Highlights:

Corporate Brief

• SEBI circular regarding the amendment to the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025.
• SEBI circular on Framework on Social Stock Exchange (SSE).
• RBI circular regarding Master Directions – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025.
• RBI circular regarding Master Direction – Reserve Bank of India (Prudential Norms on Capital Adequacy for Regional Rural Banks) Directions, 2025.
• RBI circular on Gold Monetization Scheme (GMS), 2015 – Amendment.
• SEBI circular regarding the amendment to Master Circular for Real Estate Investment Trusts. 

RERA Brief 

• Circular dated 01.03.2025 issued by the Telangana Real Estate Regulatory Authority (“TG RERA”) for issuance of instructions / guidelines for extension of project registration under Section 6 of the Real Estate (Regulation and Development) Act, 2016 (“RERA Act”).
• Circular dated 04.03.2025 issued by the TG RERA for incorporating the amendment to Telangana Real Estate (Regulation & Development) Rules, 2017 (“Telangana RERA Rules”).
• Order dated 28.03.2025 issued by the Gujarat Real Estate Regulatory Authority (“GujRERA”) regarding extension of Voluntary Compliance Scheme–2025 (Form-5).
• Office order dated 28.03.2025 issued by the Uttar Pradesh Real Estate Regulatory Authority (“UP RERA”) regarding mandatory court fees on authorization letters submitted by authorized representatives. 

Intellectual Property Rights Brief

• Azure Hospitality Private Limited vs. Phonographic Performance Limited.
• Office of the Controller General of Patents, Designs & Trade Marks (O/o CGPDTM) Launched a new format for Copyright Registration Certificate and Secure Online Filing Procedures on World Copyright Day 2025. 

NCLT Brief  

• Piramal Capital and Housing Finace Ltd. Vs. 63 Moons Technologies Ltd. & Ors.

Litigation Brief

• Nikhila Divyang Mehta & Anr. VS. Hitesh P. Sanghvi & Ors. 
• Composite Arbitration Allowed Despite Multiple Work Orders: Courts Now Emphasize Substance over Form.

Corporate Brief:

SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2025.

Circular No. SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31 dated 11.03.2025 of Securities and Exchange Board of India (SEBI) 

In exercise of the powers conferred under Section 11 and Section 11A of the Securities and Exchange Board of India Act, 1992 read with Regulation 299 of SEBI (Issue of Capital and Disclosure   Requirements) Regulations, 2018 (“SEBI (ICDR) Regulations”), Securities and Exchange Board of India (“SEBI”) has issued the circular SEBI/HO/CFD/CFD-PoD-1/P/CIR/2025/31 dated 11.03.2025 (“said Circular”) introducing a new framework for Rights issue. As a part of the new framework, in terms of amended Regulation 85 of SEBI (ICDR) Regulations, it is specified that Right issues shall be completed within 23 working days from the date of the Board of Directors of the Issuer approving the Rights Issue.

The revised timelines for completion of the various activities involved in the Rights Issue process from the date of the Board of Directors of the Issuer approving the Rights Issue till the date of closure of the Rights Issue have been provided under Annexure I of the said Circular. Further, it has also been specified that in case the issuer makes a rights issue of convertible debt instruments, wherein shareholders’ approval is required, then the timelines for the Rights Issue would be adjusted accordingly, owing to shareholders’ approval. In terms of Regulation 87 of SEBI (ICDR) Regulations, it is specified that Right Issue shall be kept open for subscription for a minimum period of 7 days and for a maximum period of 30 days.

System for Validation of Bids

Under the said Circular, it has also been stated that Validation of application bids received for subscribing to the shares in the Rights Issue and finalization of basis of allotment shall also be carried out by the Stock Exchanges and Depositories along with the Registrar to the issue. Accordingly, a system for automated validation of applications by the investors shall be developed by the Stock Exchanges and Depositories within a period of six months from the date of applicability of said Circular.

