No Revival of a Self-Terminated Contract: Delhi High Court Upholds Automatic Termination and Refuses Interim Relief Under Section 9

The Appellant, JLT Energy 9 SAS (a French renewable energy company in the Technique Solaire group), executed two SPAs on 31.12.2024 with Hindustan Cleanenergy Ltd. and Peridot Power Ventures Pvt. Ltd. for acquisition of solar power projects in Tamil Nadu and Bihar (“Tamil Nadu SPA” and “Bihar SPA”). Schedule VII of the Bihar SPA stipulated that closing of the Tamil Nadu SPA was a CP to the Bihar SPA, making the transaction composite and interlinked. The CPs under Clause 5 read with Schedule VII were to be completed before the CLSD of 30.04.2025.

Clause 11 of Part A of Schedule VII required the Respondents to convert the project land to the non-agricultural category (“NA Conversion Condition”). Clause 5.6 provided that non-fulfillment of CPs before the CLSD would result in automatic termination. Clause 16.2(b)-(c) provided for SIAC-administered arbitration.

The Appellant invoked arbitration on 07.08.2025 via an Emergency Relief Application before SIAC, obtaining an Emergency Award/Order dated 28.08.2025 granting a prohibitory injunction restraining Respondents from creating third-party rights in the project assets. The injunction was continued by the Arbitral Tribunal upon its constitution on 18.12.2025.

The Appellant filed a Section 9 Petition (O.M.P.(I)(COMM.) 464/2025) to enforce the Emergency Arbitrator’s relief. The Single Judge dismissed the petition, holding that: the unsigned amendment agreement was non-binding; the CLSD could not be extended via email; the agreement stood automatically terminated under Clause 5.6; specific performance would entail implications for the government authorities rather than the Respondents; and no prima facie case was established. The Appellant appealed under Section 37(1)(b) of the Act.

The Appellant contended, inter alia, that the SPAs were not inherently determinable, had not automatically terminated, and that contemporaneous conduct converted the NA Conversion Condition from a CP to a CS; the Single Judge’s determination of arbitrable issues rendered the arbitration infructuous; and the Emergency Award/Order was wrongly disregarded. The Respondents contended that Section 37 interference is minimal, the SPAs stood automatically terminated under Clause 5.6, and the breach allegations were unsubstantiated.

The Court reiterated that Section 37 jurisdiction is narrow and interference is warranted only where the court below’s discretion is arbitrary, perverse, or in disregard of settled principles. Reliance was placed on Somdatt Builders NCC NEC (JV) v. National Highway Authority of India (Civil Appeal No. 2058/2012). In this context, the court examined the impugned order and held as follows: 

1. Nature of the Transaction: The Court observed that the SPAs formed a composite, interlinked transaction as the Tamil Nadu SPA’s closing was a CP to the Bihar SPA. Courts under the Act must be slow to dilute such consciously negotiated commercial structures.

2. CPs, CLSD and Automatic Termination: The CLSD (originally 30.04.2025, extended by mutual consent to 31.05.2025) and Clause 5.6’s automatic termination provision were clear, unambiguous, and self-operative, leaving no discretion once the stipulated event occurred. 

3. Alleged Conversion of CP into CS: The Court rejected the Appellant’s contention that the NA Conversion Condition was converted from a CP to a CS through conduct or a draft amendment. Clause 17.5 mandated amendments be in writing and executed by all parties; Clause 17.10 required express written waivers. The unsigned draft amendment and email exchanges did not constitute a concluded agreement. 

4. Automatic Termination and Fault: Upon non-fulfillment of CPs within the extended CLSD, the agreement stood terminated by operation of Clause 5.6 without requiring any act by either party. The Court rejected fault-based arguments, holding that: the agreement did not cast an exclusive obligation on Respondents for NA Conversion; no deliberate delay was demonstrated; and Clause 5.6 does not predicate termination upon attribution of fault as reading in a fault-based exception would rewrite the contractual bargain. 

5. Infructuousness of Arbitration: Section 9 jurisdiction is protective and ancillary, requiring a subsisting enforceable right. Where the agreement has prima facie ceased to subsist, Section 9 cannot resurrect a terminated contract. The Arbitral Tribunal remains free to adjudicate all disputes on merits.

6. Specific Performance and Statutory Approvals: The NA Conversion depended on the competent authority’s discretion and was not within either party’s control. Relying on Nand Kishore Lalbhai Mehta v. New Era Fabrics ( (2015) 9 SCC 755 : (2015) 4 SCC (Civ) 708) and Puravankara Projects Ltd. v. Hotel Venus International Ltd. ((2007) 10 SCC 33), the Court held the contract could not be specifically enforced where governmental permission was not obtained.

7. Emergency Award/Order: The Emergency Award emanated from the SIAC Rules institutional framework, not the Act. Relying on Raffles Design International (India) (P) Ltd. v. Educomp Professional Education Ltd. (2016 SCC OnLine Del 5521), the Court held it does not bind Section 9 courts, which must independently assess the material. The injunction requirements were not met: no subsisting right was demonstrated; balance of convenience did not favour the Appellant given the USD 12 million asset value with no consideration paid; and no irreparable injury was shown since the SPAs contemplated monetary consequences upon termination.

Conclusion

The Division Bench found no infirmity in the impugned order and dismissed the appeal, clarifying that its observations shall not influence the Arbitral Tribunal’s determination on merits. The judgment reaffirms the limited scope of Section 37 appellate interference in commercial contracts; underscores the sanctity of automatic termination clauses, holding that courts cannot read fault-based exceptions into no-fault mechanisms; clarifies that Emergency Awards under institutional rules do not bind Section 9 courts; and reinforces that Section 9 cannot resurrect a prima facie terminated contract. For M&A practitioners, it serves as a reminder that contractual timelines and formal amendment procedures must be strictly observed and informal understandings or unsigned drafts will not override express contractual requirements.