#Contractual Dispute

The Delhi High Court struck down NHAI’s two-year debarment of SAI Consulting, ruling that blacklisting is an extraordinary sanction that can be imposed only after showing serious misconduct and affording a fair hearing. The decision limits agencies to use debarment proportionately, protecting contractors from punitive bans for mere contractual lapses.

Meghalaya High Court rules that withholding undisputed contractual payments violates natural justice, directing release of Rs. 17.79 lakhs while disputed Rs. 7.89 lakhs undergoes independent assessment. The ruling sets a precedent for equitable relief in public works contracts, ensuring contractors receive undisputed dues without procedural delays.

Supreme Court holds that a bank cannot initiate insolvency proceedings under Section 7 of the IBC if the loan was disbursed to a builder rather than the corporate debtor. The ruling underscores that financial creditor status requires a direct lending arrangement, not merely a contractual transaction.

Patna High Court holds that mere allegations of fraud or contract non-compliance do not invalidate an arbitration clause, empowering courts to appoint arbitrators under Section 11(6) if the designated authority fails to act. This ruling reinforces the primacy of arbitration agreements in commercial disputes, ensuring parties cannot evade arbitration through procedural objections.

Jharkhand High Court rules that disputes involving contractual dues with an arbitration clause must be resolved through arbitration, not writ petitions. The court dismissed a writ seeking refund of a security deposit, reinforcing that arbitration is the exclusive remedy for such claims under the contract.

Bombay High Court reiterates that contractual disputes with an arbitration clause must be resolved through arbitration, not writ jurisdiction, unless a clear public law violation is demonstrated. The ruling reinforces the limited scope of Article 226 in private contractual matters, impacting contractors and government entities bound by arbitration agreements.

The Punjab & Haryana High Court has ruled that a property dealer’s retention of commission after a cancelled land deal, without proof of initial dishonest intent, cannot be prosecuted under Sections 406 or 420 IPC. This clarifies that contractual disputes over commissions, even when substantial, remain civil remedies unless criminal mens rea is established - protecting intermediaries from misuse of criminal law in commercial disagreements.

The Punjab & Haryana High Court ruled that performance bank guarantees cannot be encashed unilaterally when contractual disputes exist and an arbitration clause is operative. The court directed the petitioner to initiate arbitration within 45 days while restraining the respondent from encashing the guarantee, reinforcing the primacy of arbitration agreements in commercial disputes.

The High Court of Meghalaya directs referral to arbitration despite force majeure invocation, affirming that contractual arbitration clauses prevail over unilateral termination threats.