Equating "Offered" With "Accepted And Paid For" In Non-Compete Clause Amounts To Rewriting The Contract: Bombay High Court

The Court further held that a confidentiality clause in a private commercial contract cannot override a disclosure direction issued by an Indian Court of law, and that a party to arbitration proceedings cannot escape such a direction merely by producing two disjointed letters from a foreign government claiming that confidentiality permission was sought and refused.

Setting aside an interlocutory order of a three-member arbitral tribunal under Section 37 of the Arbitration and Conciliation Act, 1996, the Court remanded the matter for fresh hearing with a direction that the full Bhutan Contract be disclosed to the arbitral tribunal without any redaction of the confidentiality clause, the identity of officials involved in correspondence, or any facet having a bearing on the question of interim relief.

Justice Somasekhar Sundaresan observed that,  “an approach that has the result of holding that a statutory or regulatory or even a legal obligation to make a disclosure would stand obliterated by a privately contracted confidentiality clause, in my respectful opinion, the finding would be perverse for being contrary to first principles of which obligation would give way and which obligation would cede ground. Typically, the very confidentiality clauses in private agreements provide for the private law obligation in the contract ceding ground to public law obligations to make disclosures, with the parties engaging on the terms of the disclosure but ensuring that they are compliant with the law”,

While addressing the core question for consideration by the Court, sitting in appeal over the Impugned Order to see if the interpretation that “offer” should mean “purchase” or “deployed” is a plausible view, observed, “The conflation of the word ‘offered’ with the phrase ‘accepted and paid for’ by the Learned Arbitral Tribunal constitutes re-writing the contract and is untenable, necessitating this finding to be quashed and set aside. The business efficacy test cannot be lightly deployed by any forum in the absence of ambiguity being writ large in a contract, more so, at a prima facie stage when all that the Learned Arbitral Tribunal has to examine is to see what measure would best protect and preserve the subject matter of the arbitration agreement. In this case, the subject matter of the arbitration agreement is the exclusivity of relationship for conducting the ‘Business’ in the ‘Territory’, only through the JV”.

Senior Advocate J.P. Sen appeared for the petitioner and Advocate Ninad Deshpande appeared for the respondent.

Oil Field Instrumentation India Pvt. Ltd., the Indian promoter of a joint venture with Xcalibur Multiphysics Group S.L., a Spanish company, entered into a Shareholders Agreement in October 2022 under which the investor acquired 51% equity. The Agreement established an exclusive arrangement, the joint venture was to be the sole vehicle for airborne geophysical surveys across a defined Territory including India, Sri Lanka, Bhutan and Myanmar, with Iraq as the only non-exclusive market.

Clause 18.3.2 contained a non-compete obligation binding on both parties. Clause 18.3.5 carved out an exception for technologies not offered by the investor to the joint venture.

On discovering through public reports that the investor's Australian affiliate had secured an aerial geophysical survey contract in Bhutan, the promoter approached the Bombay High Court under Section 9. An ad interim order dated May 9, 2025 restrained the investor from signing new contracts in the Territory outside the joint venture and directed disclosure of the Bhutan Contract. The matter was converted to a Section 17 application before the arbitral tribunal.

The tribunal declined interim relief on two grounds, that the Government of Bhutan had refused to waive confidentiality, excusing disclosure; and that "offered" in Clause 18.3.5 meant "accepted and paid for," placing the Bhutan technology outside the non-compete. The promoter challenged both findings under Section 37.

On Non-Disclosure:

The Court found that the so-called correspondence justifying non-disclosure comprised only two disjointed letters, one from the Australian Affiliate dated June 9, 2025 seeking Bhutan's permission to disclose, and one from an unidentified Bhutan government official dated June 23, 2025 refusing permission. A third letter dated June 18, 2025, which had apparently prompted Bhutan's refusal, was never placed before the tribunal. The entire chain of correspondence was therefore unknown to the arbitral record.

“Multiple avenues were available for the proceedings to be conducted, addressing the concerns that may have arisen about the disclosure. First, the purported confidentiality clause could have been called for. Second, concerns about the contents that would cause concerns to Bhutan could have been addressed by appropriate redacting and blanking of clauses containing sensitive information. Third, a closed confidentiality ring could have been put in place to ensure that specific identified individuals alone would have access even to the redacted material and such individuals would be bound by the obligation to maintain confidentiality over such information. None of these have been meaningfully explored when returning a decision to excuse disclosure of the core transactions that would need to be adjudicated”, the Bench observed.

The Court further noted that the investor was itself relying on the Bhutan Contract to argue the exception in Clause 18.3.5, making its refusal to disclose that very contract to the tribunal perverse. This also undermined the basis on which the tribunal had distinguished the Bombay High Court's earlier decision in Interactive Avenues.

 “An approach that has the result of holding that a statutory or regulatory or even a legal obligation to make a disclosure would stand obliterated by a privately contracted confidentiality clause, in my respectful opinion, the finding would be perverse for being contrary to first principles of which obligation would give way and which obligation would cede ground. Typically, the very confidentiality clauses in private agreements provide for the private law obligation in the contract ceding ground to public law obligations to make disclosures, with the parties engaging on the terms of the disclosure but ensuring that they are compliant with the law”, the Bench further observed.

On Offered v. Accepted and Paid For:

The record showed that iCORUS-X had been offered to the joint venture in 2023 and was being actively pursued for deployment in the Indian market as recently as January 2025. A postponement of purchase pending viable deployment could not be read as a deemed rejection.

The Court held that when sophisticated multinational parties choose specific language in a contract, it must be presumed that they meant what they wrote. Had actual purchase been the intended metric, the parties would have said so. The business efficacy test cannot be deployed in the absence of ambiguity, particularly at the prima facie stage of Section 17 proceedings.

The Court further held that Clause 18.3 was not a mere restraint on trade but a positive commitment to conduct trade exclusively through the joint venture, characterising it as a commitment to a marriage reduced to writing.

Cause Title: Oil Field Instrumentation India Pvt. Ltd. v. Xcalibur Multiphysics Group S.L. and Ors. (Neutral Citation: 2026:BHC-OS:12502)

Appearances:

Petitioner: J.P. Sen, Senior Counsel, Piyush Raheja, Pranav Narsaria, M/s Rashmikant and Partners, Advocates.

Respondents: Ninad Deshpande, Aishwarya Darda and Shreyas Deshpande, Advocates.

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