Delhi High Court Halts Arbitration in Ramprastha–Rhine Power Dispute Pending Contempt Ruling

The Delhi High Court on 20 April upheld a Single Judge's order directing that arbitration proceedings between Ramprastha Promoters & Developers Pvt. Ltd. and investor Rhine Power Pvt. Ltd. remain stayed until the Court decides a pending contempt petition concerning alleged sale of fifteen flats in breach of a subsisting Section 9 injunction.

A Division Bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia dismissed Ramprastha's intra-court appeal and affirmed the direction deferring arbitration, holding that the contempt proceedings and arbitration were inextricably linked and could not proceed independently. It observed:

“Compelling continuation of the arbitration while the contempt petition remains pending would be manifestly unjust, as the outcome of the contempt proceedings would have a direct bearing on the nature of relief in arbitration. The issues arising are inextricably connected, and it is appropriate to await the decision in the contempt petition.”

The dispute arose from an Agreement to Sell dated 27 September 2018 under which Ramprastha agreed to sell certain flats to Rhine Power. Following disputes, Rhine Power invoked arbitration seeking specific performance.

Before arbitration commenced, Rhine Power approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996 and obtained an interim injunction on 2 June 2023 restraining Ramprastha from creating third-party rights or parting with possession of the flats.

After the constitution of the arbitral tribunal, interim protection continued. During the subsistence of the injunction, Ramprastha sold and transferred possession of fifteen flats forming part of the subject matter.

Rhine Power initiated contempt proceedings alleging wilful disobedience of the Section 9 order. On 7 November 2024, the Court recorded a prima facie finding of wilful disobedience against Ramprastha.

Thereafter, Rhine Power sought adjournment of arbitration proceedings before the tribunal on 20 November 2024 till disposal of the contempt petition. The tribunal rejected the request on 4 December 2024, holding that the Arbitration and Conciliation Act, 1996 did not permit such a stay absent a court order.

Rhine Power challenged the refusal before the High Court. On 2 February 2026, a Single Judge directed that arbitration await the outcome of the contempt proceedings.

Ramprastha appealed, arguing that arbitration must proceed independently and alleging that the Section 9 injunction had been obtained by misrepresentation. It further contended that judicial interference in arbitral proceedings was impermissible. Rhine Power submitted that unless the contempt court first determined the validity of the impugned transfers, its claim for specific performance would be rendered ineffective and reduced to damages.

Upholding Rhine Power's submissions, the Division Bench held that the outcome of the contempt proceedings would directly determine the nature of relief available in arbitration, particularly whether specific performance could still be granted.

The Court observed that if the contempt court ultimately finds the transfers void for breach of injunction, the claim for specific performance may still survive in arbitration. The Bench noted that Ramprastha had not challenged the original Section 9 order and could not indirectly assail its validity in contempt proceedings. It reiterated that disobedience of an operative court order attracts contempt consequences even if the order is later modified or set aside.

Holding that the case met the narrow threshold for judicial intervention to prevent prejudice to effective relief, the Court clarified that the direction did not interfere with arbitral autonomy but preserved the efficacy of judicial proceedings.

Accordingly,the Division Bench dismissed the appeal and upheld the order keeping arbitration in abeyance.

Appearances for appellant (M/s Ramprastha Promoters Developers Pvt Ltd): Senior Advocate Virender Ganda, with Advocates Sougat Sinha, R. Gayathri Manasa, Ayandeb Mitra, Ishika Sharma, Gargi Patel, Sonali Kumar, Vishal Majumdar and Maitrayee Shrivastva.

Appearances for respondent (M/s Rhine Power Pvt Ltd): Advocate Viksit Arora.