Indian markets love to price fear. And when a company simultaneously carries a Singapore arbitration award, a CRISIL D rating, and a Madras High Court order on its file, the average retail investor does not pause to read the fine print. He sells first, panic-tweets second, and asks questions never. SEPC Limited (BSE: 513446) has been living in this particular purgatory for over three years — down on bad days, overlooked on good ones, and relentlessly misread on all of them.
Here is what the selling crowd has consistently missed: the Madras High Court, far from playing the role of a cold-eyed executioner, has been the most pragmatic actor in this entire drama. It recognised the award. It also made sure the company could still pay its employees. It appointed PwC to understand what was actually going on. And it put the indemnor — not SEPC — in the hot seat.
Today — June 23, 2026 — the matter is listed again. If you have been tracking the arc of these orders rather than the arc of the stock price, the direction of travel is not particularly ambiguous.
| 1 |
The Origin Story: What Singapore Decided, and Why Chennai Had to Agree |
The dispute originates from three Share Purchase Agreements signed in September 2015, under which Gaja Capital — a SEBI-registered private equity fund with, one imagines, excellent lawyers — invested in the erstwhile Shriram EPC. A put option buried in those SPAs gave Gaja the right to exit at a predetermined price, effectively guaranteeing a return on investment. When Shriram EPC defaulted on its obligations, Gaja did what aggrieved PE funds do: it invoked the put option, packed its bags, and headed to the Singapore International Arbitration Centre.
SIAC ruled in Gaja's favour. The Singapore International Commercial Court upheld that ruling on appeal. And in January 2023, the Madras High Court — applying settled principles under Sections 47 and 48 of the Arbitration and Conciliation Act — recognised and enforced the award as a decree of the court. The quantum: approximately ₹195 crore principal plus interest, which had by then accumulated to over ₹250 crore. Compound interest, as always, is the villain no one writes songs about.
The legal logic was straightforward. Indian courts do not sit in appeal over foreign arbitral awards at the enforcement stage. They are not a second chance for the losing party to make arguments it forgot to make in Singapore. The scope of judicial interference under Section 48 is deliberately narrow — reserved for situations where enforcement would violate the fundamental policy of Indian law. The Madras HC found no such violation and proceeded to enforce.
Case File: The Chronology of Orders
| Jan 2023 | Madras HC enforces SIAC award of ₹195 cr + interest as a court decree. The judgment debtor's "but Singapore was wrong" argument goes nowhere. |
| Oct 2023 | Interim order — SEPC restrained from withdrawing from bank accounts totalling ₹33.07 crore. CRISIL immediately puts ratings on watch. Markets panic on cue. |
| Feb 2024 | Division Bench hears Twarit/SEPC appeal (OSA 163 of 2023). Matter continues. Nothing resolves quickly in Indian courts — which is occasionally a feature, not a bug. |
| Feb 19, 2026 | HC orders interim attachment of ₹154.63 cr from SEPC's receivables of ₹449.62 cr. PwC appointed to review SEPC's financials. The court wants facts, not assertions. |
| Apr 30, 2026 | HC gives liquidity relief — ₹2 cr for salaries; ₹15.69 cr bank appropriation; Twarit directed to deposit ₹2.5 cr with Registrar General and disclose source of ₹7.5 cr quarterly payments. |
| Jun 23, 2026 | Next hearing — banks to file affidavit on Trust & Retention Account. Further directions expected. The plot, as they say, thickens. |
| 2 |
The FEMA Defence: Compelling in Theory, Hobbled in Practice |
SEPC's defenders have raised a genuinely interesting counter-argument — the kind that sounds devastating at a dinner party but struggles rather badly in a courtroom. The put option, they argue, promised guaranteed returns to foreign investors, something expressly prohibited under FEMA. If the underlying contract violates Indian public policy, shouldn't the award built on that contract be unenforceable here?
It is not a frivolous argument. Structuring guaranteed returns for foreign investors is a regulatory minefield under Indian foreign exchange law, and the complications are real. But here is the problem: the Supreme Court, in its landmark ruling in Vijay Karia v. Prysmian Cavi E Sistemi SRL, made it unmistakably clear that a mere violation of FEMA does not automatically constitute a breach of the "fundamental policy of Indian law." Courts must exercise extreme caution before refusing enforcement on FEMA grounds alone. The bar is set very high — deliberately.
