Court Denies Interim Injunction, Directs Security for Petitioner's Investment Amid Arbitration Proceedings
In a significant ruling, the Delhi High Court, presided over by Justice Purushaindra Kumar Kaurav, has dismissed a petition by JLT Energy 9 SAS seeking an interim injunction against Hindustan Clean Energy Limited. The case involved disputes over Securities Purchase Agreements (SPAs) related to solar power projects in Tamil Nadu and Bihar. The Court upheld the automatic termination clause in the agreements, as the conditions precedent were not fulfilled by the stipulated date.
JLT Energy 9 SAS, a French company engaged in renewable energy projects, had sought to prevent Hindustan Clean Energy from creating third-party rights in the assets of the solar projects. The company argued that the termination was due to the respondents' failure to fulfill the conditions precedent, particularly concerning land use conversion, which was a prerequisite for the agreement's completion.
Justice Kaurav noted that the agreements contained a self-collapsing mechanism where failure to meet the conditions precedent by the "Closing Long Stop Date" would lead to automatic termination. The Court emphasized that specific performance could not be granted as it involved conditions dependent on governmental approvals, which the Court could not compel.
Despite dismissing the petition for interim injunction and specific performance, the Court directed Hindustan Clean Energy to secure JLT Energy's investment for the pending arbitration proceedings. The respondents must deposit or furnish a bank guarantee of INR 3,00,00,000 with the arbitral tribunal within 15 days. This measure aims to protect the petitioner's financial interests during arbitration.
The ruling highlights the judiciary's adherence to contractual terms and the limitations on judicial intervention in commercial agreements, especially when contingent upon regulatory approvals.
Bottom Line:
Arbitration and Conciliation Act, 1996 - Section 9 - Interim injunction sought under Section 9 of the Act to restrain respondents from creating third-party rights or interest in assets or securities - Agreement automatically terminated due to non-fulfillment of conditions precedent - Specific performance and interim relief denied. However, respondents directed to secure the petitioner's investment for arbitration proceedings.
Statutory provision(s): Arbitration and Conciliation Act, 1996 - Section 9
JLT Energy 9 SAS v. Hindustan Clean Energy Limited, (Delhi) : Law Finder Doc Id # 2833626
