Supama Realtors Llp And Ors vs Mulchand Kaluchand Ranka
- Court
- Bombay High Court
2026:BHC-OS:11983
Neeta Sawant CARAP 242 OF 2026
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION NO. 242 of 2026
Supama Realtors LLP and others ...Applicants
Versus.
Mulchand Kaluchand Ranka and others
...Respondents
________________
with Mr. Vinayak Siraskar, Ms. Karishma Shah & Ms.
Mr. Akshay Patil
Devika Mahadekar i/b Kiran Jain & Co., for the Applicants.
Mr. Amit Mehta with Mr. Vedant Rane, for Respondent Nos. 1 to 3.
Ms. Neuty Thakkar with Mr. Dhavall Ghandy i/b Mr. Tushar Goradia, for
Respondent Nos. 4 to 9.
________________
CORAM: SANDEEP V. MARNE, J.
Reserved On: 29 April 2026.
Pronounced On: 8 May 2026.
Judgment:
1) This is an application under Section 11 r/w Section 14 of the
Arbitration and Conciliation Act, 1996 (Arbitration Act) seeking
direction for termination of mandate of the previous arbitrator and for
appointment of the substitute arbitrator in the reference stated to be
pending between the parties.
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By order dated 17 September 2014 passed in Arbitration
2)
Application No. 113 of 2014, this Court made a reference for adjudication
of disputes and differences between the parties for arbitration and
appointed Mr. E.P. Bharucha, Senior Advocate of this Court to adjudicate
the disputes and differences between the parties in relation to affairs,
business and assets of the partnership firm M/s. Shree Ranka Kothari
Kanugo Realtors.
3) By further order 17 March 2015 passed in Application No.
332 of 2014 filed by Respondents Nos.4 to 8, this Court referred the
disputes and differences between the parties to arbitration by appointing
Mr. E.P. Bharucha, Senior Advocate of this Court. Before appointment of
the arbitrator, Applicants had filed Arbitration Petition No. 402 of 2014
under Section 9 of the Arbitration Act which was disposed of by orders
dated 18 February 2016 and 20 December 2016 appointing Court
Receiver in respect of the properties of the Partnership Firm. The Court
Receiver was subsequently discharged by order dated 22 October 2019.
4) The arbitration proceedings commenced before the learned
sole Arbitrator. The Applicants filed statement of claim and the
Respondents filed their respective statement of defence and
counterclaims. Affidavits of evidence were also filed by the respective
parties. The last meeting of arbitration was held on 25 July 2017.
According to the Applicant, settlement talks were thereafter held
between the parties and parties met on many occasions to resolve the
disputes. According to the Applicants, the arbitration proceedings were
at the stage of conducting cross-examination of Applicant's witness.
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However, parties jointly sought adjournments from time to time before
the learned Arbitrator on account of settlement talks.
5) The Applicants contend that the settlements talks could not
fructify due to noncooperation from Ranka Group and there were also no
progress in the Project.
6) In the above background, Mr. Pradeep D. Kanugo
(Respondent No.6) on behalf of Kanugo Group addressed email to the
learned sole Arbitrator informing him about (i) demise of his father and
need to bring his heirs and representatives on record (ii) of continued
non-co-operation of Ranka Group in inducting the heirs into partnership
firm, (iii) his desire to resume arbitration proceedings (iv) partnership
firm losing in various litigations on account of non-contribution of funds
by Respondent No.1 (v) his intention of taking out various applications
in the arbitral proceedings through fresh advocate and (vi) request for
scheduling a meeting by the learned sole arbitrator for deciding the
further conduct of arbitral proceedings.
7) Applicants claim that the learned Arbitrator did not give
any response to the email of Respondent No. 7. Since no communication
is received to the email dated 2 January 2026 from the learned sole
Arbitrator, Applicants made inquiries from his office and received verbal
intimation that the learned sole Arbitrator is now of advanced age and is
not in a position to actively conduct and conclude the arbitration
proceedings. In the above background, Applicants have filed the present
Application under the provisions of Section 11 r/w Section 14 of the
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Arbitration Act for appointment of a substitute arbitrator The prayers in
the Application read thus:
a) this Hon'ble Court be pleased to terminate the mandate of Mr. E. P.
Bharucha, Senior Advocate, as the Sole Arbitrator in the arbitration
proceedings arising out of disputes in relation to the affairs, business
and assets of the Partnership firm M/s. Shree Ranka Kothari Kanugo
Realtors;
d) this Hon'ble Court be pleased to pass appropriate orders/directions
to appoint a substitute arbitrator under Section 11 r/w. Section 14 of
the Arbitration and Conciliation Act, 1996 in the arbitration
proceedings pending between the Applicants and the Respondents and
continue the same from the stage it had come to;
c) this Hon'ble Court be pleased to appoint a fresh arbitrator from list of
arbitrators provided hereinabove or any other suitable person as the
Sole Arbitrator in place of Mr. E. P. Bharucha, Senior Advocate, to enter
into reference and continue the arbitration proceedings from the stage
already reached in relation to the affairs, business and property of the
Partnership firm M/s. Shree Ranka Kothari Kanugo Realtors;
d) for costs of the Application; and
e) for such other and further reliefs as the nature and circumstances of
the case may require.
