
- The court’s role is to ensure the appointment of an independent and impartial tribunal, not to routinely override party autonomy.
5. Prospective Application
- The new law applies prospectively to arbitrator appointments made after the date of the judgment, especially for three-member tribunals.
Practical Implications
- For Government and PSUs: While maintaining panels of arbitrators is permitted, mandating the other party to select only from such panels is not.
- For Private Parties: Both parties must have an equal say in the appointment process. Any clause that restricts this can be challenged.
- For Ongoing Arbitrations: The law applies prospectively, so existing tribunals are not automatically invalidated.
Comparative and International Perspective
- The judgment aligns Indian law with international best practices, where party autonomy is respected but not at the cost of fairness and impartiality.
- Many foreign jurisdictions also prohibit unilateral appointments or provide for court intervention when the process is unfair.
Conclusion

This Supreme Court judgment marks a significant step in strengthening the integrity of arbitration in India. By reinforcing the principles of equality, independence, and impartiality, it ensures that arbitration remains a credible and effective alternative to traditional litigation, especially in contracts involving the government or public sector undertakings.

Connected Matter

Supreme Court’s Examination of Pre-Deposit Clauses in Government Arbitration Contracts

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Source: Supreme Court

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August 20, 2026
Supreme Court’s Examination of Pre-Deposit Clauses in Government Arbitration Contracts
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 19.08.2026

Supreme Court’s Examination of Pre-Deposit Clauses in Government Arbitration Contracts

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The Supreme Court of India’s recent judgment in the case of M/S Santosh Associate Private Limited vs. Haryana State Industrial and Infrastructure Development Corporation Ltd. has brought renewed attention to the constitutionality and fairness of pre-deposit clauses in government contracts. This article provides a detailed analysis of the dispute, the legal arguments, and the broader implications for arbitration and contract law in India.

Background of the Dispute

In 2017, Santosh Associate Pvt. Ltd. was awarded a government contract for storm water drainage works in Gurugram, Haryana. The contract included an arbitration clause (Clause 25-A(vii)) requiring contractors to deposit 10% of any claim exceeding ₹1,00,000 as a security before initiating arbitration. When disputes arose over final payments after a reduction in project scope, the contractor sought arbitration without making the required deposit. The respondent objected, and both the Sole Arbitrator and the Commercial Court dismissed the contractor’s claim for non-compliance with the pre-deposit requirement.

Key Legal Issues

The central legal question is whether a contractual clause mandating only the contractor (and not the government entity) to make a substantial pre-deposit before arbitration is constitutional and consistent with Indian contract and arbitration law.

Arguments by the Appellant (Contractor)
1. Violation of Article 14 (Equality Before Law): The clause discriminates against contractors by imposing a financial burden not required of the government, violating the principle of equal treatment.
2. No Rational Nexus: The 10% deposit does not logically serve the purpose of deterring frivolous claims, as such claims can be addressed by awarding costs at the end of arbitration.
3. Disproportionate Burden: The required deposit is significantly higher than court fees for similar claims, making arbitration less accessible.
4. Precedent Support: Relied on Supreme Court judgments (e.g., ICOMM Tele Ltd., Lombardi Engineering Ltd., and CORE) that struck down similar clauses as arbitrary and contrary to the objectives of arbitration.
Arguments by the Respondent (Government Entity)
1. Binding Precedent: Cited S.K. Jain vs. State of Haryana, where a similar refundable pre-deposit clause was upheld as reasonable and non-arbitrary.
2. Legitimate Purpose: Argued that refundable deposits deter frivolous claims without being punitive, and are thus valid.
3. Material Differences in Clauses: Emphasized that only clauses with punitive forfeiture or those foreclosing access to arbitration have been struck down, not refundable deposit clauses.
Supreme Court’s Reasoning

The Court reviewed the evolution of judicial thinking on pre-deposit clauses:
- S.K. Jain (2009): Upheld refundable pre-deposit clauses as reasonable deterrents against frivolous claims.
- ICOMM Tele Ltd. (2019): Struck down a clause with forfeiture provisions as arbitrary and contrary to Article 14.
- Lombardi Engineering Ltd. (2024) & CORE (2025): Affirmed that party autonomy in contracts cannot override constitutional rights, and that excessive or one-sided pre-deposit clauses may be invalid.
The Court noted that while it found merit in the reasoning of ICOMM Tele Ltd., it was bound by the larger bench decision in S.K. Jain unless a larger bench overruled it. The Court also highlighted the importance of ensuring that arbitration remains accessible and does not become more onerous than litigation.

