O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 1 of 35

$~

* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Judgment reserved on: 15.05.2026

Judgment pronounced on: 29.05.2026

+ O.M.P.(I) (COMM.) 531/2025 & I.A. 10418/2026 (For Delay

101 days in filing the Reply)

MORGAN SECURITIES AND CREDITS PVT. LTD.

.....Petitioner

Through: Mr. Simran Mehta, Mr.

Pushpendedra Jadon & Mr.

Archit Vashistha, Advs.

versus

BPL LIMITED & ORS. .....Respondents

Through: Mr. Ajit Warrier, Mr. Arjun

Perikal, Mr. Angad Kochhar,

Mr. Himanshu Setia, Mr Khush

Bhachawat & Ms. Aishwarya

Prasad, Advs. for R-1.

Mr. Ashish Dholakia, Sr. Adv.

with Ms. Tanvi Dubey, Ms.

Meghna Jandu, Mr. Yash

Dubey & Mr. Mekala Ganesh

Kumar Reddy, Advs. for R-2.

Mr. Shivam Narang, Advocate

for R-3.

Mr. Dayan Krishnan & Mr.

Ashok Panigrahi, Sr. Advs.

with Mr. Prateek Chadha, Mr.

Sukrit Seth, Mr. Shreedhar

Kale, Ms. Radhika Yadav, Mr.

Sreekar Aechuri, Mr. Aniket

Chauhaan & Ms. Surbhi Soni,

Advs. for R-4.

+ ARB.P. 835/2026 & I.A. 12815/2026 (Ex.)

MORGAN SECURITES AND CREDITS PVT LTD

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 2 of 35

.....Petitioner

Through: Mr. Simran Mehta, Mr.

Pushpendedra Jadon & Mr.

Archit Vashistha, Advs.

versus

BPL LIMITED & ORS. .....Respondents

Through: Mr. Ajit Warrier, Mr. Arjun

Perikal, Mr. Angad Kochhar,

Mr. Himanshu Setia, Mr Khush

Bhachawat & Ms. Aishwarya

Prasad, Advs. for R-1.

Mr. Ashish Dholakia, Sr. Adv.

with Ms. Tanvi Dubey, Ms.

Meghna Jandu, Mr. Yash

Dubey & Mr. Mekala Ganesh

Kumar Reddy, Advs. for R-2.

Mr. Shivam Narang, Advocate

for R-3.

Mr. Dayan Krishnan, Sr. Adv.

with Mr. Prateek Chadha, Mr.

Sukrit Seth, Mr. Shreedhar

Kale, Ms. Radhika Yadav, Mr.

Sreekar Aechuri, Mr. Aniket

Chauhaan & Ms. Surbhi Soni,

Advs. for R-4.

CORAM:

HON'BLE MR. JUSTICE HARISH VAIDYANAT HAN

SHANKAR

J U D G M E N T

HARISH VAIDYANATHAN SHANKAR, J.

1. The present Petitions, being O.M.P.(I)(COMM.) No. 531/2025

filed under Section 9 and ARB. P. No. 835/2026 filed under Section 11

of the Arbitration and Conciliation Act, 1996

1

, have been preferred

1

A&C Act

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 3 of 35

by the Petitioner and which arise out of disputes under the Bill

Discounting Facilities dated 27.12.2002 and 11.06.2003

2

.

2. Since the parties in both the Petitions are identical, arise from

the same factual matrix, and involve interconnected issues, the same

are being adjudicated and disposed of by way of this common

judgment.

BRIEF FACTS:

3. A brief factual background, to the extent necessary for the

adjudication of the present Petitions, is set out herein below:

(a) The Petitioner had extended financial facilities to Respondent

No. 1, BPL Ltd., under the Facility Agreement, which inter alia

contains an Arbitration clause governing the disputes inter se

the Petitioner and Respondent No.1.

(b) Disputes arising under the said Facility Agreement had earlier

culminated in an Arbitral Award dated 14.12.2016

3

in favour

of the Petitioner, and the said Award has attained finality upon

dismissal of the challenge thereto by the Hon‟ble Supreme

Court vide Judgment dated 04.12.2025.

(c) During the pendency of proceedings before the Hon‟ble

Supreme Court, vide Order dated 12.09.2025, Respondent No. 1

was directed to deposit an amount of Rs. 96 crores with its

Registry.

(d) Subsequently, the Promoters of the Respondent No. 1, i.e.,

Respondent Nos. 2 & 3, M/s ER Computers Private Limited &

Electro Investments Private Limited, had conjointly entered into

2

Facility Agreement

3

Award

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 4 of 35

a Pledge Agreement dated 12.09.2025

4

with Respondent No. 4,

Claypond Capital Partners Private Limited, thereby pledging

their respective shares in favour of Respondent No. 4 to secure

a loan amount of Rs. 96 Crores.

(e) Thereafter, Respondent No. 1 had called its Extra-Ordinary

General Meeting dated 11.11.2025

5

, whereby it was resolved

that Respondent Nos. 2 & 3, being the promoters, were

authorised to secure a loan by pledging or creating a charge

upon the tangible or intangible assets of Respondent No. 1 and,

in view thereof, the Respondent No.1 acquired a loan of Rs. 96

Crores from Respondent No. 2 to comply with the direction of

the Hon‟ble Supreme Court to deposit the aforesaid amount.

(f) It is the case of the Petitioner that the aforesaid transactions,

including the pledge of promoter shareholding and creation of

encumbrances in favour of Respondent No. 4, were undertaken

in violation of Clause 6 of the Facility Agreement, which reads

as follows:

“6. In the event of any amount remaining overdue on

any hundi/bill of exchange under the facility neither of the

Drawer and Drawee shall without the prior written

permission of the Discounting Company pass any

resolution for its winding up for its amalgamation/merger

or otherwise or for amalgamation/merger of any other

company into the Drawer or Drawee enter directly or

indirectly into any new area/filed of business/operation or

dispose off or sell or encumber any of its undertaking or

business or any of its investments in shares etc.

register/recognize any transfer of its shares by any of its

present promoters group; change its paid up share capital

or redeem any security; appoint or reappoint, or modify

any term and condition of appointment of any whole time

or managing director; pay any remuneration to any of its

4

Pledge Agreement

5

EGM

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 5 of 35

managing directors, whole time directors or the chairman;

or pay any dividend on any shares.”

(g) In particular, disclosures dated 16.09.2025 made to the Bombay

Stock Exchange

6

by Respondent No. 1 indicated that promoter

shareholding was pledged in favour of Respondent No. 4 and

that Respondent No. 1 had availed a loan of approximately Rs.

96 crores from Respondent No. 2, with authorisation to create a

charge over its tangible or intangible assets.

(h) The Petitioner claims to have discovered the aforesaid

transactions on 05.12.2025, which, according to it, gave rise to

a fresh cause of action and a new arbitrable dispute under the

said Facility Agreement.

