Does a Satisfied Contingency Tantamount to ‘Determinability’ in a Contract?: An Unanswered Question

TWO MONTHS AGO, a Division Bench of the Delhi High Court in JLT Energy 9 SAS v. Hindustan Clean Energy Limited & Ors. (2026), affirmed the sanctity of long stop dates in Mergers & Acquisitions (‘M&A’) agreements as ‘self-collapsing’ mechanisms, such that if conditions precedent in a share/security purchase agreement are not met or waived by the other party, the agreement stands terminated.  The Division Bench confirmed the decision of the Single Judge in O.M.P.(I) (COMM.) 464/2025.      

While these judgments confirm the validity of another typical M&A mechanism under Indian law, it adds to a worrying trend of Indian courts expounding on private and contract law concepts through arbitration related proceedings only, and not through civil trials and appeals. 

What was the case about?

JLT Energy 9 SAS (‘JLT’), a French entity, executed two interlinked Security Purchase Agreements dated December 31, 2024 (‘SPA(s)’) with Hindustan Cleanenergy Limited and Peridot Power Ventures Pvt. Ltd. for the acquisition of solar power project companies in Tamil Nadu and Bihar. The closing of the Tamil Nadu SPA was a contractual condition precedent (‘CP’) to closing of the Bihar SPA. The Tamil Nadu SPA required conversion of project land to non-agricultural use by the Closing Long Stop Date (‘CLSD’) of April 30, 2025. But this conversion was never obtained, even after an extension of the CLSD to May 31, 2025. Clause 5.6 of the SPA provided that non-fulfilment of the CPs by the CLSD would result in automatic termination. 

JLT contended that subsequent correspondence and a draft amendment had varied this position by permitting closing against a holdback in escrow and relegating the conversion of the land to a condition subsequent (‘CS’). It also argued that the sellers' own default in failing to procure conversion should not be allowed to benefit them. 

JLT obtained an Emergency Award from a Singapore International Arbitration Centre (‘SIAC’) emergency arbitrator that granted a prohibitory injunction against creating third party rights in securities of the said solar power project companies. It then sought to confirm this via a petition under Section 9 of the Arbitration and Conciliation Act (‘Arbitration Act’) (interim measures by court in support of arbitration) before the Delhi High Court. ˙

Both the Single Judge, and subsequently the Division Bench (in appeal by JLT) held that the SPAs had stood automatically terminated by operation of the self-executing Clause 5.6, that the draft amendment was a non-binding discussion draft, that Section 9 jurisdiction is ancillary and cannot revive a contract that has died its natural death, and that the SIAC emergency award (founded on a lower, provisional evidentiary standard) could not override the Court’s fuller assessment. 

What are ‘Long Stop Dates’ in M&A agreements?

A general M&A agreement typically manifests as a share purchase agreement in which a buyer/investor enters into a contract for purchase of securities of the target company(ies). There are two major dates of interest in such agreements —the signing date and the closing date. 

The signing of the agreement is when parties enter into the contract. The closing date is when the majority of the consideration for the transaction passes from the buyer to the seller and the securities from the seller to the buyer. In the period between the signing and closing, both parties need to perform certain tasks known as ‘conditions precedent’ or CPs. 

Most CPs are usually to be performed by the seller group. The CPs may be regulatory approvals, business reorganisation, or legal and financial regularisation by the seller which are identified as imperative during the due diligence process that precedes the signing of the SPAs. The ‘long stop date’ is the outer limit by which the parties must fulfil the CPs to the satisfaction of the other party, failing which the contract terminates automatically. 

However, this requirement to fulfil a CP by the long stop date can be waived by the other party, or relegated to a ‘condition subsequent’ to the closing of the SPA. The long stop date can also be extended. This is usually achieved by an amendment of the SPA which records such extension or waiver, along with further indemnities or hold back amounts.