Reference to Larger Bench

Given the conflicting precedents and the constitutional questions involved, the Supreme Court referred the following issues to a larger bench:
1. Whether requiring only the contractor to make a pre-deposit violates the principle of equal treatment in arbitration.
2. Whether such pre-deposit conditions discourage alternative dispute resolution and undermine its objectives.
3. Whether these clauses are arbitrary and violate the right to sue under Article 14 and Section 28 of the Indian Contract Act.
4. Whether refundable pre-deposit clauses are valid.
5. Whether S.K. Jain remains a binding precedent.
Implications for Contractors and Government Bodies
- For Contractors: The outcome will determine whether they can be compelled to make substantial deposits before seeking arbitration, impacting access to justice and the cost-effectiveness of arbitration.
- For Government Bodies: The decision will clarify the extent to which they can use pre-deposit clauses to deter frivolous claims without violating constitutional principles.
- For Arbitration Law: The case will shape the balance between party autonomy in contracts and the need for fairness and equality in dispute resolution.
Conclusion

The Supreme Court’s referral of these issues to a larger bench underscores the significance of ensuring that arbitration remains a fair, accessible, and constitutionally compliant mechanism for resolving disputes. The final decision will have far-reaching consequences for government contracting and the future of arbitration in India.

Connected Matter

Independence, Impartiality, and Equality in Indian Arbitration

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Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Supreme Court

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August 19, 2026
Delhi High Court Upholds Arbitral Award: Scope of Judicial Review u/s 34 of the Arbitration and Conciliation Act, 1996
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 18.08.2026

Delhi High Court Upholds Arbitral Award: Scope of Judicial Review u/s 34 of the Arbitration and Conciliation Act, 1996

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

A recent judgment by the Delhi High Court has brought clarity to the scope of judicial intervention in arbitral awards under Section 34 of the Arbitration and Conciliation Act, 1996. The case involved a contractual dispute between India Tourism Development Corporation (ITDC) and Bajaj Electricals Ltd. (BEL) regarding specialized illumination work at the Safdarjung Tomb Monument in New Delhi. This article provides a detailed analysis of the dispute, the arbitral award, the grounds for challenge, and the court’s findings.

Background of the Dispute
- Project Overview: ITDC awarded BEL a contract for the supply, installation, testing, and commissioning of state-of-the-art lighting at Safdarjung Tomb, following a competitive tender process.
- Contractual Timeline:
  1. Tender submitted by BEL on 6 February 2007.
  2. Letter of Intent issued on 4 April 2007 for Rs. 2,08,90,095/-.
  3. Detailed work order and contract signed in May 2007, incorporating General Conditions of Contract (GCC).
- Execution Issues:
- During execution, media reports highlighted alleged damage to the monument, prompting the Archaeological Survey of India (ASI) to revise fixture layouts and require new approvals.
- BEL completed the revised work, and ASI took over the installation in June 2009.
- BEL submitted a final bill of Rs. 1,18,95,572/- but faced delays in payment, leading to disputes and eventual arbitration.
The Arbitral Award
- Award Details:
  - Principal amount of Rs. 46,92,298.22/- awarded to BEL.
  - Interest of Rs. 33,27,886/- (from July 2009 to April 2013) and Rs. 31,17,742.91/- as pendente lite interest (April 2013 to October 2018).
  - Future interest from the date of award until payment.
- ITDC’s Challenge:
  - ITDC filed a petition under Section 34 to set aside the award, alleging errors in contract interpretation, non-consideration of deductions, and excessive interest.
Key Contentions and Court’s Analysis