(i) In this backdrop, the Petitioner, complying with the statutory

requirement under Section 21 of the A&C Act, issued a Notice

dated 20.12.2025 invoking the Arbitration Clause under the

Facility Agreement against the Respondents.

(j) Apprehending that the Respondents may proceed to further

encumber or alienate assets of Respondent No. 1, thereby

frustrating the Petitioner‟s rights, the Petitioner filed the

Petition, being O.M.P.(I)(COMM.) No. 531/2025, under Section

9 of the A&C Act, seeking the following prayers:

“In light of the abovementioned facts and circumstances, it

is respectfully prayed, that this Hon‟ble Court may be

pleased to pass orders:

A. Restraining the Respondents from acting in

furtherance of the resolution dated 11.11.2025, in

any manner whether directly or indirectly, in so

far as it seeks to create any encumbrance over the

assets of Respondent No. 1, in favour of any third

party, including but not confined to Respondent

No. 2.

6

BSE

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 6 of 35

B. Restraining Respondent No. 1 from registering and/or

recognizing any transfer of its shares held under promoter

category, by Respondents Nos. 2 & 3, to any one

including Respondent No. 4.

C. Restraining the Respondents from selling, disposing,

encumbering or creating any third-party interest,

whatsoever, in the assets, undertaking, business and

investments of Respondent No. 1.

D. Pass any other such/further Orders as this Hon‟ble Court

deems fit in facts of the present case.

E. Pass ad-interim ex-parte orders in terms of prayers A, B,

C and D above.”

(k) This Court, vide its Order 23.12.2025, passed in the said Section

9 Petition, considering the material on record, directed

Respondent No. 1 to refrain from acting in furtherance of its

EGM and creating any charge or pledge on its tangible or

intangible assets.

(l) Consequent upon the invocation of arbitration and in the

absence of any consensus between the parties with respect to

the appointment of the Arbitrator, the Petitioner has also filed

the Petition, being ARB. P. No. 835/2026, under Section 11 of

the A&C Act, seeking appointment of a Sole Arbitrator to

adjudicate upon the allegedly fresh cause of action stated to

have arisen inter se the parties. The said Arbitration Clause

reads as follows:

“Any dispute or difference whatsoever between the parties arising

out of or in connection with the present facility and for any other

transaction/s between the parties shall be settled by Arbitration of a

Sole Arbitrator appointed by Chairman of Morgan Securities &

Credits Private Limited, who would also have right to appoint

alternate Arbitrator in place of the aforesaid Arbitrator, in case of

his, death or being incapable or refusal to act or in the event of

termination of his mandate for any reason. The arbitration

proceedings shall be held at New Delhi. The power of the

Chairman to appoint a Sole Arbitrator shall not be challenged by

any party. Further, the parties agree that the Arbitrator so

appointed may be an employee and/or professional retainer and/or

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 7 of 35

a person who has a relation or interest in the company. The parties

agree not to ask for any adjournment except under extra-ordinary

reasons.”

4. In the aforesaid factual backdrop, these petitions are being

adjudicated by this Court.

SUBMISSIONS ON BEHALF OF THE PETITIONER :

5. Learned counsel for the Petitioner would submit that the

disputes between the parties arise out of the Facility Agreement, under

which substantial financial exposure was extended to Respondent No.

1, and which contains a binding Arbitration clause governing disputes

between the Petitioner and Respondent No.1.

6. He would submit that disputes arising under the said Facility

Agreement had earlier culminated in an Award, under which a sum

exceeding Rs. 1321 crores is payable by Respondent No. 1, and the

said Award has attained finality upon dismissal of the challenge

thereto by the Hon‟ble Supreme Court on 04.12.2025.

7. Learned counsel would emphasise that, despite the Award

having attained finality, the conduct of Respondent No. 1, in

connivance with its promoter, has consistently been directed towards

defeating and frustrating enforcement of the Petitioner‟s rights by

diluting and encumbering the asset base of Respondent No. 1, as is

also evident from the prior proceedings between the parties.

8. He would submit that Clause 6 of the Facility Agreement

imposes an express contractual restraint, inter alia, prohibiting

Respondent No. 1 and its promoters from encumbering assets,

transferring shareholding, or effecting any change in control without

prior consent of the Petitioner when dues remain outstanding.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 8 of 35

9. Learned counsel would contend that the recent transactions

undertaken by the Respondents, including the pledge of promoter

shareholding in favour of Respondent No. 4 and the proposed creation

of a charge over the assets of Respondent No. 1 to secure a loan of Rs.

96 crores, are in the teeth of the aforesaid contractual stipulation and

constitute a clear breach thereof.

10. It would be submitted that the said transactions are not bona

fide commercial arrangements but constitute a colourable exercise to

indirectly effect a transfer of control and encumber the assets of

Respondent No. 1, thereby frustrating the Petitioner‟s rights and

rendering the arbitral award incapable of effective enforcement.

11. Learned counsel would further submit that Respondent Nos. 2

and 3, being promoter entities holding a controlling stake of

approximately 50.25% in Respondent No. 1, are not strangers to the

transaction but are integral to the contractual framework and its

performance, and together with Respondent No. 1 constitute a single

economic entity.

12. Learned counsel would further submit that the Arbitration is not

confined in its operation to the signatories alone, and can, in

appropriate cases, extend to non-signatories forming part of a

composite transaction. Reliance in this regard would be placed on the

decision of the Hon‟ble Supreme Court in Cox and Kings Ltd. v. SAP

India Pvt. Ltd.

7

, wherein it has been held that the doctrine of group of

companies permits binding of non-signatories where the

circumstances demonstrate a clear intention to bind such entities,

7

(2024) 4 SCC 1

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 9 of 35

having regard to their role in the negotiation, performance, and subject

matter of the transaction.

13. He would submit that the active and continued involvement of

Respondent Nos. 2 and 3 in the affairs of Respondent No. 1, including

their role in earlier arbitral proceedings and offering of assets as

security, clearly attracts the applicability of the group of companies’

doctrine, rendering them amenable to Arbitration, notwithstanding

their status as non-signatories.

14. It would be further submitted that Respondent No. 4, though a

non-signatory to the Facility Agreement, has, in collusion with the

Respondent Nos. 2 &3, entered into the Pledge Agreement that

effectively facilitates a structured transfer of control and encumbers

the assets of Respondent No. 1.

15. It would be contended that, having regard to the role and

involvement of Respondent Nos. 2, 3 and 4 in the aforesaid

transactions and keeping in view the principles enunciated in Cox and

Kings (supra), the said Respondents are not third parties but are

intrinsically connected with, and have a direct interest in, the

transactions forming the subject matter of the present dispute, and are

therefore liable to be brought within the fold of the arbitral

proceedings notwithstanding their status as non-signatories to the

Facility Agreement.