8) Mr. Akshay Patil the learned counsel appearing for the
Applicant submits that substitution of the learned arbitrator is
necessitated on account of his inability to conclude the arbitral reference
due to advanced age. That the learned Arbitrator has not responded to
specific request made by Respondent No.6 for resumption of arbitration
proceedings. Mr. Patil further submits that the reference to the
arbitration is made before coming into effect of the 2015 amendment to
Arbitration Act. That at the relevant time, there was no prescribed time
limit for conclusion of arbitral proceedings and that there is no
requirement of extension of mandate by the Court. That Section 29A
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introduced w.e.f 23 October 2015 has prospective effect and cannot be
applied to the arbitration commenced earlier. In support, he relies on
judgment of the Apex Court in Board of Control for Cricket in India
1
Versus. Kochi Cricket Private Limited and others .
Mr. Patil further submits that while making reference to
9)
arbitration, this Court has used the expression ‘shall endeavour’ while
indicating the period of 9 months. That use of the word ‘endeavour’
cannot be construed as mandatory, time bound, condition precedent to
exercise of arbitrator’s jurisdiction. He submits that the legal position of
the word ‘endeavour’ in the context of termination of mandate of
arbitrator has been settled by the Apex Court. That Section 29A is
applicable to international commercial arbitration which uses the word
‘endeavour’ and that in Tata Sons Private Limited Versus. Siva
2
Industries and Holdings Limited and others , the Apex Court has held
that the provision of Section 29A is directory in nature. He further
submits that the parties themselves never considered that arbitrator’s
mandate will get automatically extinguished after expiry of period of 9
month from the date of making reference. That the proceedings
therefore continued to subsist in law and the application is maintainable
on the ground of de-facto inability under Section 14 of the Arbitration
Act.
10) Mr. Patil further submits that the arbitration does not stand
abandoned as falsely contended by the Respondent-Ranka Group. That
abandonment requires a clear, unequivocal and demonstrable intention
1
2018 6 SCC 287
2
2023 (5) SCC 421
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of a party to relinquish its right to pursue the reference. That such
intention cannot be inferred from mere passage of time, delay or failure
to seek dates. That email dated 2 January 2026 sent by Respondent No.6
on behalf of Kanugo Group constitutes an express ‘affirmation of
intention to resume the arbitral proceedings’. That the contesting
Respondent-Ranka Group did not oppose the request in email dated 2
January 2026. He submits that the hiatus in the proceedings from July
2017 onwards was mutual and consensual. That it is a cardinal principle
of procedural law that abandonment being akin to form of waiver or
election is required to be specifically pleaded in the pleadings by the
party asserting it and that bald allegation of abandonment unsupported
by particulars, is liable to be rejected at the threshold. That the burden of
proving abandonment rests squarely and entirely on Ranka Group. He
relies on judgment of the Apex Court in
Dani Wooltex Corporation and
3
others Versus. Sheil Properties Private Limited and another in support
of his contention that abandonment of arbitral proceedings cannot be
lightly inferred.
11) Mr. Patil relies on provision of Section 25 of the Arbitration
Act submitting that the appropriate remedy for the contesting
Respondents was to approach the Tribunal under Section 25 for seeking
dismissal of reference for default. That the Tribunal has not terminated
the proceedings on the ground that they have become unnecessary or
impossible. He submits that there is a distinction between termination
of mandate of proceedings and termination of mandate of arbitrator.
That in the present case only the mandate of the arbitrator needs to be
3
2024 7 SCC 1
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terminated by substituting him while the mandate of the arbitral
proceedings would still continue. He therefore prays for appointment of
a substitute arbitrator.
12) Ms. Thakkar, the learned counsel appearing for
Respondents Nos. 4 to 9 (Kungo Group) has not opposed the arbitration
application and has supported the application.
13) Per contra Mr. Mehta the learned counsel appearing for
Respondents Nos.1 to 3 (Ranka Group) has strenuously opposed the
application submitting that the arbitration proceedings/reference is not
alive and is abandoned by parties. That though no time limit was fixed at
the relevant time under the Arbitration Act for making the award, the
parties were bound by order dated 17 September 2014 which mandated
making of the Award within a period of 9 months. That for 9 long years,
no communication was sent to the arbitrator for proceeding ahead with
the reference. That email dated 2 January 2026 was not even marked to
Ranka Group. That the mandate of the arbitrator has not been extended
by any order of the Court. That once this Court had stipulated time limit
for making of an award, Applicants ought to have approached this Court
for seeking extension of time. On the basis of conduct of all the parties
during the last 9 long years, it needs to be inferred that the parties have
abandoned the arbitration reference. He relies on judgment of this Court
in Nalin Vallabhbhai Patel and another Versus. Athrava Realtors and
4
others in support of his submission that arbitration proceedings have
been abandoned and abandoned proceedings cannot be revived by filing
4
CARBP- 430 of 2025 decided on 1 April 2026
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fresh application under Section 11 read with Section 14 of the
Arbitration Act. He prays for dismissal of the Application.
14) The rival contentions raised on behalf of the parties now
fall for my consideration.