In view of the new framework of the Rights Issue, the necessary modifications were carried out in Master Circular No. SEBI/HO/CFD/PoD-1/P/CIR/2024/0154 on SEBI (ICDR) Regulations. The said Circular shall come into effect from 07.04.2025.

Framework on Social Stock Exchange (“SSE”) 

Circular SEBI/HO/CFD/PoD-1/P/CIR/2025/33 dated 19.03.2025 of SEBI: 

In exercise of the powers conferred under Section 11 and Section 11A of the Securities and Exchange Board of India Act, 1992, read with Regulation 299 of SEBI ICDR Regulations, SEBI has issued the circular No. SEBI/HO/CFD/PoD-1/P/CIR/2025/33 dated 19.03.2025.

SEBI vide its circular SEBI/HO/CFD/PoD-1/P/CIR/2022/120 dated 19.09.2022, notified the detailed framework on the Social Stock Exchange. The same was amended vide Circular SEBI/HO/CFD/PoD-1/P/CIR/2023/196 dated 28.12.2023.

Based on recommendations of the Social Stock Exchange Advisory Committee and public comments received in respect of the Consultation paper in the matter, SEBI has amended the existing minimum application size for subscribing to Zero Coupon Zero Principal Instruments from Rs. 10,000 (Rupees ten thousand only) to a lower amount i.e. Rs. 1,000 (Rupees one thousand only).

Master Directions – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025.

Notification Number RBI/FIDD/2024-25/128 dated 03.2025 of the Reserve Bank of India (RBI): 

In exercise of the powers conferred under section 21 and 35A read with Section 56 of the Banking Regulation Act, 1949, the Reserve Bank of India (“RBI”) has issued the Master Directions – Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2025 (‘Master Direction”).

The Master Directions shall come into effect on 01.04.2025 and shall supersede the earlier Directions on the subject, namely, the Reserve Bank of India (Priority Sector Lending – Targets and Classification) Directions, 2020 (Ref. FIDD.CO.Plan.BC.5/04.09.01/2020-21) dated 04.09.2020. All loans eligible to be categorised as Priority Sector Lending under the erstwhile Master Directions on PSL dated September 04, 2020 (updated from time to time) shall continue to be eligible for such categorization under this Master Directions. 

Master Direction – Reserve Bank of India (Prudential Norms on Capital Adequacy for Regional Rural Banks) Directions, 2025

Notification Number RBI/DOR/2024-25/129 dated 25.03.2025 of the RBI:

In exercise of the powers conferred under Section 35A of the Banking Regulation Act 1949, and of all the powers enabling it in this behalf, the RBI on 25.03.2025 has issued Master Direction – Reserve Bank of India (Prudential Norms on Capital Adequacy for Regional Rural Banks) Directions, 2025 (“Prudential Norms Direction”).

The Prudential Norms Directions aim to consolidate and incorporate all the existing guidelines/ instructions/directives applicable to Regional Rural Banks (“RRBs”) relating to the subject matter in one place. The Prudential Norms Directions shall come into effect from 01.04.2025.

Gold Monetization Scheme (GMS), 2015 – Amendment

Circular Number RBI/2024-25/132 dated 25.03.2025 of RBI: 

In the exercise of the powers conferred by Section 35A of the Banking Regulation Act, 1949, RBI has issued notification bearing number RBI/2024-25/132 dated 25.03.2025 (“Amendment Circular”) has amended the Master Direction No.DBR.IBD.No.45/23.67.003/2015-16 dated October 22, 2015 on Gold Monetization Scheme, 2015.

Under the Amendment Circular, the RBI has announced the discontinuation of Medium-Term and Long-Term Government Deposits (“MLTGD”) under Gold Monetization Scheme, 2015. Accordingly, any gold deposits tendered at the designated Collection and Purity Testing Centre (CPTC) or GMS Mobilisation, Collection & Testing Agent (GMCTA) or the designated bank branches towards the MLTGD component of GMS shall not be accepted after March 25, 2025. The designated banks, at their discretion, may offer Short Term Bank Deposits (STBD) under GMS. The MLTGD mobilized till March 25, 2025, shall continue till redemption as per the extant guidelines.     