1. Total Value of Work and Deductions
- ITDC’s Argument: The arbitrator ignored legitimate deductions (Rs. 11,07,832/-) for non-execution or substitution of materials, as recorded in the Measurement Book.
- Court’s Finding: The arbitrator based the award on evidence, including ITDC’s own admissions. Deductions recorded after 13 August 2008 (not signed by all parties) were rightly excluded. No patent illegality was found.
2. Statutory Deductions (ESI/EPF, Service Tax, Labour Cess)
- ITDC’s Argument: Amounts withheld for ESI/EPF, service tax, and labour cess were already deposited with authorities, and BEL failed to provide adequate proof.
- Court’s Finding: BEL submitted required indemnity bonds and challans. The arbitrator’s acceptance of these documents was within his discretion and based on contract terms.
3. Interest Rate
- ITDC’s Argument: The 12% per annum interest awarded was excessive.
- Court’s Finding: The arbitrator has wide discretion under Section 31(7) of the Act to award interest. The rate was not so unreasonable as to shock the court’s conscience.
4. Post-Award Payments
- ITDC’s Argument: A payment of Rs. 13,93,368/- made after the award should be adjusted against the principal for future interest calculation.
- Court’s Finding: Such adjustments are to be addressed at the execution stage, not under Section 34 proceedings.
Legal Principles Affirmed
- Limited Scope of Section 34: The court reiterated that it does not sit in appeal over arbitral awards. Interference is limited to grounds such as patent illegality, violation of public policy, or fundamental procedural errors.
- Respect for Arbitrator’s Findings: If the arbitrator’s view is plausible and based on evidence, courts will not substitute their own conclusions, even if another view is possible.
- Interest Awards: Arbitrators have discretion to award reasonable interest unless expressly barred by contract.
Conclusion

The Delhi High Court dismissed ITDC’s petition, upholding the arbitral award in favor of Bajaj Electricals Ltd. This judgment reinforces the principle of minimal judicial interference in arbitral awards and underscores the importance of clear contractual compliance and documentation in public works contracts.

This case serves as a significant reference for parties involved in government contracts and arbitration, highlighting the need for meticulous record-keeping and the finality of arbitral decisions within the statutory framework.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Delhi High Court

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August 18, 2026
Enforceability of Shareholders’ Agreements in Auditor Appointments
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 17.08.2026

Enforceability of Shareholders’ Agreements in Auditor Appointments

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The recent judgment in the case of DHANUKA AGRITECH PRIVATE LIMITED vs. IOTECHWORLD AVIGATION PRIVATE LIMITED & ORS. provides a significant precedent on the interplay between Shareholders’ Agreements (SHA), Articles of Association (AoA), and the rights of investors in private companies. This article explores the background, legal arguments, and implications of the case for corporate governance and shareholder protections in India.

Background of the Dispute
- Investment and Agreements: DHANUKA AGRITECH invested Rs. 30 crores in IOTECHWORLD AVIGATION, with the investment governed by a definitive SHA. The SHA included specific safeguards for the investor, notably requiring an affirmative vote from the investor’s nominee director for key decisions, including the appointment of auditors.
- Board Resolution: Despite these provisions, the Board of IOTECHWORLD appointed M/s SC Verma and Co. as statutory auditors without obtaining the required affirmative vote, leading to a dispute and arbitration.
Key Legal Issues
1. Binding Nature of SHA vs. AoA:
  - The core issue was whether the SHA’s provisions, especially those requiring affirmative votes for certain decisions, are enforceable if not incorporated into the AoA.
2. Waiver of Rights:
  - The respondents argued that the investor had waived its rights by conduct, while the appellant insisted that any waiver must be in writing as per the SHA.
Arguments and Judicial Reasoning

