Bombay High Court: In Supama Realtors LLP arbitration raising the question whether, in circumstances where arbitral proceedings had remained dormant for several years, the Court could terminate the mandate of the arbitrator and appoint a substitute under Sections 11 and 14, Arbitration and Conciliation Act, 1996 (A&C Act), a Single Judge Bench of Sandeep V. Marne, J., while dismissing the application, denied the substitution of arbitrator after the arbitral proceedings were abandoned for 9 years.
The Court observed that,
“Where the reference is alive, but arbitrator’s mandate terminates, the Court can exercise powers under Sections 14 and 15 read with Section 11 A&C Act to substitute the arbitrator. However, once the arbitral proceedings terminate under Section 32, substitute arbitrator cannot be appointed.”
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Background
The disputes arose in relation to the affairs, business and assets of a partnership firm, and the matter was referred to arbitration by the Court in September 2014, directing the arbitrator to endeavour to pass his award within a period of 9 months from the date of his first meeting. Again, in March 2015, another application was filed in which the Court referred the disputes arising between Kanugo Group and Ranka Group to sole arbitration. The arbitral proceedings progressed to the stage of pleadings, filing of evidence affidavits, and were at the stage of cross-examination of witnesses. The last meeting was held on 25 July 2017, after which parties jointly sought adjournments on account of settlement talks. The applicants contend that the settlements talks could not fructify due to non-cooperation from Ranka Group and there was also no progress in the project.
In January 2026, an email was addressed by Respondent 6 to the arbitrator seeking to resume the proceedings, however, no response was received. Upon inquiry, the applicants received a verbal intimation that the arbitrator, owing to advanced age, could not continue with the proceedings. Consequently, the applicants filed the present application under Section 11 read with Section 14 A&C Act, seeking termination of the sole arbitrator’s mandate and appointment of a substitute arbitrator to continue the proceedings from the stage already reached.
The applicants contended that substitution was necessitated due to the inability of the arbitrator to perform his functions and that the arbitral proceedings, having commenced prior to the 2015 Amendment to the A&C Act, were not governed by the time-limits prescribed for its conclusion under Section 29-A, which operated prospectively. It was argued that while referring the matter to arbitration, the Court had used the expression “shall endeavour” while indicating the period of 9 months, and the use of the word “endeavour” could not be construed as mandatory.
The applicants also contended that the proceedings were not abandoned, as abandonment required a clear, unequivocal and demonstrable intention of a party to relinquish its right to pursue the reference and the email seeking resumption constituted an express “affirmation of intention to resume the arbitral proceedings”. It was alleged that the Ranka Group had not opposed the request in the email and that the hiatus in the proceedings from July 2017 onwards was mutual and consensual. They emphasised the distinction between termination of mandate of the arbitrator and termination of arbitral proceedings and asserted that only the mandate of the arbitrator was to be terminated by substituting him while the mandate of the arbitral proceedings would continue.
Respondents 4 to 9 did not object to the application, but the Ranka Group contended that the arbitral proceedings were abandoned due to complete inaction for nearly 9 years. It was urged that the order directing completion within 9 months had not been acted upon, nor was any extension of time sought, and that the conduct of the parties inferred abandonment of the reference. It was further submitted that abandoned arbitral proceedings cannot be revived by resorting to an application under Sections 11 and 14 A&C Act.
Issue
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Whether the mandate of arbitral proceedings continues or whether the arbitration is abandoned, and
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Whether the Court can substitute the arbitrator by exercising powers under Section 11 read with Section 14 A&C Act?
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Analysis
The Court observed that prior to the insertion of Section 29-A with effect from 23 October 2015, there was no statutory time limit prescribed for making an arbitral award, and relied on BCCI v. Kochi Cricket (P) Ltd., (2018) 6 SCC 287, wherein it was held that Section 29-A A&C Act would apply prospectively. The Court opined that the direction contained in the order dated 17 September 2014 requiring the arbitrator to “endeavour” to pass an award within 9 months could not be construed as a mandatory time-bound condition. The Court referred to TATA Sons (P) Ltd. v. Siva Industries & Holdings Ltd., (2023) 5 SCC 421, and observed 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. The Court also noted that even the parties did not treat the 9 months period to be the maximum permissible time-limit for conclusion of arbitral proceedings, as the arbitral meetings took place up to 25 July 2017, which was well past the period of 9 months.
The Court highlighted the distinction between termination of the mandate of an arbitrator under Sections 14 and 15 A&C Act and the termination of arbitral proceedings under Section 32 A&C Act. The Court referred to Nalin Vallabhbhai Patel v. Atharva Realtors, 2026 SCC OnLine Bom 2359, wherein it was observed that mere termination of mandate of 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) A&C Act.
The Court opined that where the reference is alive, but arbitrator’s mandate terminates, the Court can exercise powers under Sections 14 and 15 read with Section 11 A&C Act to substitute the arbitrator. However, once the arbitral proceedings terminate under Section 32, substitute arbitrator cannot be appointed. Under Section 32 A&C Act, the arbitral proceedings terminate either by making of final 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.
However, the Court noted that in the present case, neither the final award was made by the Tribunal, nor did it make an order under Section 32(2) A&C Act.
The Court relied on Dani Wooltex Corpn. v. Sheil Properties (P) Ltd., (2024) 7 SCC 1, wherein it was observed that:
“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.”
The Court opined that mere failure on the part of the applicants in seeking fixation of dates of meeting could not ipso facto attract the ground under Section 32(2) A&C Act. However, their conduct during the past 9 years led to the inference that the proceedings were abandoned. The Court noted that no event took place from 25 July 2017 to 2 January 2026 and only vague pleadings relating to settlement talks are raised, to which the Court observed that it was incomprehensible that settlement talks could go on for 9 long years. The Court noted that during this period, no party bothered to approach the arbitrator intimating him about the reason for not seeking fixation of arbitral meetings.
The Court also highlighted that the applicants did not express any intent in prosecuting the claim and noted that the present application was filed by partners belonging to Kanugo Group and none of the applicants ever approached the Arbitral Tribunal for resumption of the arbitral proceedings. The Court observed that the applicants cannot bank on an email by Respondent 6 who were themselves a party to the arbitral proceedings.
Decision
The Court concluded that the arbitral proceedings were abandoned by the applicants and the proceedings stood terminated under Section 32(2)(c) A&C Act. The Court observed that it was unable to substitute the arbitrator in exercise of powers under Sections 11 or Section 14 and consequently, dismissed the application.
[Supama Realtors LLP v. Mulchand Kaluchand Ranka, 2026 SCC OnLine Bom 3054, decided on 8-5-2026]
Advocates who appeared in this case :
For the Applicants: Akshay Patil with Vinayak Siraskar, Karishma Shah & Devika Mahadekar i/b Kiran Jain & Co.
For the Respondents: Amit Mehta with Vedant Rane, Neuty Thakkar with Dhavall Ghandy i/b Mr. Tushar Goradia.
