No Concluded Contract, No Interim Relief: Delhi High Court Dismisses Developer's Plea Against ARCIL

The Delhi High Court has dismissed Parsvnath Developers' plea seeking enforcement of an alleged Rs. 750 crore restructuring agreement against Asset Reconstruction Company (India) Limited, holding that courts cannot compel parties to honour a settlement that never matured into a concluded contract.

Justice Jasmeet Singh held that the draft restructuring agreement remained at a negotiatory stage. Although drafts were exchanged, essential terms were unsettled. The schedules were marked preliminary and subject to internal approval. Several material particulars were left blank.

In these circumstances, the court held, “In the absence of a concluded agreement, the foundational basis for the reliefs sought in the present petition collapses"

Parsvnath had invoked Section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain ARCIL from acting on its 16 July 2025 email rejecting the restructuring and from pursuing insolvency and recovery proceedings.

At the outset, the Court clarified that at the Section 9 (interim relief) stage, the primary enquiry is the existence of an arbitration agreement.

On this aspect, the Bench rejected Parsvnath's case that the arbitration clause from the original loan agreements stood incorporated into the draft restructuring arrangement. “There is neither a specific reference nor a clear intention to incorporate the arbitration clause,” the Court held.

Parsvnath had argued that the restructuring amounted to novation of the original loan agreements. At the same time, however, it relied on the arbitration clause embedded in those very agreements. The court held that these positions were inconsistent. If the contracts stood novated, the arbitration clause would cease to operate. Conversely, if the arbitration clause survived, the plea of novation necessarily failed.

Referring to settled law on incorporation by reference, the court observed that “mere reference to another document containing an arbitration clause does not ipso facto result in incorporation of the arbitration clause contained therein"

Parsvnath and its group entities had availed loan facilities aggregating Rs. 4,861.25 crores from lenders, whose exposure was subsequently assigned to ARCIL. Earlier Section 7 insolvency proceedings were withdrawn or disposed of before the National Company Law Tribunal.

According to Parsvnath, the parties later arrived at a “mutual understanding” to settle the entire exposure for Rs. 750 crores. It paid Rs.125 crores and circulated draft restructuring documents in furtherance of that understanding.

However, the Court noted that the email exchanges between March and July 2025 reflected continuing negotiations rather than a concluded bargain. Drafts were revised. Comments were exchanged. Open issues remained unresolved. Ultimately, the proposal was rejected on July 16, 2025.

Holding that Section 9 cannot be used to create contractual rights where none exist, the Court dismissed the petitions and vacated the interim order.

For petitioner (Parsvnath Developers Limited & Ors.; Noida Marketing Private Limited): Advocates Rajat Joneja, Manoranjan Sharma, Arpit Dwivedi, Karan Rajpurohit and Sakshi Kapoor.

For respondent (Asset Reconstruction Company (India) Limited & Ors.): Senior Advocates Rajiv Nayar and Dayan Krishnan with Advocates Meghna Mishra, Karan Luthra, Ujjwala Gupta, Shubham Madaan and Siddharth Joshi.