Legal Updates (June 08 – June 13, 2026)
CASE UPDATES
Strict compliance with Rule 9 of the Security Interest (Enforcement) Rules, 2002 is a statutory sine qua non for a valid auction sale of secured immovable property under the SARFAESI Act
The Supreme Court in the case of M.R. Vasumathi vs The Authorized Officer [Civil Appeal No. 1606 of 2026] dated June 09, 2026, has clarified that compliance with Rule 9 of the Security Interest (Enforcement) Rules, 2002 is a statutory sine qua non for a valid auction sale of secured immovable property under the SARFAESI Act. Where the balance 75% of the purchase price is paid beyond the fifteen-day period prescribed in Rule 9(4), and there is no written agreement extending such time as required by the Rule, the sale stands vitiated. A sale suffering from such statutory non-compliance cannot be validated on the basis of equities, the borrower’s earlier inaction, or the fact that the sale had been confirmed. The Court therefore set aside the auction sale on the ground of material irregularity going to the root of the matter, while expressly leaving the limitation issue open.
The Court observed that the validity of an auction under the SARFAESI framework must be tested strictly against the statute and rules, and not on equitable considerations alone. It emphasised that Rule 9(3), 9(4) and 9(5), as they stood at the relevant time, are mandatory in character. The purchaser was required to deposit 25% of the sale price immediately on the date of sale, and the balance amount within fifteen days of confirmation of sale unless an extended period had been agreed upon in writing between the parties.
The Court noted that, on the record, the balance 75% of the bid amount was admittedly paid only on 31.03.2010, whereas the outer limit of fifteen days had expired on March 26, 2010. The Bench found no material showing that the auction purchaser had sought extension before that date, or that any written agreement extending time had been entered into between the relevant parties. It held that broader considerations such as the borrower’s conduct, delay in challenging proceedings, or hardship to the auction purchaser could not cure a sale process vitiated by statutory non-compliance. The Court also observed that the appellant and other legal heirs had taken steps before the DRT seeking permission to redeem the property, which sufficiently indicated willingness to redeem.
Accordingly, the Apex Court set aside the High Court, DRAT and DRT orders, and quashed the auction sale of the secured asset. It directed that the auction purchaser be refunded the entire amount deposited by him together with interest at 7% per annum from the respective dates of deposit until payment, such refund to be made by the secured creditor within six weeks. The appellant was granted an opportunity to redeem the mortgage by approaching the secured creditor within two weeks to ascertain the amount due, and on payment within the time to be stipulated by the secured creditor, the secured asset was to be restored.
The Court further directed that restoration would be available upon payment of Rs. 95.42 lakhs together with interest at 5% per annum from the date of the Section 13(2) notice until payment. If the appellant failed to avail this one-time opportunity, the secured creditor could put the property to fresh auction after eight weeks, after obtaining a fresh valuation report from a government-empanelled valuer.
Click here to read/ download the original judgment
Tenancy created by the borrower after receipt of notice under Section 13(2) of the SARFAESI Act, without prior written consent of the secured creditor, confers no enforceable right, title, or interest against the secured creditor or auction purchaser
The Calcutta High Court in the case of Boon Realtors vs Julien Educational Trust [F.M.A.T 493 of 2025] dated June 09, 2026, has that a tenancy created by the borrower after receipt of notice under Section 13(2) of the SARFAESI Act, without prior written consent of the secured creditor, is hit by Section 13(13), is a nullity, and confers no enforceable right, title, or interest against the secured creditor or auction purchaser. Further, where the reliefs in a civil suit are directed against sale certificate, sale deed, and other consequences of measures taken under Section 13(4), such dispute falls within the scope of Section 17 and the jurisdiction of the civil court is barred by Section 34 of the SARFAESI Act.
The Court observed that the tenancy agreement dated 4 January 2016 was executed long after the notice under Section 13(2) dated 13 May 2011 and therefore squarely offended Section 13(13) of the SARFAESI Act. Since no written consent of the secured creditor had been shown, the Court held that the tenancy was a nullity and conferred no title upon the plaintiff. The Court also rejected the plaintiff’s objection regarding service or knowledge of the notice, observing that the law did not require service of notice under Sections 13(2) or 13(4) upon anyone other than the borrowers, and that the plaintiff, claiming through the borrowers, had no locus to challenge the propriety of such notice after the process had culminated in a valid sale certificate and sale deed.
