Full Judgment Text
2026:BHC-OS:7338
901-J-F-CARBPL-942-2026.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 942 OF 2026
SFC Solutions India (Sealing) Pvt Ltd ...Petitioner
Versus
Talegaon Industrial Parks Pvt Ltd ... Respondent
Mr. Zubin Behramkamdin, Senior Advocate, a/w Aditya Gupte,
Lalit Munshi, Devanshi Sanghvi & Aliya Tabassum, i/b Samvad
Partners, for the Petitioner.
Mr. Robin Jaisinghani, Counsel, i/b Dastur Kalambi & Associates,
for Respondent.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : March 26, 2026
Judgement:
Context and Factual Background:
1. This is a Petition filed under Section 37(2)(b) of the Arbitration
and Conciliation Act, 1996 (“ the Act” ), impugning an order dated
December 18, 2025 (“ Impugned Order ”) passed by a Learned Sole
Arbitrator under Section 17 of the Act, directing the Petitioner, SFC
Digitally
signed by
ASHWINI
JANARDAN
VALLAKATI
Date:
2026.03.26
15:55:32
+0530
Solutions India (Sealing) Pvt. Ltd. (“ SFC ”) to issue a bank guarantee in
ASHWINI
JANARDAN
VALLAKATI
the sum of Rs.7,83,97,762/- to be kept subsisting until expiry of three
months after completion of the arbitration proceedings.
Page 1 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
2. The disputes and differences between SFC and the Respondent,
Talegaon Industrial Parks Pvt. Ltd. (“ Talegaon ”) relate to an Agreement
to Lease dated November 11, 2019 (“ Agreement ”) which contains an
arbitration agreement. The Agreement entails SFC agreeing to take on
lease premises admeasuring 60,000 square feet, that were to be
developed by Talegaon in accordance with the specifications stipulated
by SFC and as agreed between the parties.
3. SFC would contend in the arbitration that the parties had
differences of opinion about the pace of work and SFC complained to
Talegaon , seeking specific status update and to share a plan for recovery
of the speed of work, by an email dated March 24, 2020. In response,
Talegaon wrote on March 28, 2020, invoking force majeure conditions
attributable to the Covid-19 pandemic and the consequential suspension
of construction work owing to the hard lockdown. It is SFC's contention
that the pace had been slow even prior to the pandemic. On May 4,
2020, SFC wrote to Talegaon pointing out that the revised construction
timeline shared by Talegaon was misleading and incorrect and pointed
to various purported inconsistencies and the incomplete nature of
various works and activities. On June 9, 2020, Talegaon indicated a
handover date of June 15, 2020 and the parties agreed to conduct a site
Page 2 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
inspection on June 12, 2020, on which date SFC pointed out essential
works were still necessary to complete the work.
4. The parties traded correspondence thereafter, with Talegaon
taking positions based on the scope of work and SFC having a different
point of view. On October 5, 2020, after further inspection of the
premises, SFC claims to have expressed its intention to revoke the
Agreement and sought an amicable resolution. This met with a reply
dated November 4, 2020 from Talegaon, asserting that should SFC walk
away, it would be liable to compensate Talegaon. SFC would contend
that this letter dated November 4, 2020 points to crystallization of
Talegaon’s claims. The basis of the assertion is to lay the foundation for
the delay in commencement of arbitration proceedings that were
initiated by Talegaon. Talegaon sought compensation from SFC by legal
notice s dated December 24, 2020 and February 10, 2021 which were
dealt with by reply from lawyers of SFC on May 24, 2021.
5. Eventually, on October 30, 2021, Talegaon issued a termination
notice invoking Clause 17.2 of the Agreement , calling upon SFC to pay a
sum of Rs.~8.19 crores along with certain additional amounts.
6. SFC contends that on January 7, 2022, Talegaon executed an
Agreement with GE Oil and Gas India Pvt. Ltd. (“ GE Oil ”) for leasing
Page 3 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
out a substantial part of the unit meant to be taken by SFC at a
significantly higher rental and in another six months executed an
Agreement with Delhivery Ltd. (“ Delhivery ”) leasing out another
portion of the premises at significantly higher rent. SFC would contend
that Talegaon had already entered into a Letter of Intent with GE Oil on
July 22, 2021. The upshot of this contention is that Talegaon did not
suffer any loss since it had leased out the premises to others.
7. Eventually, Talegaon invoked arbitration on October 1, 2024. The
Statement of Claim was filed on March 24, 2025. The Statement of
Defence, on May 19, 2025. SFC's discovery and production application
led to a disclosure by Talegaon on July 9, 2025 that further agreements
with GE Oil and Delhivery had been effected.
8. After pleadings were completed, on July 28, 2025, Talegaon filed
a Section 17 Application seeking interim measures including the
furnishing of security. Pleadings in the Section 17 Application were
completed by September 10, 2025. Meanwhile, SFC filed an Application
seeking summary adjudication (“ Summary Application ”) on the premise
that Talegaon had suffered no loss and instead had gained from SFC not
picking up the premises. Pleadings in this Application were completed
by September 23, 2025. An order in this Application, rejecting the
Page 4 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
prayer for a summary adjudication was passed on December 5, 2025,
essentially indicating that the losses claimed by Talegaon would need to
be proved and it would not be appropriate to shut out a trial with a
summary rejection of the claim.
9. Eventually, the Impugned Order came to be passed disposing of
the Section 17 Application, asking SFC to furnish a bank guarantee as
stated above.
Contentions of the Parties:
10. Against this backdrop, I have heard Mr. Zubin Behramkamdin
Learned Senior Advocate on behalf of SFC and Mr. Robin Jaisinghani,
Learned Advocate on behalf of Talegaon. With their assistance, I have
examined the material on record. The core contentions by Mr.