15) The short issue that arises for considerations in the present
application is whether the mandate of arbitral proceedings continues or
whether the arbitration is abandoned and whether this Court can
substitute the Arbitrator by exercising powers under Section 11 read with
Section 14 of the Arbitration Act.
16) The reference to the arbitration was made initially by order
dated 17 September 2014 by which all disputes arising out of partnership
deed dated 14 October 2010 between the parties were referred to the sole
arbitration of Mr. E.P. Bharucha, Senior Advocate. The order directed the
learned Arbitrator to endeavour to pass his award within a period of 9
months from the date of his first meeting. The order dated 17 September
2014 reads thus:
1. Heard the learned Advocates appearing for the parties and the
following order is passed by consent :
i. The disputes arising out of the Partnership Deed dated 14th October,
2010 between the parties are referred to the sole Arbitration of Mr. E.P.
Bharucha, Senior Advocate.
ii. The parties shall appear before the learned Arbitrator in his
chambers, on 22nd September, 2014 at 5.00 p.m. and obtain necessary
directions.
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iii. The learned Arbitrator shall endeavour to pass his Award within a
period of nine months from the date of the first meeting held before
him by the parties.
iv. The cost of arbitration shall initially be borne by all the three parties
equally.
v. All issues/contentions including arbitrability of disputes of the
parties are kept open.
The above Arbitration Application is accordingly disposed of.
17) It appears that another application was filed by
Dhawalchand Chaganlal Kanugo (Arbitration Application 332 of 2014)
under Section 11 of the Arbitration Act, in which this Court passed order
on 17 March 2015 referring the disputes and differences arising between
Kanugo Group and Ranka Group to sole arbitration of Mr. E.P. Bharucha,
Senior Advocate. By the time both the references were made on 17
September 2014 and 17 March 2015, the Act of 3 of 2016 amending the
Arbitration Act was yet to come into force. The amendments to
Arbitration Act came into force w.e.f. 23 October 2015 when inter-alia
Section 29A was inserted in the Arbitration Act. It now prescribes a time
limit of 12 months for making of award in domestic arbitration from the
date of completion of pleadings. Prior to 23 October 2015, there was no
provision in the Arbitration Act prescribing any time limit for making of
the final award. It is now well settled position that provisions of Section
29-A of the Arbitration Act apply prospectively as held by the Apex Court
in Board of Control for Cricket in India (supra).
In the light of absence of any statutory time limit for
18)
making of final award, the Respondent-Ranka Group seeks to rely upon
the direction contained para-1(iii) of order dated 17 September 2014,
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which directed the learned Arbitrator to make an endeavour to pass his
award within a period of 9 months from the date of first meeting held
before him. It appears that no such direction was issued while making
second reference in respect of the disputes and differences between
Kanugo Group and Ranka Group vide order dated 17 March 2015.
19) In my view, the direction issued in para-1(iii) of order dated
17 September 2014 for making an ‘endeavour’ to pass the award within 9
months cannot be treated as specification of a time-mandate in respect
of the arbitral proceedings. Mere direction for making an endeavour to
complete arbitral proceedings in specified time does not tantamount to
issuance of positive direction resulting in a consequence for not
following the same. The issue is otherwise no more res-intergra . Section
29A introduced w.e.f. 23 October 2015 and which applies to international
commercial arbitration uses the expression ‘ endeavour may be made to
dispose of the matter within a period of 12 months ’. The said expression is
incorporated by the Apex Court in Tata Sons Private Limited (supra) in
which it is held in para-34 to 36 of the judgment as under:
34. The 2019 Amendment Act does not contain any provision
equivalent to Section 26 of Act 3 of 2016 evincing a legislative intent
making the application of the amended provision prospective. The
amended provisions of Section 29A, in terms of which the arbitral
tribunal has to endeavour to dispose of the proceedings in an
international commercial arbitration as expeditiously as possible within
a period of twelve months from the completion of the pleadings are
remedial in nature. The amended provision has excepted international
commercial arbitrations from the mandate of the twelvemonth timeline
which governs domestic arbitrations. The amendment is intended to
meet the criticism over the timeline in its application to international
commercial arbitrations. The amendment is remedial in that it carves
out international commercial arbitrations from the rigour of the
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timeline of six months. This lies within the domain of the arbitrator and
is outside the purview of judicial intervention. The removal of the
mandatory time limit for making an arbitral award in the case of an
international commercial arbitration does not confer any rights or
liabilities on any party. Since Section 29A(1), as amended, is remedial in
nature, it should be applicable to all pending arbitral proceedings as on
the effective date i.e., 30 August 2019.
35. We may notice certain judgments of the High Courts on the
provisions of Section 29A which have been adverted to during the
course of oral submissions. Those decisions are:
i. A decision of a Single Judge of the High Court of Delhi dated 23
January 2020 in Shapoorji Pallonji & Co. Pvt. Ltd. Vs Jindal India
Thermal Power Ltd.;
ii. A decision of a Single Judge of the Delhi High Court dated 21 July
2020 in ONGC Petro Additions Ltd. vs Ferns Construction Co. Inc.; and
iii. The decision of the Chief Justice of the High Court of Judicature for
Orissa at Cuttack dated 11 December 2020 in M/s SARA International
Pvt. Ltd. Vs Southern Eastern Railways & Anr.
