After Two Firms Missed a ₹240-Crore Arbitral Settlement Deadline, Bombay HC Orders Asset Disclosure, Restrains Dealings That Could Frustrate Disputed ₹278-Crore Claim

The parties settled their disputes by Consent Terms dated 22 February 2026, under which Respondent Nos. 1 and 2 agreed to pay the Petitioners ₹240 crore within six months, with scheduled properties and Master General Powers of Attorney forming part of the security arrangement.

The Sole Arbitrator made an award in accordance with the Consent Terms on 16 March 2026 and extended the payment deadline to 6 September 2026. The amount remained unpaid.

The Petitioners invoked the default provisions and sought, under Section 9 of the Arbitration and Conciliation Act, 1996, disclosure of assets and interim protection against dealings that could frustrate their claim to the enhanced settlement amount of ₹278 crore.

Respondent No. 4, whose land formed part of the scheduled properties, disputed personal liability and relied on claimed third-party interests. The Court had previously dismissed the Respondents’ Section 9 petition seeking further time to pay, and no stay of that decision was shown.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the Court to grant appropriate interim measures to preserve the subject matter and protect the effectiveness of arbitration, assessed on the case’s circumstances; it does not entitle a claimant to security merely because a monetary claim is made (Essar House Private Limited v. Arcelor Mittal Nippon Steel India Limited).

Contractual terms must be read together and not rewritten to add conditions the parties did not agree to (Nabha Power Ltd. v. Punjab State Power Corporation Ltd.).

Under Section 74 of the Indian Contract Act, 1872, a stipulated sum on breach is not automatically recoverable in full; the court or tribunal must consider reasonable compensation (Fateh Chand v. Balkishan Das; ONGC Ltd. v. Saw Pipes Ltd.; Kailash Nath Associates v. Delhi Development Authority).

A consent judgment is intended to end litigation and binds the parties according to its terms (Byram Pestonji Gariwala v. Union Bank of India).

Section 9 relief may, in an appropriate case, affect a third party to protect the arbitral subject matter, but cannot be used to impose on that person liability not arising under the award or to prejudice independent third-party rights (Ningbo Aux Imp & Exp Co. Limited v. Amstrad Consumer India Pvt. Ltd.).

The Court found that the Settlement Amount was unpaid by the extended deadline and that finance discussions or proposed property transactions did not amount to payment or extend the deadline. The earlier dismissal of the Respondents’ petition, which had considered the Chennai encumbrance argument, had not been stayed.

The Consent Terms provided a security mechanism after default, but the Court distinguished the triggering of that mechanism from transfer of ownership: any exercise of rights under the Master GPAs remained subject to their terms, agreed valuations, registration requirements and applicable law.

The Section 74 challenge to the ₹278 crore amount remained open; it did not, by itself, require the Court to disregard the security arrangement or refuse limited preservation measures.

The property transactions and uncertainty about the current status of secured assets supported disclosure and tailored restraints against Respondent Nos. 1 and 2. As to Respondent No. 4, the Court found no basis to make him personally liable for the settlement sum, but his role in relation to scheduled land justified limited protection, subject to existing orders and completed third-party rights. Relief concerning Respondent No. 3 was likewise confined to identified lands and traceable proceeds.

They were restrained, pending commencement and conclusion of arbitration, from dealing with their assets in a manner that may defeat or frustrate the Petitioners’ claim, except with prior leave of the Court or competent arbitral forum. The order did not prevent lawful exercise of rights under Clauses 3.2 and 3.3 of the Consent Terms and the Master GPAs, subject to applicable limits.

Respondent No. 4 was directed to maintain status quo over identified unsold scheduled Mysore properties, subject to existing purchaser and allottee rights and the order in O.S. No. 440 of 2026; Respondent No. 3 was similarly directed to maintain status quo over identified unsold lands.

Respondent Nos. 3 and 4 were directed to disclose proceeds received from sales or transfers of the scheduled Mysore properties, and any such proceeds still available were to be deposited in Court, subject to credit for amounts already paid.

The Court left final liability, the enforceability and calculation of the enhanced amount, and disputed title and third-party rights open; there was no order as to costs, and a requested stay was refused.