Behramkamdin on behalf of SFC may be summarized as follows:-
a) The Impugned Order is grossly erroneous, for it has
secured a claim for damages even before evidence has been
led. The contention is that the standard applied for rejecting
the Summary Application ought to have been the standard by
which the Section 17 Application should have been
Page 5 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
considered – that without evidence being led, no further
orders can be passed;
b) Multiple findings in the Impugned Order would
squarely point to the full rejection of Talegaon’s contentions
and yet, the Learned Arbitral Tribunal, thinking of the
provision of a bank guarantee as a benign measure, has
granted such relief without any rational basis to grant the
same. What would have been an unsecured award for
damages has been secured in advance, which is contrary to
the principles laid down in judgements of this Court in Arun
1 2
Bhoomi ; Yusufkhan and a judgement dated October 31,
2025 passed by the Single Judge of the Delhi High Court in
3
RCCIVL ;
c) There was no urgency to direct issuance of a
guarantee when Talegaon had initiated arbitration four years
after having first crystallized its claim and even well after
1 Arun Bhoomi Corporation and Another v. Jagruti Developers and Others
2024 SCC OnLine Bom 3801
2 Yusufkhan v. Prajita Developers Pvt. Ltd. And Another 2019 SCC OnLine
Bom 505
3 RCCIVL-RKIPL LLP v. RCC Infraventures Ltd & Ors. in ARB A. (COM)
25/2021
Page 6 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
invocation of arbitration, having filed Section 17 Application
nine months thereafter;
d) The finding that a prima facie case had been made
out by Talegaon is necessarily perverse, because to arrive at
such a finding, the Learned Arbitral Tribunal ought to have
examined if there is any proof of loss , which is a sine qua non
for a claim in damages;
e) SFC's financial prospects are strong and it has turned
around and is recouping its past accumulated losses and has
robust financials which are , in fact , extracted by the Learned
Arbitral Tribunal in the Impugned Order. SFC has assets
exceeding Rs.50 crores and a positive net worth of Rs.275 . 3
crores and it was wholly unnecessary to direct provision of a
bank guarantee in the sum of Rs.7.8 crores;
f) Having leased out the very same unit substantially to
GE Oil and to Delhivery, the claim pursued by Talegaon is in
the realm of unjust enrichment and for such a claim, no
interlocutory protective arrangement is necessary;
Page 7 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
g) There is a complete failure to consider any finding of
irreparable injury or to balance competing equities and the
well settled test for grant of interim relief has not been met;
h) Finally, it is contended that significant firm findings
have been rendered in the garb of making out a prima facie
case, which undermines the interests of SFC at such an early
stage.
11. Mr. Behramkamdin would submit that the approach adopted in
Arun Bhoomi , where a Learned Single Judge of this Court found that
the denial of interim relief was justified by a delay of seven to nine years
since the accrual of a cause of action or the issuance of a termination
notice applies. The reliance on Yusufkhan is essentially to emphasize
that the principle for granting interim reliefs to secure a claim preferred
by a claimant in an arbitral tribunal, must be meticulously followed
before any drastic order is passed. It is contented that the tribunal must
come to a conclusion that there is a serious apprehension that upon an
award being passed , there would be no property available for executing
it, and therefore, even at an interim stage some security is to be
provided.
Page 8 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
12. It is contended , based on the judgement that the Arbitral Tribunal
must carefully examine whether there is a serious question to be tried
and if there is any probability that the party seeking the interim relief is
entitled to it and that intervention from the Arbitral Tribunal is
necessary to protect such party from injury that the Arbitral Tribunal
would consider irreparable, if it is inflicted even before legal rights stand
established at that time.
13. As regards RCCIVL , Mr. Behramkamdin would submit that in this
case too , in the teeth of verification and reconciliation of payments
remaining disputed, a monetary direction founded on the very same
Agreement in which disputes existed at an interim stage is not
acceptable, and that commercial hardship alone is no ground for
attachment of property. He would rely on another decision of this Court
4
in National Shipping Co. that has been cited by the Learned Single
Judge of the Delhi High Court in RCCIVL , to contend that unless a clear
case is made out not only on merits but also on the denial of such
interim relief resulting in grave injustice, interim protective relief must
not be granted. Although, the provisions of Order 38 Rule 5 of the Code
of Civil Procedure, 1908 (“ CPC ”) need not be strictly satisfied, the
4 National Shipping Co. of Saudi Arabia v. Sentrans Industries Ltd., 2004 SCC
OnLine Bom 25
Page 9 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
arbitral tribunal must have some material , apart from the merits of the
claim to demonstrate that such protection is eminently necessary.
14. In sharp contrast, Mr. Robin Jaisinghani, Learned Advocate on
behalf of Talegaon would submit that the Learned Arbitral Tribunal has
meticulously examined the situation arising out of the dispute between
the parties in connection with the Agreement and has rightly noticed the
conduct of SFC, which necessitated the intervention made by the
Learned Arbitral Tribunal.
15. Mr. Jaisinghani would submit that the Agreement to Lease dated
November 6, 2019 was registered on November 11, 2019 from which
date, the various deadlines stipulated in the Agreement were to be
computed. He would point to the provisions of Clause 3 to indicate that
Talegaon was meant to plan, design and obtain all necessary approvals
for construction of the unit agreed to be taken on lease by SFC, in line
with the plans and requirements stipulated by SFC. He would submit
that this necessitated serious capital expenditure on the part of
Talegaon to construct the premises in question in line with SFC's
requirements. Under Clause 4.3.1, SFC also had a right for another
twelve months, to seek construction of an additional area of 1,00,000
square feet. Therefore, apart from the resources being spent on
Page 10 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
constructing the premises as required by SFC, Talegaon was also
required to keep aside contiguous development potential for another
1,00,000 square feet.
16. Against this backdrop, Mr. Jaisinghani would point to the
contemporaneous correspondence between the parties that would belie
the contention that SFC was aggrieved by the purported delay in the
development. On the contrary, it was SFC taking a new view on the
need to lease that led to SFC requesting termination of the transaction
and SFC was , in fact , apologetic about the inconvenience caused – quite
contrary to the sharply different stand about facts being taken now.
This has been caught out by the Learned Arbitral Tribunal, he would
contend, to submit that all that the Learned Arbitral Tribunal has done
is to take measures that do not render the final outcome in the
arbitration a paper award.
17. The Agreement entailed a lock-in clause for five years and an
assured income of lease rentals for such period. Under Clause 6.1, SFC
was to keep deposited with Talegaon an interest-free refundable security
deposit equivalent to six months’ lease rental i.e. sum of Rs.70.50 lakhs.
That apart, out of such amount, SFC was to pay Talegaon an amount of
Rs.11.75 lakhs at the time of execution of the Agreement and another
Page 11 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
sum of Rs.23.60 lakhs within a day of the execution. Mr. Jaisinghani
would submit that the Learned Arbitral Tribunal has given credit for
these amounts that have already been paid by SFC to Talegaon and has
deducted them from the assured payment provided for in the Agreement
in the form of the lease rentals due for the lock-in period of five-years.