16. Learned counsel would submit that the Petitioner became aware

of the aforesaid transactions only on 05.12.2025 upon perusal of

disclosures made to the BSE by the Respondent No. 1, which gave

rise to a fresh cause of action and a new arbitrable dispute under the

Facility Agreement.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 10 of 35

17. He would further submit that in order to preserve the subject

matter of the dispute and to prevent the Respondents from rendering

the arbitral proceedings infructuous, the Petitioner has invoked the

jurisdiction of this Court under Section 9 of the A&C Act, whereupon

this Court, vide Order dated 23.12.2025, has already granted interim

protection by directing Respondent No. 1 to refrain from creating any

charge or pledge on its tangible or intangible assets, thereby

recognising the existence of an arbitrable dispute and the necessity to

preserve the subject matter thereof.

18. In these circumstances, learned counsel would submit that the

Petitioner has rightly invoked the arbitration afresh vide Notice dated

20.12.2025 and, in the absence of any agreement between the parties,

has approached this Court under Section 11 of the A&C Act.

19. It is thus urged that the interim protection already granted by

this Court in the proceedings under Section 9 of the A&C Act be

continued so as to preserve the subject matter of the dispute, and that

the Petition under Section 11 of the A&C Act, as preferred by the

Petitioner, be allowed and a Sole Arbitrator be appointed for effective

adjudication of the disputes arising under the Facility Agreement.

SUBMISSIONS ON BEHALF OF RESPONDENT S:

Respondent No. 1’s submissions:

20. Learned counsel for Respondent No. 1 would, at the outset,

submit that the present proceedings are fundamentally misconceived

and amount to an impermissible attempt by the Petitioner to re-agitate

the disputes which have already attained finality under the Award.

21. He would submit that the disputes arising under the Facility

Agreement had already culminated in the aforesaid Award, and the

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 11 of 35

Petitioner has admittedly initiated enforcement proceedings in respect

thereof before the competent court at Bengaluru, wherein applications

for attachment and restraint over assets of Respondent No. 1 have also

been pursued.

22. Learned counsel would contend that the present Petition under

Section 9 of the A&C Act is, in substance, a post-award proceeding

which seeks to secure the fruits of the award, and therefore, partakes

the character of enforcement rather than interim protection in aid of

arbitration.

23. It would be submitted that once the arbitral award has become

enforceable as a decree under Section 36 of the A&C Act, the remedy

of the Petitioner lies exclusively within the framework of execution

proceedings under Order XXI of the Code of Civil Procedure, 1908,

and the same cannot be circumvented by invoking the jurisdiction of

this Court under Section 9 of the A&C Act.

24. In this regard, reliance would be placed upon the Judgment of

the Hon‟ble Bombay High Court in Centrient Pharmaceuticals

(India) (P) Ltd. v. Hindustan Antibiotics Ltd.

8

, particularly

paragraphs 28 to 30 thereof, wherein it has been held that once an

award becomes enforceable, recourse must be taken to execution

proceedings and proceedings under Section 9 of the A&C Act cannot

be invoked as a substitute therefor.

25. Learned counsel would further submit that the reliefs sought in

the present Petition under Section 9 of the A&C Act are substantially

identical to those already sought in the enforcement proceedings,

including attachment and restraint on alienation of assets, and the

8

2019 SCC OnLine Bom 1614

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 12 of 35

Petitioner has failed to disclose the extent of such proceedings or

explain why similar reliefs could not be pursued therein.

26. It would be contended that the Petitioner, while asserting the

finality and enforceability of the Award, is simultaneously seeking to

invoke Arbitration afresh on the very same cause of action, which is

legally impermissible, as the liability adjudicated under the Award

forms an integral and inseparable part of the reliefs now sought, and

therefore cannot give rise to a fresh arbitrable dispute.

27. Learned counsel would submit that the purported “fresh cause

of action” pleaded by the Petitioner is illusory and is merely a device

to initiate a second round of Arbitration by way of clever drafting, in

order to overcome the limitations of enforcement proceedings.

28. It would be further submitted that permitting such a course

would amount to a collateral re-opening of issues already adjudicated,

and would constitute an abuse of the arbitral process, which cannot be

countenanced in law.

29. It would be contended by the learned counsel for Respondent

No. 1 that if the Section 9 Petition under the A&C Act is held to be

not maintainable, the premise of the existence of any fresh arbitrable

dispute would necessarily fail. Consequently, the Petition under

Section 11 of the A&C Act, being predicated on the same cause of

action, would also not survive and must meet the same fate.

Respondent No. 2’s submissions:

30. Learned senior counsel for Respondent No. 2 would submit that

the present proceedings, insofar as they seek to implead Respondent

No. 2, are wholly misconceived and liable to be rejected, as

Respondent No. 2 is admittedly a non-signatory to the Facility

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 13 of 35

Agreement and is neither a party to the underlying contract nor to the

Arbitration agreement contained therein.

31. He would submit that an arbitration agreement, being a creature

of consent within the meaning of Section 7 of the A&C Act, can bind

only those parties who have expressly or impliedly agreed to be bound

by it, and in the absence of any such consent, no proceedings, whether

under Section 9 or Section 11, can be maintained against a non-

signatory.

32. Learned senior counsel would further submit that the Petitioner

itself has admitted that Respondent No. 2 is a non-signatory to the

Facility Agreement, and is, therefore, estopped from seeking any

coercive or restraining relief against the Respondent No. 2.

33. It would be contended that the attempt of the Petitioner to

invoke the „group of companies‟ doctrine and to treat Respondent No.

2 as an alter ego or part of a single economic unit with Respondent

No. 1 is wholly misconceived and contrary to settled law.

34. Learned senior counsel would submit that, as clarified by the

Hon‟ble Supreme Court in Cox and Kings (supra), the said doctrine

cannot be invoked mechanically on the basis of common shareholding

or management, and can apply only where a clear intention of the

parties, including the non-signatory, to be bound by the arbitration

agreement is demonstrably established.

35. He would further submit that no such intention, whether express

or implied, has been pleaded or established in the present case, and

mere shareholding or corporate relationship does not suffice to bind

Respondent No. 2 to the arbitration agreement.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 14 of 35

36. Learned senior counsel would also rely on settled principles that

a non-signatory cannot be treated as a party to an arbitration

agreement merely by virtue of being part of the same corporate group

or having common directors, and the burden to establish otherwise lies

heavily on the Petitioner, which has not been discharged.

37. It would be submitted that Respondent No. 2 is a separate and

distinct juristic entity, and the corporate veil cannot be lifted in the

absence of a specific case of fraud, sham, or façade, none of which has

been pleaded or established in the present proceedings.

38. It would also be submitted that any affidavit or undertaking

given by Respondent No. 2 in earlier proceedings cannot be construed

as a general submission to arbitral jurisdiction, as such an undertaking

is limited to the context of the earlier proceedings and is incapable of

being expanded to bind Respondent No. 2 in the present dispute.

