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UGRO Capital Limited vs. Trucap Finance Limited & Anr.

Original Miscellaneous Petition (Interim, Commercial) · 2026:DHC:7564Decided 1 Sept 2026New Delhi Bench
O.M.P.(I) (COMM.) 371/2026CNR: DLHC010403312026
Justice Om Prakash Shukla

Background

UGRO Capital and TruCap Finance, both NBFCs, had a co-lending Business Partnership Agreement (20.10.2022) to jointly fund loans. TruCap was contractually bound to back its share with a "First Loss Default Guarantee", partly a fixed deposit, partly a corporate guarantee, but fell short by about Rs. 1.7 crore combined and never made up the shortfall despite acknowledging the obligation. When UGRO tried to actually cash the fixed deposit, the bank holding it said it couldn't release the money because of an unrelated court stay affecting TruCap's securities. With TruCap's financial position reportedly worsening (loan defaults, falling credit rating, mounting losses), UGRO went to the High Court under Section 9 fearing any future arbitration award would be unenforceable.

Decision Breakdown

The Court agreed the balance of convenience favoured UGRO and that it faced real risk of ending up with only a "paper decree" if TruCap's assets were left unprotected. It appointed a sole arbitrator (under Delhi International Arbitration Centre rules) to decide the dispute, and, as an interim measure, restrained TruCap from creating any third-party rights over or otherwise disposing of assets worth up to Rs. 1.70 crore until the arbitrator takes over. The petition was then converted into a Section 17 application before that arbitrator.

Lesson Learnt

Where a party has admitted a contractual security obligation but not fulfilled it, and its deteriorating finances put a future arbitration award at real risk of going unenforced, courts can step in under Section 9 of the Arbitration Act to freeze assets as a protective measure pending arbitration.

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