36. In Shapoorji Pallonji, the Delhi High Court had held that amended
Section 29A(1) of the Arbitration and Conciliation Act, being procedural
law, would apply to the pending arbitrations as on the date of the
amendment. However, a coordinate bench in MBL Infrastructures Ltd v.
Rites Ltd.18 held that the amended Section 29A would be prospective in
nature, without referring to the earlier order in Shapoorji Pallonji.
Finally, the Delhi High Court in ONGC Petro Additions settled the
controversy and reiterated the position of law as laid down in Shapoorji
Pallonji. The Court, inter alia, stated that Section 29A(1) shall be
applicable to all pending arbitrations seated in India as on August 30,
2019 and commenced after October 23, 2015, and there is no strict time
line prescribed to the proceedings which are in nature of international
commercial arbitration as defined under the Act, seated in India.
20) Thus it is settled position that in relation to international
commercial arbitration, use of the expression ‘ endeavour may be made to
dispose of the matter within a period of 12 months’ does not mean a
mandatory prescription of time-limit and the specified period is merely
directory.
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Even otherwise, the parties themselves never treated the
21)
period of 9 months contemplated in para-1(iii) of the order dated 17
September 2014 to be the maximum permissible time limit for
conclusion of arbitral proceedings. The arbitral meetings took place upto
25 July 2017 i.e. well past the period of 9 months. In the meeting held on
25 July 2017, parties (including Ranka Group) jointly requested for
adjournment on account of settlement talks. Ranka Group thus did not
take a position that the arbitral proceedings were terminated within the
meaning of Section 32 of the Arbitration Act upon expiry of period of 9
months from the date of first meeting in the reference.
22) Though this Court is not inclined to accept the contention of
Respondent-Ranka Group that arbitral proceedings were required to be
concluded within 9 months, at the same time, it is seen that no further
proceedings/ meetings were conducted in the reference after the meeting
of 25 July 2017. From 26 July 2017 till 2 January 2026, when the
Respondent wrote an email to the learned arbitrator, nothing transpired
in the arbitral proceedings. The issue for consideration is whether it can
be concluded that parties have abandoned the arbitral proceedings by
their conduct and that therefore appointment of substitute arbitrator
cannot be made?
23) There is marked difference between the concepts of
termination of mandate of the arbitrator under Section 14 and
termination of arbitral proceedings under Section 32. Sections 14 and 15
of the Arbitration Act deal with termination of mandate of arbitrator.
Sections 14 and 15 of the Arbitration Act provide thus:
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14. Failure or impossibility to act.—
(1) The mandate of an arbitrator shall terminate and he shall be
substituted by another arbitrator, if—
(a) he becomes de jure or de facto unable to perform his
functions or for other reasons fails to act without undue delay;
and
(b) he withdraws from his office or the parties agree to the
termination of his mandate.
(2) If a controversy remains concerning any of the grounds
referred to in clause (a) of sub-section (1), a party may, unless
otherwise agreed by the parties, apply to the Court to decide on
the termination of the mandate.
(3) If, under this section or sub-section (3) of section 13, an
arbitrator withdraws from his office or a party agrees to the
termination of the mandate of an arbitrator, it shall not imply
acceptance of the validity of any ground referred to in this
section or sub-section (3) of section 12.
15. Termination of mandate and substitution of arbitrator.
—
(1) In addition to the circumstances referred to in section 13 or
section 14,the mandate of an arbitrator shall terminate—
(a) where he withdraws from office for any reason; or
(b) by or pursuant to agreement of the parties.
(2) Where the mandate of an arbitrator terminates, a substitute
arbitrator shall be appointed according to the rules that were
applicable to the appointment of the arbitrator being replaced.
(3) Unless otherwise agreed by the parties, where an arbitrator is
replaced under sub-section (2), any hearings previously held
maybe repeated at the discretion of the arbitral tribunal.
(4) Unless otherwise agreed by the parties, an order or ruling of
the arbitral tribunal made prior to the replacement of an
arbitrator under this section shall not be invalid solely because
there has been a change in the composition of the arbitral
tribunal.
As contradistinct from termination of mandate of the
24)
‘arbitrator’ under Sections 14 and 15 of the Arbitration Act, Section 32
provides for termination of ‘arbitral proceedings’. Section 32 of the
Arbitration Act provides thus:
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32. Termination of proceedings.—
(1) The arbitral proceedings shall be terminated by the final arbitral
award or by an order of the arbitral tribunal under sub-section (2).
(2) The arbitral tribunal shall issue an order for the termination of the
arbitral proceedings where—
(a) the claimant withdraws his claim, unless the respondent
objects to the order and the arbitral tribunal recognises a
legitimate interest on his part in obtaining a final settlement of
the dispute,
(b) the parties agree on the termination of the proceedings, or
(c) the arbitral tribunal finds that the continuation of the
proceedings has for any other reason become unnecessary or
impossible.
(3) Subject to section 33 and sub-section (4) of section 34, the mandate
of the arbitral tribunal shall terminate with the termination of the
arbitral proceedings.