39. Learned senior counsel would submit that the aforesaid

transaction, whereby Respondent No. 2 pledged its shareholding in

Respondent No. 1 in favour of Respondent No. 4, is a bona fide

commercial transaction undertaken in the ordinary course of business

and the Petitioner, being a stranger to the same, has no locus to

challenge or restrain such transaction.

40. He would further submit that the shares held by Respondent No.

2 are its independent property, and in the absence of any contractual

restriction binding upon it, no restraint can be imposed on Respondent

No. 2 in respect thereof.

41. Learned senior counsel would also submit that the Petitioner

has failed to satisfy the well-settled parameters for the grant of interim

relief under Section 9 of the A&C Act, namely, the existence of a

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 15 of 35

prima facie case, balance of convenience, and irreparable injury,

insofar as Respondent No. 2 is concerned.

42. It would be further submitted that the present proceedings,

insofar as they seek to implead Respondent No. 2, suffer from

misjoinder of parties and are an attempt to indirectly secure reliefs

against Respondent No. 1, which cannot be directly obtained, and

therefore ought not to be entertained.

43. In these circumstances, learned senior counsel would submit

that no relief under Section 9 of the A&C Act can be granted against

Respondent No. 2, and in the absence of any arbitration agreement

binding upon it, no proceedings under Section 11 of the A&C Act can

also be maintained.

Respondent No. 3’s submissions:

44. Learned counsel appearing on behalf of Respondent No. 3

would submit that no separate submissions are being advanced on its

behalf and that Respondent No. 3 adopts and relies upon the

submissions advanced on behalf of Respondent No. 2, to the extent

applicable.

Respondent No. 4’s submissions:

45. Learned senior counsel appearing on behalf of Respondent No.

4 would contend that its presence in the present proceedings is

misconceived, inasmuch as Respondent No. 4 derives its rights solely

under the Pledge Agreement and has no contractual relationship or

arbitration arrangement with the Petitioner under the Facility

Agreement.

46. He would submit that Respondent No. 4 is an independent

third-party commercial lender, whose sole connection to the present

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 16 of 35

dispute arises from the Pledge Agreement, whereby Respondent Nos.

2 and 3 pledged their shareholding in Respondent No. 1 in favour of

Respondent No. 4 to secure a loan of Rs. 96 crores. The said

transaction is distinct and independent of the underlying contractual

framework between the Petitioner and Respondent No. 1.

47. Learned counsel would contend that in the absence of any

arbitration agreement binding Respondent No. 4, no proceedings

under Section 11 of the A&C Act can be maintained against it, and

equally, no relief under Section 9 thereof can be granted against a

complete alien to the contract, save in exceptional circumstances,

none of which arise in the present case.

48. It would be submitted that the attempt of the Petitioner to

invoke the group of companies’ doctrine is wholly untenable, as

Respondent No. 4 is neither part of the corporate group of Respondent

Nos. 1 to 3, nor has it participated in the negotiation, execution, or

performance of the Facility Agreement, nor derived any benefit

thereunder.

49. It would be contended that the jurisdiction under Section 9 of

the A&C Act cannot be invoked so as to defeat vested third-party

rights, particularly those of a bona fide secured creditor, whose

security interest was created prior to the institution of the present

proceedings and without notice of any alleged contractual embargo.

50. Learned senior counsel would submit that the present Petition

is, in substance, an attempt to employ Section 9 of the A&C Act as a

parallel enforcement mechanism in aid of an arbitral award, which is

already the subject matter of execution proceedings before the

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 17 of 35

competent court, and such use of Section 9 is contrary to the scheme

of the A&C Act.

51. It would be further submitted that the Petitioner‟s case proceeds

on a fundamental misconception by treating the shares held by

Respondent Nos. 2 and 3 in Respondent No. 1 as assets of Respondent

No. 1 itself, whereas in law, shares are the property of the

shareholders and not of the company.

52. Learned counsel would submit that the pledge in question was

created by Respondent Nos. 2 and 3 in their capacity as shareholders

over their own shares, and Respondent No. 1 is neither the pledgor nor

the borrower in the said transaction. Consequently, no restriction

applicable to Respondent No. 1 can be extended to such independent

shareholder transactions or to Respondent No. 4 as pledgee.

53. It would be submitted that the right to transfer or encumber

shares, including by way of pledge, is a statutory right recognised

under Section 58(2) of the Companies Act, 2013, and the Petitioner

cannot, by relying upon a private contractual clause, seek to override

such statutory rights, particularly against a third party which is not

bound by the contract.

54. Learned senior counsel would further submit that Clause 6 of

the Facility Agreement, in any event, operates only inter se the

contracting parties and cannot bind Respondent No. 4, which had no

notice of such clause and was under no obligation to investigate

private contractual restrictions between the Petitioner and Respondent

No. 1.

55. It would be contended that the apprehension of change in

control of Respondent No. 1 is wholly speculative, as the pledge has

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 18 of 35

not been invoked, ownership and voting rights remain with

Respondent Nos. 2 and 3, and no transfer of shares has taken place.

56. Learned senior counsel would emphasise that even otherwise,

any eventual invocation of the pledge would be subject to the

regulatory framework under the Securities and Exchange Board of

India (Substantial Acquisition of Shares and Takeovers) Regulations,

2011, which adequately safeguards the interests of stakeholders,

including creditors.

57. It would also be submitted that the Petitioner has, in fact,

directly benefited from the very transaction it now seeks to impugn,

since the funds generated through the pledge were utilised to deposit

Rs. 96 crores before the Hon‟ble Supreme Court, which amount has

since been released in favour of the Petitioner.

58. Learned senior counsel would contend that having accepted and

retained the benefit of the said transaction, the Petitioner is estopped

from challenging the same, the conduct being hit by the doctrine of

approbate and reprobate, disentitling it to any equitable relief.

59. It would be further submitted that no case for the grant of

interim relief is made out against Respondent No. 4, as there is neither

any prima facie case nor any irreparable injury; thereby, the interim

Order dated 23.12.2025, passed by this Court in the present Petition

under Section 9 of the A&C Act, is required to be vacated.

ANALYSIS:

60. This Court has heard the learned counsel appearing on behalf of

the parties and, with their able assistance, has carefully perused the

paperbook and other material documents placed on record.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 19 of 35

61. At the outset, this Court deems it apposite to note the

jurisdiction that is provided under Sections 9 and 11 of the A&C Act,

as the former being interim and protective in nature, is intended to

preserve the subject matter of the arbitration and safeguard the

efficacy of the arbitral process, and the latter being confined to a

prima facie examination of the existence of a valid arbitration

agreement and the referral of disputes to arbitration.

62. Accordingly, while considering a Petition under Section 9 of

the A&C Act, the Court is required to examine whether the well-

settled parameters governing the grant of interim relief, namely, the

existence of a prima facie case, the balance of convenience and the

likelihood of irreparable injury, stand satisfied. In ArcelorMittal

Nippon Steel (India) Ltd. v. Essar Bulk Terminal Ltd.

