The Insolvency and Bankruptcy Board of India (IBBI)
Circular
IBBI issues Guidelines for Conducting Valuation under the Insolvency and Bankruptcy Code, 2016
IBBI vide Circular No. IBBI/RV/103/2026 dated June 15, 2026, has issued the Guidelines for Conducting Valuation under the Insolvency and Bankruptcy Code, 2016, prescribing a uniform framework for the preparation of valuation reports under the IBC. The guidelines seek to improve consistency, transparency, and reliability in valuations and apply to all valuations conducted under the Code from the date of issuance.
The guidelines prescribe minimum content and reporting requirements, standardized valuation report formats for Land & Building, Plant & Machinery, and Securities or Financial Assets, and introduce the role of a Coordinating Valuer to determine the fair value of the corporate debtor by integrating individual asset valuations and business synergies.
Source: https://ibbi.gov.in//uploads/legalframwork/9d426e3d5c806a7a8f763103960345ea.pdf
Judicial Curve
Darshan Mandir Co-Operative Housing Society Ltd. v. District Deputy Registrar, Co-operative Societies & Ors.
The Hon’ble Bombay High Court examined whether the pendency of Corporate Insolvency Resolution Proceedings (CIRP) against a subsequent purchaser of a property could prevent the Competent Authority from exercising its jurisdiction under Section 11 of the Maharashtra Ownership Flats (Regulation of the Promotion of Construction, Sale, Management and Transfer) Act, 1963 (MOFA) to grant deemed conveyance in favour of a co-operative housing society. The dispute arose after the Competent Authority rejected the Society’s application solely on the ground that a moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) was in force against the subsequent purchaser.
The Court observed that the obligation to execute a conveyance under MOFA is a statutory duty of the promoter and that proceedings for deemed conveyance are meant to enforce this obligation rather than recover a debt. It held that the Competent Authority performs a statutory function, which is not barred by the moratorium under Section 14 of the IBC. The Court further observed that permitting developers to rely on insolvency proceedings to delay conveyance would defeat the welfare objective of MOFA and adversely affect the rights of flat purchasers.
Accordingly, the Bombay High Court set aside the Competent Authority’s order and restored the Society’s application for fresh consideration on merits. The Court held that the mere pendency of CIRP or the moratorium under Section 14 of the IBC cannot be a ground to refuse or defer deemed conveyance proceedings under Section 11 of MOFA, emphasizing that the statutory rights of flat purchasers must be protected.
Mr. K.C.M. Gowda v. Aditya Birla Capital Limited & Ace Embedded Intensive Care Units Private Limited
The Hon’ble Karnataka High Court examined whether the NCLT can determine an applicant’s locus standi before admitting an application under Section 94 of the Insolvency and Bankruptcy Code, 2016, relating to personal insolvency proceedings. The dispute arose after the NCLT rejected the petitioner’s application on the ground that he had failed to establish his status as a personal guarantor, thereby rendering him ineligible to invoke the personal guarantor insolvency framework.
The Court observed that examining whether an applicant possesses the requisite legal standing is only a threshold inquiry and does not amount to adjudicating the insolvency claim on merits. It held that the NCLT is required to verify the existence of jurisdictional facts before exercising its powers, particularly as the filing of an insolvency application triggers significant consequences, including an interim moratorium affecting creditors’ rights. The Court further held that the status of a personal guarantor must arise from a valid contract of guarantee and cannot be established merely by a unilateral description in a demand notice.
Accordingly, the Karnataka High Court upheld the NCLT’s order, holding that the petitioner had failed to produce any deed or instrument evidencing a valid guarantee and was only shown as a co-borrower in the loan documents. The Court dismissed the writ petition with costs of ₹1 lakh, emphasizing that the NCLT is empowered to examine an applicant’s locus standi before permitting insolvency proceedings under the IBC to proceed.