This difference between the concepts of termination of
25)
mandate of arbitrator and termination of arbitration proceedings is
noted by this Court in Nalin Vallabhbhai Patel (supra) in which this
Court has considered various judgments on the issue and it has been
held in paras-24 and 25 of the judgment as under:
Thus, arbitral proceedings get terminated by final Award or by withdrawal
24)
of claim by the Claimant or by termination of proceedings with agreement of
parties or when the Tribunal finds that continuation of proceedings has
become unnecessary or impossible. Under sub-section (3) of Section 32 of the
Arbitration Act, the mandate of the Arbitral Tribunal terminates with
termination of arbitral proceedings. Thus, Sub-section (3) of Section 32 of the
Arbitration Act once again makes a distinction between concepts of
‘termination of mandate of arbitrator’ and ‘termination of arbitral
proceedings’. This Court had an occasion to consider distinction between the
concepts of termination of mandate of arbitrator and termination of mandate
of arbitral proceedings in (supra) and has
Tata Motors Passenger Vehicles Ltd.
held that mere termination of mandate of the Arbitral Tribunal does not result
in automatic termination of arbitral proceedings. This Court held in
paragraphs 21, 22, 23 and 24 as under:
21) However, there is difference between the concepts of
termination of mandate of arbitrator and termination of
arbitral proceedings. Mere termination of mandate of
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arbitrator does not automatically result in termination of
arbitral proceedings, and in such an event the reference
continues and merely a vacancy occurs in the chair of the
arbitrator, which can be filled up under Section 15(2) of the
Arbitration Act. However, the distinct concept of termination of
arbitral proceedings is dealt with under Section 32 of the
Arbitration Act which provides thus:
xxx
22) The position that mere termination of mandate of the
arbitrator does not result in automatic termination of arbitral
proceedings is well settled and reference in this regard can be
made to the judgment of the Apex Court in Dani Wooltex
Corporation (supra) in which the Apex Court has held in Paras-
12 to 14 as under:
12. The Arbitration Act has two provisions for
terminating an arbitrator's mandate. Sections 14 and
15 are the relevant sections. The arbitrator is
empowered to withdraw from his office, which
terminates his mandate. However, the arbitral
proceedings continue by the arbitrator's
substitution.
13. The order of termination passed by the learned
arbitrator, in this case, gives an impression that he was of
the view that unless parties move the Arbitral Tribunal
with a request to fix a meeting or a date for the hearing,
the Tribunal was under no obligation to fix a meeting or
a date for hearing. The appointment of the Arbitral
Tribunal is made with the object of adjudicating upon the
dispute covered by the arbitration clause in the
agreement between the parties. By agreement, the
parties can appoint an arbitrator or Arbitral Tribunal.
Otherwise, the Court can do so under Section 11 of the
Arbitration Act. An arbitrator does not do pro bono work.
For him, it is a professional assignment. A duty is vested
in the learned arbitrator or the Arbitral Tribunal to
adjudicate upon the dispute and to make an award. The
object of the Arbitration Act is to provide for an efficient
dispute resolution process. An arbitrator who has
accepted his appointment cannot say that he will not fix
a meeting to conduct arbitral proceedings or a hearing
date unless the parties request him to do so. It is the duty
of the Arbitral Tribunal to do so. If the claimant fails to
file his statement of claim in accordance with Section 23,
in view of clause (a) of Section 25, the learned arbitrator
is bound to terminate the proceedings. If the respondent
to the proceedings fails to file a statement of defence in
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accordance with Section 23, in the light of clause (b) of
Section 25, the learned arbitrator is bound to proceed
further with the arbitral proceedings. Even if the
claimant, after filing a statement of claim, fails to appear
at an oral hearing or fails to produce documentary
evidence, the learned arbitrator is expected to continue
the proceedings as provided in clause (c) of Section 25.
Thus, he can proceed to make an award in such a case.
14. On a conjoint reading of Sections 14 and 15, it is
apparent that an arbitrator always has the option to
withdraw for any reason. Therefore, he can withdraw
because of the parties' non-cooperation in the
proceedings. But in such a case, his mandate will be
terminated, not the arbitral proceedings .
23) Similarly, this Court in Kifayatullah Haji Gulam Rasool (supra) has held in
paras-11, 12, 16 and 17 as under:
11. Section 14 specifies the grounds for terminating the
mandate of an arbitrator and method of doing so. The grounds
for terminating the mandate are : (i) the arbitrator becomes de
jure or de facto unable to perform his function or (ii) for some
other reasons fails to act without undue delay or (iii) the
arbitrator withdraws from his office or (iv) the parties agree to
the termination of his authority as an arbitrator; whereas three
methods can be employed for terminating the mandate of the
arbitrator. They are (a) by withdrawal of the arbitrator from his
office (b) by agreement of parties and (c) by decision by the
Court.
12. Section 15 provides for additional grounds for termination of
the mandate and for appointment of substitute arbitrator. The
additional grounds provided are (a) where he withdraws from
office for any reason or (b) by or pursuant to the agreement of
the parties. Though sub-section (1) purports to state additional
grounds for termination of authority of an arbitrator but one of
the grounds mentioned therein is covered by the grounds set out
in clause (b) of sub-section (1) of section 14. On the authority of
the arbitrator being terminated, a substitute arbitrator in place
of arbitrator whose authority is terminated has to be appointed
and such appointment, as per sub-section (2) is required to be
made by following the same procedure as followed while
appointing the arbitrator who is being substituted.