9

, the Hon‟ble

Supreme Court has expounded upon the contours of such jurisdiction

in the following terms:

“88.Applications for interim relief are inherently applications

which are required to be disposed of urgently. Interim relief is

granted in aid of final relief. The object is to ensure protection of

the property being the subject-matter of arbitration and/or

otherwise ensure that the arbitration proceedings do not become

infructuous and the arbitral award does not become an award on

paper, of no real value.

89.The principles for grant of interim relief are (i) good prima facie

case, (ii) balance of convenience in favour of grant of interim relief

and (iii) irreparable injury or loss to the applicant for interim relief.

Unless applications for interim measures are decided

expeditiously, irreparable injury or prejudice may be caused to the

party seeking interim relief.

90.It could, therefore, never have been the legislative intent that

even after an application under Section 9 is finally heard, relief

would have to be declined and the parties be remitted to their

remedy under Section 17.

9

(2022) 1 SCC 712

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 20 of 35

91. When an application has already been taken up for

consideration and is in the process of consideration or has already

been considered, the question of examining whether remedy under

Section 17 is efficacious or not would not arise. The requirement to

conduct the exercise arises only when the application is being

entertained and/or taken up for consideration. As observed above,

there could be numerous reasons which render the remedy under

Section 17 inefficacious. To cite an example, the different

arbitrators constituting an Arbitral Tribunal could be located at far

away places and not in a position to assemble immediately. In such

a case, an application for urgent interim relief may have to be

entertained by the Court under Section 9(1).”

(emphasis supplied)

63. The Hon‟ble Supreme Court, in Essar House Pvt. Ltd. v.

Arcelor Mittal Nippon Steel India Ltd.

10

, has made some pertinent

observations concerning the nature and contours of the jurisdiction of

the Court under Section 9 of the A&C Act, which are extracted

hereinbelow:

“48. Section 9 of the Arbitration Act confers wide power on the

Court to pass orders securing the amount in dispute in arbitration,

whether before the commencement of the arbitral proceedings,

during the arbitral proceedings or at any time after making of the

arbitral award, but before its enforcement in accordance with

Section 36 of the Arbitration Act. All that the Court is required to

see is, whether the applicant for interim measure has a good prima

facie case, whether the balance of convenience is in favour of

interim relief as prayed for being granted and whether the applicant

has approached the court with reasonable expedition

*****

49. Proof of actual attempts to deal with, remove or dispose of the

property with a view to defeat or delay the realisation of an

impending Arbitral Award is not imperative for grant of relief

under Section 9 of the Arbitration Act. A strong possibility of

diminution of assets would suffice. To assess the balance of

convenience, the Court is required to examine and weigh the

consequences of refusal of interim relief to the applicant for

interim relief in case of success in the proceedings, against the

consequence of grant of the interim relief to the opponent in case

the proceedings should ultimately fail.”

10

(2022) 20 SCC 178

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 21 of 35

64. Likewise, the ambit provided under Section 11 of the A&C Act

is extremely circumscribed, whereby this Court only acts as a referral

court. In this regard, a three-Judge Bench of the Hon‟ble Supreme

Court in SBI General Insurance Co. Ltd. v. Krish Spinning

11

, after

taking into consideration the authoritative pronouncement of the

seven-Judge Bench in Interplay Between Arbitration Agreements

under Arbitration Act, 1996 & Stamp Act, 1899, In re

12

,

comprehensively delineated the contours of judicial intervention at the

stage of Section 11 of the A&C Act. The excerpt of Krish Spg (supra)

reads as under:-

“(c) Judicial interference under the 1996 Act

110. The parties have been conferred with the power to decide and

agree on the procedure to be adopted for appointing arbitrators. In

cases where the agreed upon procedure fails, the courts have been

vested with the power to appoint arbitrators upon the request of a

party, to resolve the deadlock between the parties in appointing the

arbitrators.

111. Section 11 of the 1996 Act is provided to give effect to the

mutual intention of the parties to settle their disputes by arbitration

in situations where the parties fail to appoint an arbitrator(s). The

parameters of judicial review laid down for Section 8 differ from

those prescribed for Section 11. The view taken inSBP &

Co. v. Patel Engg. Ltd., (2005) 8 SCC 618 and affirmed in Vidya

Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 that Sections 8

and 11, respectively, of the 1996 Act are complementary in nature

was legislatively overruled by the introduction of Section 11(6-A)

in 2015. Thus, although both these provisions intend to compel

parties to abide by their mutual intention to arbitrate, yet the scope

of powers conferred upon the courts under both the sections are

different.

112. The difference between Sections 8 and 11, respectively, of the

1996 Act is also evident from the scope of these provisions. Some

of these differences are:

11

(2024) 12 SCC 1

12

(2024) 6 SCC 1

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 22 of 35

112.1. While Section 8 empowers any “judicial authority” to refer

the parties to arbitration, under Section 11, the power to refer has

been exclusively conferred upon the High Court and the Supreme

Court.

112.2. Under Section 37, an appeal lies against the refusal of the

judicial authority to refer the parties to arbitration, whereas no such

provision for appeal exists for a refusal under Section 11.

112.3. The standard of scrutiny provided under Section 8 is that of

prima facie examination of the validity and existence of an

arbitration agreement. Whereas, the standard of scrutiny under

Section 11 is confined to the examination of the existence of the

arbitration agreement.

112.4. During the pendency of an application under Section 8,

arbitration may commence or continue and an award can be

passed. On the other hand, under Section 11, once there is failure

on the part of the parties in appointing the arbitrator as per the

agreed procedure and an application is preferred, no arbitration

proceedings can commence or continue.

113. The scope of examination under Section 11(6-A) is confined

to the existence of an arbitration agreement on the basis of Section

7. The examination of validity of the arbitration agreement is also

limited to the requirement of formal validity such as the

requirement that the agreement should be in writing.

114. The use of the term “examination” under Section 11(6-A) as

distinguished from the use of the term “rule” under Section 16

implies that the scope of enquiry under Section 11(6-A) is limited

to a prima facie scrutiny of the existence of the arbitration

agreement, and does not include a contested or laborious enquiry,

which is left for the Arbitral Tribunal to “rule” under Section 16.

The prima facie view on existence of the arbitration agreement

taken by the Referral Court does not bind either the Arbitral

Tribunal or the Court enforcing the arbitral award.

115. The aforesaid approach serves a twofold purpose — firstly, it

allows the Referral Court to weed out non-existent arbitration

agreements, and secondly, it protects the jurisdictional competence

of the Arbitral Tribunal to rule on the issue of existence of the

arbitration agreement in depth.