18. Under Clause 10.1.7, the parties have explicitly provided for the
consequences of SFC failing or neglecting to execute and register the
final lease deed by stipulating that compensation equivalent to the lease
,
rent in respect of the entire lock-in period, including the interest-free
refundable security deposit already deposited , would be forfeited. It is
also envisaged that Talegaon could, at its own discretion, grant a further
lease or license to any third party and dispose of the unit as it deems fit;
19. Clause 10.2.2 provides that if Talegaon exercised the right to
terminate the Agreement owing to SFC's event of default, Talegaon
would be entitled to recover from SFC the aggregate of payments
accruing under the agreement; recovery of possession of the unit of the
premises; and compensation as stipulated. Clause 16.5 also provides
that if SFC were not to execute the lease deed due to any reason other
than Talegaon’s default, SFC would pay Talegaon compensation of
Page 12 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Rs.8,19,22,762/- which is essentially a sum equivalent to lease rental for
60 months of the lock-in period contracted between the parties;
20. In short, Mr. Jaisinghani's submission is that the parties were
well aware of the serious repercussions that would be visited upon
Talegaon if SFC were to default in its obligation to finally execute the
lease deed and had correspondingly provided for serious monetary
stipulations on SFC. The submission on behalf of Talegaon is that the
Learned Arbitral Tribunal has demonstrated clear application of mind
to the terms of the Agreement between the parties and has acted in
accordance with the same, also taking into account the conduct of the
parties.
21. As regards conduct, Mr. Jaisinghani would submit that SFC has
wrongly attempted to project a false picture that there had been delays
on the part of Talegaon in construction of the premises in line with
specifications stipulated by SFC. He would submit that the Agreement
having been registered on November 11, 2019, handover within a period
of six months was scheduled only for May 11, 2020. Time for handover
had been extended by mutual consultation of the parties, and far from
the picture being presented today, contemporaneous correspondence
Page 13 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
would show that it was SFC that sought to rescind the Agreement by
seeking to revisit the commitment to take the premises.
22. Alluding to the list of dates presented by SFC, Mr. Jaisinghani
would point to the communication dated August 18, 2020 by which, it
was claimed that the contract was being terminated. He would point to
the said email of that date (at page 699 of the compilation of
documents) to point out that it was SFC that proposed rescission of the
Agreement, citing slowdown in the automotive business and the desire
to abort the plans to expand. He would also point to the communication
dated October 5, 2020 from SFC, which would point to SFC being the
party invoking Covid-19 to table the fact that there was a change in
management with a German investor coming in, who desired to rethink
and revisit the business plan and preserve cash flows. It was SFC that
proposed, with regret, that it would be unable to go ahead with the Pune
plant and execute the Lease Deed as contracted earlier, and proposed
revocation of the existing arrangement by mutual consent.
23. SFC was apologetic about the disruption caused by it and this
would point to the submissions being made before this Court and before
the Arbitral Tribunal about defaults on the part of Talegaon having been
dishonest and not in conformity with the record.
Page 14 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
24. Further, Mr. Jaisinghani would also point to an email dated
December 10, 2020 from one Mr. Nils Berg, a Director of the parent of
SFC in Germany, who reduced to writing the points of discussion
between him and Talegaon on a visit to India by him. Mr. Jaisinghani
would point out that this was a clear record of why SFC desired to move
away from the Agreement, namely, having inherited a badly managed
business from the earlier owners and having had to reverse earlier
strategic decisions for its survival. This email indicated efforts to find a
new tenant and also requesting Talegaon to list out the actual expenses
which had accumulated on account of Talegaon’s performance under
the Agreement. This email would indicate that even as late as December
2020, SFC did not demonstrate the conduct of a counterparty who was
upset with any purported delay in delivery of the premises and instead
was the apologetic counterparty because of whom serious capital
expenditure incurred by Talegaon would be jeopardised.
25. In this backdrop, Mr. Jaisinghani would also point to an email
dated August 11, 2020, from which it would become clear that even in
the interregnum , contemporaneously, SFC was giving instructions on
the structure and design of the premises, which is far from the position
now being taken that Talegaon's default in meeting the extended
deadline necessitated termination of the Agreement by SFC.
Page 15 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Analysis and Findings:
26. Against this backdrop, I have examined the record with the
assistance of the parties and reviewed the Impugned Order, bearing in
mind the scope of jurisdiction of this Court under Section 37 of the Act,
in particular, when considering a challenge to an order passed under
Section 17 of the Act. The Learned Arbitral Tribunal has examined the
provisions of the Agreement containing the arbitration clause; the
bargain between the parties; the conduct of the parties; and the
credibility of the positions adopted by the parties in the course of the
arbitration proceedings.
27. Having examined the same, in my opinion, the Learned Arbitral
Tribunal cannot be faulted for adopting a reasonable and logical
arrangement to preserve the subject matter of the arbitration agreement
and address the threat perception to the outcome of the arbitration,
bearing in mind the strength of the prima facie case, the irreparable
harm and injury and the balance of convenience in making such an
arrangement.
28. Admittedly, weak financials inherited by the new owners of SFC is
writ large on the face of the record. It is evident that it was SFC that
revisited the very need for the premises and that too, based on the weak
Page 16 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
financial position of the business inherited by its new owners. It would
prima facie , indeed be correct to state that the presentation of
submissions in the proceedings is not in conformity with the factual
position on record. The submissions whether in the list of dates or
otherwise had all been premised on Talegaon being in breach of
deadlines, and being in default of contracted obligations under the
Agreement, whereas the record shows that it was SFC that felt the need
to conserve its financial resources and took a view to terminate the
Agreement.
29. Even if SFC took the view that it ought not to invest more funds
into the plant in Pune, the costs of breaking existing contracts on pre-
agreed contractual terms would present a very strong prima facie case in
a situation where the parties had reduced to writing the financial
consequences of such an event. The eventuality of SFC terminating, with
the contracted consequences for such termination are all well
considered. That would present a pointer to the strength of Talegaon’s
prima facie case, and the relative strength (or the lack of it) in SFC’s
defence.
30. Moreover, the Learned Arbitral Tribunal has meticulously
analysed the email correspondence contemporaneous with the record
Page 17 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
and has returned a logical finding that there is no contemporaneous
objection on the facet of timelines. In fact, the real reason for the
termination is quite clear from the record and the Learned Arbitral
Tribunal cannot be faulted for noting what is writ large on the record.
31. The contention by Mr. Behramkamdin that the Learned Arbitral
Tribunal has effectively converted an unsecured potential future liability
into a secured debt also does not appeal to me inasmuch as the Learned
,
Arbitral Tribunal has examined the danger posed to a party that has an
extremely good prima facie chance of succeeding in the proceedings,
with demonstrable financial weakness on the part of SFC. The Learned
Arbitral Tribunal has analysed the case law in connection with Section
37 of the Act and has returned views that are consistent with the factual
matrix on the record and indeed accurate in terms of the stipulations in
the law.
32. Moreover, the Impugned Order contains a detailed analysis of the
case law cited by the parties and has indeed returned a satisfactory view
on the need for preserving and protecting the subject matter of the
arbitration. While SFC would contend that it is now in financially good
health and accumulated losses of the past ought not to be a factor for
consideration, the Learned Arbitral Tribunal has indeed noticed the
Page 18 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
serious indebtedness that SFC is placed in, and the prospect of a
potential outcome in favour of a party with a very strong prima facie
case running a credible risk of being presented with a paper award.