On possession, the Court found it significant that the plaintiff had neither sought a possessory injunction in the plaint nor in the temporary injunction application. It noted that the plaintiff’s own case, including its letter dated 6 November 2023, showed only beneficial use from September 2023 and not continuous possession. The Court held that such intermittent user by students and guardians during school hours could not amount to physical possession. Since the property was vacant land, the Court held that symbolic or deemed possession delivered under the sale certificate and sale deed was sufficient to clothe the appellant with possessory rights, especially when no continuous physical possession had been established by the plaintiff.
The Court also held that the plaintiff’s reliance on the expressions “tenanted,” “as is where is,” and related wording in the sale documents was misplaced. It found that the “tenants” referred to in the sale notice were other persons involved in prior litigation and not the present plaintiff. It further held that the sale deed had to be read as a whole and, when so read along with the sale certificate, it clearly showed that possession had been handed over to the appellant and the sale was free from encumbrances known to the secured creditor.
On maintainability, the Court compared the prayers in the suit with Sections 13, 17, and 34 of the SARFAESI Act and held that every relief sought by the plaintiff, declaration that the sale certificate and sale deed were illegal, cancellation of those documents, and injunction restraining the appellant from asserting rights under them, was in substance a challenge to measures taken under Section 13(4). Such grievances, the Bench held, lay before the Debts Recovery Tribunal under Section 17, and therefore the civil court’s jurisdiction was expressly barred by Section 34. It added that maintainability of the suit was an essential component of a prima facie case for injunction, and since the suit was prima facie barred, no injunction ought to have been granted. The Court further found that the trial judge had committed errors by overlooking the effect of Section 13(13), misconstruing the “as is where is” clauses, holding that Section 34 did not bar the suit, and granting protection regarding possession despite there being no such prayer in the injunction application.
Presence of a different house mark does not, by itself, defeat a passing off claim where the overall trade dress is deceptively similar, especially for low-cost, fast-moving consumer goods purchased on the basis of memory and visual impression
The Delhi High Court in the case of GRM FOODKRAFT vs KS AGRO IMPEX [CS(COMM) 637/2024] dated May 29, 2026, has confirmed the ex parte ad interim injunction granted on 1 August 2024 and held that, until disposal of the suit, the Defendants and all persons acting on their behalf are restrained from selling, offering for sale or advertising Golden Sella Basmati Rice in the impugned trade dress/packaging that is confusingly or deceptively similar to the Plaintiffs’ trade dress/packaging. At the same time, the Court clarified that Defendant No. 1 is not precluded from continuing its business in Golden Sella Basmati Rice if it uses packaging that is distinct and not deceptively similar to the Plaintiffs’ packaging.
The Court also clarified that in a passing off action based on packaging/trade dress, the Court must assess deceptive similarity on the basis of the overall visual impression of the competing trade dresses, focusing on similarities in the ensemble rather than dissecting individual differences. Even where individual elements such as colours, imagery or certain words may be generic or common to trade, protection may still be granted if their distinctive combination, arrangement and presentation has acquired goodwill and if the defendant has adopted a substantially similar overall get-up likely to cause confusion.
The Court essentially ruled that presence of a different house mark does not, by itself, defeat a passing off claim where the overall trade dress is deceptively similar, especially for low-cost, fast-moving consumer goods purchased on the basis of memory and visual impression. In the case of edible products such as rice, the threshold of deceptive similarity is lower and greater sensitivity is required because consumer confusion is more readily occasioned.
The High Court observed that the governing test in a passing off action concerning trade dress is one of overall impression and deceptive similarity, to be assessed from the standpoint of a consumer of average intelligence and imperfect recollection, with greater attention to similarities than dissimilarities. On comparing the rival packaging, the Court found striking similarities in the green and gold colour scheme, gold lettering styled to resemble Urdu/Arabic script, the use of the word “Zarda” in similar stylisation, hanging lanterns and stars, and imagery of a pulao dish with minarets, and concluded that Defendant No. 1 had copied the essential elements of the Plaintiffs’ trade dress and attempted to come as close as possible to it.