16. On the above backdrop let us consider the legal provisions
providing for commencement and termination of the arbitration
proceedings.
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(a) Section 21 of the Act provides for commencement of
the arbitral proceedings. This section provides that in the
absence of an agreement between the parties to the reference,
the arbitral dispute in respect of a particular dispute shall
commence on the date on which a request for that dispute to be
referred to the Arbitration is received by other party. If in the
arbitral agreement parties provide any other mode for
commencement of the arbitral proceedings, the arbitral
proceedings will commence in accordance therewith.
(b) Section 25 incorporates the course of action arbitral
Tribunal may adopt in the event of party committing any of the
three defaults mentioned in this section. The provision of
section 25 is intended to enable the arbitral tribunal not to allow
any proceedings to drag on at the instance of one or the other
party. What is contemplated in this section is an order passed by
arbitral Tribunal terminating arbitral proceedings. No such order
has been passed by the arbitral tribunal in this case as such even
provision of section 25 is not available to the petitioners. The
said provision cannot be invoked before this Court. However, the
petitioners are at liberty to obtain appropriate orders in this
behalf from the arbitral Tribunal but not from this Court.
(c) Section 32 of the Act makes provision for termination
of the arbitral proceedings. Under this section it is provided, that
the arbitral proceedings shall automatically stand terminated
when final award is made. Hence, for automatic termination of
the arbitral proceedings, arbitral award has to be final. Reading
of section 32 unequivocally provides that only ‘final award’ shall
terminate the arbitral proceedings. The final award is one which
decides or completes decision of claims presented.
The arbitral proceedings can also be terminated by an
order of the arbitral Tribunal which order can only be passed
when claimant withdraws the claim or when the parties to the
reference agree on the termination of the proceeding, or the
arbitral Tribunal finds that continuation of the arbitral
proceeding has become unnecessary or impossible. As per clause
(b) of sub-section (2) of section 32 the parties to the agreement
have also been given liberty to terminate arbitral proceedings
but such a request must be made to the arbitral tribunal by the
parties to the proceedings and it must be accepted by the
arbitral Tribunal by an order passed in that behalf. As per sub-
section (3) the mandate of the arbitral tribunal, can also be
brought to an end with termination of arbitral proceedings
subject to section 33 and sub-section (4) of section 34 of the Act.
17. In the above premises, the Act makes specific provision for
commencement and termination of the arbitral proceedings. In
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the instant case, none of the events as contemplated under
section 32 of the Act have taken place. No final award has been
passed. No joint request depicting agreement of parties have
been made to the arbitral tribunal to terminate proceedings. No
orders have been passed by the Arbitral Tribunal as
contemplated under sub-section (2) of section 32 of the Act.
Therefore, it cannot be said that the arbitral proceeding
have come to an end. I, therefore, hold that the arbitral
proceedings have not come to an end even though the
mandate of the arbitrators have come to an end.
24) Therefore, mere withdrawal by the learned Arbitrator
from the arbitral proceedings vide letter dated 18 March 2021
has not resulted in termination of arbitral proceedings under
Section 32 of the Arbitration Act. The reference continued
notwithstanding the withdrawal by the learned Arbitrator.
25) The distinction between the concepts of termination of mandate of
arbitrator and termination of arbitral proceedings is also highlighted in
Division Bench judgment of this Court in Khorshed E. Nagarwalla (supra) in
which it is held in the context of provisions of Section 14 and 15 of the
Arbitration Act as under:
4. Both the provisions if read would show what is
terminated is the mandate of the arbitrator and not the
provision for arbitration . Section 11(2) thereafter provides
that in the event of vacancy in the arbitral tribunal and the
parties not agreeing to appoint an arbitrator, any aggrieved
party can move under section 11(5) of the said Act requesting
the Chief Justice or his designate to fill in the vacancy. Thus, the
Act itself contains provisions for reconstitution of the Tribunal
even in the case where the named arbitrator expires.
(emphasis added)
When the reference is alive, but the mandate of the
26)
arbitrator terminates, the Court can exercise powers under Sections 14
and 15 read with Section 11 of the Arbitration Act to substitute the
arbitrator. However, once the arbitral proceedings terminate under
Section 32 of the Act, substitute arbitrator cannot be appointed. Under
Section 32, the arbitral proceedings terminate either by making of final
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award or by reasoned order made by the Arbitral Tribunal under Section
32(2). The Arbitral Tribunal can issue an order for termination of arbitral
proceedings when (i) the claimant withdraws from the claim, (ii) the
parties agree on termination of proceedings or (iii) where the Tribunal
finds that continuation of proceedings has for any other reason become
unnecessary or impossible.
27) In the present case, neither final award is made by the
Tribunal nor the Tribunal has made an order under sub-section 2 of
Section 32.
