Premature lease termination to secure higher rent warrants restraint where damages would burden the public exchequer.

PRG Shipping held leases of spaces at the Nagapattinam Passenger Terminal.

The lease term had been extended, with the Board’s approval dated 15 December 2025 indicating an end date of 23 December 2027. Before that date, the Board issued termination letters under clause 18 of the agreements and e-tender notices for the spaces.

PRG Shipping sought interim injunctions under Section 9 of the Arbitration and Conciliation Act, 1996, pending arbitration.

The Board argued that the leases had been granted through negotiations rather than the tender process and that open tendering could secure higher rent; it also submitted that the agreements allowed termination without cause.

1. Whether interim injunctions should restrain the Board from acting on the termination letters and e-tender notices pending arbitration.

2. Whether the Board’s stated intention to obtain higher rent through open tender justified terminating the leases before their stated expiry.

Section 9 of the Arbitration and Conciliation Act, 1996 empowers the court to grant interim measures in aid of arbitration.

The court considered clause 18 of the lease agreements, which the Board relied on as permitting termination without cause.

The judgment cited no precedents and stated no broader legal test for interim relief.

It treated the potential burden on public-exchequer funds, arising from a possible damages award for premature termination, as relevant to whether the injunction should be granted.

The court noted that the grants of lease were not disputed and that the Board had consciously let the spaces to PRG Shipping for a defined period.

It considered the stated aim of obtaining better rent through open tender insufficient, on a prima facie basis, to justify shortening the agreed lease term—particularly as the tender policy was available when the leases were granted.

The court also considered that premature termination might expose the Board, a statutory authority, to a damages claim payable from public funds.

On that basis, it granted the injunction, while clarifying that its observations were only for the applications and would not bind the arbitral proceedings.

The protection would automatically stand vacated if PRG Shipping failed to initiate arbitral proceedings within 12 weeks from 16 October 2026.