****

117. In view of the observations made by this Court in Interplay

Between Arbitration Agreements under the Arbitration Act, 1996

& the Stamp Act, 1899, In re, (2024) 6 SCC 1, it is clear that the

scope of enquiry at the stage of appointment of arbitrator is limited

to the scrutiny of prima facie existence of the arbitration

agreement, and nothing else. For this reason, we find it difficult to

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 23 of 35

hold that the observations made inVidyaDrolia v. Durga Trading

Corpn., (2021) 2 SCC 1 and adopted inNTPC Ltd. v. SPML Infra

Ltd., (2023) 9 SCC 385 that the jurisdiction of the Referral Court

when dealing with the issue of “accord and satisfaction” under

Section 11 extends to weeding out ex facie non-arbitrable and

frivolous disputes would continue to apply despite the subsequent

decision inInterplay Between Arbitration Agreements under the

Arbitration Act, 1996 & the Stamp Act, 1899, In re,(2024) 6 SCC

1.

****

119. The question of “accord and satisfaction”, being a mixed

question of law and fact, comes within the exclusive jurisdiction of

the Arbitral Tribunal, if not otherwise agreed upon between the

parties. Thus, the negative effect of competence-competence would

require that the matter falling within the exclusive domain of the

Arbitral Tribunal, should not be looked into by the Referral Court,

even for a prima facie determination, before the Arbitral Tribunal

first has had the opportunity of looking into it.

120. By referring disputes to arbitration and appointing an

arbitrator by exercise of the powers under Section 11, the Referral

Court upholds and gives effect to the original understanding of the

contracting parties that the specified disputes shall be resolved by

arbitration. Mere appointment of the Arbitral Tribunal does not in

any way mean that the Referral Court is diluting the sanctity of

“accord and satisfaction” or is allowing the claimant to walk back

on its contractual undertaking. On the contrary, it ensures that the

principle of arbitral autonomy is upheld and the legislative intent

of minimum judicial interference in arbitral proceedings is given

full effect. Once the Arbitral Tribunal is constituted, it is always

open for the defendant to raise the issue of “accord and

satisfaction” before it, and only after such an objection is rejected

by the Arbitral Tribunal, that the claims raised by the claimant can

be adjudicated.

121. Tests like the “eye of the needle” and “ex facie meritless”,

although try to minimise the extent of judicial interference, yet

they require the Referral Court to examine contested facts and

appreciate prima facie evidence (however limited the scope of

enquiry may be) and thus are not in conformity with the

principles of modern arbitration which place arbitral autonomy and

judicial non-interference on the highest pedestal.

122. Appointment of an Arbitral Tribunal at the stage of Section 11

petition also does not mean that the Referral Courts forego any

scope of judicial review of the adjudication done by the Arbitral

Tribunal. The 1996 Act clearly vests the national courts with the

power of subsequent review by which the award passed by an

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 24 of 35

arbitrator may be subjected to challenge by any of the parties to the

arbitration.

*****

126. The power available to the Referral Courts has to be

construed in the light of the fact that no right to appeal is available

against any order passed by the Referral Court under Section 11 for

either appointing or refusing to appoint an arbitrator. Thus, by

delving into the domain of the Arbitral Tribunal at the nascent

stage of Section 11, the Referral Courts also run the risk of leaving

the claimant in a situation wherein it does not have any forum to

approach for the adjudication of its claims, if its Section 11

application is rejected.

127. Section 11 also envisages a time-bound and expeditious

disposal of the application for appointment of arbitrator. One of the

reasons for this is also the fact that unlike Section 8, once an

application under Section 11 is filed, arbitration cannot commence

until the Arbitral Tribunal is constituted by the Referral Court. This

Court, on various occasions, has given directions to the High

Courts for expeditious disposal of pending Section 11 applications.

It has also directed the litigating parties to refrain from filing bulky

pleadings in matters pertaining to Section 11. Seen thus, if the

Referral Courts go into the details of issues pertaining to “accord

and satisfaction” and the like, then it would become rather difficult

to achieve the objective of expediency and simplification of

pleadings.

128. We are also of the view that ex facie frivolity and dishonesty

in litigation is an aspect which the Arbitral Tribunal is equally, if

not more, capable to decide upon the appreciation of the evidence

adduced by the parties. We say so because the Arbitral Tribunal

has the benefit of going through all the relevant evidence and

pleadings in much more detail than the Referral Court. If the

Referral Court is able to see the frivolity in the litigation on the

basis of bare minimum pleadings, then it would be incorrect to

doubt that the Arbitral Tribunal would not be able to arrive at the

same inference, most likely in the first few hearings itself, with the

benefit of extensive pleadings and evidentiary material.”

(emphasis supplied)

65. Thus, the decision in Krish Spinning (supra) unequivocally

reiterates that the Referral Court, while exercising jurisdiction under

Section 11 of the A&C Act, is required to confine itself to a prima

facie examination of the existence of a valid Arbitration Agreement

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 25 of 35

and nothing beyond. The Court‟s role is facilitative and

procedural, namely, to give effect to the parties‟ agreed mechanism of

dispute resolution when it has failed, without embarking upon an

adjudication of contentious factual or legal issues, which are reserved

for the Arbitral Tribunal.

66. It is in the light of the aforesaid legal framework that the

contentions advanced on behalf of all the parties fall to be examined.

67. The central thread running through all the objections raised

before this Court, whether by Respondent No. 1 on maintainability, or

by Respondents Nos. 2, 3 and 4 on non-impleadment, ultimately

converge on a common issue, namely, whether the transactions of

pledging of promoter shareholding and creation of encumbrances over

the assets of Respondent No. 1, violate the Clause 6 of Facility

Agreement, giving rise to a fresh and independent arbitrable dispute

thereunder. In the considered view of this Court, the material on

record prima facie answers the said question in the affirmative, for the

reasons as set out below.

68. It is an undisputed fact that the earlier disputes inter se the

Petitioner and Respondent No. 1 arising out of the Facility Agreement

had culminated in an Award, whereby substantial amounts were held

payable by Respondent No. 1 to the Petitioner. The mere existence of

the said Award cannot, by itself, lead to the conclusion that every

subsequent dispute arising between the parties stands foreclosed.

69. This Court notes that the present proceedings are not directed

towards reopening or re-agitating issues already concluded; rather, the

grievance of the Petitioner in the present proceedings stems from

subsequent transactions which are alleged to be in breach of the

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 26 of 35

continuing contractual obligations under the Facility Agreement,

particularly Clause 6 thereof. These subsequent events, being distinct

in point of time and nature, prima facie give rise to an independent

cause of action, the adjudication of which falls within the domain of

Arbitration.

70. It is also noted that Clause 6 of the Facility Agreement, as

extracted hereinabove, imposes an express and unconditional

contractual embargo upon Respondent No. 1 and its promoter group

against, inter alia, encumbering any undertaking, business or

investments in shares, registering or recognising any transfer of shares

by the present promoter group, or changing the paid-up share capital,

in each case without the prior written permission of the Petitioner, so

long as any amount remains overdue.