28) In Dani Wooltex Corporation , the case involved reference of
disputes to the Arbitral Tribunal in a suit filed by Marico Industries
. Another reference was made to arbitration in suit filed by Sheil
(Marico)
Properties . Thus, both Sheil and Marico had claims against Dani
(Sheil)
Wooltex Corporation. Both Sheil and Marico filed their respective
statements of claim. The reference in Marico’s claim culminated into
final award. However, arbitral proceedings based on Sheil’s claim did not
proceed. In such background, Dani Wooltex Corporation addressed
communication to the Arbitral Tribunal for dismissal of Sheil’s claim on
the ground that Sheil had abandoned the claim. The Tribunal fixed
meeting on 11 March 2020, which was not attended by Sheil. In
subsequent meeting, the Tribunal directed Dani Wooltex Corporation to
file application seeking dismissal of Sheil’s claims. When such
application was filed seeking dismissal of Sheil’s claim on account of
abandonment of arbitral proceedings, Sheil opposed the same. The
Tribunal however passed order terminating the arbitral proceedings in
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exercise of powers under Section 32(2)(c) of the Arbitration Act. The
Single Judge of this Court had set aside the order of termination of
proceedings and directed Arbitral Tribunal to continue the proceedings.
The Apex Court has upheld the order passed by this Court.
29) In the above factual background, in Dani Wooltex
Corporation , the Apex Court has held that the failure of a party to
appear before the Arbitrator after filing of the claim, does not render the
proceedings unnecessary or impossible. It has held that it is Tribunal’s
duty to fix a meeting for hearing even if parties to the proceedings do not
make such a request. It has further held that failure of the claimant to
request the Arbitral Tribunal to fix a date for hearing per-se is not a
ground to conclude that the proceedings have become unnecessary. The
Apex Court has also decided the issue as to when abandonment can be
treated as a ground for termination of arbitral proceeding The Apex
Court has held in paras-17, 23, 24 and 25 of the judgment as under:
17. Therefore, clause (c) of sub-section (2) of Section 32 can be invoked
for reasons other than those mentioned in sub-section (1) of Section 32
and clauses (a) and (b) of sub-section (2) of Section 32. Under clause (c),
the mere existence of a reason for terminating the proceedings is not
sufficient. The reason must be such that the continuation of the
proceedings has become unnecessary or impossible. In a given case,
when a claimant files a claim and does not attend the proceedings,
clause (a) of Section 25 comes into operation, resulting in the learned
arbitrator terminating the proceedings. If, after filing a claim, the
claimant fails to appear at an oral hearing or fails to produce
documentary evidence, it cannot be said that the continuation of
proceedings has become unnecessary. If the claimant fails to appear at
an oral hearing after filing the claim, in view of clause (c) of Section 25,
the learned arbitrator can proceed with the arbitral proceedings. The
fact that clause (c) of Section 25 enables the Arbitral Tribunal to
proceed in the absence of the claimant shows the legislature's intention
that the claimant's failure to appear after filing the claim cannot be a
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ground to say that the proceedings have become unnecessary or
impossible.
23. The question is whether Sheil abandoned its claim filed before the
learned arbitrator. As stated earlier, Sheil regularly attended meetings
held to hear Marico's claim. During the period during which the claim of
Marico was heard, at no stage, the learned arbitrator suggested that the
claim of Sheil could be heard simultaneously. On the contrary, from the
conduct of the parties and the learned arbitrator, an inference can be
drawn that Marico's claim was given priority. Two meetings were
convened in March 2020 in connection with Sheil's claim. In March
2020, COVID-19 was spreading its wings in our country. The second
meeting in March 2020 was admittedly not held. In any case, there is no
express abandonment. Even if it is to be implied, there must be
convincing circumstances on record which lead to an inevitable
inference about the abandonment. In the facts of the case, there was no
abandonment either express or implied.
24. In a case where the claim is abandoned, the learned arbitrator
can take the view that it would be unnecessary to continue the
proceedings based on the already abandoned claim. In this case, the
inference of the abandonment has been drawn by the learned arbitrator
only on the grounds that Sheil did not challenge the Marico award and
took no steps to convene the meeting of the Arbitral Tribunal. The
failure to challenge the award on Marico's claim will not amount to
abandonment of the claim filed by Sheil in January 2012. In the claim
submitted by Sheil, a prayer was made in the alternative for passing an
award in terms of money against the first appellant. Therefore, we hold
that there was absolutely no material on record to conclude that Sheil
had abandoned its claim or, at least, the claim against the first
appellant. Till the award dated 6-5-2017 was passed in Marico's claim,
Sheil's representative was always present at all hearings till the passing
of the award. After the award, the learned arbitrator never convened a
meeting to deal with Sheil's claim until 11-3-2020. Hence, the finding of
the learned arbitrator that there was abandonment of the claim by the
first appellant is not based on any documentary or oral evidence on
record. The finding is entirely illegal. Such a finding could never have
been rendered on the material before the Arbitral Tribunal. Thus, the
learned arbitrator committed illegality.
25. To conclude:
25.1. The power under clause (c) of sub-section (2) of Section 32 of the
Arbitration Act can be exercised only if, for some reason, the
continuation of proceedings has become unnecessary or impossible.
