This case arises from a commercial dispute concerning an international coal trade agreement between Belvedere Resources DMCC, a UAE-based coal trading company, and SM Niryat Pvt. Ltd. (SMN), which was later amalgamated with OCL Iron and Steel Ltd. (R1), an Indian steel manufacturer. The petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief to secure the petitioner’s monetary claim of approximately USD 2.77 million, following an alleged wrongful repudiation of a binding coal supply agreement governed by English law and subject to arbitration under the Singapore International Arbitration Centre (SIAC).

The petitioner, Belvedere Resources DMCC, supplied coal globally. SMN approached the petitioner in September 2022 via WhatsApp for a coal purchase offer. The petitioner proposed a shipment of 75,000MT to 150,000MT of coal at a specified rate, which SMN accepted, thereby forming a binding agreement via electronic communication. To formalise the transaction, the parties engaged in detailed discussions incorporating the globally accepted Standard Coal Trading Agreement (ScoTA), which included a dispute resolution clause referring disputes to SIAC arbitration seated in Singapore.

Despite continued confirmations, requests for shipping details, and acceptance of contractual terms through WhatsApp and email, SMN failed to make the agreed advance payment and ultimately cancelled the deal on 15 November 2022—after the petitioner had already nominated a vessel (MV GLYFADA) which had reached the designated load port within the agreed laycan period. Following the cancellation, Belvedere resold the cargo at a loss and initiated arbitration proceedings in June 2024. It subsequently sought interim relief before the Delhi High Court under Section 9 to secure the claim amount due to fears of asset dissipation by the respondents.

The court considered three principal issues in this matter. First, whether a valid arbitration agreement existed. The court held that there was indeed a valid arbitration agreement based on the exchange of emails and WhatsApp messages, satisfying the criteria under Section 7(4)(b) of the Act. The ScoTA was shared, accepted in conduct, and confirmed in writing by SMN, with arbitration specifically agreed to be conducted under SIAC rules.

Second, the court examined whether it had territorial jurisdiction over the dispute. It held that it did not. While R1 listed a Delhi address in regulatory filings, all contractual communications, the contract’s performance, and the ultimate repudiation occurred outside Delhi. The petitioner and SMN were based in Dubai and Kolkata respectively, and neither the negotiation nor execution had any nexus with Delhi. The presence of shares in a Delhi-based company or the historical presence of a branch office in Delhi was deemed insufficient to confer jurisdiction.

Third, the court considered whether it could direct the respondents to furnish security for the claimed amount. The claim was one for unliquidated damages due to breach of contract. Indian law holds that such claims do not amount to a “debt” until adjudicated by a competent authority. The court reaffirmed this legal position, citing Union of India v. Raman Iron Foundry, and held that there was no existing pecuniary obligation that could justify securing the amount in dispute. The petitioner’s request for an attachment or security was therefore denied.

The petitioner submitted that SMN’s conduct and confirmations through multiple channels established a binding contract. It argued that the unilateral cancellation after vessel nomination and advance payment requests constituted wrongful repudiation. The losses were real and quantifiable, having resold the cargo at a lower price. It further argued that the amalgamation of SMN into R1, with shared management and directors, meant R1 was liable for SMN’s obligations under Section 232 of the Companies Act, 2013. The petitioner also pointed to the risk of asset dissipation, particularly due to R1’s insolvency history and significant secured loans.

The respondents denied the existence of a binding contract and arbitration agreement. They challenged the court’s jurisdiction and highlighted the lack of cause of action in Delhi. It was argued that unliquidated damages do not entitle the petitioner to interim protection under Section 9. The delay in filing and lack of documentary proof regarding resale losses were also raised as grounds for dismissal.

The Delhi High Court, while recognizing the arbitration agreement’s validity, dismissed the petition on the ground of lack of territorial jurisdiction. The request for interim relief (security of USD 2.77 million) was also denied, holding that claims for unliquidated damages cannot be secured before adjudication. The court, however, acknowledged the petitioner’s right to pursue such reliefs before the appropriate forum or arbitral tribunal.

This case reinforces the principle that electronic communications can form a binding arbitration agreement under Indian law, even in the absence of a formally signed document. It also underlines the strict interpretation of territorial jurisdiction and the distinction between unliquidated damages and enforceable debt. Lastly, it serves as a cautionary tale on the need for timely action and proper legal forum selection in cross-border commercial disputes.