Appellant’s Position (DHANUKA AGRITECH)
- Enforceability of SHA: Clauses 3.3.9 and 3.4.1 of the SHA require written consent from the investor’s nominee director for auditor appointments.
- Company as Party: The SHA was signed by both shareholders and the company, making it binding on all parties.
- No Written Waiver: The SHA explicitly requires any waiver to be in writing, which had not occurred.
Respondents’ Position
- Primacy of AoA: Citing legal precedents, the respondents argued that unless SHA provisions are incorporated into the AoA, they cannot override the AoA.
- Alleged Waiver by Conduct: They claimed the investor had, by its actions, waived the right to an affirmative vote.
Court’s Analysis
- Supreme Court Precedents: The judgment referenced key Supreme Court decisions, including Vodafone International Holdings BV v. Union of India, which clarified that while SHAs are private contracts, their provisions cannot override the AoA unless incorporated.
- Company as Signatory: The court distinguished this case from others by noting that the company itself was a party to the SHA, making its terms binding on the company.
- No Conflict with AoA: There was no inherent conflict between the SHA and AoA; the SHA simply added an extra layer of protection for the investor.
- No Written Waiver: The court found no evidence of a written waiver, as required by the SHA.
Outcome and Immediate Impact
- Stay on Auditor Appointment: The court stayed the board resolution appointing the auditor and the majority arbitral order, pending final disposal of the appeal.
- Regulatory Compliance: The court noted that the company could seek an extension from regulatory authorities if needed due to the stay.
Broader Implications for Corporate Governance
1. Importance of Incorporating SHA Provisions into AoA:
  - While SHAs can provide additional protections, their enforceability against the company is strongest when the company is a signatory and when provisions are reflected in the AoA.
2. Investor Protections:
  - Affirmative vote clauses are common to protect minority or strategic investors. This case reinforces their validity when properly documented and agreed upon by all parties, including the company.
3. Written Waivers:
  - Parties must strictly adhere to contractual requirements for waivers; informal or implied waivers may not be recognized.
Conclusion

The DHANUKA AGRITECH case underscores the need for clarity and diligence in drafting and implementing SHAs, especially regarding their relationship with the AoA. For investors and companies alike, ensuring that key contractual protections are both agreed upon and properly incorporated into company governance documents is essential for enforceability and effective corporate management.

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Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Delhi High Court

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August 17, 2026
Supreme Court on Taxation of Offshore Indirect Transfers and Cross-Border M&A
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 14.08.2026

Supreme Court on Taxation of Offshore Indirect Transfers and Cross-Border M&A

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The Vodafone International Holdings B.V. v. Union of India case is a pivotal Supreme Court judgment that shaped the landscape of foreign direct investment (FDI), cross-border mergers and acquisitions, and the taxation of offshore transactions involving Indian assets. This article provides a detailed overview of the case, its background, legal issues, the Supreme Court’s reasoning, and its broader implications for international investors and Indian tax law.

Background: The Transaction and Dispute

In 2007, Vodafone International Holdings B.V. (VIH), a Dutch company, acquired the entire share capital of CGP Investments (Holdings) Ltd., a Cayman Islands company. CGP indirectly held a controlling stake (through a complex web of subsidiaries) in Hutchison Essar Limited (HEL), a major Indian telecom operator. The acquisition was valued at approximately US $11.08 billion and was structured as an offshore transaction between two non-resident entities.

The Indian tax authorities (the Revenue) sought to tax the capital gains arising from this transaction, arguing that although the share transfer occurred offshore, the underlying assets were Indian, and thus the gains were taxable in India. Vodafone contested this, asserting that the transaction was a legitimate share sale outside India and not subject to Indian capital gains tax.

Key Legal Issues
1. Taxability of Offshore Transactions: Whether the transfer of shares of a foreign company (CGP) that indirectly held Indian assets could be taxed in India under Section 9(1)(i) of the Income Tax Act, 1961.
2. “Look Through” Principle: Whether Indian tax law allowed the authorities to “look through” the offshore structure and tax the underlying Indian assets.
3. Nature of Rights Transferred: Whether the transaction involved only a share sale or also the transfer of other rights and entitlements (such as management rights, brand licenses, options, etc.) that could be considered capital assets in India.
4. Obligation to Withhold Tax: Whether Vodafone was required to withhold tax at source under Section 195 when making payment to Hutchison.
The Supreme Court’s Analysis and Findings

