### Interim Protection Against Termination Triggered by Section 9 Notice Where Default Procedures Are Bypassed

In brief

The question

1. Whether the court can grant interim protection under Section 9 of the Act to stay a termination letter and preserve the status quo of immovable property

The court held

The court stayed the impugned termination letter and directed that consequential third-party allotments shall not be given effect

It also directed

The court appointed Hon’ble Mr. Justice Rajesh Bindal (Retd.) as the Sole Arbitrator to resolve the disputes

The Section 9 petition was ordered to be treated as an application under Section 17 before the learned Arbitrator. The petition was disposed of with all rights and contentions left open for the merits of the arbitration

01Facts

The Petitioner entered into an Agreement for Sale (dated 26.03.2019) and subsequent Supplemental Agreements with the Respondents regarding commercial units in Gurugram

pp. 2-3

On 27.04.2026, the Petitioner served a Section 9 notice under the Arbitration and Conciliation Act, 1996, upon the Respondents seeking to protect his rights

¶ 2

On 28.04.2026, the Respondents issued a letter terminating the allotment, citing "force majeure" and commercial frustration

¶ 2, 12, 21

On 30.04.2026, the Respondents purportedly allotted the same units to a third party (M/s Amrit Skyline Builders) for nominal token amounts

¶ 9-10, 18

The Petitioner moved the High Court seeking interim stay on the termination and a restraint on the creation of third-party rights

p. 2

02Issues

i.1. Whether the court can grant interim protection under Section 9 of the Act to stay a termination letter and preserve the status quo of immovable property

¶ 16-17

ii.2. Whether the Respondents’ invocation of "force majeure" for events dating back to 2020 justifies termination in 2026 after subsequent affirming conduct

¶ 21-22

iii.3. Whether the purported third-party allotments were bona fide commercial transactions or sham proceedings intended to frustrate the Petitioner's rights

¶ 10, 18, 24

03Law Applied

The court primarily applied Section 9 of the Arbitration and Conciliation Act, 1996, regarding interim measures

pp. 1-2

It relied on Rahul Bhargava v. Neo Developers (P) Ltd., establishing that in real estate disputes, preservation of property is central to ensuring final adjudication remains effective

¶ 7

The court noted the 2018 amendment to Section 10 of the Specific Relief Act, 1963, which emphasizes the enforcement of contractual rights in immovable property

¶ 6, 8

Regarding the non-enforceability of terminated contracts, the court distinguished JLT Energy SAS v. Hindustan Cleanenergy Ltd. and Bharat Catering Corpn. v. IRCTC, holding that there is no "straitjacket" rule barring protective relief if the termination appears prima facie retaliatory or contrary to agreed contractual procedures

¶ 11-16

Provisions in the judgment · 6 · Linked ones open on LawLens

Arbitration and Conciliation Act, 1996 Section 9 Section 11 Section 12 Section 17 Section 21

Specific Relief Act, 1963 Section 10

04Reasoning

The court found the timing of the termination (one day after the Section 9 notice) to be prima facie retaliatory and intended to defeat the Petitioner’s rights

¶ 17

It observed that the Respondents failed to comply with the mandatory notice and 90-day cure period stipulated under Clauses 7.10.1 and 7.10.2 of the Agreement

¶ 19-20

The "force majeure" plea was rejected at the prima facie stage because the Respondents had executed Supplemental Agreements and transfer certificates as recently as 2024 and 2025, long after the COVID-19 events cited

¶ 21-22

Furthermore, the court viewed the third-party allotments with suspicion, noting that units worth crores were purportedly transferred for only nominal token amounts immediately following the termination

¶ 10, 18, 24

Consequently, the court determined that the balance of convenience favored the Petitioner to prevent irreparable prejudice

¶ 23