Case Note & Summary
The litigation arises from a dispute over a Compulsorily Convertible Debentures Subscription and Securities Holders Agreement dated 21.06.2013 between L&T entities and Bhoruka group companies and promoter shareholders. L&T invested ₹325 crores in CCDs of BPCL, with an exit date within 60 months. After default, the Fund issued a buy-back notice on 04.09.2018, declaring an event of default on 03.11.2018. Various correspondences and negotiations failed. The Fund acquired 6,729 CCDs through a Deed of Adherence. On 03.04.2004, the Fund exercised its rights under Clause 18.4(A)(a) of the CCD Agreement and called upon the Promoter Shareholders and BPCL to purchase the equity shares and CCDs at an IRR of 22% p.a. BPIIPL responded on 16.09.2024, contending the sale notice was barred by limitation. On 11.12.2024, the appellant issued a notice under Section 21 of the A&C Act invoking arbitration and nominating an arbitrator. On 10.01.2025, the appellant lodged an arbitration request with the London Court of International Arbitration (LCIA). The plaintiffs filed commercial suits in Bengaluru court seeking to restrain the arbitration, asserting the arbitration clause did not provide for LCIA administration. The commercial court passed ex-parte interim orders on 28.04.2025, restraining the appellant from proceeding with the LCIA arbitration. The appellant filed the present appeals under Section 13(1A) of the Commercial Courts Act, 2015 challenging those interim orders. The appeals raised two key issues: (i) whether the arbitration clause in the CCD Agreement provides for LCIA arbitration, and (ii) whether the suits are maintainable given the bar under Section 5 of the A&C Act. The High Court heard arguments and reserved judgment. The judgment text as provided does not include the Court's final decision.
Headnote
A) Arbitration – Anti-Arbitration Injunction – Maintainability of Civil Suit – Section 5, Arbitration and Conciliation Act, 1996 – Suit filed to restrain the appellant from continuing with LCIA arbitration request – Appellant contended that Section 5 bars any judicial intervention except as provided in the A&C Act – Respondent argued that the suit was maintainable to determine whether the arbitration clause permitted LCIA administration – Issue involved interpretation of the scope of Section 5 and whether it ousts civil court jurisdiction for anti-arbitration injunctions (Paras 4, 20)
B) Arbitration – Interpretation of Arbitration Clause – Ad Hoc vs. Institutional Arbitration – Clause 18 of CCD Agreement – The arbitration clause required reference to dispute resolution in accordance with the A&C Act – Appellant claimed that the clause permitted LCIA administration, while respondents contended it prescribed ad hoc arbitration under Indian law – The court had to ascertain the parties’ intention from the language of the clause (Paras 4, 20)
Issue of Consideration
Whether the arbitration clause in the CCD Agreement provided for arbitration administered by the London Court of International Arbitration (LCIA) under LCIA Rules, 2020, and whether a civil suit for anti-arbitration injunction is maintainable in view of the bar under Section 5 of the Arbitration and Conciliation Act, 1996.
Law Points
- interpretation of arbitration clause
- applicability of LCIA Rules
- maintainability of suit to restrain arbitration under Section 5 of Arbitration and Conciliation Act
- 1996
- scope of interim injunction under Order XXXIX Rules 1 and 2 CPC
- power of Commercial Court under Section 13 of Commercial Courts Act
- 2015 to grant anti-arbitration injunction
- distinction between ad hoc and institutional arbitration
- contractual default and buy-back obligations under securities subscription agreements
Case Details
2020 LawText (KAR) (09) 45
COMAP No. 261 of 2025 c/w COMAP No. 279 of 2025
Hon'ble Mr. Vibhu Bakhru, Chief Justice; Hon'ble Mr. Justice C M Joshi
Appellant: Sri Dhyan Chinnappa, Senior Advocate, Sri Mohammed Shameer, Ms. Lavanya B. Ananth, Ms. Nidhi, Mr. Sudheesh Kesarkar; Respondents: Sri Udaya Holla, Senior Advocate in COMAP 261; Sri C.K. Nandakumar, Senior Advocate in COMAP 279
L and T Infra Investment Partners Advisory Private Limited
COMAP 261: Bhoruka Power Corporation Limited; COMAP 279: Bhoruka Power Investments India Pvt. Limited, Mr. Satyanarayana Agarwal, Ms. Umah Agarwal, Mr. Siddhartha Agarwal, Mr. Vivek Agarwal
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Nature of Litigation
Commercial appeals challenging interim orders restraining the appellant from proceeding with an arbitration request lodged with the London Court of International Arbitration (LCIA).
Remedy Sought
Appellant sought to set aside the impugned orders dated 28.04.2025 passed in I.A. No. 2 in Com. OS No. 384/2025 and 385/2025, which restrained the appellant from continuing with the LCIA arbitration.
Filing Reason
The commercial court granted an interim injunction on the ground that the arbitration clause in the CCD Agreement did not contemplate LCIA-administered arbitration, and the appellant contended that the suits were not maintainable and that the arbitration clause permitted institutional arbitration.
Previous Decisions
The LXXXII Addl. City Civil & Sessions Judge, Bengaluru, in interim applications under Order XXXIX Rules 1 & 2 CPC, passed orders dated 28.04.2025 restraining the appellant from continuing with the LCIA arbitration request.
Issues
Whether the arbitration clause under the CCD Agreement provides for arbitration administered by the London Court of International Arbitration (LCIA) under the LCIA Arbitration Rules, 2020.
Whether the suits filed by the respondents are maintainable in view of Section 5 of the Arbitration and Conciliation Act, 1996, which bars judicial intervention in arbitral proceedings except as specifically provided.
Submissions/Arguments
Appellant argued that the arbitration clause in the CCD Agreement permitted LCIA-administered arbitration, and that the suits seeking to restrain a domestic arbitration are barred by Section 5 of the A&C Act.
Respondents contended that the arbitration clause did not contemplate LCIA arbitration and that the suits were maintainable to interpret the scope of the arbitration agreement and to prevent an arbitration not consented to.
Judgment Excerpts
In terms of the impugned orders, the learned Commercial Court had restrained the appellant from continuing with the arbitration request dated 10.01.2025 lodged by the appellant with the London Court of International Arbitration [LCIA] and instituting or continuing any arbitration proceedings against the Plaintiffs under the LCIA Rules in respect of disputes arising from or in connection with the CCD subscription and Securities Holders Agreement dated 21.06.2013.
The appellant disputes the aforesaid contention. The appellant also challenges the maintainability of the suits on the ground that no action for restraining a domestic arbitration, is maintainable outside the framework of the Arbitration & Conciliation Act, 1996 [A&C Act], by virtue of Section 5 of the A&C Act.
Procedural History
The respondents/plaintiffs filed Com.O.S.No.384/2025 and 385/2025 before the LXXXII Addl. City Civil & Sessions Judge, Bengaluru, seeking to restrain the appellant from proceeding with the LCIA arbitration under the CCD Agreement. On 28.04.2025, the commercial court passed interim orders under Order XXXIX Rules 1 & 2 CPC, restraining the appellant from continuing the LCIA arbitration. The appellant then filed Commercial Appeals No. 261/2025 and 279/2025 under Section 13(1A) of the Commercial Courts Act, 2015 before the High Court of Karnataka, impugning those interim orders. The appeals were heard and reserved for judgment, and judgment was pronounced on 26.09.2025.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 5, Section 21
- Commercial Courts Act, 2015: Section 13, Section 13(1A)
- Code of Civil Procedure, 1908: Order XXXIX Rules 1 & 2
- Indian Trusts Act, 1882:
- Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012:
