Interim mandatory injunction cannot restore or continue a terminated determinable contract pending arbitration.

The petitioners were transport contractors engaged for transportation of bulk LPG under contracts issued by BPCL/IOCL. Under Corrigendum No. 3, trucks offered under an Agreement to Sell (“ATS”) could be used, provided that the Registration Certificate and PESO licence were transferred into the bidder’s name within four months from issuance of the Letter of Intent (“LOI”); the tender stipulated that this timeline would not be extended and that penal action could include forfeiture, termination and blacklisting.

In the lead matter, the LOI was issued on 19 October 2025 for Tank Truck No. TN 88 C 6993. The Registration Certificate was transferred on 18 February 2026, within the stipulated period ending 19 February 2026. However, the application for transfer of the PESO licence was made on 23 February 2026 and the licence was transferred on 26 February 2026.

BPCL had issued LPG loads even before execution of the formal Transport Contract Agreement and continued allotments after expiry of the four-month period.

After calling upon the petitioner to furnish the requisite documents, BPCL issued a show-cause notice dated 8 April 2026. Following the petitioner’s reply, BPCL terminated the truck’s engagement on 15 June 2026 and forfeited the caution money of ₹1,00,000.

The petitioners approached the Bombay High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking suspension of the termination, protection against forfeiture and a mandatory direction requiring restoration and continued allotment of LPG loads pending arbitration.

Whether the petitioners were entitled to an interim mandatory injunction directing the respondents to restore the terminated contractual arrangements and continuously allot LPG loads pending arbitration?

Whether the contracts were determinable by their nature, such that restoration or specific performance could not be granted in view of Section 14(d) of the Specific Relief Act, 1963?

Whether the respondents’ termination was sufficiently questionable, in view of the short delay in transferring the PESO licence, continued allotment of loads and the availability of different penal consequences, to justify interim protection?

Whether the caution money of ₹1,00,000 could be immediately forfeited, or whether it should be preserved pending constitution of the arbitral tribunal?

The Court exercised its interim jurisdiction under Section 9 of the Arbitration and Conciliation Act, 1996, while applying the principles governing interlocutory mandatory injunctions.

Relying on Dorab Cawasji Warden v. Coomi Sorab Warden, (1990) 2 SCC 117, as explained in Samir Narain Bhojwani v. Aurora Properties & Investments, (2018) 17 SCC 203, the Court held that an interim mandatory injunction requires a stronger case than an ordinary prima facie case, a necessity to prevent irreparable or serious injury not ordinarily compensable in money, and a balance of convenience in favour of the applicant.

Under Section 14(d) of the Specific Relief Act, 1963, a contract which is determinable by its nature cannot ordinarily be specifically enforced.

The Court relied on the principle stated in Indian Oil Corporation Ltd. v. Amritsar Gas Service, that where a contract is revocable in accordance with its terms, restoration of the contractual relationship cannot be granted merely because the termination may ultimately be found wrongful.

The Court also applied the contractual provisions permitting termination on thirty days’ notice without assigning reasons and immediate termination for specified breaches.

The Court held that the petitioners had an arguable case because the delay in PESO-licence transfer was short, BPCL had continued allotting LPG loads after expiry of the stipulated period, and the Corrigendum described the possible consequences as penal action that “may include” forfeiture, termination and blacklisting rather than making termination automatic.

However, the petitioners had not even applied for transfer of the PESO licence within the contractual period; therefore, this was not a case where the petitioners had completed all required steps and were merely awaiting administrative action.

The Court further found that Clause 33 independently authorised termination or foreclosure on thirty days’ notice without assigning reasons, while Clause 34 dealt with immediate termination for specified events.

The contract was consequently prima facie determinable, and the requested direction to resume allotments would substantially restore and compel continuation of a terminated commercial contract, amounting in substance to specific performance.

The petitioners’ claims of uncertain damages, limited operational life of the specialised trucks and reputational harm were relevant but insufficient to satisfy the heightened threshold for an interim mandatory injunction.

The Court therefore declined to restore the contractual relationship but preserved the caution money because the validity and proportionality of the forfeiture required determination by the arbitral tribunal.

The respondents were directed to maintain the caution money of ₹1,00,000 separately and were restrained from appropriating, utilising or finally dealing with it until commencement of arbitral proceedings and an appropriate application before the arbitral tribunal.

This protection did not stay or set aside the termination order and did not amount to restoration or continuation of the transport contracts.

The arbitral tribunal was directed to decide the disputes independently and without being influenced by the Court’s prima facie observations; the petitions were disposed of with no order as to costs.