Unless the Arbitral Tribunal records its satisfaction based on the
material on record that proceedings have become unnecessary or
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impossible, the power under clause (c) of sub-section (2) of Section 32
cannot be exercised. If the said power is exercised casually, it will defeat
the very object of enacting the Arbitration Act;
It is the Arbitral Tribunal's duty to fix a meeting for hearing even
25.2.
if parties to the proceedings do not make such a request. It is the duty
of the Arbitral Tribunal to adjudicate upon the dispute referred to it. If,
on a date fixed for a meeting/hearing, the parties remain absent without
any reasonable cause, the Arbitral Tribunal can always take recourse to
the relevant provisions of the Arbitration Act, such as Section 25;
25.3. The failure of the claimant to request the Arbitral Tribunal to fix a
date for hearing, per se, is no ground to conclude that the proceedings
have become unnecessary; and
25.4. The abandonment of the claim by a claimant can be a ground
to invoke clause (c) of sub-section (2) of Section 32. The
abandonment of the claim can be either express or implied. The
abandonment cannot be readily inferred. There is an implied
abandonment when admitted or proved facts are so clinching that
the only inference which can be drawn is of the abandonment.
Only if the established conduct of a claimant is such that it leads
only to one conclusion that the claimant has given up his/her
claim can an inference of abandonment be drawn. Even if it is to
be implied, there must be convincing circumstances on record
which lead to an inevitable inference about the abandonment.
Only because a claimant, after filing his statement of claim, does not
move the Arbitral Tribunal to fix a date for the hearing, the failure of
the claimant, per se, will not amount to the abandonment of the claim.
(emphasis added)
30) Thus, the Apex Court in Dani Wooltex Corporation has
recognized abandonment of the claim by a claimant as a ground to
invoke clause (c) of sub-section 2 of Section 32. It has held that
abandonment of the claim can either be express or implied but the same
cannot be readily interfered. Arbitration can be impliedly abandoned
when admitted or true facts are so clinching that the only inference that
can be drawn is of abandonment. It is only when established conduct of
the claimant is such that it leads to only one conclusion that the
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claimant has given up his/her claim and an inference of abandonment
can be drawn.
31) Applying the ratio of the judgment of the Apex Court in
Dani Wooltex Corporation , it is seen that mere failure on the part of the
Applicants/Claimants in seeking fixation of dates of meeting can not
ipso-facto attract the ground under Section 32(2) of the Arbitration Act.
However, at the same time, the conduct of the Claimants during the past
9 years has been such that the only inference that can be drawn would be
that of abandonment. In the entire application, Applicants have not
referred to any event taking place from 25 July 2017 to 2 January 2026
concerning the arbitral proceedings. Only vague pleadings relating to
settlement talks are raised. It is incomprehensible that settlement talks
can go on for 9 long years. It is not that the Applicants were writing to
the learned arbitrator about progress of the settlement talks or have
even kept the arbitrator informed about settlement talks happening. If
the Applicants were serious enough in prosecuting the claim, they would
have written at least once to the learned Arbitrator that fixation of dates
in the arbitral proceedings were not being sought on account of
negotiations happening between the parties. Also, no material is placed
on record to indicate that the parties met each other for holding
negotiations. During 9 long years, no party has even bothered to
approach the learned Arbitrator intimating him about the reason for not
seeking fixation of arbitral meetings.
32) The factual situation in Dani Wooltex Corporation is
entirely different than the one involved in the present case. In case
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before the Apex Court there were 2 claims of Marico and Sheil and the
Apex Court has held that the arbitrator never suggested that the claim of
Sheil could he heard simultaneously. The Apex Court on the other hand
has held that Marico’s claim was given priority. It is in these peculiar
circumstances, that the Apex Court did not find convincing
circumstances leading to an inevitable inference about abandonment of
arbitral proceedings. In the present case, however the Applicants did not
take any steps for prosecution of the arbitral proceedings after 25 July
2017 and have virtually abandoned the same.
33) Also curious to note is the fact that the Applicants, by
themselves, have not expressed any interest in prosecuting the claim.
The email dated 2 January 2026 is addressed by Respondent No.6, who is
the legal heir of deceased partner late Dhawalchand Chaganlal Kanugo.
Respondent No.6 was apparently not a party to the arbitral proceedings
nor has filed any application for bringing him on record as legal heir of
late Dhawalchand Chaganlal Kanugo. By order dated 17 March 2015,
separate reference was made in respect of Dhawalchand Chaganlal
Kanugo. Be that as it may, the present application is essentially filed by
partners belonging to Kanugo Group and none of the Applicants ever
approached the Arbitral Tribunal for resumption of the arbitral
proceedings. They cannot bank on email dated 2 January 2026 by
Respondent No.6 who were themselves a party to the arbitral
proceedings.
34) In my view therefore the inescapable conclusion that
emerges is that the arbitral proceedings are abandoned by the Applicants
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and the proceedings are terminated under Section 32(2)(c) of the
Arbitration Act.
35) Since arbitral proceedings are terminated under the
provisions of Section 32(2)(c) of the Arbitration Act, this Court is unable
to substitute the arbitrator in exercise of powers under Section 11 or
under Section 14 of the Arbitration Act. The Application accordingly
fails. The same is dismissed with no order as to costs.
[SANDEEP V. MARNE, J.]
Digitally
signed by
NEETA
SHAILESH
SAWANT
Date:
2026.05.08
19:36:59
+0530
NEETA
SHAILESH
SAWANT
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