33. Mr. Jaisinghani’s submissions on the transactions with GE Oil
and Delhivery , being the basis for the holding that Talegaon has suffered
no loss at all deserve comment. He would point out that the
development potential enjoyed by Talegaon around the premises is
significantly much larger. GE Oil and Delhivery could have been
accommodated without SFC having walked away from the Agreement.
They were not substitutes for SFC, but were business potential that
would have been tapped over and above the bargain contracted with
SFC. The property contracted with SFC was of 60,000 square feet of
which a part also went to GE Oil (33,000 square feet). The property
given to Delhivery is 1,00,000 square feet, of which 15,000 square feet
would have fallen within the 60,000 square feet contracted with SFC.
Therefore, even taking the areas earmarked for SFC into account, it
would follow that only 48,000 square feet has been utilised in these two
subsequent contracts and there would still be a gap of 12,000 square
feet. Therefore, I agree that the Summary Application being dismissed
was a logical decision of the Learned Arbitral Tribunal and it would not
be possible to simply contend that the same approach should be
Page 19 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
followed by taking no protective measures in the teeth of a specifically
contracted set of terms in the Agreement that would govern how SFC’s
refusal to execute the lease should be dealt with. Therefore, SFC’s
contention that the Learned Arbitral Tribunal refusing to give an award
without trial on the premise that evidence needs to be led was somehow
inconsistent with the granting of security to Talegaon without evidence
being led, does not appeal to me.
34. It is evident to me from the factual matrix that there would be
some mitigation and this can indeed be factored in at the time of final
adjudication. The reliance by Talegaon on the judgements of the English
5 6
Courts in Vic Mills and Interoffice is quite correctly appreciated by the
Learned Arbitral Tribunal. The following extract from Vic Mills would
be noteworthy:-
“The fallacy of that is in supposing that the second customer was a
substituted customer, that, had all gone well, the makers would not
have had both customers, both orders, and both profits, In fact, what
they did, acting reasonably, and I think very likely more than
reasonably in the interests of the Vic Mill, was to content themselves
with earning the profit on the second contract at the cost of adapting
the machines, which has been taken at £5; but they are still losers of
the profit which they would have made on the Vic Mill contract,
because they could, if they had been minded, have performed both the
5 Vic Mills (1913) 1 Ch 465
6 Interoffice Telephones Ltd v Robert Freeman Co. Ltd (1958) 1 Q.B. 190
Page 20 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
contracts, and have made the profit on both the contracts but for the
breach by the Vic Mill Company of their contract”
[Emphasis Supplied]
35. Likewise, Vic Mills , having been followed in Interoffice , also
points to a very logical and plausible approach adopted by the Learned
Arbitral Tribunal. The negative net-worth of Rs.400 crores, which is
indeed potentially being recouped and recovered by SFC need not turn
the needle against the protective relief granted by the Learned Arbitral
Tribunal.
36. I do not think it necessary to analyse all the references to the
financial position in the instant case. Suffice it to say, that when
examining whether this Court under Section 37 of the Act must interfere
with Section 17 order, it is well settled law that an appeal is to be
regarded as a continuation of the original proceeding. Unless there is a
statutory requirement to the contrary, the powers of the appellate forum
are co-extensive with the powers of the forum whose adjudication is
7
under appeal . Equally, an appellate Court exercising the power under
Section 37 of the Act to review the exercise of discretion by an Arbitral
Tribunal is well guided by the principles set out by the Supreme Court in
7 Jute Corporation of India Ltd. Vs. CIT 1991 Supp (2) SCC 744
Page 21 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
8
Wander vs. Antox which stipulate that the Court may interfere only if
there is something perverse or implausible in the exercise of discretion.
The following extract would suffice:
14. The appeals before the Division Bench were against the exercise of
discretion by the Single Judge. In such appeals, the appellate court
will not interfere with the exercise of discretion of the court of first in-
stance and substitute its own discretion except where the discretion has
been shown to have been exercised arbitrarily, or capriciously or per-
versely or where the court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions. An appeal
against exercise of discretion is said to be an appeal on principle. Ap-
pellate court will not reassess the material and seek to reach a conclu-
sion different from the one reached by the court below if the one
reached by that court was reasonably possible on the material. The ap-
pellate court would normally not be justified in interfering with the ex-
ercise of discretion under appeal solely on the ground that if it had
considered the matter at the trial stage, it would have come to a con-
trary conclusion. If the discretion has been exercised by the trial court
reasonably and in a judicial manner the fact that the appellate court
would have taken a different view may not justify interference with the
trial court's exercise of discretion.
[Emphasis Supplied]
37. In a plethora of judgements, the principle articulated in Wander vs.
Antox has been followed and reiterated.
8 Wander Ltd. Vs. Antox India (P) Ltd. G 1990 Supp SCC 727
Page 22 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
38. There is considerable debate in every Section 37 proceeding about
9 10
whether Essar House and Sanghi present conflicting positions taken
by the Supreme Court in the context of Section 37 of the Act, or whether
it is possible to reconcile the same, and indeed whether Sanghi was
rendered without reference to Essar House . In my opinion the
observations in each of Essar House as well as Sanghi cannot be read in
isolation, without regard to the factual matrix in each case and the risk
perception discernible from them, in exercise of the Section 17
jurisdiction. The abiding theme is to consider whether the factual
matrix before the Section 9 Court or, as the case may be, the Arbitral
Tribunal under Section 17, presented a situation where the subject
matter of the Arbitration Agreement was under threat, and what
appropriate protective measures such forum would consider necessary,
being the master of the evidence and having conducted its review of the
same.
39. Applying that principle and approach to the facts of the case,
in my view, no case has been made out to interfere with the plausible
findings and the consequential measures issued by the Learned Arbitral
9 Essar House (P) Ltd. Vs. Arcellor Mittal Nippon Steel India Ltd., 2022 SCC OnLine
SC 1219
10 Sanghi Industries Ltd. Vs. Ravin Cable Ltd., 2022 SCC OnLine SC 1329
Page 23 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Tribunal. For the aforesaid reasons, in my opinion, there is no scope for
intervention with the Impugned Order.
40. Therefore, the Petition is dismissed with no interference with
the Impugned Order.
41. All actions required to be taken pursuant to this order shall
be taken upon receipt of a downloaded copy as available on this Court’s
website.
[ SOMASEKHAR SUNDARESAN, J.]
