The Bombay High Court has held that when a contract is terminated without citing any breaches, parties cannot subsequently introduce fresh allegations in arbitration or court proceedings to justify the termination. Dismissing a challenge under Section 34 of the Arbitration and Conciliation Act, 1996, the Court upheld an arbitral award directing Lloyds Realty Developer Limited to pay ₹59.85 lakh to Oakwood Asia Pacific Limited.
The Petitioner assailed the award on two main grounds: first, that the Arbitrator erred by relying on the Letter of Intent (LOI) to infer that “time was of the essence” in the subsequently executed contract; and second, that the case was one of repudiation, where reasons for termination need not be expressly stated relying on Juggilal Kamlapat v. Pratapmal Rameshwar (1978) 1 SCC 69.
Justice Sandeep V. Marne rejected both contentions. On the first issue, the Court clarified that the Arbitrator referred to the LOI only to assess the Petitioner’s own allegation of delay, and not to rewrite or alter the terms of the executed agreement. The LOI was not used to advance the Respondent’s case, but merely to understand the factual matrix placed by the Petitioner itself.
On the second issue, the Court held that the reliance on Juggilal Kamlapat was wholly misplaced. The present dispute involved termination by express communication, not repudiation arising through conduct. Since the Petitioner’s termination letter did not allege any breach on the part of Oakwood, the Petitioner could not later claim breaches for the first time in arbitration. The Court emphasised:
“Repudiation arises out of conduct. Termination is the legal ending of the contract effected by express communication. Here, the contract was expressly terminated by the Petitioner without alleging any breaches.”
Finding no ground under Section 34, the Court upheld the Arbitrator’s reasoning, noting that the Tribunal had not rejected breach allegations merely for lack of contemporaneous correspondence rather, the alleged breaches were never proved. The petition was accordingly dismissed.
Appearances:
Mr. Navroz Seervai, Senior Advocate with Mr. Tushar Hathiramani, Ms. Lizum Wangdi, Mr. Abhishek Kale, Ms. Shalvika Nachankar, Mr. Aditya Ojha and Ms. Meenakshi Krishna i/b M/s. Naik Naik & Co. for the Petitioner.
Mr. Ashishchandra Rao with Mr. Manav Nagpal and Ms. Anuli Mandlik i/b M/s. Economic Law Practice for Respondent.