Claudia Z. Springer v. Voizzit Technology Private Limited
The Hon’ble Kerala High Court examined whether a commercial suit concerning assets of subsidiary companies undergoing Chapter 11 bankruptcy proceedings in the United States could be continued before an Indian Commercial Court. The dispute arose after the Chapter 11 Trustee appointed by the United States Bankruptcy Court sought to strike off the suit, contending that the subject matter had already been dealt with in the foreign bankruptcy proceedings and that the plaintiffs had suppressed material facts regarding their participation in those proceedings.
The Court observed that the declaratory relief sought by the plaintiffs had become infructuous as the assets in question had already been sold pursuant to orders of the United States Bankruptcy Court. It held that allowing the suit to continue would amount to an abuse of the process of law, particularly when the plaintiffs had failed to disclose material facts and had attempted to create an artificial cause of action within the territorial jurisdiction of the Commercial Court. The Court further held that no cause of action was disclosed against the Chapter 11 Trustee, who was merely acting as an officer of the foreign court in administering the bankruptcy process.
Accordingly, the Kerala High Court set aside the Commercial Court’s order and directed that the Chapter 11 Trustee be struck off from the array of parties. While leaving it open to the Resolution Professional appointed in the CIRP of the first defendant to raise objections regarding the maintainability of the suit under the Insolvency and Bankruptcy Code, 2016, the Court emphasized that judicial proceedings cannot be used to circumvent foreign insolvency orders or sustain claims founded on suppression of material facts.
Competition Commission of India (CCI)
Notification
CCI approves acquisition of certain shareholding in Nippon Life India AIF Management Limited by DWS Group GmbH & Co. KGaA
CCI has approved the proposed combination involving the acquisition of certain shareholding in Nippon Life India AIF Management Limited by DWS Group GmbH & Co. KGaA. Pursuant to the transaction, DWS Group will acquire a stake in Nippon Life India AIF Management Limited, which is engaged in alternative asset management and acts as an investment manager and/or sponsor to SEBI-registered Alternative Investment Funds (AIFs). The target is also registered with SEBI as a co-investment portfolio manager.
DWS Group GmbH & Co. KGaA is a globally active asset manager providing individuals, institutions and large corporations with access to a broad range of investment solutions and portfolios across multiple asset classes and investment disciplines. The proposed transaction is expected to strengthen DWS Group’s presence in the alternative asset management segment in India. (Press Release No. 30/2026-27 dated June 30, 2026).
Source: https://www.cci.gov.in/media-gallery/press-release/details/668/0
CCI approves subscription of equity shareholding by Kedaara Pearl Holding and Kedaara Capital Fund IV AIF in Axis Finance Limited
CCI has approved the proposed combination involving the subscription of certain equity shareholding in Axis Finance Limited by Kedaara Pearl Holding and Kedaara Capital Fund IV AIF. Pursuant to the transaction, the Kedaara Group investment vehicles will acquire a stake in Axis Finance Limited, a non-banking financial company engaged in wholesale lending, MSME financing, retail loans to individuals and businesses, and the distribution of insurance products across India.
Kedaara Pearl Holding and Kedaara Capital Fund IV AIF are investment vehicles belonging to the Kedaara Group, which focuses on investments across diverse sectors. The proposed transaction is expected to strengthen the Acquirers’ investment portfolio in the financial services sector through their investment in Axis Finance Limited. (Press Release No. 26/2026-27 dated June 16, 2026).
Source: https://www.cci.gov.in/media-gallery/press-release/details/664/0
CCI approves acquisition of shareholding in Shriram Life Insurance Company Limited by Sanlam Emerging Markets (Mauritius) Ltd
CCI has approved the proposed combination involving the acquisition of 2.80% of the expanded equity capital of Shriram Life Insurance Company Limited through a preferential issue by Sanlam Emerging Markets (Mauritius) Ltd. Pursuant to the transaction, Sanlam Emerging Markets (Mauritius) Ltd. will increase its stake in the IRDAI-registered life insurer, which is engaged in providing life insurance products, including unit-linked life insurance plans, and other activities permitted under the Insurance Act, 1938.