The Madras HC's own 2023 Aapico-Sakthi ruling — the one case where a foreign award was actually refused enforcement on FEMA grounds — turned on the presence of active, non-curable fraud on the tribunal. No fraud was alleged or found in SEPC's case. The FEMA issue, whatever its technical merit, was a regulatory technicality of the kind that the same Madras HC, in a July 2024 ruling, explicitly said does not meet the threshold for refusing enforcement.
And then there is the doctrine of transnational issue estoppel — affirmed by the Supreme Court — which holds that issues examined and decided by the Singapore court cannot be re-agitated in Chennai dressed up as a fresh public policy challenge. SEPC had its day in Singapore. The Indian enforcement court is not an encore performance.
"A breach that is procedural or rectifiable does not amount to a breach of fundamental policy of India. Even non-rectifiable breaches have been held not to violate fundamental policy." — Madras HC, July 2024, FSS matter.
| 3 |
April 2026: The Court Pivots From Enforcement to Triage |
The April 30, 2026 order of the Madras HC is not the order of a court that wants to liquidate SEPC. It is the order of a court managing a genuinely complex stakeholder matrix — Gaja's right to recover its award, the consortium banks' priority rights as secured creditors, SEPC's employees who would presumably like their salaries, and the residual going-concern value of an EPC company with a ₹10,455 crore order book.
The court allowed ₹2 crore exclusively for salary payments. That is judicial pragmatism, not generosity — a dead company recovers nothing for anyone. It permitted the bank consortium to appropriate ₹15.69 crore from the Trust and Retention Account, acknowledging their secured creditor priority. And it directed Twarit Consultancy Services — the actual indemnor — to deposit ₹2.5 crore with the Registrar General within 15 days and explain where exactly the ₹7.5 crore quarterly payment is coming from.
That last direction is the most telling. The court is not dismissing the Twarit indemnity. It is verifying it. Stress-testing the indemnor's capacity in real time, under judicial supervision, is constructive oversight — not a sign that the arrangement is unravelling.
| 4 |
The Twarit Shield: What the Market Refuses to Read |
Here is the analytical crux that the market has spent three years ignoring. The indemnification agreement dated September 29, 2015 — between SEPC, Twarit Consultancy Services Pvt Ltd, and Shri Housing Pvt Ltd — is not a footnote. It is the entire story. Under its terms, all financial obligations arising from the Gaja arbitration sit with the co-respondents. SEPC is a legal pass-through in this litigation. It is wearing someone else's liability as a costume, and the market is pricing the costume as if it were the man inside.
This is not speculation. Twarit has already paid ₹164.50 crore under this indemnity. The residual claim being litigated is ₹154.63 crore against SEPC's total receivables of ₹449.62 crore. The attachment covers roughly 34% of receivables — the remaining ₹295 crore is untouched and operational. SEPC is being inconvenienced. It is not being strangled.
The market is treating SEPC as if the ₹154 crore claim will detonate on its own balance sheet. That analysis ignores the indemnity structure entirely. A sophisticated reading of the situation recognises that Twarit's quarterly commitment of ₹7.5 crore is a structured paydown mechanism — one that the court has now formally placed under its own supervision. Far from being ominous, this is accountability architecture working exactly as designed.
Twarit has already paid ₹164.50 crore under the indemnity. The indemnor is not a ghost — it has demonstrated financial capacity. The court knows this. The market, apparently, does not.
| 5 |
The Operating Company Underneath All This Legal Theatre |
While Gaja and Twarit conduct their legal proceedings at one end of the building, the actual SEPC business has been quietly doing what EPC companies do — winning orders, executing contracts, and generating revenue. Nine-month FY26 revenue stood at ₹796.89 crore, already exceeding the full-year FY25 number. The order book has crossed ₹10,455 crore. A ₹673 crore SAIL plant expansion package is in active execution. Mark AB Capital — the new strategic promoter with networks across the GCC — has invested ₹350 crore in equity and used it to clean up legacy debt.
The CRISIL D rating is a mechanical consequence of the October 2023 bank account restraint order temporarily disrupting debt servicing. It is a rating of an event, not a rating of the business. As the court progressively releases the operational tourniquet — which it has been doing, order by order, since 2023 — the underlying cash flows will reassert themselves in the rating metrics. CRISIL does not upgrade on court hearings. It upgrades on sustained debt servicing. That capacity is rebuilding.