71. However, the existence of the aforesaid clause is not in dispute,

and since the question of whether Clause 6 was in fact violated and

what consequences flow therefrom is precisely the kind of mixed

question of fact and law, this Court deems it appropriate to be left

within the exclusive domain of the learned Arbitral Tribunal.

72. Turning to the objection raised by the Respondent No. 1 that the

present Petition under Section 9 of the A&C Act is, in substance, a

proceeding for enforcement of the Award, in view of this Court, is

devoid of any merit. It is noted that the reliefs sought by the Petitioner

in the Petition under Section 9 of the A&C Act are not directed

towards recovery of the awarded amount, nor do they seek attachment

of assets, payment of money, or any step in execution of the award.

Instead, what is sought is preservation of the existing assets of

Respondent No. 1 and restraint against any alteration in its

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 27 of 35

management or control, pending adjudication of disputes arising from

the alleged breach of Clause 6.

73. In the considered opinion of this Court, such reliefs as are

sought by the Petitioner are protective in nature and are sought in aid

of a fresh arbitral process. The distinction between measures in aid of

arbitration and steps in execution of an award is both factual and

material, and the present case squarely falls within the scope of

Section 9 of the A&C Act.

74. Further, the reliance placed by the Respondent No.1 upon the

decision of the Bombay High Court in Centrient Pharmaceuticals

(supra), to contend that the present proceeding under Section 9 of the

A&C Act is a disguised enforcement proceeding and cannot be

adjudicated under the present proceeding, is misplaced.

75. In Centrient Pharmaceuticals (supra), upon which Respondent

No. 1 has placed its reliance, is factually not similar to the present

case, as in the above-mentioned ruling, Section 9 of the A&C Act was

invoked as a substitute for execution in respect of an existing award.

However, in the present case, the subsequent transactions give rise to

a distinct cause of action and thus the need to preserve the subject

matter pending adjudication thereof. The ratio of the said judgment,

therefore, does not advance the case of Respondent No. 1.The

objection to the maintainability of the present proceedings is

accordingly rejected.

76. The contention advanced by Respondent No. 1 that the alleged

fresh cause of action, as asserted by the Petitioner, is illusory or

merely a device to reopen concluded disputes, also does not merit

acceptance. The transactions and events relied upon by the Petitioner,

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 28 of 35

including the Pledge Agreement, disclosures made to the BSE, the

loan transaction involving a sum of Rs. 96 crores, and the EGM

Resolution, are all subsequent developments that arose long after the

conclusion of the earlier arbitral proceedings.

77. In view of the foregoing, this Court finds that each of the above

transactions and findings by the Petitioner constitutes a distinct act,

alleged to be in breach of Clause 6 of the contractual framework, in

respect of which, Arbitration was invoked vide Notice dated

20.12.2025. The present invocation cannot be characterised as a re-

agitation of disputes already adjudicated, being in response to

subsequent and independent acts of alleged contractual violation.

While the agreement remains unchanged, the disputes, being founded

on fresh transactions, are clearly distinct and capable of independent

reference to Arbitration.

78. The further contention that the Petition under Section 11 of the

A&C Act is contingent upon the fate of the Petition under Section 9 of

the A&C Act is also misplaced.

79. The inquiry under Section 11 of the A&C Act, as envisaged

hereinabove, is confined to the existence of a valid arbitration

agreement and its invocation, both of which are undisputed in the

present case. The grant or refusal of interim relief under Section 9 of

the A&C Act is a separate consideration and does not affect the

maintainability of the Section 11 Petition. Accordingly, the present

objection raised by Respondent No. 1 is, therefore, rejected.

80. As regards the objections raised by Respondent Nos. 2 and 3,

this Court notes that both the said Respondents are admittedly non-

signatories to the Facility Agreement. However, the issue as to

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 29 of 35

whether a non-signatory may nevertheless be bound by an arbitration

agreement, including through application of the group of companies’

doctrine, is essentially a jurisdictional question falling within the

competence of the learned Arbitral Tribunal under Section 16 of the

A&C Act.

81. In this regard, reference may be made to the decisions of the

Hon‟ble Supreme Court in Cox and Kings (supra) and Interplay

Between Arbitration Agreements under Arbitration Act, 1996 &

Stamp Act, 1899, In re (supra), wherein it was authoritatively held

that the applicability of the group of companies doctrine is a fact-

intensive exercise requiring examination of multiple relevant factors,

including the role of the non-signatory entities in the underlying

transaction, the composite nature of the transaction, the conduct of the

parties, their mutual intention, and the degree of their participation in

the performance, negotiation, or termination of the contractual

arrangement.

82. It is also pertinent to note that the aforesaid judgments

recognise the width and scope of the jurisdiction conferred upon the

Arbitral Tribunal under Section 16 of the A&C Act to determine all

questions touching upon its own jurisdiction. Such jurisdiction would

necessarily include examination of the Respondents‟ objections

concerning the arbitrability of the disputes, the maintainability of

claims against non-signatories, the applicability of the group of

companies’ doctrine, the nature and extent of participation of

Respondent Nos. 2 and 3 in the underlying transaction, as well as all

other allied and incidental jurisdictional objections sought to be raised

before this Court.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 30 of 35

83. At this stage, therefore, this Court does not deem it appropriate

to conclusively adjudicate upon such disputed and mixed questions of

fact and law, particularly when the statutory framework under Section

16 of the A&C Act specifically empowers the learned Arbitral

Tribunal to undertake such an examination in accordance with law.

84. In the present case, it is noted that Respondent Nos. 2 and 3 are

the controlling promoters of Respondent No. 1, holding 50.25%

conjointly; they are the pledgors in the very transaction alleged to

constitute the breach; and they are expressly identified within Clause 6

as the "present promoter group" whose conduct is restricted. In view

of these facts, this Court is of the prima facie view that these

circumstances raise a triable issue as to their amenability to

arbitration; however, it cannot be conclusively determined at this

stage.

85. It is also relevant to note that the interim protection granted by

this Court under Section 9 of the A&C Act is confined to the assets

and affairs of Respondent No. 1 under the contractual framework of

the Facility Agreement and is intended solely to preserve the subject

matter of the dispute pending arbitral proceedings. The said protection

operates qua Respondent No. 1, which is admittedly a party to the

Facility Agreement, and cannot be construed as a final determination

of any rights or obligations of Respondent Nos. 2 and 3.

86. Consequently, the mere objection raised by Respondent Nos. 2

and 3 on the basis of their non-signatory status does not, at this stage,

denude this Court of its jurisdiction to grant protective relief in aid of

Arbitration.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 31 of 35

87. Accordingly, the interim protection granted under Section 9 of

the A&C Act shall continue to operate until commencement of the

arbitral proceedings or until varied by the learned Arbitral Tribunal in

exercise of its powers under Section 17 of the A&C Act. Insofar as the

proceedings under Section 11 are concerned, this Court does not

consider it either necessary or appropriate to conclusively determine

whether Respondent Nos. 2 and 3 are bound by the arbitration

agreement, the said issue being left open for consideration by the

learned Arbitral Tribunal, if and when the occasion so arises, in

accordance with law.