Page 24 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL ARBITRATION PETITION (L) NO. 942 OF 2026
SFC Solutions India (Sealing) Pvt Ltd ...Petitioner
Versus
Talegaon Industrial Parks Pvt Ltd ... Respondent
Mr. Zubin Behramkamdin, Senior Advocate, a/w Aditya Gupte,
Lalit Munshi, Devanshi Sanghvi & Aliya Tabassum, i/b Samvad
Partners, for the Petitioner.
Mr. Robin Jaisinghani, Counsel, i/b Dastur Kalambi & Associates,
for Respondent.
CORAM : SOMASEKHAR SUNDARESAN, J.
DATE : March 26, 2026
Judgement:
Context and Factual Background:
1. This is a Petition filed under Section 37(2)(b) of the Arbitration
and Conciliation Act, 1996 (“ the Act” ), impugning an order dated
December 18, 2025 (“ Impugned Order ”) passed by a Learned Sole
Arbitrator under Section 17 of the Act, directing the Petitioner, SFC
Digitally
signed by
ASHWINI
JANARDAN
VALLAKATI
Date:
2026.03.26
15:55:32
+0530
Solutions India (Sealing) Pvt. Ltd. (“ SFC ”) to issue a bank guarantee in
ASHWINI
JANARDAN
VALLAKATI
the sum of Rs.7,83,97,762/- to be kept subsisting until expiry of three
months after completion of the arbitration proceedings.
Page 1 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
2. The disputes and differences between SFC and the Respondent,
Talegaon Industrial Parks Pvt. Ltd. (“ Talegaon ”) relate to an Agreement
to Lease dated November 11, 2019 (“ Agreement ”) which contains an
arbitration agreement. The Agreement entails SFC agreeing to take on
lease premises admeasuring 60,000 square feet, that were to be
developed by Talegaon in accordance with the specifications stipulated
by SFC and as agreed between the parties.
3. SFC would contend in the arbitration that the parties had
differences of opinion about the pace of work and SFC complained to
Talegaon , seeking specific status update and to share a plan for recovery
of the speed of work, by an email dated March 24, 2020. In response,
Talegaon wrote on March 28, 2020, invoking force majeure conditions
attributable to the Covid-19 pandemic and the consequential suspension
of construction work owing to the hard lockdown. It is SFC's contention
that the pace had been slow even prior to the pandemic. On May 4,
2020, SFC wrote to Talegaon pointing out that the revised construction
timeline shared by Talegaon was misleading and incorrect and pointed
to various purported inconsistencies and the incomplete nature of
various works and activities. On June 9, 2020, Talegaon indicated a
handover date of June 15, 2020 and the parties agreed to conduct a site
Page 2 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
inspection on June 12, 2020, on which date SFC pointed out essential
works were still necessary to complete the work.
4. The parties traded correspondence thereafter, with Talegaon
taking positions based on the scope of work and SFC having a different
point of view. On October 5, 2020, after further inspection of the
premises, SFC claims to have expressed its intention to revoke the
Agreement and sought an amicable resolution. This met with a reply
dated November 4, 2020 from Talegaon, asserting that should SFC walk
away, it would be liable to compensate Talegaon. SFC would contend
that this letter dated November 4, 2020 points to crystallization of
Talegaon’s claims. The basis of the assertion is to lay the foundation for
the delay in commencement of arbitration proceedings that were
initiated by Talegaon. Talegaon sought compensation from SFC by legal
notice s dated December 24, 2020 and February 10, 2021 which were
dealt with by reply from lawyers of SFC on May 24, 2021.
5. Eventually, on October 30, 2021, Talegaon issued a termination
notice invoking Clause 17.2 of the Agreement , calling upon SFC to pay a
sum of Rs.~8.19 crores along with certain additional amounts.
6. SFC contends that on January 7, 2022, Talegaon executed an
Agreement with GE Oil and Gas India Pvt. Ltd. (“ GE Oil ”) for leasing
Page 3 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
out a substantial part of the unit meant to be taken by SFC at a
significantly higher rental and in another six months executed an
Agreement with Delhivery Ltd. (“ Delhivery ”) leasing out another
portion of the premises at significantly higher rent. SFC would contend
that Talegaon had already entered into a Letter of Intent with GE Oil on
July 22, 2021. The upshot of this contention is that Talegaon did not
suffer any loss since it had leased out the premises to others.
7. Eventually, Talegaon invoked arbitration on October 1, 2024. The
Statement of Claim was filed on March 24, 2025. The Statement of
Defence, on May 19, 2025. SFC's discovery and production application
led to a disclosure by Talegaon on July 9, 2025 that further agreements
with GE Oil and Delhivery had been effected.
8. After pleadings were completed, on July 28, 2025, Talegaon filed
a Section 17 Application seeking interim measures including the
furnishing of security. Pleadings in the Section 17 Application were
completed by September 10, 2025. Meanwhile, SFC filed an Application
seeking summary adjudication (“ Summary Application ”) on the premise
that Talegaon had suffered no loss and instead had gained from SFC not
picking up the premises. Pleadings in this Application were completed
by September 23, 2025. An order in this Application, rejecting the
Page 4 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
prayer for a summary adjudication was passed on December 5, 2025,
essentially indicating that the losses claimed by Talegaon would need to
be proved and it would not be appropriate to shut out a trial with a
summary rejection of the claim.
9. Eventually, the Impugned Order came to be passed disposing of
the Section 17 Application, asking SFC to furnish a bank guarantee as
stated above.
Contentions of the Parties:
10. Against this backdrop, I have heard Mr. Zubin Behramkamdin
Learned Senior Advocate on behalf of SFC and Mr. Robin Jaisinghani,
Learned Advocate on behalf of Talegaon. With their assistance, I have
examined the material on record. The core contentions by Mr.
