Authority: High Court of Judicature at Madras
Order Date: 31 July 2026
Case Overview
- Applicant: M/s Rassense Pvt. Ltd, a catering and facility‑management company, represented by authorised signatory Mrs S. Ramadevi.
- Respondent: M/s Sai University, located at One Hub Chennai, Paiyanur, Old Mahabalipuram Road, Chennai.
- The dispute arises from a catering service agreement originally dated 19 September 2022 between a third‑party and the university, which was later novated on 16 April 2026, substituting Rassense as the acceding party. The applicant alleges that the university has not paid invoices totalling Rs 3.29 crore and that the university terminated the agreement on 16 April 2026 invoking Clause 9.1.
- The applicant seeks an unconditional, irrevocable bank guarantee of Rs 3.90 crore pending commencement and conclusion of arbitration, invoking Clause 11 of the original agreement which provides for arbitration.
- The respondent contends that the applicant was not a party to the original agreement and that the deed of novation does not contain an arbitration clause, relying on Cox and Kings Ltd. v. SAP India Pvt. Ltd. (2024) 4 SCC 1.
Final Outcome
- The Court holds that the novation makes Rassense a substituted party and therefore it may rely on the arbitration clause; the objection that it was not an original party is unsustainable.
- The respondent is directed to furnish an unconditional bank guarantee of Rs 3.90 crore for a period of six (6) months.
- The applicant must initiate arbitration proceedings within eight (8) weeks of receipt of this order and may file a protective‑relief application under Section 17 of the Arbitration and Conciliation Act, 1996.
- The bank guarantee shall remain subject to the result of any Section 17 petition and the arbitrator’s order.
- No order as to costs was made.
Topics: Arbitration, Bank Guarantee, Service Agreement