SEBI circular regarding the amendment to master circular Real Estate Investment Trusts (RIETs) dated May 15, 2024.

Circular SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/43 dated 28.03.2025 of the Securities and Exchange Board of India (SEBI): 

In exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992 and Regulation 14(3), 14(11) and 33 of the SEBI (Real Estate Investment Trusts) Regulations) Regulations, 2014, SEBI has issued the said No. SEBI/HO/DDHS/DDHS-PoD-2/P/CIR/2025/43 dated 28.03.2025 (“Amendment Circular”), amending certain provisions of the Master Circular for Real Estate Investment Trusts (“REITs”) dated May 15, 2024. The following amendments were made by the Amendment Circular:

Review of Lock-in Provisions of Preferential Issue of Units for REITs

Under the Amendment Circular, it has been stated that –

1. Fifteen percent of the units allotted to sponsor(s) and sponsor group(s) shall be locked in for a period of three years from the date of trading approval granted for the units;
2. The remaining units allotted to sponsor(s) and sponsor group(s) shall be locked in for a period of one year from the date of trading approval granted for the units.

Provided that the sponsor(s) and sponsor group(s) shall comply with the minimum unitholding requirement specified in Regulation 11(3) of SEBI (Real Estate Investment Trusts) Regulations, 2014, at all times.

RERA Brief:

Circular dated 01.03.2025 issued by the TG RERA for issuance of instructions / guidelines for extension of project registration under Section 6 of the Real Estate (Regulation and Development) Act, 2016.

• Vide this circular dated 01.03.2025, TG RERA stated that the application filed for extension of Registration must contain the following information –

1. detailed explanatory note on delay in promoter’s letterhead clearly indicating the status of development work in the project, pending works in the project and the reasons, in detail, for not completing the construction and development work in the project within the period as declared by the promoter in force of application and the same was granted by the Authority, including any previous extension(s) granted,
2. notarized affidavit by promoter in prescribed format,
3. an excel file of the proposed physical and financial plan for completion of the project to be uploaded by promoter in prescribed format,
4. the date till which extension of registration is being sought, not to exceed a period of one year,
5. valid sanctioned plan/ building plan/ layout,
6. promoter to ensure that all the QPRs, i.e., Audited Annual Accounts Statements, withdrawal details from separate/designated project account with certification from project Architect, project Engineer, Chartered Accountant, are completed and up to date,
7. details of project separate/ designation bank accounts to be filled, kept up to date and accurate, and
8. promoter to obtain the consent of individual allottees in the project in the prescribed format, along with excel file containing the list of sold and unsold inventory in prescribed format provided.

• For further details regarding the said circular dated 01.03.2025, the following link can be referred:

https://rera.telangana.gov.in/Home/ShowPdf?pdffilename=BU_180325140524694.pdf

Circular dated 04.03.2025 issued by TG RERA for incorporating the amendment to Telangana RERA Rules.

• In order to align the Telangana RERA Rules, with the provisions of the RERA Act, and in view of the directions issued by the Government of Telangana vide G.0.Ms. No.60, MA&UD Dept., dated 04.03.2025; the following amendments have been incorporated into the Telangana RERA Rules:

1. Substitution of Rule 1(2): The existing Rule 1(2) of the Telangana RERA Rules, to be substituted with the following:

“These Rules are applicable to all Real Estate Projects for which the completion certificate has not been issued as on the date of coming into force as stipulated in sub-section (1) of section 3 of the Real Estate (Regulation &Development) Act,2016 by the Competent Authorities viz., UDAs/DTCP/Municipal Corporations/Municipalities/Nagar Panchayats/TGIIC.”