Behramkamdin on behalf of SFC may be summarized as follows:-
a) The Impugned Order is grossly erroneous, for it has
secured a claim for damages even before evidence has been
led. The contention is that the standard applied for rejecting
the Summary Application ought to have been the standard by
which the Section 17 Application should have been
Page 5 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
considered – that without evidence being led, no further
orders can be passed;
b) Multiple findings in the Impugned Order would
squarely point to the full rejection of Talegaon’s contentions
and yet, the Learned Arbitral Tribunal, thinking of the
provision of a bank guarantee as a benign measure, has
granted such relief without any rational basis to grant the
same. What would have been an unsecured award for
damages has been secured in advance, which is contrary to
the principles laid down in judgements of this Court in Arun
1 2
Bhoomi ; Yusufkhan and a judgement dated October 31,
2025 passed by the Single Judge of the Delhi High Court in
3
RCCIVL ;
c) There was no urgency to direct issuance of a
guarantee when Talegaon had initiated arbitration four years
after having first crystallized its claim and even well after
1 Arun Bhoomi Corporation and Another v. Jagruti Developers and Others
2024 SCC OnLine Bom 3801
2 Yusufkhan v. Prajita Developers Pvt. Ltd. And Another 2019 SCC OnLine
Bom 505
3 RCCIVL-RKIPL LLP v. RCC Infraventures Ltd & Ors. in ARB A. (COM)
25/2021
Page 6 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
invocation of arbitration, having filed Section 17 Application
nine months thereafter;
d) The finding that a prima facie case had been made
out by Talegaon is necessarily perverse, because to arrive at
such a finding, the Learned Arbitral Tribunal ought to have
examined if there is any proof of loss , which is a sine qua non
for a claim in damages;
e) SFC's financial prospects are strong and it has turned
around and is recouping its past accumulated losses and has
robust financials which are , in fact , extracted by the Learned
Arbitral Tribunal in the Impugned Order. SFC has assets
exceeding Rs.50 crores and a positive net worth of Rs.275 . 3
crores and it was wholly unnecessary to direct provision of a
bank guarantee in the sum of Rs.7.8 crores;
f) Having leased out the very same unit substantially to
GE Oil and to Delhivery, the claim pursued by Talegaon is in
the realm of unjust enrichment and for such a claim, no
interlocutory protective arrangement is necessary;
Page 7 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
g) There is a complete failure to consider any finding of
irreparable injury or to balance competing equities and the
well settled test for grant of interim relief has not been met;
h) Finally, it is contended that significant firm findings
have been rendered in the garb of making out a prima facie
case, which undermines the interests of SFC at such an early
stage.
11. Mr. Behramkamdin would submit that the approach adopted in
Arun Bhoomi , where a Learned Single Judge of this Court found that
the denial of interim relief was justified by a delay of seven to nine years
since the accrual of a cause of action or the issuance of a termination
notice applies. The reliance on Yusufkhan is essentially to emphasize
that the principle for granting interim reliefs to secure a claim preferred
by a claimant in an arbitral tribunal, must be meticulously followed
before any drastic order is passed. It is contented that the tribunal must
come to a conclusion that there is a serious apprehension that upon an
award being passed , there would be no property available for executing
it, and therefore, even at an interim stage some security is to be
provided.
Page 8 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
12. It is contended , based on the judgement that the Arbitral Tribunal
must carefully examine whether there is a serious question to be tried
and if there is any probability that the party seeking the interim relief is
entitled to it and that intervention from the Arbitral Tribunal is
necessary to protect such party from injury that the Arbitral Tribunal
would consider irreparable, if it is inflicted even before legal rights stand
established at that time.
13. As regards RCCIVL , Mr. Behramkamdin would submit that in this
case too , in the teeth of verification and reconciliation of payments
remaining disputed, a monetary direction founded on the very same
Agreement in which disputes existed at an interim stage is not
acceptable, and that commercial hardship alone is no ground for
attachment of property. He would rely on another decision of this Court
4
in National Shipping Co. that has been cited by the Learned Single
Judge of the Delhi High Court in RCCIVL , to contend that unless a clear
case is made out not only on merits but also on the denial of such
interim relief resulting in grave injustice, interim protective relief must
not be granted. Although, the provisions of Order 38 Rule 5 of the Code
of Civil Procedure, 1908 (“ CPC ”) need not be strictly satisfied, the
4 National Shipping Co. of Saudi Arabia v. Sentrans Industries Ltd., 2004 SCC
OnLine Bom 25
Page 9 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
arbitral tribunal must have some material , apart from the merits of the
claim to demonstrate that such protection is eminently necessary.
14. In sharp contrast, Mr. Robin Jaisinghani, Learned Advocate on
behalf of Talegaon would submit that the Learned Arbitral Tribunal has
meticulously examined the situation arising out of the dispute between
the parties in connection with the Agreement and has rightly noticed the
conduct of SFC, which necessitated the intervention made by the
Learned Arbitral Tribunal.
15. Mr. Jaisinghani would submit that the Agreement to Lease dated
November 6, 2019 was registered on November 11, 2019 from which
date, the various deadlines stipulated in the Agreement were to be
computed. He would point to the provisions of Clause 3 to indicate that
Talegaon was meant to plan, design and obtain all necessary approvals
for construction of the unit agreed to be taken on lease by SFC, in line
with the plans and requirements stipulated by SFC. He would submit
that this necessitated serious capital expenditure on the part of
Talegaon to construct the premises in question in line with SFC's
requirements. Under Clause 4.3.1, SFC also had a right for another
twelve months, to seek construction of an additional area of 1,00,000
square feet. Therefore, apart from the resources being spent on
Page 10 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
constructing the premises as required by SFC, Talegaon was also
required to keep aside contiguous development potential for another
1,00,000 square feet.
16. Against this backdrop, Mr. Jaisinghani would point to the
contemporaneous correspondence between the parties that would belie
the contention that SFC was aggrieved by the purported delay in the
development. On the contrary, it was SFC taking a new view on the
need to lease that led to SFC requesting termination of the transaction
and SFC was , in fact , apologetic about the inconvenience caused – quite
contrary to the sharply different stand about facts being taken now.
This has been caught out by the Learned Arbitral Tribunal, he would
contend, to submit that all that the Learned Arbitral Tribunal has done
is to take measures that do not render the final outcome in the
arbitration a paper award.
17. The Agreement entailed a lock-in clause for five years and an
assured income of lease rentals for such period. Under Clause 6.1, SFC
was to keep deposited with Talegaon an interest-free refundable security
deposit equivalent to six months’ lease rental i.e. sum of Rs.70.50 lakhs.
That apart, out of such amount, SFC was to pay Talegaon an amount of
Rs.11.75 lakhs at the time of execution of the Agreement and another
Page 11 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
sum of Rs.23.60 lakhs within a day of the execution. Mr. Jaisinghani
would submit that the Learned Arbitral Tribunal has given credit for
these amounts that have already been paid by SFC to Talegaon and has
deducted them from the assured payment provided for in the Agreement
in the form of the lease rentals due for the lock-in period of five-years.
18. Under Clause 10.1.7, the parties have explicitly provided for the
consequences of SFC failing or neglecting to execute and register the
final lease deed by stipulating that compensation equivalent to the lease
,
rent in respect of the entire lock-in period, including the interest-free
refundable security deposit already deposited , would be forfeited. It is
also envisaged that Talegaon could, at its own discretion, grant a further
lease or license to any third party and dispose of the unit as it deems fit;
19. Clause 10.2.2 provides that if Talegaon exercised the right to
terminate the Agreement owing to SFC's event of default, Talegaon
would be entitled to recover from SFC the aggregate of payments
accruing under the agreement; recovery of possession of the unit of the
premises; and compensation as stipulated. Clause 16.5 also provides
that if SFC were not to execute the lease deed due to any reason other
than Talegaon’s default, SFC would pay Talegaon compensation of
Page 12 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Rs.8,19,22,762/- which is essentially a sum equivalent to lease rental for
60 months of the lock-in period contracted between the parties;
20. In short, Mr. Jaisinghani's submission is that the parties were
well aware of the serious repercussions that would be visited upon
Talegaon if SFC were to default in its obligation to finally execute the
lease deed and had correspondingly provided for serious monetary
stipulations on SFC. The submission on behalf of Talegaon is that the
Learned Arbitral Tribunal has demonstrated clear application of mind
to the terms of the Agreement between the parties and has acted in
accordance with the same, also taking into account the conduct of the
parties.