1. Corporate Structure and Substance Over Form
- The Court recognized that multinational companies often use complex holding structures for commercial, regulatory, and tax reasons. Such structures are legitimate unless proven to be sham or colorable devices for tax evasion.
- The “look at” principle was emphasized: the legal nature of the transaction must be assessed holistically, not by dissecting each component.
2. Section 9(1)(i) and Indirect Transfers
- Section 9(1)(i) taxes income arising from the transfer of a capital asset situated in India. The Court held that the law, as it stood, did not cover indirect transfers (i.e., transfer of shares of a foreign company holding Indian assets).
- The Court rejected the Revenue’s argument that Section 9(1)(i) was a “look through” provision, noting that such an approach would require explicit legislative language, which was absent at the time.
3. Nature of Rights and Controlling Interest
- The Court clarified that controlling interest is an incident of shareholding and not a separate capital asset. The transfer of shares inherently includes the transfer of all rights attached to those shares.
- Other contractual rights (such as call/put options, brand licenses, non-compete agreements) were either not transferred or were not capital assets situated in India.
4. Withholding Tax and Representative Assessee
- Since the transaction was between two non-residents and the asset transferred (CGP shares) was situated outside India, there was no obligation on Vodafone to withhold tax under Section 195.
- Vodafone could not be treated as a representative assessee under Section 163, as there was no transfer of a capital asset situated in India.
5. Legitimacy of Tax Planning
- The Court reaffirmed that tax planning is legitimate if within the framework of law. Only colorable devices or sham transactions designed solely for tax evasion can be disregarded.
The Judgment and Its Impact
- The Supreme Court set aside the Bombay High Court’s decision and ruled in favor of Vodafone, holding that the offshore transaction was not taxable in India under the law as it existed at the time.
- The Court directed the Revenue to return the amount deposited by Vodafone, with interest.
- The judgment emphasized the need for certainty and clarity in tax laws, especially for foreign investors.
Broader Implications
1. Certainty for Foreign Investors: The ruling provided much-needed clarity and assurance to international investors regarding the tax treatment of offshore transactions involving Indian assets.
2. Legislative Response: In response to the judgment, the Indian government later amended the Income Tax Act (retrospectively) to tax indirect transfers of Indian assets, introducing the so-called “Vodafone tax”.
3. Principles for Taxing Cross-Border M&A:
  - The situs of shares is determined by the place of incorporation and registration, not by the location of underlying assets.
  - The transfer of shares includes all rights attached to those shares; controlling interest is not a separate asset.
  - Anti-avoidance rules (such as GAAR) must be expressly provided for in the law.
Conclusion

The Vodafone judgment stands as a landmark in Indian tax jurisprudence, balancing the interests of revenue with the need for legal certainty and a favorable investment climate. It underscores the importance of clear legislative drafting and the principle that courts cannot expand the scope of tax statutes beyond their explicit language. The case also triggered significant policy and legislative changes, shaping the future of cross-border investments in India.

Connected Matter

Delhi HC on Scope of IP-I Registration, Telecom Licensing, and Arbitral Award Review under Section 34 of the Arbitration and Conciliation Act, 1996

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Source: Supreme Court

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August 14, 2026
Delhi HC on Scope of IP-I Registration, Telecom Licensing, and Arbitral Award Review under Section 34 of the Arbitration and Conciliation Act, 1996
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 13.08.2026

Delhi HC on Scope of IP-I Registration, Telecom Licensing, and Arbitral Award Review under Section 34 of the Arbitration and Conciliation Act, 1996

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case between the Union of India (Department of Telecommunications) and Sterlite Technologies Limited, addressing complex issues around telecom infrastructure licensing, regulatory compliance, and the scope of arbitral review. This article provides a detailed analysis of the dispute, the legal arguments, and the implications of the court’s decision.

Background of the Dispute

Sterlite Technologies Limited (STL), a leading provider of digital network solutions, was granted an Infrastructure Providers Category-I (IP-I) Registration Certificate by the Department of Telecommunications (DoT). This certificate authorized STL to provide passive telecom infrastructure, such as fiber ducts and related facilities, but explicitly barred it from dealing with active telecom equipment or providing end-to-end bandwidth services, which require a separate telecom service provider (TSP) license.

STL, through its wholly owned subsidiary Speedon Network Limited (SNL), entered into Master Service Agreements (MSAs) with various TSPs, notably Citycom Networks and Microscan Computers. The payment structure under these agreements was based on subscriber base and revenue sharing, rather than traditional lease rentals for passive infrastructure. The DoT alleged that STL, via these arrangements, was effectively functioning as a TSP without the necessary license, thereby violating the terms of its IP-I registration and causing loss of government revenue.