1. Substitution of Rule 2(1)(j): The existing Rule 2(1)(j) of the Telangana RERA Rules shall be substituted with the following:

“Ongoing Project” means a Project where development is going on and for which Occupancy Certificate or Completion Certificate from the Competent Authority has not been issued as on the date of coming into force as per sub-section (1) of section 3 of the Real Estate (Regulation & Development) Act, 2016.”

• The link to the circular dated 04.03.2025 is as follows: https://rera.telangana.gov.in/Home/ShowPdf?pdffilename=BU_130325152324048.pdf

Order dated 28.03.2025 issued by GujRERA regarding extension of Voluntary Compliance Scheme–2025 (Form-5).

• As per the order dated 28.03.2025, GujRERA is considering to increase the processing fees for online submission of pending Form-5 (Annual Report) and as a last chance to defaulting promoters, has extended the deadline for the Voluntary Compliance Scheme-2025 (Form-5) till 30.04.2025.

Office order dated 28.03.2025 issued by UP RERA regarding mandatory court fees on authorization letters submitted by authorized representatives.

• Vide the office order dated 28.03.2025, keeping in view the provisions of Schedule 2, serial number 10(c) of the Court Fees Act, 1870, UP RERA has mandated that, a court fee of Rs. 5.00/- (Rupees Five only) is to be levied on every authorization letter submitted by any authorized representatives, such as chartered accountants, company secretaries, cost accountants, or legal practitioners, of the parties in all matters before UP RERA.
• The said order dated 28.03.2025 shall be applicable on all authorization letters submitted on or after 01.04.2025.
• The link to the said office order dated 28.03.2025 is as follows:

https://www.up-rera.in/pdf/Order-Court-Fees.pdf.

Intellectual Property Rights Brief:

Azure Hospitality Private Limited vs. Phonographic Performance Limited.

[HIGH COURT OF DELHI | SUPREMENT COURT OF INDIA | CM APPL. 16177/2025]

Issue:

In related to a matter of copyright infringement, whether an unregistered copyright society, also an assignee of copyright, can issue licenses and enforce rights under Section 30 of the Copyright Act.

Case Brief:

Phonographic Performance Ltd (PPL) alleged that Azure Hospitality Pvt. Ltd. violated its copyright by using sound recordings in its restaurants without obtaining valid licence. PPL claimed ownership of the rights through assignment deeds from original producers/authors under Section 18 of the Copyright Act, 1957 (“Act”).  PPL was a registered copyright society until from 1996-2014. Since the expiry, it has not been re-registered neither has it become a part of any other society. PPL has not denied being considered as a copyright society.

Azure argued that in the case of a copyright society, only a registered society can issue license under Section 33 of the Act. That PPL is not a registered copyright society and therefore cannot issue licenses or enforce licensing rights.

On March 3, 2025, the Single Judge of the Delhi High Court granted an interim injunction restraining Azure from using PPL’s sound recordings.

Azure appealed to the Division Bench and on April 15, 2025, the Division Bench held that “…there is no embargo on PPL licensing the sound recordings assigned to it and forming part of its repertoire, but, for that purpose, PPL would have either to be a registered copyright society or a member of one. PPL is admittedly not a registered copyright society, though it was one at an earlier point of time. It could, however, still licence the subject sound recordings for playing in the public, but in accordance with the terms of the copyright society registration which, presently, vests only with RMPL. If PPL were to be a member of RMPL – we note, from the website of RMPL that it has nearly 700 members – it could grant licences to others, such as Azure, to play the sound recordings in which copyright stands assigned to it, but at the Tariff rates applicable to RMPL as per the copyright society registration granted to it under Section 33(3).”

Azure and PPL were also required to submit a three-monthly statement of payments made and received before the learned Single Judge.