88. Moving to the objections raised by Respondent No. 4, this

Court notes that the principal contention advanced is that Respondent

No. 4, being a non-signatory to the Facility Agreement and deriving

its rights independently under the Pledge Agreement executed with

Respondent Nos. 2 and 3, cannot be subjected to the consequences

arising out of the contractual arrangement between the Petitioner and

Respondent No. 1.

89. In this regard, it is relevant to note that the interim protection

granted vide Order dated 23.12.2025 is confined to preservation of the

subject matter of the dispute arising under the Facility Agreement and

operates qua Respondent No. 1 under its contractual framework. The

said order neither determines nor conclusively affects any rights that

Respondent No. 4 may independently claim under the Pledge

Agreement.

90. Learned senior counsel appearing for Respondent No. 4 has

also placed reliance upon Section 58(2) of the Companies Act, 2013,

to contend that the right to pledge shares is a statutory right and

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 32 of 35

cannot be curtailed by a private contractual arrangement. While this

Court finds no reason to dispute the said proposition as a general

statement of law, the issue in the present proceedings is not the

existence of such a right, but the effect of its exercise in the context of

the contractual obligations governing Respondent No. 1 under the

Facility Agreement.

91. It is also noted that during the course of oral submissions,

learned senior counsel for Respondent No. 4 urged that the interim

Order dated 23.12.2025 deserves to be vacated. It was firstly

contended that the Petitioner, having accepted and retained the benefit

of Rs. 96 crores generated through the pledge transaction, cannot seek

to impugn the same, as its conduct is hit by the doctrine of approbate

and reprobate. Secondly, it was contended that the restraint on the

creation of a charge or pledge over the assets of Respondent No. 1

cannot extend to shares held by Respondent Nos. 2 and 3, as such

shares are the property of the shareholders and not of the company.

92. This Court is not persuaded by either of those submissions. The

receipt of Rs. 96 crores by the Petitioner was pursuant to the

directions of the Hon‟ble Supreme Court and in partial satisfaction of

an adjudicated liability exceeding Rs. 1321 crores. Such a receipt

cannot be construed as a voluntary acceptance of the impugned

transaction, such as to invite the doctrine of approbate and reprobate.

93. Insofar as the second contention is concerned, while it is correct

that shares are, in law, the property of the shareholders and not assets

of the company, however, Clause 6 of the Facility Agreement

expressly restrains any transfer or recognition of transfer of promoter

shareholding without prior written consent of the Petitioner and

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 33 of 35

invocation of the pledge would, prima facie, may result in a change in

controlling interest and management of Respondent No. 1.

94. Therefore, this Court deems it apposite, at this stage, that such a

technical distinction cannot be permitted to dilute the protective scope

of an Order made to safeguard contractual rights pending adjudication,

and whether the said pledge falls within the precise ambit of Clause 6

is a matter to be adjudicated upon by the learned Arbitral Tribunal.

95. Accordingly, the objections raised by the Respondent No.4 are

rejected.

CONCLUSION:

I. ARB. P. No. 835/2026

96. Considering the foregoing discussion, with respect to the

Petition under Section 11 of the A&C Act, this Court, upon a prima

facie examination in terms of the principles laid down in Krish

Spinning(supra), is satisfied that a valid arbitration agreement exists

between the Petitioner and Respondent No. 1 under the Facility

Agreement; and that a fresh arbitrable dispute has been disclosed,

whereupon the statutory requirement under Section 21 of the A&C

Act invoking Arbitration has been duly complied vide Notice dated

20.12.2025; therefore this Court finds no impediment to appoint a

Sole Arbitrator to adjudicate the disputes as arisen inter se the parties

to the said agreement.

97. Insofar as Respondent Nos. 2, 3 and 4 are concerned, this Court

refrains from expressing any conclusive opinion at this stage on the

question as to whether they are bound by the arbitration agreement or

whether they constitute necessary or proper parties to the arbitral

proceedings.

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 34 of 35

98. The said issues or any other issue concerning the jurisdiction or

competence of the learned Arbitral Tribunal fall squarely within the

jurisdictional domain of the learned Arbitral Tribunal under Section

16 of the A&C Act, and shall be examined and adjudicated by the

learned Arbitral Tribunal independently, in accordance with law,

without being influenced by any observations made hereinabove.

99. This Court requests Hon’ble Mr. Justice U. U. Lalit, Former

Chief Justice of India, to enter into the reference and adjudicate the

disputes between the parties.

100. The learned Arbitrator shall be entitled to a fee as may be

agreed upon between the parties and the learned Arbitrator.

101. The learned Arbitrator is also requested to file the requisite

disclosure under Section 12 of the A&C Act within a week of entering

the reference.

II. O.M.P.(I)(COMM.) No. 531/2025

102. This Court, in regard to the Petition under Section 9 of the A&C

Act finds that the interim protection granted vide Order dated

23.12.2025 warrants confirmation as, upon a prima facie examination

of the pleadings and material on record, the balance of convenience

lies in favour of the Petitioner and any invocation of the pledge or

transfer of management and control of Respondent No. 1 would cause

irreversible consequences that cannot be undone or compensated in

monetary terms, whereas continuation of the status quo does not

causes irreparable harm to the Respondents.

103. Consequently, the interim protection granted vide Order dated

23.12.2025 in Section 9 Petition is confirmed and shall continue to

remain operative until such time as the same is modified, varied, or

O.M.P.(I) (COMM.) 531/2025 & Connected matter Page 35 of 35

vacated by the learned Arbitral Tribunal in exercise of its powers

under Section 17 of the A&C Act, in accordance with law.

104. It is made clear that, insofar as both the petitions are concerned,

all rights and contentions of the parties arising out of or in relation to

the arbitration agreement, including those pertaining to the claims and

counter-claims, are expressly kept open to be adjudicated by the

learned Arbitral Tribunal on their own merits, in accordance with law.

105. It is also made clear that the observations made hereinabove are

purely prima facie in nature and have been rendered only for the

purposes of adjudication of the present petitions. The same shall not

be construed as an expression of opinion on the merits of the disputes

between the parties, and the learned Arbitral Tribunal shall decide all

issues independently and uninfluenced by any observations contained

in the present judgment, in accordance with law.

106. The Registry is directed to send a copy of this Judgment to the

learned Arbitrator through all permissible modes, including through e-

mail.

107. Accordingly, both Petitions, being O.M.P. (I) (COMM.) No.

531/2025 & ARB. P. No. 835/2026, along with pending application(s),

if any, stand disposed of in the above terms.

108. No Order as to costs.

HARISH VAIDYANATHAN SHANKAR, J.

MAY 29, 2026/jk