Key Events Leading to Arbitration
1. Inspection and Allegations:
  - In February 2015, DoT inspected STL’s premises in Pune and concluded that STL was operating beyond its permitted scope by selling bandwidth and managing active equipment through SNL.
  - The inspection report alleged unauthorized services and revenue evasion exceeding Rs. 2.5 crores.
2. Correspondence and Show Cause Notice:
  - STL provided detailed responses, clarifying that active equipment belonged to the TSPs, not STL or SNL.
  - In July 2018, DoT issued a show cause notice for violation of IP-I terms, followed by a demand notice in August 2020 for Rs. 8.55 crores.
3. Arbitration Proceedings:
  - STL challenged the demand, invoking the arbitration clause in the IP-I certificate.
  - The arbitrator ruled in favor of STL, declaring the demand notice illegal, arbitrary, and unjustified.
Legal Arguments Presented

Union of India (Petitioner)
- Ownership and Operation: Argued that STL and SNL, as related entities, owned and operated active equipment without a license, and that billing based on bandwidth proved provision of end-to-end services.
- Damages: Claimed inherent right to seek damages for breach of registration terms, even without explicit contractual provisions.
Sterlite Technologies Limited (Respondent)
- Separation of Entities: Emphasized that SNL and STL are legally distinct, with SNL holding its own IP-I registration and later a unified license.
- Scope of Services: Asserted that STL only provided passive infrastructure, with active equipment and bandwidth services managed and billed by the TSPs.
- Contractual Interpretation: Highlighted that the MSAs and subsequent novation agreements clarified the roles and responsibilities, limiting STL to passive infrastructure.
Court’s Analysis and Findings

The High Court, upholding the arbitrator’s award, made several key observations:
1. Scope of IP-I Registration:
  - The regulatory framework and the IP-I certificate clearly prohibit IP-I holders from providing active services or end-to-end bandwidth.
  - The evidence showed STL provided only passive infrastructure, with TSPs responsible for active equipment and subscriber services.
2. Ownership of Equipment:
  - The court found no conclusive proof that STL owned or operated active equipment. Lease agreements and correspondence supported STL’s position.
3. Billing and Revenue Model:
  - The MSAs did not establish that STL’s charges were based on bandwidth utilization by end subscribers. The arbitrator’s factual findings on this point were upheld.
4. Legal Entity Distinction:
  - SNL and STL were recognized as separate legal entities, each with distinct registrations and licenses. The court rejected the argument that SNL was merely a façade for STL.
5. Demand Notice Validity:
  - The demand notice lacked statutory backing, as there was no provision in the IP-I certificate or the Indian Telegraph Act for such a penalty. The court emphasized that damages under Section 73 of the Indian Contract Act require proof of actual loss, which was absent.
6. Scope of Judicial Review:
  - The court reiterated the limited scope of interference under Section 34 of the Arbitration and Conciliation Act, stating that plausible views taken by arbitrators should not be disturbed unless they are patently illegal or contrary to public policy.
Implications of the Judgment
- Regulatory Clarity: The judgment reinforces the distinction between passive infrastructure providers and licensed TSPs, providing clarity for industry participants.
- Arbitral Autonomy: It underscores the judiciary’s deference to arbitral awards, limiting court intervention to narrow grounds.
- Contractual Precision: The case highlights the importance of clear contractual definitions and compliance with regulatory frameworks in the telecom sector.
Conclusion

The Delhi High Court’s decision in Union of India vs. Sterlite Technologies Limited sets an important precedent for telecom infrastructure regulation and the enforcement of arbitral awards. By upholding the arbitrator’s reasoned findings and emphasizing the limits of judicial review, the court has provided valuable guidance for both industry stakeholders and legal practitioners.

Connected Matter

Supreme Court on Taxation of Offshore Indirect Transfers and Cross-Border M&A

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Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Delhi High Court

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August 13, 2026
Bombay High Court Clarifies Partnership Retirement and Loan Repayment Rights
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 12.08.2026

Bombay High Court Clarifies Partnership Retirement and Loan Repayment Rights

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

A recent judgment by the Bombay High Court has brought to light critical issues surrounding partnership dissolution, retirement, and financial claims within family-run firms. The case, involving Sandeep Dixit and his family members, offers valuable insights into the interpretation of partnership deeds, the enforceability of informal agreements, and the scope of arbitral awards under Indian law.