The Court rejected the defence that the presence of the house mark “DOUBLE CHABI” was sufficient to dispel confusion, observing that in the case of rice, a fast-moving edible commodity sold through common trade channels, purchasing decisions are predominantly influenced by visual recognition of packaging rather than careful textual scrutiny of brand distinctions. The Court also held that even if “Zarda” were assumed to be generic or descriptive, that did not materially weaken the Plaintiffs’ claim because the gravamen of the action lay in the deceptive imitation of the overall trade dress and visual presentation.
The Court further found that the Plaintiffs had prima facie established goodwill and distinctiveness in the relevant packaging by producing material showing cumulative sales of more than Rs. 86.16 crores under the 10X Zarda King packaging, GST invoices for printed laminated packaging, promotional material, endorsements, hoardings, online listings and a CA certificate. It observed that the sales figures and expenditure could not be treated as nominal for an FMCG product such as rice and were sufficient at the interim stage to support the Plaintiffs’ claim of strong market presence and goodwill in the impugned trade dress.
Click here to read/ download the original judgment
If social media publications are prima facie false & disparaging that harms the goodwill and reputation attached to a well-known trademark, and where such content has rapid and unrestricted digital reach capable of causing continuing commercial and reputational injury, the Court may grant ex parte ad interim injunctive relief
The Delhi High Court in the case of Gujarat Cooperative Milk Marketing Federation vs RK Singh Rajput [CS(COMM) 636/2026] dated May 29, 2026, has emphasised that online publications are capable of causing continuing reputational and commercial injury to the user of a well-known trademark, and therefore, restrained Defendants and all persons acting on their behalf from uploading any videos or other publications disparaging the plaintiffs or the AMUL mark, and also directed Defendants to take down the URLs within 36 hours of receipt of the order and prohibited re-upload of identical content until further orders.
The Court held that where social media publications are prima facie false, disparaging and structured in a manner that harms the goodwill and reputation attached to a well-known trademark, and where such content has rapid and unrestricted digital reach capable of causing continuing commercial and reputational injury, the Court may grant ex parte ad interim injunctive relief. Accordingly, the Court treated the continuing publication and dissemination of such material as constituting imminent and irreparable harm, especially where reputational injury could not be adequately compensated in monetary terms.
The Court recorded that the impugned publications and posts on social media platforms were, prima facie, disparaging and appeared to demonstrate a deliberate attempt to sensitize public sentiments relating to cow meat in India. It noted that the content had far-reaching and global dissemination through social media and was causing harm to the formidable goodwill and reputation of the plaintiffs in respect of products sold under the well-known mark AMUL since 1958.
The Court also observed that, given the false, sensational, provocative and inflammatory nature of the content, there was a real likelihood of further amplification of the misinformation if the material remained accessible in the public domain. Further, the Court accepted the plaintiffs’ contention that continued accessibility and circulation of the impugned material posed an imminent and continuing threat to their goodwill, reputation and commercial interests, and observed that once reputation is lost, monetary compensation may not retrieve the damage. On that basis, the Court found that the plaintiffs had made out a prima facie case for grant of ex parte ad interim injunction, that the balance of convenience lay in their favour, and that irreparable harm would follow if interim protection were denied.
Click here to read/ download the original judgment
An arbitral tribunal cannot excuse disclosure of a contract central to an alleged breach of exclusivity or non-compete obligations solely on the basis of an asserted contractual confidentiality obligation, particularly where a court has already directed disclosure
The Bombay High Court in the case of Oil Field Instrumentation India vs Xcalibur Multiphysics Group S.L. [Commercial Arbitration Petition (L) No. 16156 of 2026] dated June 08, 2026, has held that an arbitral tribunal cannot excuse disclosure of a contract central to an alleged breach of exclusivity or non-compete obligations solely on the basis of an asserted contractual confidentiality obligation, particularly where a court has already directed disclosure and where standard protective mechanisms such as redaction, confidentiality rings, and restricted access remain available. A private confidentiality clause in a commercial contract cannot override a legal obligation to disclose before a court or tribunal in order to adjudicate the dispute properly.