Sanlam Emerging Markets (Mauritius) Ltd., incorporated in Mauritius, is part of the Sanlam Group of South Africa and is a strategic partner of the Shriram Group with investments in various Shriram Group entities in India. The proposed transaction further strengthens Sanlam Group’s investment in the Indian life insurance sector through Shriram Life Insurance Company Limited. (Press Release No. 24/2026-27 dated June 9, 2026).
Source: https://www.cci.gov.in/media-gallery/press-release/details/662/0
CCI approves restructuring of UPL group companies and related entities
CCI has approved the proposed combination involving the restructuring of UPL group companies and related entities. The transaction comprises a series of interconnected steps that will result in the transfer of UPL Limited’s India crop protection business, housed under UPL Sustainable Agri Solutions Limited, and its global crop protection business, held directly and indirectly through UPL Crop Protection Holdings Limited, to UPL Global Sustainable Agri Solutions Limited. The restructuring also involves TPG Upswing Limited, Platinum Jasmine A 2018 Trust and Woodhall Holdings (DIFC) Limited.
UPL Limited is a global agri-solutions company engaged in the research, development, manufacture and sale of crop protection products, seeds, bio-solutions and related agricultural products. UPL Sustainable Agri Solutions Limited manages the India crop protection business, while UPL Global Sustainable Agri Solutions Limited is intended to hold both the India and global crop protection businesses upon completion of the transaction. TPG Inc. is a global investment firm, and Woodhall Holdings (DIFC) Limited belongs to the Brookfield Group, a global alternative investment manager. (Press Release No. 22/2026-27 dated June 2, 2026).
Source: https://www.cci.gov.in/media-gallery/press-release/details/660/0
Securities & Exchange Board of India (SEBI)
SEBI issues updated Master Circular for Alternative Investment Funds
SEBI, vide Master Circular No. HO/19/34/11(6)2025-AFD-POD1/I/12928/2026 dated June 3, 2026 (last updated on June 16, 2026), has issued an updated Master Circular for Alternative Investment Funds (AIFs). The circular supersedes the earlier Master Circular dated May 7, 2024 and consolidates all circulars issued under the SEBI (Alternative Investment Funds) Regulations, 2012 up to May 31, 2026. It also incorporates the latest regulatory framework on the winding-up of AIFs, retention of proceeds, and the introduction of the ‘Inoperative Fund’ status.
The Master Circular provides a consolidated framework governing the registration, operations, governance, disclosures, reporting, investments, and winding-up of AIFs. It strengthens investor protection through enhanced disclosure and compliance requirements, prescribes operational norms for Category III AIFs and overseas investments, and mandates an expanded Compliance Test Report (CTR). The circular also rescinds the earlier AIF-related circulars while preserving the validity of actions taken under the previous framework.
SEBI relaxes certification requirements for investment adviser personnel performing sales and non-core services
SEBI, vide Circular No. HO/38/12/11(5)2026-MIRSD-POD/I/14660/2026 dated June 24, 2026, has relaxed the certification requirements for Persons Associated with Investment Advice (PAIA) who perform only sales and other non-core services. As a measure to promote ease of doing business, such personnel will now be required to obtain the NISM Series-XXV-B: Persons Associated with Investment Advice (Sales and Other Non-Core Services) Certification Examination, instead of the existing Level 1 and Level 2 Investment Adviser certification examinations.
The circular clarifies that the revised certification requirement applies only to personnel engaged in sales and other non-core services who are not directly involved in providing investment advice. Other PAIAs will continue to be required to obtain the NISM Series-X-A and Series-X-B certifications. Existing personnel holding these certifications need not immediately undertake the new examination and may obtain the Series-XXV-B certification before the expiry of their current certification. The circular has come into force with immediate effect.