Background of the Dispute

The dispute arose within a family partnership firm, where Sandeep Dixit (Petitioner) and his wife, Rekha Dixit (Respondent No. 1), along with their children and Sandeep’s mother, were partners. Rekha Dixit was admitted as a partner in August 2021, contributing Rs. 25,000 as capital and advancing a substantial loan of Rs. 5 crores to the firm. The partnership deed allowed for interest on capital contributions but was ambiguous regarding interest on loans.

Key Issues in the Case
1. Nature of the Partnership and Loan
  - The partnership was claimed to be “at will,” allowing dissolution or retirement by notice.
  - Rekha Dixit advanced a Rs. 5 crore loan, with interest payments of Rs. 2.5 lakhs per month until July 2022, after which payments ceased due to matrimonial disputes.
2. Dissolution vs. Retirement
  - Rekha initially sought dissolution but later restricted her claim to retirement and financial settlement.
  - The court examined whether a notice of dissolution could be treated as a notice of retirement under the partnership deed and the Indian Partnership Act.
3. Entitlement to Profits and Loan Repayment
  - The arbitrator awarded Rekha a 20% share in profits as of September 2022 and repayment of the Rs. 5 crore loan with 9% annual interest.
  - The Petitioner challenged the award, arguing that the partnership deed did not provide for interest on loans and that WhatsApp messages cited as evidence did not constitute a binding contract.
Court’s Analysis and Findings

Validity of Retirement Notice
- The court held that the statement of claim (SOC) could be treated as a valid notice of retirement, as the partnership deed required only a one-month notice without specifying the form.
- The court relied on precedents where dissolution notices were accepted as retirement notices if the partnership deed allowed such flexibility.
Loan and Interest Claims
- The court found that while the Rs. 5 crore loan was proven, the partnership deed did not explicitly provide for interest on such loans.
- The arbitrator’s reliance on WhatsApp messages as a contract for 9% interest was deemed unsustainable, as this was not the pleaded case and contradicted the deed’s terms.
- The award of 9% interest on the loan was quashed, but the principal repayment and profit share were upheld.
Severability of the Award
- The court exercised its power to sever the unsustainable part (interest award) from the rest, maintaining the valid portions of the arbitral award.
Legal Principles Established
1. Interpretation of Partnership Deeds: Courts will closely scrutinize the deed’s language and intent, especially regarding financial entitlements and partner exits.
2. Role of Extrinsic Evidence: Informal communications (like WhatsApp messages) may not override formal contract terms unless clearly pleaded and proven as binding agreements.
3. Arbitral Award Review: Courts can partially set aside arbitral awards if certain components are found to be illegal or contrary to public policy, while preserving the rest.
Practical Implications for Partnerships
- Clarity in Agreements: All financial arrangements, especially loans and interest terms, should be explicitly documented in the partnership deed.
- Notice Requirements: Partners should follow the deed’s notice provisions for retirement or dissolution to avoid disputes.
- Evidence in Arbitration: Parties must ensure that their claims and supporting evidence align with the contract and are clearly pleaded.
Conclusion

The Sandeep Dixit judgment underscores the importance of precise drafting in partnership agreements and the limits of informal arrangements in legal disputes. It also highlights the judiciary’s balanced approach in upholding valid contractual rights while correcting arbitral overreach. This case serves as a crucial reference for partners, legal practitioners, and arbitrators dealing with similar disputes in India.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Bombay High Court

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August 12, 2026
Delhi High Court Sets Aside Arbitral Award Due to Unilateral Appointment of Arbitrator by Government Authority
Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 11.08.2026

Delhi High Court Sets Aside Arbitral Award Due to Unilateral Appointment of Arbitrator by Government Authority

This Short Article has been prepared & written by Arbitrator Shobhit Mallik. The views expressed are based on his interpretation of the law. He can be reached at his email id shobhit.Ica23@gmail.com .

The Delhi High Court recently delivered a significant judgment in the case of Union of India vs. M/S Goodrich Foodtech Ltd., addressing crucial issues surrounding the unilateral appointment of arbitrators in government contracts. This article provides a comprehensive overview of the dispute, the arbitral proceedings, the legal principles involved, and the implications of the Court’s decision.