The Court further laid down that, in construing a negotiated exclusivity clause in a joint venture agreement, the word “offered” must be given its contractual meaning and cannot be judicially rewritten to mean “accepted and paid for” or “purchased”. Where the record shows that the relevant technology was offered to the joint venture and its deployment continued to be pursued, the tribunal cannot infer rejection merely from postponement of purchase. In such a joint venture context, the clause is to be viewed not as a simple restraint on trade but as a positive covenant to conduct the business through the exclusive joint venture vehicle in the defined territory.
The High Court observed that the arbitral tribunal had adopted an untenable approach in excusing production of the Bhutan contract merely because the investor invoked a confidentiality clause said to exist in that very contract. It also observed that commercial confidentiality clauses ordinarily yield to legal, regulatory, or court-directed disclosure obligations, subject to mechanisms such as consultation, redaction, confidentiality rings, and controlled access.
The Court found that the arbitral tribunal had not even called for the confidentiality clause itself, nor the full correspondence with Bhutan, and had relied only on two disjointed letters without the intermediate communication or any proper examination of whether limited or protected disclosure could be made. In the Court’s view, permitting a party to avoid scrutiny of an alleged non-compete breach by invoking an unseen confidentiality clause in the allegedly offending contract would render such obligations effectively immune from adjudication.
On interpretation of “offered”, the Court disagreed with the arbitral tribunal’s view that the word should be understood as meaning technology actually made available, accepted, and paid for. The Court held that such a reading rewrote the contract. At the prima facie stage, where commercially sophisticated parties had chosen the word “offered”, it was not permissible to substitute it with “purchased” or “deployed”. The material on record did not support any rejection of the technology by the joint venture; rather, it showed continuing pursuit of deployment in India.
The Court further observed that Clause 18.3 was not merely a restraint on trade, but a commitment to conduct trade in an exclusive collaborative relationship through the joint venture. Accordingly, the tribunal’s conflation of “offered” with “accepted and paid for” was found implausible and contrary to the contractual text.
The Court also clarified that it did not disturb the tribunal’s refusal to stay performance of the Bhutan contract itself, noting that injuncting the contract could cause grave and irreparable harm. However, the Court emphasized that even if the Bhutan contract was not to be halted, the subject matter of the arbitration agreement, namely the exclusivity of the joint venture as the chosen vehicle for doing business in the Territory, still required preservation. For that purpose, disclosure of the Bhutan contract and related material was necessary at least to assess the scale of injury and possible protective measures, including damages-related preservation of the petitioner’s claim.
Click here to read/ download the original judgment
In a Section 34 challenge to an award arising from an international commercial arbitration seated in India, ground of patent illegality under Section 34(2A) is unavailable. Consequently, reappreciation of evidence, or alleged ignoring of vital evidence cannot by themselves justify setting aside the award, because those matters do not fall within the restricted scope of “public policy of India”
The Bombay High Court in the case of ONGC vs Sapura Fabrication SDN BHD [Commercial Arbitration Petition No. 720 of 2024] dated June 09, 2026, has dismissed ONGC’s Section 34 Arbitration Act petition challenging an arbitral award arising out of a contract for redevelopment of the Mumbai High South Field, under which the contractor had completed the works within time and later raised six claims for extra work or change orders, holding that in a Section 34 challenge to an award arising from an international commercial arbitration seated in India, the ground of patent illegality under Section 34(2A) is unavailable.
Consequently, perversity, reappreciation of evidence, or alleged ignoring of vital evidence cannot by themselves justify setting aside the award, because those matters fall within patent illegality and not within the restricted scope of “public policy of India.” Where the Arbitral Tribunal’s interpretation of the contract is a plausible one and no case is made out under Section 34(2), the Court will not interfere even if another view is possible, and even where the award on a particular claim may appear vulnerable on patent illegality grounds.
The Court observed that the arbitration was an international commercial arbitration because Sapura was a Malaysian company and the arbitration was seated in India. Accordingly, while Section 34 applied, the separate ground of “patent illegality” under Section 34(2A) was not available. The Court emphasised that perversity in findings is relatable to patent illegality and not to the narrower post-amendment meaning of “public policy of India.” Therefore, ONGC could not seek to set aside the award by rearguing perversity or reappreciation of evidence as though it were pursuing an appeal.
