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1. INTRODUCTION
The Hon'ble Delhi High Court in A2Z Infra Engineering Ltd. v. ITI Ltd.1 granted urgent interim measures under Section 9 of the Arbitration and Conciliation Act, 1996 ("ACA") restraining ITI from termination an Annual Maintenance Contract ("AMC") linked to a BSNL telecom project. The Court dealt with two primary issues, firstly whether a 'determinable' agreement like the AMC in this case, could be safeguarded by ordering a stay on its termination and secondly, whether a fresh Expression of Interest ("EOI") could be restrained despite a valid termination.
2. FACTS OF THE CASE
In 2014, BSNL issued the Next Generation Fiber Optic ("NFS OFC") tender which was for Defence optical fiber network in 7 distinct Packages (Package A-G) on the basis of the geographical region. ITI is a Public Sector Undertaking PSU under the Department of Telecommunications, Ministry of Communications, Govt of India. In furtherance of their proposal to bid for Packages F and G in the said NFS OFC Tender process, where ITI Ltd. ("Respondent") selected A2Z Infra Engineering Ltd. ("Petitioner") as its back-to-back EPC Partner through an EOI. Subsequently, two Tripartite Association Agreements were executed on 04.09.2013 between the Petitioner, Respondent and respective partners for supply of optical fiber cables for Package F and Package G.
The Tripartite Agreements tied the EPC Partner to an AMC, which mandated 36-month warranty along with seven-year post warranty period. The dispute arose when the Respondent, allegedly due to certain defaults in the performance of the said agreement, issued a new EOI dated 01.12.2025 to select a new system integrator for AMC and restoration of the OFC routes, in lieu of replacing the Petitioner. Further, the Respondent issued termination notice to the Petitioner on 28.01.2026.
Subsequently, the Petitioner invoked Section 9 of ACA, seeking to retrain the Respondent from proceeding with the new EOI and to stay the termination.
The question before the Delhi High Court was whether a determinable contract such as the AMC in the present case could be protected through a stay of termination under Section 9 of ACA, especially when, as the Respondent argued, the contract itself was subject to annual renewal and therefore
terminable by its nature. The Court had to take into account that whether granting such stay would amount to enforcing a contractual relationship that the law expressly recognizes as terminable. It is a settled position of law that a contract which is by its very nature determinable does not admit to an interdiction or stay restraining its termination. In the light of the Hon'ble Supreme Court's decision in the case of Indian Oil Corporation v Amritsar Gas Service & Ors.2, Courts are prohibited from reinstating or restraining the termination of determinable contracts.
The Court also had to determine whether the issuance of fresh EOI could be stayed under Section 9 of ACA despite a valid termination notice being issued, as if it is allowed to continue, it will oust the Petitioner from the Contract before an Arbitral Tribunal could delve into the merits of the case. This raised questions regarding the scope of intervention by the Courts and what can be considered the "subject matter of the dispute".
The Court agreed that allowing EOI would irreversibly change the subject matter of arbitration and render the arbitral process futile and therefore, held that in order to protect the autonomy of the arbitration process, the present petition filed under Section 9 of ACA should be treated as an application under Section 17of ACA.
3. Tenability of injunction against issuance of new expression of interest under section 9
The Court reaffirmed that determinable contracts cannot be specifically enforced.3 In Adhunik Steels Ltd. v Orissa Manganese & Minerals (P) Ltd, 4 the Court held that interim injunctions under Section 9 of ACA must be in consonance with principles applicable to Specific Relief, especially where the underlying contract is terminable by nature. Thus, the Court in this case held that allowing the Petitioner to continue under the AMC, which is determinable contract, would create a contractual relationship which the law itself treats as terminable and that is impermissible as per the law.
However, with regards to the second issue, the Court observed that unlike termination of determinable contracts which is already a well settled law, the treatment of the fresh EOI process is different. The Court reasoned that allowing the Respondent to release a fresh EOI would irreversibly change the subject matter of arbitration and subsequently, make further arbitration proceedings futile. The Court relied on the cases such as Sundaram Finance Ltd. v. NEPC India Ltd,5 Arcelor Mittal, Nippon Steel India Ltd. v. Essar Bulk Terminal Ltd.6 and Adhunik Steels Ltd. v. Orissa Manganese and Minerals,
where the Hon'ble Supreme Court held that the jurisdiction of the Courts under Section 9 of the Act can be exercised even prior to the constitution of the Arbitral Tribunal, with a view to safeguarding and preserving the subject-matter of the dispute till such time as the Arbitral Tribunal undertakes adjudication. Similarly, the Delhi High Court also relied on its own Division Bench's judgement in GTL Infrastructure Ltd. v S.C. Wadhwa7 which reinforced that courts, when exercising Sector 9 jurisdiction, may issue mandatory orders in cases where it is necessary to prevent the arbitral process from becoming futile. Thus, the Court held that the premature EOI was a decisive step taken by the Respondent for the purpose of substituting the Petitioner in the garb of mere administrative action.
The Court was of the view that the balance of convenience lies in the favour of Petitioner as the opening of EOI would cause irreparable loss to the Petitioner. The Court also agreed with the case of Petitioner that the entire contractual value was based on the premise that AMC was for a continuous period of seven years, as opposed to the Respondent's contention that AMC was envisaged to operate on a year-to-year basis.
The Court appointed a single arbitrator and transferred the Section 9 petition to be treated as a Section 17 Application. The Court acknowledged that after the 2015 Amendment, the legislative scheme suggests that once the Tribunal is in place, interim protection should be in the hands of the Tribunal itself to protect the autonomy of the arbitral process.
4. CONCLUSION
The Delhi High Court, through this case, has provided the parties with a recourse to challenge issuance of subsequent expression of interest which can render any future arbitral proceedings futile if interim relief is not provided. The Court has ensured that its observations are for the limited purpose of preservation of the subject matter of the dispute until the disputes are adjudicated by the Arbitral Tribunal. The Court reinforced the legislative intent post the 2015 Amendment by safeguarding the rights of the parties while also protecting the autonomy of an arbitral process.
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