Restoration of a terminated determinable contract requires a strong case for interim mandatory relief.

The judgment disposed of eight connected petitions under Section 9 of the Arbitration and Conciliation Act, 1996, arising from termination of LPG transportation arrangements by BPCL and IOCL.

The petitioners had participated in a tender for transportation of bulk LPG using tank trucks offered under an “Agreement to Sell” arrangement (“ATS trucks”). Corrigendum No. 3 permitted such trucks to participate but required transfer of the Registration Certificate and PESO licence within four months of the Letter of Intent, failing which penal action could include forfeiture of caution money, termination and blacklisting.

In the lead matter, the Letter of Intent was issued on 19 October 2025, making 19 February 2026 the deadline for compliance. The truck’s Registration Certificate was transferred within time on 18 February 2026, but the application for transfer of the PESO licence was made on 23 February 2026 and the licence was transferred on 26 February 2026.

Although LPG loads were allotted even after the deadline, the respondent later sought the relevant documents, issued a show-cause notice, suspended allotments and, after considering the petitioner’s reply, terminated the arrangement on 15 June 2026 and forfeited the caution money of Rs.1,00,000.

The petitioners sought suspension of the termination, protection against forfeiture, and mandatory directions requiring the respondents to resume and continuously allot LPG loads pending constitution and completion of the arbitral proceedings.

Whether the Court should restrain the respondents from acting upon the termination orders and direct restoration and continued performance of the LPG transportation contracts pending arbitration?

Whether the contracts were determinable by their nature, so that an order effectively restoring or specifically enforcing them would be impermissible under Section 14(d) of the Specific Relief Act, 1963?

Whether the respondents should be restrained from appropriating or finally dealing with the forfeited caution money until the arbitral tribunal considers the parties’ dispute?

The Court applied Section 9 of the Arbitration and Conciliation Act, 1996, governing interim measures in aid of arbitration, together with the principles applicable to interlocutory mandatory injunctions.

Relying on Dorab Cawasji Warden v. Coomi Sorab Warden, (1990) 2 SCC 117, and 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, proof of irreparable or serious injury not ordinarily compensable in money, and a balance of convenience in favour of the applicant.

Section 14(d) of the Specific Relief Act bars enforcement of a contract which is determinable by its nature.

Following the principle stated in Indian Oil Corporation Ltd., restoration of a distributorship or contractual relationship cannot ordinarily be granted where the contract is revocable in accordance with its terms, even if the termination is subsequently found wrongful.

The Court also applied the contractual provisions permitting termination on 30 days’ notice without assigning reasons, and the Corrigendum provision that penal action “may include” forfeiture, termination and blacklisting.

The Court held that the petitioners had an arguable case concerning the short delay in transferring the PESO licence, the respondents’ continued allotment of LPG loads after the contractual deadline, and whether the contractual phrase “may include” required proportionality in the choice of penalty.

However, the petitioners’ own case showed that the PESO-transfer process had not even been initiated before the deadline; therefore, they had not established the stronger case required for an interim mandatory injunction.

The requested direction to resume and continuously allot LPG loads would not merely preserve the existing position but would restore a terminated commercial relationship and compel continued performance.

This was particularly significant because Clause 33 independently permitted termination or foreclosure on 30 days’ notice without assigning reasons, making the contract prima facie determinable.

The asserted difficulty in quantifying damages, limited operational life of the trucks and reputational injury did not satisfy the heightened threshold for mandatory interim relief.

Nevertheless, because the validity and proportionality of forfeiting the caution money remained matters for arbitration, the Court directed that the amount be preserved separately pending recourse to the arbitral tribunal.

It directed the respondents to maintain the caution money of Rs.1,00,000 in a separate account and prohibited its appropriation, utilisation or final disposal until commencement of arbitration and an appropriate application before the arbitral tribunal.

This protection did not stay or set aside the termination order and did not restore or continue the transport contract.

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 without costs.