If the arbitral tribunal has adopted a plausible contractual interpretation, and provided a reasoned basis for its conclusions on risk purchase, delay, liquidated damages, and bank guarantee invocation, the award does not suffer from patent illegality
The Bombay High Court in the case of Paharpur Cooling Towers vs Siemens Limited [Commercial Arbitration Petition No. 996 of 2019] dated June 08, 2026, has held that a reasoned arbitral award will not be disturbed under Section 34 Arbitration Act merely because the losing party alleges erroneous quantification, imperfect apportionment, or a different plausible contractual interpretation. Where the arbitral tribunal has considered the parties’ submissions, relied on contemporaneous material, adopted a plausible contractual interpretation, and provided a reasoned basis for its conclusions on risk purchase, delay, liquidated damages, and bank guarantee invocation, the award does not suffer from patent illegality or perversity warranting setting aside.
On risk purchase, the High Court observed that the arbitral tribunal had not acted arbitrarily in allowing 50% of the disputed portion of Siemens’ claim, and had considered the parties’ respective cases, the evidence on record, Siemens’ notices relating to risk purchases, and the admitted absence of price negotiation as well as the higher rates paid for manpower. The Court observed that this was not a case of unreasoned “rough and ready” justice; rather, the tribunal had articulated a reasonable basis for discounting the disputed amount and arriving at a broad estimate, which could not be characterised as patent illegality or perversity under Section 34.
On delay and liquidated damages, the Court found that the tribunal had adequately dealt with the argument that part of the delay was attributable to Siemens and another contractor, Gammon India. The Court accepted Siemens’ submission that under Clause 2.1 of the GRA, the relevant question was whether delay of not less than 100 days was attributable to Paharpur, because once that threshold was crossed, liquidated damages capped at 20% of the contract price became payable. The tribunal’s reliance on contemporaneous minutes of meetings, correspondence, milestone dates, and findings on shortage of manpower and machinery was held to be evidence-based and rational. The Court therefore refused to interfere with the findings attributing delay to Paharpur and upholding liquidated damages of Rs. 23.59 crores.
On invocation of bank guarantees, the Court rejected Paharpur’s contention that the issue had remained unadjudicated or that the tribunal had ignored a Supreme Court direction. It held that the Supreme Court’s earlier order merely observed that the legality of invocation was a matter for arbitration and not criminal proceedings. The arbitral tribunal had in fact interpreted the contractual documents and reasonably concluded that the advance payment guarantee continued to operate as a performance guarantee as well, since it was required to remain valid until provisional acceptance and had not stood discharged even after adjustment of the advance. The tribunal had also returned a categorical finding that Siemens’ invocation was not mala fide, and the Court held that this interpretation and treatment of the guarantees were commercially logical and plausible, and therefore immune from interference under Section 34.
Accordingly, the High Court reaffirmed that Section 34 review does not permit a court to substitute its own view on contractual interpretation, quantification of claims, or appreciation of evidence where the arbitral tribunal has adopted a plausible and reasoned approach. It also dismissed a Section 34 challenge to a unanimous arbitral award and reiterated the limited scope of judicial interference with reasoned arbitral decisions.
If the very transaction forming the basis of a Section 7 IBC petition is seriously challenged as fraudulent, or lacking legal sanctity, and where the creditor’s own Administrator has questioned the same transaction in separate Section 66 proceedings, the NCLT cannot mechanically admit the petition merely on proof of disbursement and asserted default
The Guwahati Bench of the National Company Law Tribunal (NCLT) in the case of SREI Equipment Finance vs Kitply Industries [IA (IBC)/59/GB/2025] dated June 02, 2026, has rejected a Section 7 insolvency application filed by SREI Equipment Finance Limited against Kitply Industries Limited, holding that the matter did not disclose a clear and undisputed “financial debt” and “default” fit for summary determination under the Insolvency and Bankruptcy Code, 2016. The NCLT held that where the very transaction forming the basis of a Section 7 petition is seriously challenged as non-genuine, collusive, fraudulent, or lacking legal sanctity, and where the creditor’s own Administrator has questioned the same transaction in separate Section 66 proceedings, the Adjudicating Authority cannot mechanically admit the petition merely on proof of disbursement and asserted default.
