The Bombay High Court, while hearing a cluster of arbitration petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996, clarified the limits of interim mandatory injunctions where the underlying contract is determinable under Section 14 of the Specific Relief Act, 1963. The Court rejected the petition to resume LPG allocations and ordered the caution money to be kept separate pending arbitration.
Background & Facts
The Dispute
The petitioner, P. Perumal Transports (proprietor P. Perumal), entered into a transport contract with Bharat Petroleum Corporation Limited (BPCL) for the allocation of LPG loads using a tank truck (Registration No. TN 88 C 6993). The dispute arose over the termination of the contract and forfeiture of caution money of Rs.1,00,000.
Key Facts
- 19 Oct 2025: BPCL issued Letter of Intent (LOI) to the petitioner.
- 4 Apr 2025: Corrigendum issued allowing participation of ATS trucks and requiring transfer of Registration Certificate (RC) and PESO licence within 120 days.
- 8 May 2025: Petitioner deposited caution money of Rs.5,00,000.
- 18 Feb 2026: RC transferred to petitioner (within 120-day period).
- 23 Feb 2026: Transport Contract Agreement formally executed.
- 26 Feb 2026: PESO licence transferred (seven days after the 120-day deadline).
- 24 Dec 2025: BPCL issued first LPG load and invoice despite the formal contract not yet executed.
- 15 Jun 2026: BPCL issued termination order and forfeited caution money.
- 5 Apr 2026: BPCL emailed petitioner requesting required documents.
- 8 Apr 2026: Show Cause Notice issued; LPG loading suspended.
- 27 Apr 2026: Petitioner replied to Show Cause Notice.
- 9 Jun 2026: Petitioner filed Arbitration Petition (L) No.1138 of 2026 in Madras High Court.
- 15 Jun 2026: Termination order dated.
- 22 Jun 2026: Respondent filed counter-affidavit in Madras High Court.
- 29 Jun 2026: Petitioner withdrew the Madras petition and approached Bombay High Court.
- 12 Aug 2026: Petition filed before Bombay High Court (Arbitration Petition (L) No.22666 of 2026 and related petitions).
- 14 Aug 2026: Judgment delivered.
Procedural History
- 9 Jun 2026: A.A. No.1138 of 2026 filed in Madras High Court under Section 9, seeking interim injunction.
- 29 Jun 2026: Withdrawal of A.A. No.1138; petition filed in Bombay High Court.
- 12 Aug 2026: Arbitration petitions (L) Nos.22666, 22924, 23272, 23312, 23394, 23702, 23005 of 2026 filed before Bombay High Court.
- 14 Aug 2026: Judgment delivered by Justice Amit Borkar.
Parties' Positions
- Petitioner: Sought (a) a stay on the termination order dated 15 June 2026 and forfeiture of caution money; (b) an interim mandatory injunction directing BPCL to resume and continuously allot LPG loads to the tank truck until the arbitral tribunal is constituted and the proceedings concluded. Argued that the delay in transferring the PESO licence was minimal, BPCL continued to allot loads after the deadline, and the contract was not purely determinable.
- Respondent (BPCL): Relied on Clause 33 and Clause 34 of the Transport Contract Agreement, the General Conditions of Contract, and the Corrigendum, asserting that the contract was determinable and that the petitioner failed to comply with the 120-day deadline for transferring both RC and PESO licence. Contended that the relief sought amounted to specific performance of a determinable contract, barred under Section 14(d) of the Specific Relief Act.
Relief Sought
- Petitioner: (i) Restrain BPCL from acting upon the termination order and forfeiting the caution money of Rs.1,00,000; (ii) Direct BPCL to resume and continuously allot LPG loads to Tank Truck No. TN 88 C 6993 until the arbitral tribunal concludes.
- Respondent: Dismiss the petition, uphold termination, and retain the right to forfeit caution money as per the Corrigendum.
The Legal Issue
What is the appropriate scope of interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 when the underlying contract is determinable under Section 14 of the Specific Relief Act, 1963, and the petitioner has delayed compliance with a contractual deadline by a few days?
Arguments Presented
For the Petitioner
- The delay in transferring the PESO licence was only four days beyond the deadline; BPCL continued to allot LPG loads after the deadline, indicating a waiver of strict compliance.
- The contract contains both a 30-day notice termination clause (Clause 33) and an immediate termination clause (Clause 34); the former shows the contract is not purely determinable.
- Interim mandatory injunctions are permissible where the plaintiff can show a strong case, irreparable injury, and a balance of convenience in favour of the plaintiff, as per Samir Narain Bhojwani v. Aurora Properties and Dorab Cawasji Warden v. Coomi Sorab Warden.
