The Madras High Court has restrained Yuzhan Technology India Pvt. Ltd., which is executing a project for a Foxconn group entity, from continuing the project either by itself or through third parties till 29 June 2026, holding that the employer cannot invoke its post-termination rights before the contractor’s contractual post-termination obligations expire.
Justice K. Kumaresh Babu passed the interim order in a dispute between BNR Infrastructure Projects Pvt. Ltd. and Yuzhan Technology arising out of the partial termination of an EPC contract. The parties had already referred their disputes to arbitration and a sole arbitrator had been appointed by consent. BNR had sought interim protection against the invocation of bank guarantees aggregating to ₹310 crore and against the termination of the contract.
The Court observed that while the parties had raised rival allegations regarding delays in execution of the project, those issues required adjudication before the arbitral tribunal and would not be decided in proceedings under Section 9 of the Arbitration and Conciliation Act, 1996.
Interpreting the contractual provisions, the Court noted that the termination notice dated 30 May 2026 granted BNR 30 days to fulfil its post-termination obligations, including handing over project materials, documents and final settlement records. Until the expiry of that period, the employer could not invoke the contractual clause permitting it to continue the balance work itself or through third parties. The Court further held that the employer’s right to retain or deploy the contractor’s materials would arise only after completion of the final settlement process and determination of outstanding receivables.
Accordingly, the High Court held that Yuzhan Technology would not be entitled to continue the project, either on its own or through third-party contractors, until 29 June 2026, while leaving all disputes relating to the validity of the termination, delays and contractual claims to be decided in arbitration.