The Tribunal relied on the principle that the Adjudicating Authority must examine the nature of the financial transactions and not proceed solely because a debt and default are alleged. On the facts, the Tribunal found that the existence of a legally enforceable and undisputed financial debt was seriously overshadowed by substantial and bona fide issues requiring detailed adjudication, and therefore the essential ingredients of “financial debt” and “default” under the Code could not be said to stand established for the purposes of summary admission under Section 7.
Further, the NCLT held that although pendency of arbitration or Section 66 proceedings does not by itself bar a Section 7 petition, the present case involved disputed and complicated questions concerning the legitimacy and enforceability of the underlying transactions which were not fit for determination in summary insolvency jurisdiction. At the same time, the Tribunal declined to impose penalty under Section 65, holding that the materials on record did not meet the higher threshold needed to conclusively establish fraudulent or malicious initiation of proceedings.
The Tribunal observed that the case did not disclose a routine case of financial debt and default, but a peculiar factual matrix involving Kitply’s prior CIRP, implementation of its earlier resolution plan, allegations of connected-party control, same-day routing of funds, pending Section 66 proceedings before another Bench, and arbitral adjudication directed by the Calcutta High Court. It noted that although disbursement of amounts and execution of security documents were demonstrated, mere disbursement was not conclusive where serious allegations existed as to the true nature and legitimacy of the transaction.
The Tribunal placed significance on the fact that SEFL’s own Administrator had, in parallel proceedings, sought a declaration that the very same transactions under the contracts were fraudulent and amounted to wrongful trading. The Tribunal also noted that the Calcutta High Court had observed that the question whether the money given to Kitply was in effect a loan or a sham transaction used for round-tripping required detailed adjudication before an arbitrator.
Jurisdiction under Sections 241-242 of the Companies Act is a special statutory jurisdiction that cannot be waived by prior invocation of arbitration, and where the cause of action is composite, includes non-arbitrable reliefs, and involves parties not bound by the arbitration agreement, bifurcation is impermissible
The Chandigarh Bench of the National Company Law Tribunal (NCLT) in the case of Utsav Soi vs USAR Commerce Technologies [CA No. 201 of 2025] dated April 29, 2026, has held that where a petition under Sections 241-242 of the Companies Act, 2013 raises grievances and seeks reliefs that concern corporate governance, directorial status, board and shareholder actions, dilution of shareholding, alteration of constitutional documents, and other matters affecting rights in rem and the ownership and governance structure of the company, such disputes are statutory in character and are not amenable to arbitration merely because the dispute may have been triggered by or may overlap with contractual arrangements containing arbitration clauses.
The Tribunal further held that the jurisdiction under Sections 241-242 is a special statutory jurisdiction that cannot be waived by prior invocation of arbitration, and where the cause of action is composite, includes non-arbitrable reliefs, and involves parties not bound by the arbitration agreement, bifurcation is impermissible. The Tribunal found that many of the disputes raised and reliefs sought were not amenable to arbitration under the Employment Agreement or the Shareholders’ Agreement, and that the acts complained of fell within the exclusive jurisdiction of the Tribunal under Sections 241-242 of the Companies Act, 2013. It accordingly directed that the interim order would continue in full force and effect.
The Tribunal framed the core issue as to whether the disputes and reliefs in the petition under Sections 241-242 of the Companies Act, 2013 were amenable to arbitration under the Employment Agreement and the Shareholders’ Agreement, or whether they were fully or partly non-arbitrable matters of oppression and mismanagement falling exclusively within the Tribunal’s jurisdiction. It observed that Respondent No. 1 was not merely an employee under the Employment Agreement, but also a co-founder, 35% promoter-shareholder, and founding director, and that these capacities existed independently of the employment relationship. The Tribunal therefore held that the fact that termination of employment was the starting point did not make the entire dispute purely contractual in nature.