Background of the Dispute
1. Tender and Contract Formation
  - The Union of India invited bids for the supply of 1,390 MT of malted milk food with cocoa for the Defence sector for the year 2017-18.
  - M/S Goodrich Foodtech Ltd. emerged as the successful bidder, leading to five separate but identical contracts, each specifying delivery periods and quantities.
  - The respondent furnished performance bank guarantees totaling Rs. 2,49,87,020/- as per contract requirements.
2. Emergence of Disputes
  - After partial fulfillment of the contracts, the Union of India issued a defect notice, alleging the supplied product contained soya protein and non-milk fat (palm oil), contrary to contract specifications.
  - This led to show-cause notices, termination of four contracts, forfeiture and encashment of bank guarantees, and debarment of Goodrich Foodtech Ltd. from future procurements.
3. Arbitration Proceedings
  - Goodrich Foodtech Ltd. invoked the arbitration clause, and a sole arbitrator was appointed by the Competent Financial Authority (CFA) of the Ministry of Defence.
  - The arbitrator ruled largely in favor of Goodrich Foodtech Ltd., awarding substantial sums and quashing the termination, forfeiture, and debarment actions.
Key Legal Issues Examined

1. Unilateral Appointment of Arbitrator
- The core issue was whether the appointment of the sole arbitrator by the CFA (an official of the Union of India, a party to the dispute) was valid under Section 12(5) of the Arbitration and Conciliation Act, 1996.
- The Court examined whether mere participation in arbitration or lack of objection constituted a waiver of the right to challenge such an appointment.
2. Waiver under Section 12(5) of the Arbitration Act
- The Court relied on Supreme Court precedents, emphasizing that a waiver of ineligibility under Section 12(5) must be an “express agreement in writing” after the dispute has arisen.
- Conduct, participation, or implied consent does not amount to a valid waiver.
3. Jurisdiction and Validity of Arbitral Award
- The Court held that an award passed by an ineligible, unilaterally appointed arbitrator is a nullity and can be set aside under Section 34 of the Act.
- Even the party that made the unilateral appointment retains the right to challenge the award on this ground.
Court’s Findings and Decision
- The Court found that the appointment of the arbitrator by the CFA, an official of the Ministry of Defence, was in violation of Section 12(5) and the Seventh Schedule of the Arbitration Act.
- There was no express written waiver by both parties after the dispute arose.
- The arbitral award was declared void ab initio and set aside.
Implications of the Judgment
1. Reinforcement of Party Autonomy and Neutrality
  - The judgment reinforces the principle that both parties must have an equal say in the appointment of arbitrators, ensuring neutrality and fairness in arbitral proceedings.
2. Strict Compliance with Section 12(5)
  - Any arbitration agreement allowing unilateral appointment of arbitrators is invalid unless expressly waived in writing after the dispute arises.
  - Participation in proceedings or silence does not constitute a waiver.
3. Impact on Government Contracts
  - Government agencies must review and revise standard arbitration clauses to comply with the law and avoid similar pitfalls.
  - Awards rendered by unilaterally appointed arbitrators are vulnerable to being set aside, even if both parties participated in the proceedings.
Conclusion

The Delhi High Court’s decision in Union of India vs. Goodrich Foodtech Ltd. is a landmark ruling that clarifies and strengthens the legal framework governing the appointment of arbitrators in India. It underscores the necessity for express, written waivers and equal participation in the appointment process, setting a precedent for future contractual and arbitral practices, especially in government procurement.

Aadrikaa Legal Services is a trusted legal and regulatory support partner providing end-to-end legal solutions to law firms, corporate organizations, and businesses across India. We specialize in paralegal services, litigation support, tax and regulatory matters, delivering reliable, efficient, and result-oriented legal assistance.

Our services include comprehensive paralegal support, drafting and documentation, legal research, case management, litigation handling, and representation support across various judicial and quasi-judicial forums. We also assist in direct and indirect tax matters, customs, GST, corporate regulatory compliance, and legal advisory.

Source: Delhi High Court

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August 11, 2026