No Prima Facie Arbitration Agreement In Restructuring Dispute: Delhi HC Denies Section 9 Relief To Parsvnath Group Against ARCIL

The Delhi High Court has declined to grant interim protection to Parsvnath Developers Limited and its group entities in their dispute with Asset Reconstruction Company (India) Limited (ARCIL), holding that the petitioners failed to establish the prima facie existence of a valid arbitration agreement governing the present restructuring dispute. The bench of Justice Jasmeet Singh delivered the judgment in petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996, wherein the real estate major and its affiliates sought urgent interim reliefs against ARCIL in relation to an alleged settlement and restructuring arrangement. Parsvnath Developers and its group companies had availed loan facilities aggregating ₹4,861.25 crore from lenders, out of which ₹4,153.26 crore was disbursed. According to the petitioners, they repaid approximately ₹4,696.01 crore, including interest. A key point of dispute concerned ₹394.36 crore allegedly deducted as “upfront payments” or grossed-up TDS, which the petitioners claimed was neither adjusted towards outstanding dues nor refunded. Despite this, the lenders maintained that substantial amounts remained unpaid. The loan exposure was subsequently assigned to ARCIL through an assignment agreement. The litigation history between the parties has been extensive. Proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) were initiated in 2022 but later withdrawn after the borrowers contended that dues stood cleared. Fresh recall notices were issued in 2023, followed by another Section 7 petition before the National Company Law Tribunal (NCLT). That petition too was eventually disposed of. Meanwhile, the lenders had also invoked arbitration under Section 9 of the Arbitration Act, but those proceedings were withdrawn in April 2024. In late 2024, settlement negotiations were initiated. ARCIL, which had by then acquired the loan exposure, allegedly agreed to settle the entire outstanding exposure of the Parsvnath Group for ₹750 crore. The petitioners claimed that Rs. 125 crore was paid as part of the settlement (including ₹75 crore tendered on February 17, 2025). The Section 7 IBC proceedings were withdrawn on the same day. The settlement was recorded in NCLT and High Court orders. A draft composite restructuring agreement was circulated and negotiations progressed. A meeting on July 9, 2025 allegedly fixed July 16, 2025 for execution of documents. However, by email dated July 16, 2025, ARCIL withdrew from the restructuring process and stated it would proceed in accordance with law. The petitioners approached the High Court seeking stay of ARCIL’s July 16 email rejecting the restructuring proposal, restraint on coercive recovery measures, stay of fresh insolvency proceedings, and protection of pledged securities and personal guarantees. Senior Advocates Rajiv Nayar and Dayan Krishnan, appearing for ARCIL, raised four principal objections. Firstly, the alleged restructuring arrangement was not signed, contained no arbitration clause, and could not incorporate the arbitration clause of the original loan agreements. Secondly, the draft restructuring agreement had essential terms left blank. Continuous negotiations and exchange of drafts showed absence of consensus ad idem. Thirdly, civil courts cannot restrain proceedings under Section 7 of the IBC in view of Sections 231 and 238 of the Code. Lastly, recovery actions under SARFAESI and the RDB Act fall within exclusive jurisdiction of DRTs and cannot be interdicted through Section 9 proceedings. The petitioners argued that an email dated December 30, 2024 constituted an offer. Acceptance was recorded in NCLT proceedings on February 17, 2025. Payment of ₹125 crore fulfilled the contingency, resulting in a binding contract. The arbitration clause in the original loan agreements applied to disputes arising from the restructuring exercise. At the Section 9 stage, the Court need only examine the prima facie existence of an arbitration agreement. The court held that while judicial intervention at the pre-arbitral stage is limited, the foundational requirement under Section 9 remains the existence of an arbitration agreement. The Court observed that the petitioners’ stand was inconsistent — at times claiming novation of the original loan agreements, and at other times invoking the arbitration clause contained therein. If novation had occurred, the original arbitration clause would cease to apply. If the original agreements subsisted, the plea of novation could not be sustained. The draft restructuring agreement did not contain an arbitration clause. Mere reference to prior documents does not amount to incorporation of an arbitration clause unless there is conscious acceptance and clear intention, as laid down in M.R. Engineers & Contractors v. Som Datt Builders and Elite Engineering v. Techtrans Construction. The Court emphasised that incorporation by reference requires specific and conscious adoption of the arbitration clause — not merely a general reference. Given the shifting stands — from oral settlement to draft restructuring to email-based contract — the Court held that the petitioners failed to establish the prima facie existence of a binding arbitration agreement governing the present dispute. Case Details Case Title: Parsvnath Developers Limited & Ors. Versus Asset Reconstruction Company India Limited & Ors. Citation: JURISHOUR-39-HC-2026(Del) Case No.: O.M.P. (I) (COMM) 330/2025, I.A. 20016/2025, I.A. 26706/2025 Date: 19 .02.2026 Counsel For Appellant: Rajat Joneja Counsel For Respondent: Rajiv Nayar, Sr Adv. 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No Prima Facie Arbitration Agreement In Restructuring Dispute: Delhi HC Denies Section 9 Relief To Parsvnath Group Against ARCIL

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