The Avenir International acquisition, board-approved at ₹1,530 crore, adds international EPC muscle and Middle East order access that SEPC alone could not have unlocked. This is a company being reconstructed from the ground up — simultaneously managing a legacy arbitration dispute it has contractually ring-fenced via the Twarit indemnity. The legal noise and the business signal are running on entirely separate tracks. The market, unfortunately, can only hear the noise.
| 6 |
The Bigger Question Nobody Is Asking |
Step back from SEPC for a moment. There is a more uncomfortable conversation hiding underneath all of this.
The 2023 Madras HC order recognising the foreign award as a decree does not mean the legal battle is entirely over — the judgment debtor can still pursue appeals, challenge enforcement at the margins, and buy time through procedural routes. But the burden is incredibly heavy. Indian courts have become strictly, almost militantly, pro-enforcement of foreign arbitral awards. And while this sends an excellent signal to global markets — India respects international arbitration seats, India honours Singapore's judgments, India is open for business — it raises a question that policymakers are conspicuously slow to address.
Is the judiciary inadvertently overriding domestic regulatory safeguards?
FEMA violations alone do not automatically defeat enforcement — the Supreme Court said so clearly in Vijay Karia v. Prysmian Cavi E Sistemi SRL, and the Madras HC has followed that logic consistently. This is appropriate. You cannot have a functional arbitration ecosystem if every losing party can escape enforcement by pointing to a regulatory technicality it failed to raise during the arbitration itself. These defence lines must be convincingly established during the actual arbitration stage — not dusted off as last-minute shields at the enforcement gate.
But here is the tension that deserves genuine policy attention: guaranteed returns to foreign investors, put options structured as assured-exit vehicles, instruments that technically violate the spirit of FEMA — these are not marginal edge cases. They are common structures in Indian PE transactions. If the enforcement machinery is so robust that a FEMA-violating contract can generate an enforceable foreign award against which Indian courts offer virtually no recourse, the regulatory prohibition loses much of its practical teeth. The law says one thing; the arbitration ecosystem quietly says another.
This is not an argument for making India hostile to foreign awards. It is an argument for closing the gap between what FEMA prohibits at entry and what happens when those prohibited structures end up in international arbitration. That is a legislative and regulatory challenge — not a judicial one. The courts are working within the framework they have been given. The framework itself needs an update.
The pro-enforcement push signals to global markets that India respects international arbitration seats. But it raises a critical question: is the judiciary inadvertently overriding domestic regulatory safeguards? This trend deserves close scrutiny — before the next SEPC is invented.
Analytical Verdict
|
The Constructive Reading
The liability is Twarit's — by contract, by conduct, and by court recognition. ₹164.5 crore already paid proves the indemnity is not paper. The court's April 2026 order puts Twarit under judicial supervision — not SEPC. Structured resolution is in motion. Today's hearing is most likely a continuation of that arc.
|
|
The Risk That Keeps the Bears Alive
If Twarit fails its ₹2.5 crore deposit obligation or cannot credibly disclose the source of its quarterly payments, the court may look directly at SEPC's assets. That is the scenario the market is pricing — a tail risk, not the base case, unless Twarit's finances are significantly weaker than its track record suggests.
|
Indian stock markets are known for extremes. SEPC at ₹6.82 is pricing a burden that contractually belongs to somebody else. Twarit Consultancy Services — not SEPC — carries the ₹154 crore liability under a 2015 indemnification agreement that has already demonstrated its teeth: ₹164.50 crore paid, without drama, without default. The market is staring at SEPC's balance sheet and screaming about a fire in Twarit's kitchen.
The Madras High Court has understood this distinction from the beginning. It enforced the award because it had to. It then spent the next three years ensuring that the right entity — Twarit — is held accountable for the right liability, while SEPC continues to operate, execute contracts, and pay salaries. The April 2026 order placing Twarit's quarterly commitments under judicial supervision is not a warning sign. It is the court doing exactly what a court should do — verifying that the indemnor performs.
SEPC at ₹6.82 is not a distressed company pricing its own destruction.
It is a company with a ₹10,455 crore order book, ₹796 crore in nine-month revenue, a new strategic partner, and a Middle East acquisition — being dragged down by a liability it does not legally own. That mispricing has a shelf life. It ends the day the market reads the 2015 indemnity agreement instead of the stock price.
.jpeg)
Comments