SEBI clarifies applicability of early pay-in benefit in the Commodity Derivatives Segment
SEBI, vide Circular No. HO/47/16/13(4)2026-MRD-POD1/I/14266/2026 dated June 19, 2026, has clarified the applicability of the early pay-in facility in the Commodity Derivatives Segment. Based on stakeholder representations and the recommendations of the Working Group and the Commodity Derivatives Advisory Committee (CDAC), SEBI has revised the provisions relating to the early pay-in framework under its Master Circular for the Commodity Derivatives Segment.
The revised framework provides that Clearing Corporations may exempt positions backed by certified goods deposited under the early pay-in facility from all types of margins based on their risk assessment, while continuing to collect mark-to-market margins for such positions. The circular will come into effect from September 21, 2026.
Judicial Curve
Securities and Exchange Board of India v. Shreehas P. Tambe
The Hon’ble Supreme Court considered whether the Securities Appellate Tribunal (SAT) was justified in setting aside insider trading charges against Shreehas P. Tambe, former Vice President of Biocon Limited, in relation to trades executed prior to Biocon’s proposed collaboration with Sandoz. SEBI had alleged that Tambe, being insider and key managerial personnel, sold shares while in possession of Unpublished Price Sensitive Information (UPSI) and had imposed a market access restriction along with a monetary penalty. SAT had set aside the insider trading findings and the consequential restrictions but upheld a penalty of ₹1 lakh for delayed disclosure of trades under the SEBI (Prohibition of Insider Trading) Regulations, 2015.
The Supreme Court observed that, in the facts and circumstances of the case, there was no reason to interfere with the SAT’s findings. It noted that the Tribunal had concluded the trades were bona fide after considering that Tambe had obtained pre-clearance from the company, the trading window was open at the time of the transactions, and the sale proceeds were utilised towards the purchase of a residential property. SAT had also held that the circumstances demonstrating an insider’s innocence under the proviso to Regulation 4(1) of the PIT Regulations are illustrative and not exhaustive.
Accordingly, the Supreme Court declined to interfere with the SAT’s order exonerating Tambe of the insider trading allegations while leaving the question of law open. The Court clarified that the impugned judgment shall not be treated as a binding precedent. Consequently, the penalty of ₹1 lakh for delayed disclosure of trades was retained, whereas the findings of insider trading and the related market access restrictions remained set aside.
Source: https://api.sci.gov.in/supremecourt/2022/30843/30843_2022_8_302_71677_Order_29-May-2026.pdf
Reserve Bank of India (RBI)
RBI issues Master Direction on Credit Derivatives, 2026
The RBI, vide Master Direction No. RBI/FMRD/2026-27/407 dated June 25, 2026, has issued the Reserve Bank of India (Credit Derivatives) Directions, 2026, establishing a comprehensive regulatory framework for credit derivatives in India. The directions operationalise the RBI’s proposal announced in the Bi-monthly Monetary Policy Statement for 2025-26 to introduce derivatives on credit indices and total return swaps on corporate bonds, following public consultation on the draft framework.
The Directions prescribe the regulatory framework governing participation in credit derivatives markets, including derivatives on credit indices and total return swaps on corporate bonds. Issued under Section 45W of the Reserve Bank of India Act, 1934, the Directions aim to deepen the domestic credit derivatives market while strengthening risk management and market efficiency. The Master Direction has come into force with immediate effect.
Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13552&Mode=0
RBI strengthens customer protection framework for fraudulent electronic banking transactions
The RBI, vide Notification No. RBI/2026-27/167 dated June 24, 2026, has issued the Reserve Bank of India (Commercial Banks – Responsible Business Conduct) Third Amendment Directions, 2026, introducing a revised framework on customer protection in fraudulent electronic banking transactions. The amendments replace the existing provisions on limiting customer liability with a comprehensive framework covering customer rights, bank obligations, fraud reporting, liability determination, and compensation mechanisms. The Directions will apply to electronic banking transactions undertaken on or after January 1, 2027.