PPL filed an appeal at the Supreme Court against the order by the Division Bench at the High Court of Delhi. On April 22, 2025, the Supreme Court stayed the Division Bench’s direction requiring the payments as per RMPL’s and to submit the three-monthly statements. The Supreme Court also ordered that the order dated March 03, 2025 passed by the Single Judge will not operate.

The next date of hearing is July 21, 2025.

Office of the Controller General of Patents, Designs & Trade Marks (O/o CGPDTM) Launched a new format for Copyright Registration Certificate and Secure Online Filing Procedures on World Copyright Day 2025.

On the occasion of World Copyright Day 2025, the Office of the Controller General of Patents, Designs and Trade Marks (O/o CGPDTM) under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry, introduced a new format for the Copyright Registration Certificate and revamped the online copyright filing process. This initiative marks a significant step toward improving transparency, efficiency, and security in the copyright registration process. The upgraded filing system introduces multi-factor authentication (OTP-based login) to strengthen the security framework for applicants and ensure the integrity of the registration process.

NCLT Brief

Piramal Capital and Housing Finace Ltd. Vs. 63 Moons Technologies Ltd. & Ors

Brief Facts: –

Dewan Housing Fianance Corp Ltd. (DHFL), the Corporate Debtor (CD) was a housing and a non-banking financial company and was admitted into insolvency.  Eoi’s from 24 PRA’s were received out of which the plan submitted by Piramal Capital was approved by the CoC.  After the report of the Transaction Auditor was submitted, it was unearthed that the CD had made some transactions amounting to Rs. 45 Cr. u/s 43 to 51 and u/s 66 of IBC. Subsequently, applications were filed before the AA.  One of the creditors, 63 Moons Technologies Ltd.  filed an application before the NCLT challenging that the recoveries made from applications u/s 66 cannot appropriated towards the benefit of the SRA.  The said application was dismissed by NCLT stating that the plan was approved by a CoC of constituting of 77 Financial Creditors in their commercial wisdom giving away recoveries made from sec 66 applications to SRA in exchange of a lump sum of 37 Cr. Appeal against the said order of NCLT was filed before NCLAT by 63 Moons. Vide the order of the appeal, the order passed by NCLT was set aside by NCLAT and the plan was sent back to CoC for consideration.  NCLAT in its order held that Regulation 37A of IBBI (Liquidation Process) Regulations, 2016 empowers a liquidator to assign or transfer a not readily realizable asset during the liquidation of a CD. However, there is an absence of any such provision for the CIRP process. Hence, such recoveries cannot be transferred to a SRA in the CIRP process.

ISSUES INVOLVED: –

1. Whether the aspect of appropriation of recoveries from fraudulent transactions u/s 66 was amenable to judicial review under section 30(2) of IBC?
2. Whether the recoveries from fraudulent transactions under section 66 can be appropriated in favour of SRA?
3. Whether the appeal filed by 63 Moons should have been entertained by NCLAT under section 61 of IBC?

