Court's directions for disclosure trumps confidentiality clause in agreement: Bombay High Court

The Bombay High Court has ruled that confidentiality clauses in commercial contracts cannot be used as a shield to defy court-ordered disclosure of information, especially when such disclosure is necessary to test an alleged breach of non-compete obligations in a joint venture [Oil Field Instrumentation India Pvt Ltd v. Xcalibur Multiphysics Group S.L. & Ors.].Justice Somasekhar Sundaresan set aside an arbitral tribunal’s Section 17 (interim measures) order that had excused Xcalibur Multiphysics Group from disclosing its contract with the government of Bhutan despite an earlier High Court direction to place the contract and supporting documents on record. “I find it difficult to accept that it is reasonable to allow a litigant to claim that it will not part with relevant underlying material directed to be produced by a Court on the ground that it has a contractual obligation in another commercial contract not to produce it,” the judge said.It noted that disclosure obligations imposed by courts cannot simply be negated by relying on a contractual confidentiality clause. .Justice Sundaresan noted that commercial confidentiality provisions are typically drafted to yield to statutory and regulatory disclosure obligations, with parties working out redactions and confidentiality arrangements rather than blocking disclosure altogether. “If the approach when adjudicating an alleged breach of a non‑compete provision is to simply excuse the production of the very document that is vital to adjudicate the dispute, any alleged breach of such non‑compete obligation would become immune from scrutiny merely by claiming that a confidentiality clause is contained in the very allegedly offensive agreement by which the non‑compete obligation is said to have been breached,” the June 8 order states..The Court was hearing a plea by Oil Field Instrumentation (India) Pvt Ltd, the Indian promoter in a 51:49 joint venture (JV) company Xcalibur McPhar International Pvt Ltd with Spanish investor, Xcalibur Multiphysics Group.Under an October 17, 2022, shareholders’ agreement, the JV was an exclusive vehicle for airborne geophysical survey business across a territory covering India and several neighbouring countries, with Iraq carved out as non‑exclusive. Clause 18.3 of the agreement was a broad non‑compete clause, barring both shareholders from engaging in competing business and requiring them to sever existing relationships with other airborne survey providers in the region.The promoter (Oil Field Instrumentation) alleged that Xcalibur, through its Australian affiliate, secured an aerial geophysical survey mandate in Bhutan, within the agreed territory, in breach of the non-compete clause. In May 2025, the High Court granted ad‑interim protection, allowing the Bhutan project to continue but directing the disclosure of the project contract, technology details and supporting documents so that any breach, and its extent, could be assessed..An arbitral tribunal, however, accepted Xcalibur’s plea that it could not disclose the Bhutan contract because Bhutan had declined to waive confidentiality, relying on two heavily redacted letters as related correspondence. In view of this, the tribunal also refused to grant any interim relief to the Indian promoter. It held that the promoter must first show a prima facie breach on existing material before any onus shifted to the investor (Xcalibur) to produce documents in its exclusive possession. .Justice Sundaresan found this reasoning quite weak and perverse.The Court refused to stay the performance of the Bhutan contract, but remanded the Section 17 application (plea for interim relief) to the arbitral tribunal. It directed Xcalibur to disclose the full, unredacted Bhutan contract and ordered the tribunal to rehear the plea for interim relief to preserve the JV’s exclusivity and any claim for damages..Senior advocate JP Sen with advocates Piyush Raheja, Pranav Narsaria, Vishesh Malviya, Anuja Bhansali and Dev Menghani briefed by Rashmikant & Partners appeared for Oil Field Instrumentation India. Advocates Ninad Deshpande, Aishwarya Darda and Shreyas Deshpande appeared for Xcalibur Multiphysics..[Read judgment]