- The amendment to the Specific Relief Act (2018) removed the rigidity that damages alone bar specific relief; therefore, the petition should not be dismissed on that ground.
For the Respondent
- Clause 33 gives BPCL an unfettered right to terminate the contract with 30-day notice without assigning any reason; Clause 34 allows immediate termination on specified events, rendering the contract determinable.
- The Corrigendum expressly required transfer of RC and PESO licence within four months; the petitioner failed to transfer the licence within that period, triggering the penal clause that may include termination.
- Section 14(d) of the Specific Relief Act bars specific performance or restoration of a determinable contract, even if the termination is later found wrongful.
- The petitioner has not satisfied the higher standard required for an interlocutory mandatory injunction; the delay, though short, is material, and the contract terms are clear.
The Court's Analysis
The Court first examined the contractual framework. It noted that the Transport Contract Agreement contained two distinct termination provisions: Clause 33 allowing termination on 30-day notice without cause, and Clause 34 permitting immediate termination on specified breaches. Both clauses operate independently, meaning the contract retained a determinable character under Clause 33.
"Clause 33 of the Transport Contract Agreement provides: ‘The Corporation reserves the right to terminate / foreclose the contract … by giving the Transporter 30 days advance notice in writing without assigning any reason whatsoever.’"
The Court then turned to the Corrigendum, which stipulated a strict four-month deadline for transferring the RC and PESO licence, stating that “under no circumstances will the above-mentioned timeline be extended.” The petitioner complied with the RC transfer on 18 Feb 2026 but applied for the PESO licence transfer only on 23 Feb 2026, completing it on 26 Feb 2026 - a clear breach of the deadline.
The Court emphasized that the phrase “may include” in the Corrigendum indicated a range of possible penal actions, not an automatic termination. However, the contractual language also empowered BPCL to terminate where the stipulated documents were not submitted within the period. The Court held that the petitioner’s argument of waiver based on BPCL’s continued allotment of loads after the deadline did not override the explicit contractual condition.
Regarding the applicability of Section 14(d) of the Specific Relief Act, the Court relied on Indian Oil Corpn. Ltd. v. State and reiterated that when a contract is by its nature determinable, restoration or specific performance cannot be granted, even if the termination is later found wrongful. The Court further observed that the petition sought not merely an injunction to preserve the status quo but a mandatory direction that would effectively restore the terminated contract, which is barred for a determinable agreement.
On the standards for an interlocutory mandatory injunction, the Court reiterated the three-fold test from Samir Narain Bhojwani: (1) a strong case, (2) irreparable injury, and (3) balance of convenience. While acknowledging the petitioner’s claim of potential loss of operational life of the specialised tank truck, the Court found that the petitioner had not demonstrated a strong case sufficient to satisfy the heightened threshold, especially given the contractual breach.
Consequently, the Court concluded that the material before it did not establish the strong case required for an interim mandatory injunction. The matter of proportionality of the termination and the exact quantum of damages remained for the arbitral tribunal.
The Verdict
The Bombay High Court rejected the petitioner’s request for an interim mandatory injunction directing BPCL to resume and continuously allot LPG loads to Tank Truck No. TN 88 C 6993. It ordered BPCL to keep the caution money of Rs.1,00,000 separate and not to appropriate it until the arbitral tribunal is constituted and an appropriate application is made. The Court clarified that this protection does not stay or set aside the termination order dated 15 June 2026 and does not restore the Transport Contract Agreement. No costs were awarded.
What This Means For Similar Cases
Determinable Contracts Limit Interim Relief
Practitioners must scrutinise termination clauses. If a contract contains a clause allowing termination without cause (or a similar determinable feature), courts are unlikely to grant interim mandatory injunctions that would effectively restore the contract.
Short Delays Do Not Automatically Waive Penalties
Even a brief breach of a contractual deadline (e.g., a few days) can trigger penal consequences if the contract expressly makes the timeline mandatory. Waiver must be clearly demonstrated, not inferred from subsequent conduct.
Caution Money Remains in Limbo Until Arbitration
When a dispute is referred to arbitration, courts may order that any security or caution money be kept in a separate account, neither forfeited nor released, until the arbitral tribunal decides the substantive issues.
- Actionable Takeaway: Draft termination clauses with clear language on determinability and ensure any interim relief sought is proportionate and does not amount to restoration of a determinable contract.
- Actionable Takeaway: Document any waiver or acquiescence explicitly; reliance on post-deadline performance alone is insufficient.
- Actionable Takeaway: In arbitration petitions, request preservation of security deposits rather than immediate forfeiture, citing the principle that the arbitral tribunal should decide the ultimate fate of such amounts.