FINDINGS OF THE SUPREME COURT: –

1. FIRST ISSUE: – The Apex Court held that a harmonious reading of Sec 31(1) & Sec 60(5) of the code would lead to the result that the residual jurisdiction of NCLT u/s 60(5)(c), cannot, in any manner, whittle down Sec 31(1) of the code by the investment of some discretionary or equity jurisdiction in the AA outside Sec 30(2) of the code, when it comes to a resolution plan being adjudicated upon by the AA.  While determining  the constitutionality of a statute, the courts must vary of transgressing into the domain of legislature, especially in matters relating to economic and regulatory legislations because the court does not consist of economic or administrative experts.  The court referred to its Judgement in the matter of “ Sridhar V. Indian Overseas Bank & Ors” wherein it was held that AA can reject a plan in reference to matters specified in Sec 30(2) of IBC when the plan does not confirm to the stated requirements.
2. SECOND ISSUE: – The court stated that in case of an application filed u/s 66, AA is not empowered to pass orders as the persons involved may or many not be ascertainable, but AA is empowered to pass orders against parties who were knowingly parties to the carrying on of business in such manner, shall be liable to make contributions to the assets of the CD, as it may deem fit. Director can also be held liable u/s 66(2). Applications filed u/s 66 cannot be termed as “Avoidance Applications” as used for the applications filed u/s 43, 45 or 50. If RP has filed a common application u/s 45 & 50 & also u/s 66, the AA shall have to distinguish the same.
3. THIRD ISSUE: – The Court held that when, for any class of FC’s, an authorized representative (“AR”) is appointed u/s 25A(3A) r/w Sec 21(6A), and the AR casts vote in accordance with the decision taken by a vote of more than 50% of voting share of FC’s, the vote of the AR would bind all the FC’s he represented. An individual FC would be estopped from raising objections on such a vote.  The binding value of the vote casted by the AR was also highlighted in the case of “Jaypee Kensington Boulevard Apatments Welfare Association & Ors. V. NBCC Ltd. & Ors.”.  The Court stated that the Reliance on Reg. 37A of liquidation regulations was unwarranted as such a provision is absent in CIRP regulations. Sec 26 clearly states that the filing of Avoidance Application u/s 25(2)(g) by RP shall not effect the CIRP proceedings. Hence, NCLAT should not have interfered in the commercial wisdom of CoC.

CONCLUSION: –

The Apex Court set aside the order of NCLAT and the order passed by AA was upheld. The court settled the position of law and stated that applications filed u/s 66 are different from other PUFE transactions and their recoveries can be appropriated in the favour of SRA. The appeals were thus dismissed.

Litigation Brief:

Nikhila Divyang Mehta & Anr. VS. Hitesh P. Sanghvi & Ors. [Pronounced By the Hon’ble Supreme Court of India on 15.04.2025 S.L.P. (C) No. 13459 OF 2024] 

The case was adjudicated by a Division Bench comprising Hon’ble Justice Pankaj Mittal and Hon’ble Justice S.V.N. Bhatti.

The present suit was filed by the plaintiff before the Chamber Judge, City Civil Court, Ahmedabad, seeking to declare his father’s Will and codicil as null and void. The trial court rejected the plaint as time-barred, which was later restored by the High Court. However, a Division Bench of the Supreme Court set aside the High Court’s order, holding that the suit was ex-facie barred by limitation under section 58 of the Limitation Act.

• Facts:

1. The plaintiff, Hitesh P. Sanghvi, filed a suit in the City Civil Court, Ahmedabad, seeking to declare the Will and codicil executed by his deceased father as null and The plaintiff also sought a permanent injunction against the defendants, restraining them from entering any transaction in furtherance of the directions in the Will and codicil.
2. The plaintiff’s father passed away on 21.10.2014, and in the first week of November 2014, the plaintiff came to know about the existence of the Will and codicil. The plaintiff claimed that the cause of action arose first on 02.2014 (execution of Will), again on 20.09.2014 (codicil), and lastly on 21.10.2014 (father’s death). The defendants filed applications under Order VII Rule 11(d) CPC, arguing that the plaint was barred by limitation under section 58 of the Limitation Act, 1963, as the suit was filed on 21.11.2017.
3. The City Civil Court Ahmedabad ruled in the favour of defendants, holding that the suit was filed beyond the prescribed 3-year period and thus rejected the plaint as being ex-facie time-barred. The High Court, however, reversed the trial court’s order and restored the plaint, reasoning that limitation could involve mixed questions of law and fact requiring evidence. Aggrieved by the High Court’s decision, the defendants approached the Supreme Court.

Issue: 

Whether the suit instituted by the plaintiff on 21.11.2017 was ex-facie barred by the statutory period of limitation as prescribed under Section 58 of the Limitation Act, 1963, and consequently, whether the plaint was liable to be rejected under the provisions of Order VII Rule 11(d) of the Code of Civil Procedure, 1908.