The Tribunal rejected the applicant’s characterization of the petition as a dressed-up contractual dispute. It held that the termination was only the trigger, and that what followed went beyond enforcement of contractual rights. It specifically referred to the alleged vacation of directorship without proceedings under Section 169 of the Companies Act, 2013, the EGM convened with only one director present and without the mandatory 95% shareholder consent under Section 101, the appointment of Respondent No. 3, the filing of DIR-12, the amendments to the MOA and AOA, the issuance of CCPS resulting in dilution of shareholding, the invocation of a call option to acquire the stake at a nominal amount, and the incorporation of “Shoppin Commerce Inc.” in Delaware for diversion of intellectual property and goodwill.
According to the Tribunal, these acts were ex facie independent statutory violations and acts of oppression and mismanagement, and not merely contractual consequences of termination under Clause 9.3 of the Employment Agreement.
The Tribunal also rejected the estoppel argument founded on Respondent No. 1 having earlier invoked arbitration. Relying on the principle that estoppel cannot operate against a statute, it held that the special statutory jurisdiction of the Tribunal under Sections 241-242 of the Companies Act, 2013, cannot be waived or elected away by invoking a contractual arbitration clause. It also noted that both the company petition and the Section 11 petition were filed on the same date, ruling out any prior conscious election.
The Tribunal held that many of the reliefs claimed related to rights in rem affecting the corporate structure, governance, and ownership of the company as a whole, and therefore were not arbitrable. It reiterated that such matters are reserved for adjudication by public fora, and further held that Sections 241-242 read with Section 430 of the Companies Act reflect legislative intent that oppression and mismanagement disputes of this nature are to be adjudicated exclusively by the Tribunal.
The Tribunal also reiterated that composite causes involving in rem and in personam reliefs cannot be severed, especially where not all parties are bound by the arbitration agreement, including Respondent No. 3. It additionally found direct support in the NCLAT decision in Indus Motor for the proposition that reliefs under Section 242 of the Companies Act, 2013, are not amenable to arbitration and bifurcation would frustrate the process and risk conflicting judgments.
A declaration of ownership cannot be sustained where the plaintiff lacks valid title, and a decree for conveyance cannot be granted in the absence of specific pleadings and prayer seeking such relief in view of the proviso to Section 34 of the Specific Relief Act, 1963
The Bombay High Court in the case of Waman Narayan Bhave vs Dev Bappa Cooperative Housing Society [Second Appeal No. 425 of 2003] dated June 08, 2026, has reaffirmed that a court cannot grant relief of conveyance or specific performance where the suit is framed only as one for declaration of title and the plaintiff has omitted to seek further substantive relief. The Court held that such a course is barred by the proviso to Section 34 of the Specific Relief Act, 1963, particularly where the plaintiff had the opportunity to seek conveyance but did not pursue it.
The High Court clarified that where a suit is framed solely for declaration of title, and the plaintiff is able to seek further relief such as conveyance or specific performance but omits to do so, the court cannot grant such omitted relief indirectly, particularly in view of the proviso to Section 34 of the Specific Relief Act, 1963. A declaration of ownership cannot be sustained where the plaintiff lacks valid title, and a decree for conveyance cannot be granted in the absence of specific pleadings and prayer seeking such relief. Relief founded on Maharashtra Ownership Flats Act (MOFA) cannot be awarded beyond the pleadings merely because the facts may suggest a promoter’s obligation to convey.
The High Court observed that the plaint, on a plain reading, contained only a prayer for declaration of ownership and did not disclose pleadings or cause of action for seeking conveyance under MOFA. The society’s case as pleaded was that it already was the owner of the land and building, and therefore sought only declaratory relief. The Court noted that there was no dispute that the defendant was the owner of the land, while the members claimed rights in their respective flats only under unregistered documents. It therefore held that the trial court had misread one flat agreement as creating entitlement in the society to seek conveyance under MOFA.
The Court further observed that both courts had effectively granted a decree for specific performance or conveyance on the basis of MOFA, despite there being neither pleadings nor prayer for such relief. It stressed that the first appellate court’s reasoning was entirely founded on the society’s supposed entitlement to conveyance under MOFA, even though that relief had never been properly pursued in the suit. The Court also attached significance to the fact that the society had withdrawn its amendment seeking to add a prayer for conveyance, and therefore had abandoned that relief. In that situation, the courts below could not grant declaratory relief and, at the same time, direct conveyance of title.
Click here to read/ download the original judgment