21. As regards conduct, Mr. Jaisinghani would submit that SFC has
wrongly attempted to project a false picture that there had been delays
on the part of Talegaon in construction of the premises in line with
specifications stipulated by SFC. He would submit that the Agreement
having been registered on November 11, 2019, handover within a period
of six months was scheduled only for May 11, 2020. Time for handover
had been extended by mutual consultation of the parties, and far from
the picture being presented today, contemporaneous correspondence
Page 13 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
would show that it was SFC that sought to rescind the Agreement by
seeking to revisit the commitment to take the premises.
22. Alluding to the list of dates presented by SFC, Mr. Jaisinghani
would point to the communication dated August 18, 2020 by which, it
was claimed that the contract was being terminated. He would point to
the said email of that date (at page 699 of the compilation of
documents) to point out that it was SFC that proposed rescission of the
Agreement, citing slowdown in the automotive business and the desire
to abort the plans to expand. He would also point to the communication
dated October 5, 2020 from SFC, which would point to SFC being the
party invoking Covid-19 to table the fact that there was a change in
management with a German investor coming in, who desired to rethink
and revisit the business plan and preserve cash flows. It was SFC that
proposed, with regret, that it would be unable to go ahead with the Pune
plant and execute the Lease Deed as contracted earlier, and proposed
revocation of the existing arrangement by mutual consent.
23. SFC was apologetic about the disruption caused by it and this
would point to the submissions being made before this Court and before
the Arbitral Tribunal about defaults on the part of Talegaon having been
dishonest and not in conformity with the record.
Page 14 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
24. Further, Mr. Jaisinghani would also point to an email dated
December 10, 2020 from one Mr. Nils Berg, a Director of the parent of
SFC in Germany, who reduced to writing the points of discussion
between him and Talegaon on a visit to India by him. Mr. Jaisinghani
would point out that this was a clear record of why SFC desired to move
away from the Agreement, namely, having inherited a badly managed
business from the earlier owners and having had to reverse earlier
strategic decisions for its survival. This email indicated efforts to find a
new tenant and also requesting Talegaon to list out the actual expenses
which had accumulated on account of Talegaon’s performance under
the Agreement. This email would indicate that even as late as December
2020, SFC did not demonstrate the conduct of a counterparty who was
upset with any purported delay in delivery of the premises and instead
was the apologetic counterparty because of whom serious capital
expenditure incurred by Talegaon would be jeopardised.
25. In this backdrop, Mr. Jaisinghani would also point to an email
dated August 11, 2020, from which it would become clear that even in
the interregnum , contemporaneously, SFC was giving instructions on
the structure and design of the premises, which is far from the position
now being taken that Talegaon's default in meeting the extended
deadline necessitated termination of the Agreement by SFC.
Page 15 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Analysis and Findings:
26. Against this backdrop, I have examined the record with the
assistance of the parties and reviewed the Impugned Order, bearing in
mind the scope of jurisdiction of this Court under Section 37 of the Act,
in particular, when considering a challenge to an order passed under
Section 17 of the Act. The Learned Arbitral Tribunal has examined the
provisions of the Agreement containing the arbitration clause; the
bargain between the parties; the conduct of the parties; and the
credibility of the positions adopted by the parties in the course of the
arbitration proceedings.
27. Having examined the same, in my opinion, the Learned Arbitral
Tribunal cannot be faulted for adopting a reasonable and logical
arrangement to preserve the subject matter of the arbitration agreement
and address the threat perception to the outcome of the arbitration,
bearing in mind the strength of the prima facie case, the irreparable
harm and injury and the balance of convenience in making such an
arrangement.
28. Admittedly, weak financials inherited by the new owners of SFC is
writ large on the face of the record. It is evident that it was SFC that
revisited the very need for the premises and that too, based on the weak
Page 16 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
financial position of the business inherited by its new owners. It would
prima facie , indeed be correct to state that the presentation of
submissions in the proceedings is not in conformity with the factual
position on record. The submissions whether in the list of dates or
otherwise had all been premised on Talegaon being in breach of
deadlines, and being in default of contracted obligations under the
Agreement, whereas the record shows that it was SFC that felt the need
to conserve its financial resources and took a view to terminate the
Agreement.
29. Even if SFC took the view that it ought not to invest more funds
into the plant in Pune, the costs of breaking existing contracts on pre-
agreed contractual terms would present a very strong prima facie case in
a situation where the parties had reduced to writing the financial
consequences of such an event. The eventuality of SFC terminating, with
the contracted consequences for such termination are all well
considered. That would present a pointer to the strength of Talegaon’s
prima facie case, and the relative strength (or the lack of it) in SFC’s
defence.
30. Moreover, the Learned Arbitral Tribunal has meticulously
analysed the email correspondence contemporaneous with the record
Page 17 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
and has returned a logical finding that there is no contemporaneous
objection on the facet of timelines. In fact, the real reason for the
termination is quite clear from the record and the Learned Arbitral
Tribunal cannot be faulted for noting what is writ large on the record.
31. The contention by Mr. Behramkamdin that the Learned Arbitral
Tribunal has effectively converted an unsecured potential future liability
into a secured debt also does not appeal to me inasmuch as the Learned
,
Arbitral Tribunal has examined the danger posed to a party that has an
extremely good prima facie chance of succeeding in the proceedings,
with demonstrable financial weakness on the part of SFC. The Learned
Arbitral Tribunal has analysed the case law in connection with Section
37 of the Act and has returned views that are consistent with the factual
matrix on the record and indeed accurate in terms of the stipulations in
the law.
32. Moreover, the Impugned Order contains a detailed analysis of the
case law cited by the parties and has indeed returned a satisfactory view
on the need for preserving and protecting the subject matter of the
arbitration. While SFC would contend that it is now in financially good
health and accumulated losses of the past ought not to be a factor for
consideration, the Learned Arbitral Tribunal has indeed noticed the
Page 18 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
serious indebtedness that SFC is placed in, and the prospect of a
potential outcome in favour of a party with a very strong prima facie
case running a credible risk of being presented with a paper award.