The amended framework mandates banks to strengthen fraud prevention systems, provide 24×7 channels for reporting fraudulent transactions, issue transaction alerts, establish transparent grievance redressal mechanisms, and periodically report fraud-related complaints to their Board or designated Committee. The Directions also provide for zero customer liability in specified cases of bank negligence and certain third-party breaches, prescribe timelines for complaint resolution and transaction reversals, introduce a compensation mechanism for eligible small-value fraudulent electronic banking transactions, and prohibit banks from levying charges on regulatory, promotional, or customer awareness SMS alerts.
Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13543&Mode=0
RBI amends credit facility norms for payment instrument-linked lending
The RBI, vide Notification No. RBI/2026-27/152 dated June 23, 2026, has issued the Reserve Bank of India (Commercial Banks – Credit Facilities) Fourth Amendment Directions, 2026, introducing a new regulatory framework for credit facilities linked to specific payment instruments. The amendment aims to ensure regulatory consistency for products such as pre-sanctioned credit lines operated through the Unified Payments Interface (UPI), in line with the RBI’s earlier framework permitting such facilities.
The amendment inserts a new Chapter IIA in the Reserve Bank of India (Commercial Banks – Credit Facilities) Directions, 2025, clarifying that the prudential treatment of a credit facility shall be determined by the nature of the underlying credit facility, irrespective of the payment instrument or technology used for its disbursement. It further requires banks to incorporate the terms and conditions of such payment-linked credit facilities in their credit policies, ensure compliance with all applicable regulatory requirements, and offer only those credit facilities that are otherwise permitted under the existing regulatory framework.
Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13528&Mode=0
Judicial Curve
M/s. Unique Enterprises v. The Reserve Bank of India
The Hon’ble Kerala High Court examined the validity of an order issued by the RBI Ombudsman under the Reserve Bank – Integrated Ombudsman Scheme, 2021, rejecting a complaint filed by M/s. Unique Enterprises against its bank. The dispute arose after the petitioners alleged that, despite foreclosing their credit facilities, the bank refused to release the title deeds and demanded foreclosure charges. The RBI Ombudsman dismissed the complaint on the ground that there was no deficiency in service, leading to the present challenge.
The Court observed that the RBI Ombudsman, being a statutory authority exercising quasi-judicial functions, is required to pass reasoned and speaking orders while deciding complaints under the Scheme. It held that this obligation extends equally to orders rejecting complaints, as such orders are appealable and must disclose the rationale behind the decision. The Court further found that the impugned communication, issued as a system-generated email without reasons, signature, or independent analysis, failed to satisfy the requirements of a valid quasi-judicial order.
Accordingly, the High Court held that the Ombudsman’s order was arbitrary and legally unsustainable for lack of reasons and procedural compliance. The Court set aside the impugned order and directed the RBI Ombudsman to reconsider the complaint afresh after granting an opportunity of hearing to the parties, while observing that decisions affecting legal rights must be issued as reasoned and duly authenticated orders.
Foreign Exchange Management Act (FEMA)
RBI amends FEMA Deposit Regulations to expand SNRR account framework
The RBI, vide Notification No. FEMA 5(R)(6)/2026-RB dated June 18, 2026, has notified the Foreign Exchange Management (Deposit) (Sixth Amendment) Regulations, 2026, amending the Foreign Exchange Management (Deposit) Regulations, 2016. The amendments have been introduced to streamline the regulatory framework governing deposit accounts for persons resident outside India, expand the scope of Special Non-Resident Rupee (SNRR) accounts, and facilitate greater operational flexibility, including through branches located in International Financial Services Centres (IFSCs).
The amendment permits persons resident outside India to open, hold, and maintain SNRR accounts with authorised dealers in India or their branches outside India, including those in IFSCs, and broadens the permissible use of such accounts for bona fide transactions with both residents and non-residents. It also enables specified transfers between NRO, NRE, and SNRR accounts in accordance with the Foreign Exchange Management (Remittance of Assets) Regulations, 2016, rationalises the existing SNRR framework by deleting certain conditions under Schedule 4, and provides for transfers between non-residents based on the account holder’s instructions indicating the underlying purpose. The amendments have come into force from the date of their publication in the Official Gazette.
Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13553&Mode=0
RBI amends FEMA Cross Border Merger Regulations
The RBI, vide Notification No. FEMA 389(1)/2026-RB dated May 29, 2026, has notified the Foreign Exchange Management (Cross Border Merger) (Amendment) Regulations, 2026, amending the Foreign Exchange Management (Cross Border Merger) Regulations, 2018. The amendment seeks to align the regulatory framework governing cross-border mergers with the evolving corporate law framework by replacing references to the National Company Law Tribunal (NCLT) with the broader concept of a “Competent Authority”.
The amendment introduces the definition of “Competent Authority” to mean any authority empowered under the Companies Act, 2013 or the rules made thereunder to approve a scheme of merger or amalgamation. It further substitutes reference to the NCLT with Competent Authority across the relevant provisions governing inbound and outbound cross-border mergers. The amendments have come into force from the date of their publication in the Official Gazette.
Source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13466&Mode=0
Corporate
Judicial Curve
Aryan Energy Pvt. Ltd. v. Union of India & Ors.
The Hon’ble Delhi High Court examined whether criminal proceedings initiated against Aryan Energy Pvt. Ltd. under Section 148 of the Companies Act, 2013 for alleged non-compliance with statutory cost audit requirements could be quashed at the threshold. The petitioner contended that it was engaged solely in coal beneficiation (washing) services and did not undertake any manufacturing activity, and therefore was not required to maintain cost records or appoint a cost auditor under the Companies (Cost Records and Audit) Rules, 2014. The Union of India and the Registrar of Companies, however, argued that the company fulfilled the prescribed criteria for mandatory cost audit.
The Court observed that coal beneficiation involves processing raw coal to improve its grade, quality, and marketability by separating impurities through physical or chemical processes. Relying on the Supreme Court’s decisions in Tata Steel Ltd. v. Union of India and Global Coal and Mining Pvt. Ltd. v. Commissioner of Service Tax, it held that such processing may result in a commercially distinct product. The Court further held that whether the petitioner’s activities constitute “manufacturing” under the Companies Act, 2013 raises disputed questions of fact requiring appreciation of evidence and cannot be conclusively determined in proceedings seeking quashing of a criminal complaint.
Accordingly, the Hon’ble Delhi High Court held that it could not conclude, at the preliminary stage, that coal beneficiation falls outside the ambit of manufacturing activity so as to exempt the petitioner from the statutory cost audit framework. The Court dismissed the petition, declined to quash the criminal complaint, and held that the issue of whether the petitioner’s activities amount to manufacturing would be determined during trial on the basis of the evidence led by the parties.
Source: https://delhihighcourt.nic.in/app/showFileJudgment/NBK01062026CRLMM43502018_132210.pdf
Arbitration
Judicial Curve
National Highway Authority of India v. T. Younis & Anr.
The Hon’ble Supreme Court of India examined whether the limitation period for filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 commences from the date of the arbitral award or from the date of disposal of an application filed under Section 33 of the Act. The dispute arose from arbitral proceedings relating to compensation for land acquired under the National Highways Act, 1956, where both parties had filed applications under Section 33 seeking correction and additional relief. The Hon’ble High Court held that the subsequent challenge under Section 34 was barred by limitation and set aside the order condoning the delay.
The Court observed that Section 34(3) expressly provides that where a request under Section 33 has been made, the limitation period for challenging the arbitral award begins only from the date on which such request is disposed of by the arbitral tribunal. It held that the provision does not distinguish between applications that are ultimately allowed or dismissed, nor does it restrict the benefit only to applications found to be maintainable. The Court further observed that requiring parties to initiate proceedings under Section 34 while Section 33 proceedings are pending would lead to multiplicity of proceedings and procedural uncertainty. However, it clarified that courts may impose exemplary costs where applications under Section 33 are found to be sham, frivolous, or filed solely to circumvent the limitation period.
