The Delhi High Court has held that where the contract expressly places a continuing obligation on the developer to procure and keep approvals valid and subsisting, the developer cannot narrowly argue that its responsibility ended with initial procurement alone. If the contractual framework, read with due diligence recitals and “as is where is” acknowledgments, shows that the developer had assumed the risk and responsibility relating to approvals and the condition of the land, then a prima facie challenge to termination may fail at the interim stage.
The Court also laid down that where a joint development agreement does not create any proprietary or possessory right in the land and merely gives the developer a contractual right to develop and receive a revenue share, the developer’s loss is ordinarily compensable in damages. In such a case, interim orders staying termination or compelling continuation of the contract would amount to enforcing the contract itself rather than merely preserving the subject matter of arbitration, and such relief is not warranted under Section 9.
The Court clarified that even where a development agreement is found to be non-determinable because it is terminable only for cause after notice and cure, interim protection under Section 9 of the Arbitration and Conciliation Act will not follow as a matter of course. The applicant must still independently satisfy the three-fold test of prima facie case, balance of convenience and irreparable injury.
A Single Judge Bench of Justice Jasmeet Singh first reiterated the settled scope of Section 9. It held that interim relief under Section 9 is intended to preserve and protect the subject matter of arbitration, prevent the arbitral process from becoming ineffective, and is governed by the familiar three-fold test of prima facie case, balance of convenience and irreparable injury. The Court made it clear that although Section 9 powers are wide, they cannot be used to grant final relief or to order enforcement of contractual obligations unless such protection is necessary to preserve the subject matter of the dispute.
On the nature of the prayers, the Court held that GCD’s request to stay the termination notice and maintain status quo on the JDA was, in substance, a request to continue and enforce the JDA despite its termination by DCM. The Court said that granting such relief would effectively amount to specific performance of the contract at the interim stage. It therefore examined the issue through the lens of Sections 14(d) and 41(e) of the Specific Relief Act, which bar specific enforcement of contracts that are in their nature determinable and bar injunctions to prevent breach of contracts that cannot be specifically enforced.
On the question whether the JDA was determinable, the Court did not accept DCM’s broad contention that the agreement was determinable merely because it contained a termination clause. After examining Clause 11 of the JDA, the Court held that the JDA was terminable only for cause and only after notice and an opportunity to cure. It therefore fell within the category of a contract terminable for cause with notice and cure, which the Court treated as essentially non-determinable in nature. The Court further observed that although Clause 11.1.2 gave DCM power to assess material breach, this did not amount to an unrestricted right to revoke the agreement without cause. On this limited issue, the Court answered in GCD’s favour.
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But having held that the contract was non-determinable, the Court immediately clarified that this did not automatically entitle GCD to interim protection under Section 9. The real test still remained whether GCD had shown a prima facie case, balance of convenience and irreparable injury. The Court then turned to the core contractual clauses and found that Clause 4.4.1 squarely imposed a continuing obligation on GCD not only to procure approvals and licences but also to keep them valid and subsisting during the project. On that reading, the Court rejected GCD’s argument that its duty ended once the original licence had been obtained and did not extend to reinstatement after suspension.
The Court also relied heavily on the due diligence architecture of the transaction. Recital E of the term sheet, Recital F of the JDA and Clause 9.8 showed, in the Court’s view, that GCD had carried out detailed title, legal and technical due diligence, had examined all material documents relating to the land, had accepted the development rights strictly on an “as is where is” basis, and had acknowledged that DCM had disclosed all material information. Because of these contractual acknowledgments, the Court held that GCD could not at the Section 9 stage turn around and argue suppression of facts or lack of knowledge about the land-related issues. This weakened GCD’s attempt to blame DCM alone for the suspension.
On irreparable injury and balance of convenience, the Court found that GCD had no proprietary or possessory right in the subject land. The JDA gave DCM title and possession over the land, while GCD’s interest was confined to joint development rights subject to due performance and a 45% share of net sale revenue. The arrangement was therefore seen as a profit-sharing development model, not as a transfer of land rights. On that basis, the Court held that any loss to GCD was compensable in money if it ultimately succeeded before the arbitral tribunal. Since damages were an adequate remedy, no case of irreparable loss was made out.
Briefly, GCD Prime filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996 before the Delhi High Court seeking urgent interim protection against DCM Limited’s termination notice issued under the Joint Development Agreement (JDA). GCD asked the Court to stay the termination notice, restrain DCM from acting on it, prevent any sale, transfer, mortgage or creation of third-party rights over the land, and maintain status quo regarding ownership, possession, title, rights and development of the project land pending arbitration.
The dispute arose out of a real estate joint development arrangement concerning about 68.35 acres of land at Village Bir, Sector-23, Hisar, Haryana, owned by DCM. In 2022, DCM approached GCD to develop the land under the Deen Dayal Jan Awas Yojana, after which the parties first executed a term sheet and then a detailed JDA. Under this structure, DCM was to contribute the land, while GCD was to develop, construct and market the project at its own cost. GCD claimed that the JDA vested it with substantial development rights and entitled it to retain 45% of the net sales revenue.
GCD stated that it paid Rs. 50 crores in advance and took steps to secure statutory approvals, including obtaining a letter of intent and licence for development of an affordable plotted colony over 67.275 acres. It also claimed to have incurred substantial expenses and started performing its obligations under the JDA. However, the Director General, Town and Country Planning, Haryana suspended the licence because of an enquiry against DCM concerning alleged unauthorized sale of land and illegal change of land use, and directed cessation of development activities while also prohibiting creation of third-party rights.
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According to GCD, because the project had come to a standstill, DCM later served a notice alleging “events of default” by GCD for not ensuring validity of the licence and called upon it to cure the defects within 30 days. This was followed by the impugned notice by which DCM sought forfeiture and termination under Clause 11.3 of the JDA, stating that GCD’s rights would stand forfeited and the JDA terminated after 15 days. GCD then moved the High Court under Section 9. During the proceedings, arbitration was also invoked under Section 21 and a sole arbitrator, Justice (Retd.) Badar Durrez Ahmed, was appointed.
GCD’s case was that it had committed no breach at all. It argued that its contractual duty was to obtain the licence and approvals, not to secure reinstatement of a licence suspended because of issues attributable to DCM. It said the suspension was linked to allegations against DCM relating to illegal sale, land use change and non-disclosure, and therefore there was no “GCD event of default” within Clause 11. GCD also argued that the JDA was not determinable in nature, especially because Clause 12 described the agreement as irrevocable except as otherwise provided, and because the termination structure was only for cause with notice and cure. It further claimed prima facie case, balance of convenience and irreparable injury on the basis of its investments and its alleged vested rights in the land.
DCM, on the other hand, argued that the JDA and term sheet clearly placed responsibility on GCD to procure and keep all necessary approvals and licences valid and subsisting. DCM relied particularly on Clause 4.4.1 of the JDA and the due diligence recitals to contend that GCD had undertaken full legal and technical due diligence and accepted the land on an “as is where is” basis. DCM also argued that GCD had no ownership or possessory right in the land and was only entitled to 45% of net sale revenue under a profit-sharing model. It said the contract was determinable, the relief sought was effectively specific performance under the guise of Section 9, and in any event GCD’s remedy, if any, was only damages.