33. Mr. Jaisinghani’s submissions on the transactions with GE Oil
and Delhivery , being the basis for the holding that Talegaon has suffered
no loss at all deserve comment. He would point out that the
development potential enjoyed by Talegaon around the premises is
significantly much larger. GE Oil and Delhivery could have been
accommodated without SFC having walked away from the Agreement.
They were not substitutes for SFC, but were business potential that
would have been tapped over and above the bargain contracted with
SFC. The property contracted with SFC was of 60,000 square feet of
which a part also went to GE Oil (33,000 square feet). The property
given to Delhivery is 1,00,000 square feet, of which 15,000 square feet
would have fallen within the 60,000 square feet contracted with SFC.
Therefore, even taking the areas earmarked for SFC into account, it
would follow that only 48,000 square feet has been utilised in these two
subsequent contracts and there would still be a gap of 12,000 square
feet. Therefore, I agree that the Summary Application being dismissed
was a logical decision of the Learned Arbitral Tribunal and it would not
be possible to simply contend that the same approach should be
Page 19 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
followed by taking no protective measures in the teeth of a specifically
contracted set of terms in the Agreement that would govern how SFC’s
refusal to execute the lease should be dealt with. Therefore, SFC’s
contention that the Learned Arbitral Tribunal refusing to give an award
without trial on the premise that evidence needs to be led was somehow
inconsistent with the granting of security to Talegaon without evidence
being led, does not appeal to me.
34. It is evident to me from the factual matrix that there would be
some mitigation and this can indeed be factored in at the time of final
adjudication. The reliance by Talegaon on the judgements of the English
5 6
Courts in Vic Mills and Interoffice is quite correctly appreciated by the
Learned Arbitral Tribunal. The following extract from Vic Mills would
be noteworthy:-
“The fallacy of that is in supposing that the second customer was a
substituted customer, that, had all gone well, the makers would not
have had both customers, both orders, and both profits, In fact, what
they did, acting reasonably, and I think very likely more than
reasonably in the interests of the Vic Mill, was to content themselves
with earning the profit on the second contract at the cost of adapting
the machines, which has been taken at £5; but they are still losers of
the profit which they would have made on the Vic Mill contract,
because they could, if they had been minded, have performed both the
5 Vic Mills (1913) 1 Ch 465
6 Interoffice Telephones Ltd v Robert Freeman Co. Ltd (1958) 1 Q.B. 190
Page 20 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
contracts, and have made the profit on both the contracts but for the
breach by the Vic Mill Company of their contract”
[Emphasis Supplied]
35. Likewise, Vic Mills , having been followed in Interoffice , also
points to a very logical and plausible approach adopted by the Learned
Arbitral Tribunal. The negative net-worth of Rs.400 crores, which is
indeed potentially being recouped and recovered by SFC need not turn
the needle against the protective relief granted by the Learned Arbitral
Tribunal.
36. I do not think it necessary to analyse all the references to the
financial position in the instant case. Suffice it to say, that when
examining whether this Court under Section 37 of the Act must interfere
with Section 17 order, it is well settled law that an appeal is to be
regarded as a continuation of the original proceeding. Unless there is a
statutory requirement to the contrary, the powers of the appellate forum
are co-extensive with the powers of the forum whose adjudication is
7
under appeal . Equally, an appellate Court exercising the power under
Section 37 of the Act to review the exercise of discretion by an Arbitral
Tribunal is well guided by the principles set out by the Supreme Court in
7 Jute Corporation of India Ltd. Vs. CIT 1991 Supp (2) SCC 744
Page 21 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
8
Wander vs. Antox which stipulate that the Court may interfere only if
there is something perverse or implausible in the exercise of discretion.
The following extract would suffice:
14. The appeals before the Division Bench were against the exercise of
discretion by the Single Judge. In such appeals, the appellate court
will not interfere with the exercise of discretion of the court of first in-
stance and substitute its own discretion except where the discretion has
been shown to have been exercised arbitrarily, or capriciously or per-
versely or where the court had ignored the settled principles of law
regulating grant or refusal of interlocutory injunctions. An appeal
against exercise of discretion is said to be an appeal on principle. Ap-
pellate court will not reassess the material and seek to reach a conclu-
sion different from the one reached by the court below if the one
reached by that court was reasonably possible on the material. The ap-
pellate court would normally not be justified in interfering with the ex-
ercise of discretion under appeal solely on the ground that if it had
considered the matter at the trial stage, it would have come to a con-
trary conclusion. If the discretion has been exercised by the trial court
reasonably and in a judicial manner the fact that the appellate court
would have taken a different view may not justify interference with the
trial court's exercise of discretion.
[Emphasis Supplied]
37. In a plethora of judgements, the principle articulated in Wander vs.
Antox has been followed and reiterated.
8 Wander Ltd. Vs. Antox India (P) Ltd. G 1990 Supp SCC 727
Page 22 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
38. There is considerable debate in every Section 37 proceeding about
9 10
whether Essar House and Sanghi present conflicting positions taken
by the Supreme Court in the context of Section 37 of the Act, or whether
it is possible to reconcile the same, and indeed whether Sanghi was
rendered without reference to Essar House . In my opinion the
observations in each of Essar House as well as Sanghi cannot be read in
isolation, without regard to the factual matrix in each case and the risk
perception discernible from them, in exercise of the Section 17
jurisdiction. The abiding theme is to consider whether the factual
matrix before the Section 9 Court or, as the case may be, the Arbitral
Tribunal under Section 17, presented a situation where the subject
matter of the Arbitration Agreement was under threat, and what
appropriate protective measures such forum would consider necessary,
being the master of the evidence and having conducted its review of the
same.
39. Applying that principle and approach to the facts of the case,
in my view, no case has been made out to interfere with the plausible
findings and the consequential measures issued by the Learned Arbitral
9 Essar House (P) Ltd. Vs. Arcellor Mittal Nippon Steel India Ltd., 2022 SCC OnLine
SC 1219
10 Sanghi Industries Ltd. Vs. Ravin Cable Ltd., 2022 SCC OnLine SC 1329
Page 23 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::
901-J-F-CARBPL-942-2026.doc
Tribunal. For the aforesaid reasons, in my opinion, there is no scope for
intervention with the Impugned Order.
40. Therefore, the Petition is dismissed with no interference with
the Impugned Order.
41. All actions required to be taken pursuant to this order shall
be taken upon receipt of a downloaded copy as available on this Court’s
website.
[ SOMASEKHAR SUNDARESAN, J.]
Page 24 of 24
March 26, 2026
Ashwini Vallakati
::: Uploaded on - 26/03/2026 ::: Downloaded on - 30/03/2026 08:18:23 :::