Accordingly, the Hon’ble Supreme Court of India held that the limitation for filing the applications under Section 34 commenced from the date the common order disposing of the Section 33 applications was received by the appellant, rendering the challenge within the prescribed period. The Court set aside the Hon’ble Karnataka High Court’s judgment, restored the order condoning the delay, and directed that the applications under Section 34 be decided on their merits in accordance with law.
Source: https://api.sci.gov.in/supremecourt/2024/10437/10437_2024_3_1501_71811_Judgement_02-Jun-2026.pdf
Oil and Natural Gas Corporation Limited v. Swiber Offshore Construction Pte. Limited
The Hon’ble Bombay High Court examined the scope of post-award interim protection under Section 9 of the Arbitration and Conciliation Act, 1996 in a petition filed by Oil and Natural Gas Corporation Limited (ONGC) seeking continuation of a bank guarantee pending adjudication of its challenge to an arbitral award. The arbitral tribunal had rejected ONGC’s claim for liquidated damages arising from delays in execution of an offshore construction contract, directed return of the bank guarantee furnished by Swiber Offshore Construction Pte. Limited, and awarded a net sum in favour of Swiber. ONGC contended that continuation of the bank guarantee was necessary, particularly in view of Swiber being under liquidation.
The Court observed that post-award interim relief under Section 9 is an exceptional remedy and can be granted only where the applicant demonstrates compelling circumstances and an exceptionally strong prima facie case, as recognised by the Hon’ble Supreme Court in Home Care Retail Marts Pvt. Ltd. It held that the existence of an arguable challenge under Section 34 is, by itself, insufficient to justify continuation of security after the arbitral tribunal has directed its return. The Court further noted that the parties had consciously agreed, through consent terms, that the bank guarantee would remain valid only for a specified period after the award, and that the guarantee was intended solely to secure potential liability towards liquidated damages under the contract, and not to serve as a general security for all claims, including those arising from the respondent’s liquidation proceedings.
Accordingly, the Hon’ble Bombay High Court held that ONGC had failed to establish the exceptional and compelling circumstances necessary for grant of post-award interim protection under Section 9. The Court dismissed the petition, declined to direct continuation or extension of the bank guarantee, and clarified that its observations were confined to the Section 9 proceedings and would not prejudice the pending challenge to the arbitral award under Sections 34 and 36 of the Arbitration and Conciliation Act, 1996.
Purushothaman Thitta v. Pothan Rajan
The Hon’ble Kerala High Court examined whether an order of an arbitral tribunal rejecting a jurisdictional objection under Section 16(2) of the Arbitration and Conciliation Act, 1996 can be challenged under Article 227 of the Constitution. The dispute arose from arbitration proceedings initiated pursuant to a Memorandum of Understanding concerning the division of assets and liabilities of three companies. The petitioner contended that the arbitrator lacked jurisdiction as the issues relating to restructuring, shareholding, and management of the companies fell within the exclusive jurisdiction of the National Company Law Tribunal (NCLT) under the Companies Act, 2013.
The Court held that although an order rejecting a plea under Section 16(2) is not appealable under Section 37 of the Arbitration Act, the constitutional jurisdiction of the High Court under Article 227 remains available in exceptional cases where the arbitral tribunal acts beyond its jurisdiction or proceeds with disputes that are inherently non-arbitrable. It observed that Section 5 of the Arbitration Act limits judicial intervention under the statute but cannot curtail the High Court’s constitutional powers. The Court further reiterated that the mere existence of an arbitration clause does not render every dispute arbitrable, particularly where a special statute vests exclusive jurisdiction in a specialised forum.
The Hon’ble High Court found that the claims before the arbitrator substantially concerned restructuring of companies, division of corporate assets, alteration of shareholding, and matters falling within Sections 241 and 242 of the Companies Act, 2013, which are exclusively triable by the NCLT. Accordingly, it set aside the arbitrator’s order rejecting the jurisdictional objection, terminated the arbitral proceedings insofar as they related to the three companies, and clarified that the parties were at liberty to pursue their statutory remedies before the NCLT, while permitting arbitration to continue only in respect of disputes that were otherwise arbitrable.