Court’s observations and findings: 

1. The Supreme Court observed that the primary relief sought by the plaintiff was a declaration that the Will dated 04.02.2014 and codicil dated 20.09.2014 were null and void. All other reliefs, including the permanent injunction, were merely consequential to this declaratory Therefore, if the main relief is barred by limitation, the whole suit is rejected.
2. The Hon’ble Court ruled that a suit seeking declaratory relief must be filed within three years of the date the right to sue first accrues, in accordance with section 58 of the Limitation Act, 1963. The suit was only filed on November 21, 2017, despite the plaintiff’s own admission that he was aware of the Will and codicil in the first week of November 2014. Hence, the suit was clearly filed beyond the prescribed limitation
3. Rejecting the High Court’s finding that limitation is a mixed question of law and fact, the Court held that where the suit is ex-facie barred by limitation based on facts admitted in the plaint, no further evidence is necessary. The Court emphasised that in such clear cases, the plaint must be rejected outright under Order VII Rule 11(d)
4. The Hon’ble court made a distinction between “knowledge” and “full knowledge” that was sharply criticised by the Court, which declared that it was a complete The limitation period begins when the plaintiff first acquires knowledge sufficient to sue and not when they gain a detailed or comprehensive understanding of the issue. Furthermore, the plaintiff failed to provide a precise date of “full knowledge”, rendering the argument speculative and unsupportable.
5. The Hon’ble Court invoked Section 3 of the Limitation Act, which states that any lawsuit filed after the statute of limitations will be dismissed, regardless of whether the defendant brought up the limitation The court clarified that this clause was passed in the public interest and that it reflects a larger policy goal of guaranteeing finality and avoiding the endless litigation of stale claims. Limitation is therefore a rule of law based on public policy rather than merely a procedural detail.

Final Order:

• The plaint stands rejected as barred by
• The civil appeal was allowed

Composite Arbitration Allowed Despite Multiple Work Orders: Courts Now Emphasize Substance over Form 

IN THE MATTER OF: Johnson Controls Hitachi Air Conditioning India Ltd. Vs. M/S. Shapoorji Pallonji and Company Pvt Ltd.

(AP-COM/315/2025) (Pronounced by the Hon’ble Calcutta High Court on 23.04.2025) 

In its judgment dated 23 April 2025, in Johnson Controls Hitachi Air Conditioning India Ltd. v. M/s. Shapoorji Pallonji and Company Pvt. Ltd., the Calcutta High Court Commercial Division reiterated that where multiple contracts flow from a single commercial understanding, and where the parties by conduct treat them as part of a unified transaction, disputes may be referred to a composite arbitration. The Court emphasized that the substance of the transaction and the conduct of the parties must prevail over the multiplicity of formal documents when determining the appropriate reference procedure under the Arbitration and Conciliation Act, 1996 (“Arbitration Act“).

The decision further reinforces the critical importance of procedural neutrality in arbitration appointments, declaring that unilateral appointment clauses in standard form contracts are unenforceable following the 2015 amendments to the Arbitration Act and the Supreme Court’s jurisprudence in Perkins Eastman and Central Organisation for Railway Electrification. 

Facts:

1. The dispute arose from a Letter of Intent (“LOI“) issued by Shapoorji Pallonji and Company Pvt. Ltd. on 16 November 2015, pursuant to which Johnson Controls Hitachi Air Conditioning India Ltd. was engaged to design, supply, install, test, and commission HVAC systems at five hospitals across West Bengal—Jalpaiguri, Gopiballavpur, Egra, Panskura, and Ghatal.
2. The LOI recorded a composite acceptance of a single offer dated 5 November 2015, for a total contract value of Rs. 12.35 crores. This consolidated price encompassed all aspects of the project, including materials, labour, taxes (except VAT and Service Tax), freight, insurance, and incidental charges.
3. Based on the LOI, preliminary activities were immediately commenced by the Petitioner, and further break-ups for individual hospitals were subsequently provided at the Respondent’s request.
4. Thereafter, ten separate work orders were issued, each containing an arbitration clause stipulating that disputes were to be referred to arbitration, with the contractor reserving the right to appoint a sole arbitrator. Despite the issuance of multiple work orders, each work order made explicit reference to the foundational LOI, indicating their shared origin.
5. Disputes later arose regarding alleged delays and non-payment of dues. Johnson Controls issued a composite arbitration notice seeking reference of all disputes to a single arbitral tribunal. Shapoorji Pallonji, however, objected, asserting that each work order pertained to a separate site, required separate performance, and contained its own arbitration clause, thereby necessitating separate arbitral references.

Issues

• Whether, notwithstanding the existence of multiple work orders, disputes could be referred to arbitration by way of a composite reference;
• Whether the arbitration clauses in individual work orders precluded such a consolidated reference; and
• Whether the contractor’s unilateral right to appoint an arbitrator remained valid in light of recent developments in arbitration jurisprudence.

Court’s Observations & Findings

1. Justice Shampa Sarkar, presiding over the Commercial Division, held that the issuance of ten separate work orders could not by itself, fragment the unified nature of the transaction. The Court noted that at the very inception, the LOI evidenced an acceptance of a single consolidated offer, which was comprehensive in terms of scope and pricing.
2. Critically, the Court relied upon the parties’ subsequent conduct, to the extent that all the emails and correspondence shared inter-se the parties revealed that negotiations on payments were carried out collectively across all projects. Consolidated payments were also made against outstanding dues, without any insistence on project-wise segregation. Notably, the respondent did not object during these negotiations to the treatment of the projects as a collective whole.
3. Thus, following its earlier decision in M/s. Sauryajyoti Renewables Pvt. Ltd. v. VSL RE Power Pvt. Ltd., the Court reaffirmed that where parties by their course of dealing recognize the projects as a single business transaction, a composite arbitral reference is permissible. The formality of issuing multiple work orders could not defeat the real commercial relationship between the parties.
4. On the second issue, the Court held that the arbitration clauses contained in the work orders did not prohibit composite arbitration. Instead, they only contemplated arbitration in case of disputes without mandating fragmentation. Moreover, under Section 7 of the Arbitration Act, even multiple contracts can form the basis of a single arbitration if the disputes arise out of a series of interconnected transactions.
5. Regarding the unilateral appointment of the arbitrator, the Court relied on the Supreme Court’s decisions in Perkins Eastman Architects DPC v. HSCC (India) Ltd. [(2019) SCC OnLine SC 1517] and Central Organisation for Railway Electrification v. ECI-SPIC-SMO-MCML (JV) [(2024) SCC OnLine SC 3219], which held that a party interested in the outcome of the dispute is ineligible to unilaterally appoint a sole arbitrator. Consequently, the contractor’s reservation of appointment rights under the work orders was held to be legally untenable.
6. Accordingly, the Court exercised its jurisdiction under Section 11(6) of the Arbitration Act to appoint Mr. Shashwat Nayak, Advocate as the sole arbitrator to adjudicate upon the disputes between the parties.

Conclusion

The Calcutta High Court’s judgment in Johnson Controls Hitachi v. Shapoorji Pallonji sends a clear message in arbitration law and goes on to say that SUBSTANCE PREVAILS OVER FORM. When commercial realities reflect a unified transaction, artificial fragmentation through multiple documents will not bar a composite reference to arbitration. Further, the judgment strengthens the emphasis on procedural fairness and neutrality in the constitution of arbitral tribunals, aligning Indian arbitration practice with global best standards. The decision underscores the Court’s consistent effort to balance party autonomy with the need for fair and impartial adjudication, paving the way for efficient and consolidated dispute resolution in complex commercial projects.

 

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