Interim Relief Granted Compelling OEM to Fulfill Supply Obligations for Concluded Third-Party Tenders Despite Termination

The Plaintiff, a provider of security solutions, acts as a reseller for the Defendant, an Original Equipment Manufacturer (OEM) of antivirus software.

Under their business model, the Plaintiff freezes deals with the Defendant before participating in government tenders; upon winning, the Plaintiff issues purchase orders to the Defendant for software licenses to be supplied to government entities.

On June 23, 2025, the Defendant issued a termination letter on the grounds that the Plaintiff was earning significantly higher profit margins than the Defendant (the manufacturer).

The Plaintiff filed the captioned suit for specific performance to compel the Defendant to fulfill obligations for concluded tenders, specifically regarding three entities (Serial Nos. 4, 7, and 8) where purchase orders and repeat order obligations were already in place.

The Defendant alleged fraudulent activity, claiming the Plaintiff misrepresented losses to secure a low license rate of ₹396, only to resell them at ₹1997.

1. Whether the Plaintiff is entitled to interim directions for the supply of software licenses and maintenance services for concluded contracts despite the termination notice.

2. Whether the disparity in profit margins and alleged misrepresentation by the Plaintiff justifies the Defendant’s refusal to fulfill existing contractual obligations during the pendency of the suit.

The court applied the principles governing the grant of interim injunctions under Order XXXIX Rules 1 and 2 of the CPC, specifically the tripartite test: existence of a prima facie case, the balance of convenience, and the prevention of irreparable harm/injury.

It also considered the law regarding specific performance of commercial contracts and the obligations of an OEM under "deal lock" arrangements and concluded tenders.

The Court found that a prima facie case existed in favor of the Plaintiff because they had already secured purchase orders from three specific entities and were under contractual obligations to provide maintenance and additional licenses upon demand.

The Court noted that if these licenses were not supplied, the Plaintiff would face severe penalties, including blacklisting and forfeiture of performance guarantees, thus satisfying the requirement of irreparable harm.

While the Court recognized the Defendant’s grievance regarding low profit margins and alleged misrepresentation (receiving ₹396 vs. a ₹1997 sale price), it determined that these were commercial disputes that could be resolved through settlement or trial.

Consequently, the balance of convenience favored maintaining the supply for existing contracts to prevent third-party (government) disruption while leaving the final commercial adjustment of license fees to the outcome of the suit or mediation.

The Court clarified that the payment for additional demands would be subject to the final outcome of the suit or settlement.

The application (I.A. 1537/2026) was disposed of by referring the parties to the Delhi High Court Mediation and Conciliation Centre to resolve the price/margin dispute, with a follow-up court hearing set for August 4, 2026.